NEWTON, Mass.--(BUSINESS WIRE)--
Hospitality Properties Trust (NYSE: HPT) today announced its financial
results for the quarter and six months ended June 30, 2013.
Results for the Quarter Ended June 30, 2013:
Normalized funds from operations, or Normalized FFO, for the quarter
ended June 30, 2013 were $108.6 million, or $0.78 per share, compared to
Normalized FFO for the quarter ended June 30, 2012 of $93.0 million, or
$0.75 per share.
Net income available for common shareholders was $37.3 million, or $0.27
per share, for the quarter ended June 30, 2013 compared to $27.0
million, or $0.22 per share, for the quarter ended June 30, 2012. Net
income available for common shareholders for the quarter ended June 30,
2013 includes a $6.9 million, or $0.05 per share, income tax benefit
recorded in connection with the restructuring of certain of HPT's
taxable REIT subsidiaries, or TRSs, and a $2.2 million, or $0.02 per
share, loss on asset impairment.
The weighted average number of common shares outstanding was 139.7
million and 123.6 million for the quarters ended June 30, 2013 and 2012,
respectively.
A reconciliation of net income available for common shareholders
determined according to U.S. generally accepted accounting principles,
or GAAP, to funds from operations, or FFO, and Normalized FFO for the
quarters ended June 30, 2013 and 2012 appears later in this press
release.
Results for the Six Months Ended June 30, 2013:
Normalized FFO for the six months ended June 30, 2013 were $201.2
million, or $1.52 per share, compared to Normalized FFO for the six
months ended June 30, 2012 of $189.4 million, or $1.53 per share.
Net income available for common shareholders was $56.7 million, or $0.43
per share, for the six months ended June 30, 2013 compared to $55.8
million, or $0.45 per share, for the six months ended June 30, 2012. Net
income available for common shareholders for the six months ended June
30, 2013 includes the $6.9 million, or $0.05 per share, income tax
benefit and the $2.2 million, or $0.02 per share, loss on asset
impairment described above. Net income available for common shareholders
for the six months ended June 30, 2012 was reduced by $2.9 million, or
$0.02 per share, due to the liquidation preference for HPT's preferred
shares that it redeemed during that period exceeding the carrying value
for those preferred shares.
The weighted average number of common shares outstanding was 132.6
million and 123.5 million for the six months ended June 30, 2013 and
2012, respectively.
A reconciliation of net income available for common shareholders
determined according to GAAP to FFO and Normalized FFO for the six
months ended June 30, 2013 and 2012 appears later in this press release.
Hotel Portfolio Performance:
For the quarter ended June 30, 2013 compared to the same period in 2012
for HPT's 287 comparable hotels: average daily rate, or ADR, increased
1.8% to $104.93; occupancy increased 3.8 percentage points to 76.9%; and
revenue per available room, or RevPAR, increased 7.1% to $80.69.
During the quarter ended June 30, 2013, HPT had 42 comparable hotels
under renovation for all or part of the quarter. For the quarter ended
June 30, 2013 compared to the same period in 2012 for HPT's 245
comparable hotels not under renovation: ADR increased 1.5% to $107.48;
occupancy increased 5.2 percentage points to 78.4%; and RevPAR increased
8.7% to $84.26.
For the six months ended June 30, 2013 compared to the same period in
2012 for HPT's 285 comparable hotels: ADR increased 2.9% to $102.79;
occupancy increased 3.0 percentage points to 71.6%; and RevPAR increased
7.4% to $73.60.
During the six months ended June 30, 2013, HPT had 53 comparable hotels
under renovation for all or part of the period. For the six months ended
June 30, 2013 compared to the same period in 2012 for HPT's 232
comparable hotels not under renovation: ADR increased 2.4% to $104.08;
occupancy increased 4.7 percentage points to 73.5%; and RevPAR increased
9.4% to $76.50.
Tenants and Managers:
As of June 30, 2013, HPT had nine operating agreements with seven hotel
operating companies for 290 hotels with 43,812 rooms which represent 66%
of HPT's total annual minimum returns and rents.
-
During the three months ended June 30, 2013, 122 hotels owned by HPT
were operated by subsidiaries of Marriott International, Inc. (NYSE:
MAR), or Marriott, under three contracts. Marriott contract No. 1
includes 53 hotels and provides for annual minimum returns payments to
HPT of up to $67.4 million. Because there is no guarantee or security
deposit for this contract, the minimum returns HPT receives under this
contract is limited to available hotel cash flow after payment of
operating expenses. During the three months ended June 30, 2013, HPT
realized returns under its Marriott No. 1 contract of $20.7 million,
including the recovery of $3.7 million of minimum return shortfalls
from the first quarter of 2013. Marriott contract No. 234 includes 68
hotels and requires annual minimum returns to HPT of $104.4 million.
During the three months ended June 30, 2013, the payments HPT received
under its Marriott No. 234 contract were $2.6 million less than the
minimum amounts contractually required. At June 30, 2013, there was
$30.7 million remaining under Marriott's guaranty under contract No.
234 to cover future payment shortfalls for up to 90% of the minimum
returns due to HPT. Marriott contract No. 5 includes one resort hotel
in Kauai, HI which is leased to Marriott on a full recourse basis. The
contractual rent due HPT for this hotel for the three months ended
June 30, 2013 of $2.5 million was received.
-
During the three months ended June 30, 2013, the payments HPT received
under its management contract with subsidiaries of InterContinental
Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental,
including 91 hotels and requiring minimum returns to HPT of $135.2
million per year were $5.9 million more than the minimum amounts
contractually required. HPT replenished the available security deposit
with the $5.9 million of excess payments to recover payment shortfalls
which reduced the security deposit during the first quarter of 2013.
At June 30, 2013, the available security deposit which HPT held to
cover future payment shortfalls was $26.5 million.
-
As of June 30, 2013, HPT's remaining 77 hotels are operated under five
contracts: one management contract with a subsidiary of Hyatt Hotels
Corporation (NYSE: H), or Hyatt (22 hotels); one management contract
with a subsidiary of Wyndham Worldwide Corporation (NYSE: WYN), or
Wyndham (21 hotels); one management agreement with Sonesta
International Hotels Corporation, or Sonesta (22 hotels); one
management contract with a subsidiary of Carlson Hotels Worldwide, or
Carlson (11 hotels); and one lease with a subsidiary of Morgans Hotel
Group Co. (NASDAQ: MHGC), or Morgans (1 hotel). Minimum returns and
rents due HPT are partially guaranteed under the Hyatt, Wyndham and
Carlson contracts.
-
For the three months ended June 30, 2013, the aggregate coverage ratio
of (x) total hotel cash flow available to pay HPT's minimum returns
and rents due from hotels to (y) HPT's minimum returns and rents due
from hotels was 1.04x (0.47x to 1.31x). As of June 30, 2013,
approximately 70% of HPT's aggregate annual minimum returns and rents
from its hotels were secured by guarantees and security deposits from
HPT's managers and tenants pursuant to the terms of the hotel
operating agreements.
As of June 30, 2013, HPT had two leases with TravelCenters of America
LLC, or TA, for 185 travel centers located along the U.S. Interstate
Highway system which represent 34% of HPT's total annual minimum returns
and rents. As of June 30, 2013, all payments due to HPT from TA under
these leases were current. For the three months ended June 30, 2013, the
aggregate coverage ratio of (x) total cash flow at the leased travel
centers available to pay HPT's minimum rent due from TA to (y) HPT's
minimum rent due from TA was 1.77x.
Recent Investment Activities:
On February 27, 2013, HPT announced that it had entered a letter of
intent with NH Hoteles, S.A. (BME: NHH) (NYSE: NHHEY (ADRs)), or NH
Hoteles, for investments with NH Hoteles in Latin America, Europe and
the United States totaling approximately $375 million. On April 24,
2013, NH Hoteles notified HPT that it was unable to obtain the necessary
bank approvals to allow it to complete the transaction as outlined in
the letter of intent. HPT subsequently held discussions with NH Hoteles
about possible modifications or alternatives to the proposed transaction
originally announced but was unable to reach agreement and is currently
no longer pursuing this transaction.
On May 17, 2013, HPT acquired a 426 room full service hotel located in
the Atlanta, GA metropolitan market for $29.7 million, excluding closing
costs. HPT converted this hotel to the Sonesta Gwinnett Place and added
it to its management agreement with Sonesta. HPT expects to invest
approximately $4.6 million to renovate this hotel to Sonesta brand
standards.
On June 28, 2013, HPT acquired the fee interest in the Royal Sonesta
Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for
$120.5 million, excluding closing costs, from the third party owner from
which HPT previously leased this hotel and the lease with the third
party terminated. Simultaneously with this acquisition, HPT and Sonesta
amended the management agreement for this hotel and, as a result, HPT's
22 Sonesta branded hotels are now pooled under one agreement.
On August 1, 2013, HPT acquired a full service hotel in Florham Park, NJ
for $52.8 million, excluding closing costs, and added it to its
management contract with Wyndham. HPT's annual minimum returns under the
Wyndham agreement increased by $4.2 million and the maximum amount of
the limited guaranty provided by Wyndham which secures payment of the
minimum returns for this and other hotels in that combination contract
increased to $35.7 million upon closing of this hotel acquisition. HPT
has agreed to invest approximately $10.0 million to renovate this hotel
to Wyndham brand standards; and as this investment is funded, the
minimum returns due HPT will increase according to a contractual formula.
Recent Financing Activities:
On June 6, 2013, HPT issued $300.0 million of 4.5% unsecured senior
notes due in 2023 in a public offering. Net proceeds from this offering
($297.1 million after underwriting and other offering expenses) were
used for the acquisition of the New Orleans Hotel described above, to
fund the redemption of HPT's 7% Series C Cumulative Redeemable Preferred
Shares described below and for general business purposes.
On July 1, 2013, HPT redeemed all of its 6.7 million outstanding shares
of 7% Series C Cumulative Redeemable Preferred Shares for $25.00 per
share plus accrued and unpaid distributions ($169.0 million in total).
HPT funded this redemption with proceeds from its senior notes offering
described above. HPT's net income in the third quarter of 2013 will be
reduced by $5.6 million, or approximately $0.04 per share, for the
excess of the redemption price paid for these preferred shares over
their carrying value.
Conference Call:
On Tuesday, August 6, 2013, at 1:00 p.m. Eastern Time, John Murray,
President and Chief Operating Officer, and Mark Kleifges, Treasurer and
Chief Financial Officer, will host a conference call to discuss the
results for the quarter ended June 30, 2013. The conference call
telephone number is (800) 230-1059. Participants calling from outside
the United States and Canada should dial (612) 234-9959. 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 beginning on Tuesday,
August 6, 2013 and will run through Tuesday, August 13, 2013. To hear
the replay, dial (320) 365-3844. The replay pass code is 296742.
A live audio webcast of the conference call will also be available in a
listen only mode on HPT's website, which is located at www.hptreit.com.
Participants wanting to access the webcast should visit HPT's website
about five minutes before the call. The archived webcast will be
available for replay on HPT's website for about one week after the call. The
transcription, recording and retransmission in any way of HPT's second
quarter conference call are strictly prohibited without the prior
written consent of HPT.
Supplemental Data:
A copy of HPT's Second Quarter 2013 Supplemental Operating and Financial
Data is available for download at HPT's website, www.hptreit.com. HPT's
website is not incorporated as part of this press release.
Hospitality Properties Trust is a real estate investment trust, or REIT,
which as of June 30, 2013, owned 290 hotels and 185 travel centers
located in 44 states, Puerto Rico and Canada. HPT is headquartered in
Newton, MA.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER HPT USES
WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN",
"ESTIMATE" OR SIMILAR EXPRESSIONS, HPT IS MAKING FORWARD LOOKING
STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HPT'S
PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS
ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
THIS PRESS RELEASE STATES THAT $30.7 MILLION REMAINED, AS OF JUNE 30,
2013, TO PARTIALLY FUND MINIMUM PAYMENT SHORTFALLS UNDER THE TERMS OF
A LIMITED GUARANTY PROVIDED BY MARRIOTT. THIS STATEMENT MAY IMPLY THAT
MARRIOTT WILL BE ABLE OR WILLING TO FULFILL ITS OBLIGATION UNDER THIS
GUARANTY OR THAT FUTURE SHORTFALLS WILL NOT EXHAUST THE GUARANTY CAP.
HOWEVER, THIS GUARANTY EXPIRES ON DECEMBER 31, 2019, AND HPT CAN
PROVIDE NO ASSURANCE WITH REGARD TO MARRIOTT'S FUTURE ACTIONS OR THE
FUTURE PERFORMANCE OF HPT'S HOTELS TO WHICH THE MARRIOTT LIMITED
GUARANTY APPLIES.
-
THIS PRESS RELEASE INDICATES THAT HPT IS HOLDING A SECURITY DEPOSIT TO
COVER THE SHORTFALL IN MINIMUM PAYMENTS OWED TO IT UNDER ITS
INTERCONTINENTAL AGREEMENT, AND THAT THE REMAINING AVAILABLE SECURITY
DEPOSIT TO COVER FUTURE PAYMENT SHORTFALLS WAS $26.5 MILLION AS OF
JUNE 30, 2013. THE SECURITY DEPOSIT WHICH HPT IS HOLDING IS LIMITED IN
AMOUNT. THERE CAN BE NO ASSURANCE REGARDING THE AMOUNT OF PAYMENTS HPT
MAY RECEIVE IN THE FUTURE UNDER THIS AGREEMENT, AND FUTURE SHORTFALLS
MAY EXCEED THE AMOUNT OF THE SECURITY DEPOSIT HPT HOLDS. MOREOVER, THE
SECURITY DEPOSIT IS NOT ESCROWED OR OTHERWISE SEGREGATED FROM HPT'S
OTHER ASSETS AND LIABILITIES; ACCORDINGLY, IF HPT APPLIES THIS
SECURITY DEPOSIT TO COVER MINIMUM PAYMENTS DUE, HPT WILL RECORD INCOME
BUT IT WILL NOT RECEIVE ANY ADDITIONAL CASH.
-
THIS PRESS RELEASE STATES THAT AS OF JUNE 30, 2013, APPROXIMATELY 70%
OF HPT'S AGGREGATE ANNUAL MINIMUM RETURNS AND RENTS FOR ITS HOTELS
WERE SECURED BY GUARANTEES AND SECURITY DEPOSITS FROM HPT'S MANAGERS
AND TENANTS. THIS MAY IMPLY THAT THESE MINIMUM RETURNS AND RENTS WILL
BE PAID. IN FACT, THESE GUARANTEES AND SECURITY DEPOSITS ARE LIMITED
IN AMOUNT AND DURATION AND GUARANTEES ARE SUBJECT TO THE GUARANTORS'
ABILITY AND WILLINGNESS TO PAY. FURTHER, AS NOTED ELSEWHERE,
APPLICATION OF SECURITY DEPOSITS TO COVER SHORTFALLS WILL RESULT IN
HPT RECORDING INCOME, BUT WILL NOT RESULT IN HPT RECEIVING ADDITIONAL
CASH.
-
THIS PRESS RELEASE STATES THAT HPT EXPECTS TO SPEND APPROXIMATELY $4.6
MILLION TO RENOVATE A HOTEL TO SONESTA BRAND STANDARDS AND THAT HPT
HAS AGREED TO INVEST APPROXIMATELY $10.0 MILLION TO RENOVATE A HOTEL
TO WYNDHAM BRAND STANDARDS. HOTEL RENOVATION COSTS ARE DIFFICULT TO
PROJECT. RENOVATION PROJECTS OFTEN COST MORE THAN ANTICIPATED.
ACCORDINGLY, HPT MAY BE REQUIRED TO INVEST ADDITIONAL AMOUNTS THAN
THOSE NOW EXPECTED TO COMPLETE THESE RENOVATION PLANS.
THE INFORMATION CONTAINED IN HPT'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS"
IN HPT'S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM HPT'S FORWARD
LOOKING STATEMENTS. HPT'S FILINGS WITH THE SEC ARE AVAILABLE ON THE
SEC'S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON HPT'S FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, HPT DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
|
Hospitality Properties Trust
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS
|
AND NORMALIZED FUNDS FROM OPERATIONS
|
(amounts in thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues (1)
|
|
$
|
349,877
|
|
|
$
|
265,068
|
|
|
$
|
641,528
|
|
|
$
|
490,053
|
|
|
Rental income (1)
|
|
|
61,856
|
|
|
|
73,688
|
|
|
|
124,068
|
|
|
|
146,948
|
|
|
FF&E reserve income (2)
|
|
|
589
|
|
|
|
4,427
|
|
|
|
1,192
|
|
|
|
7,602
|
|
|
|
Total revenues
|
|
|
412,322
|
|
|
|
343,183
|
|
|
|
766,788
|
|
|
|
644,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses (1)
|
|
|
248,543
|
|
|
|
193,219
|
|
|
|
455,192
|
|
|
|
343,240
|
|
|
Depreciation and amortization
|
|
|
73,598
|
|
|
|
64,277
|
|
|
|
145,878
|
|
|
|
125,640
|
|
|
General and administrative
|
|
|
11,918
|
|
|
|
11,475
|
|
|
|
24,062
|
|
|
|
21,997
|
|
|
Acquisition related costs (3)
|
|
|
1,814
|
|
|
|
504
|
|
|
|
2,090
|
|
|
|
1,564
|
|
|
Loss on asset impairment (4)
|
|
|
2,171
|
|
|
|
-
|
|
|
|
2,171
|
|
|
|
889
|
|
|
|
Total expenses
|
|
|
338,044
|
|
|
|
269,475
|
|
|
|
629,393
|
|
|
|
493,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
74,278
|
|
|
|
73,708
|
|
|
|
137,395
|
|
|
|
151,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
60
|
|
|
|
51
|
|
|
|
79
|
|
|
|
117
|
|
|
Interest expense (including amortization of deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financing costs and debt discounts of $1,524,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,376, $3,036 and $2,954, respectively)
|
|
|
(35,014
|
)
|
|
|
(32,714
|
)
|
|
|
(70,202
|
)
|
|
|
(66,806
|
)
|
|
Equity in earnings of an investee
|
|
|
79
|
|
|
|
76
|
|
|
|
155
|
|
|
|
121
|
|
Income before income taxes
|
|
|
39,403
|
|
|
|
41,121
|
|
|
|
67,427
|
|
|
|
84,705
|
|
|
Income tax benefit (expense) (5)
|
|
|
5,950
|
|
|
|
(3,435
|
)
|
|
|
5,432
|
|
|
|
(4,071
|
)
|
Net income
|
|
|
45,353
|
|
|
|
37,686
|
|
|
|
72,859
|
|
|
|
80,634
|
|
|
Excess of liquidation preference over carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of preferred shares redeemed (6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,944
|
)
|
|
Preferred distributions
|
|
|
(8,097
|
)
|
|
|
(10,722
|
)
|
|
|
(16,194
|
)
|
|
|
(21,910
|
)
|
Net income available for common shareholders
|
|
$
|
37,256
|
|
|
$
|
26,964
|
|
|
$
|
56,665
|
|
|
$
|
55,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO: (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
37,256
|
|
|
$
|
26,964
|
|
|
$
|
56,665
|
|
|
$
|
55,780
|
|
Add:
|
Depreciation and amortization
|
|
|
73,598
|
|
|
|
64,277
|
|
|
|
145,878
|
|
|
|
125,640
|
|
|
|
Loss on asset impairment (4)
|
|
|
2,171
|
|
|
|
-
|
|
|
|
2,171
|
|
|
|
889
|
|
FFO
|
|
|
113,025
|
|
|
|
91,241
|
|
|
|
204,714
|
|
|
|
182,309
|
|
Add:
|
Deferred percentage rent (8)
|
|
|
672
|
|
|
|
1,253
|
|
|
|
1,282
|
|
|
|
2,562
|
|
|
|
Acquisition related costs (3)
|
|
|
1,814
|
|
|
|
504
|
|
|
|
2,090
|
|
|
|
1,564
|
|
|
|
Excess of liquidation preference over carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of preferred shares redeemed (6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,944
|
|
Less:
|
Deferred income tax benefit (5)
|
|
|
(6,868
|
)
|
|
|
-
|
|
|
|
(6,868
|
)
|
|
|
-
|
|
Normalized FFO
|
|
$
|
108,643
|
|
|
$
|
92,998
|
|
|
$
|
201,218
|
|
|
$
|
189,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
139,743
|
|
|
|
123,560
|
|
|
|
132,624
|
|
|
|
123,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
0.27
|
|
|
$
|
0.22
|
|
|
$
|
0.43
|
|
|
$
|
0.45
|
|
|
|
FFO (7)
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
|
$
|
1.54
|
|
|
$
|
1.48
|
|
|
|
Normalized FFO (7)
|
|
$
|
0.78
|
|
|
$
|
0.75
|
|
|
$
|
1.52
|
|
|
$
|
1.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) At June 30, 2013, HPT owned 290 hotels; 287 of these hotels are
leased by HPT to its TRSs and managed by hotel operating companies and
three hotels are leased to hotel operating companies. At June 30, 2013,
HPT also owned 185 travel centers that are leased to a travel center
operating company under two lease agreements. HPT's Condensed
Consolidated Statements of Income include hotel operating revenues and
expenses of managed hotels and rental income from its leased hotels and
travel centers. Certain of HPT's managed hotels had net operating
results that were, in the aggregate, $8,018 and $3,081, less than the
minimum returns due to HPT in the three months ended June 30, 2013 and
2012, respectively, and $30,369 and $26,396 less than the minimum
returns due to HPT in the six months ended June 30, 2013 and 2012,
respectively. When the managers of these hotels are required to fund the
shortfalls under the terms of HPT's operating agreements or their
guarantees, HPT reflects such fundings (including security deposit
applications) in its Condensed Consolidated Statements of Income as a
reduction of hotel operating expenses. The reduction to hotel operating
expenses was $1,267 and $535 in the three months ended June 30, 2013 and
2012, respectively, and $8,772 and $20,027 in the six months ended June
30, 2013 and 2012, respectively. HPT had $6,751 and $2,546 of shortfalls
at certain of its managed hotel portfolios not funded by the managers of
these hotels under the terms of its operating agreements in the three
months ended June 30, 2013 and 2012, respectively, and $21,597 and
$6,369 in the six months ended June 30, 2013 and 2012, respectively,
which represent the unguaranteed portions of HPT's minimum returns from
Marriott and from Sonesta.
(2) Various percentages of total sales at certain of HPT's hotels are
escrowed as reserves for future renovations or refurbishment, or FF&E
reserve escrows. HPT owns all the FF&E reserve escrows for its hotels.
HPT reports deposits by its third party tenants into the escrow accounts
as FF&E reserve income. HPT does not report the amounts which are
escrowed as FF&E reserves for its managed hotels as FF&E reserve income.
(3) Represents costs associated with HPT's hotel acquisition activities.
(4) HPT recorded a $2,171, or $0.02 per share, loss on asset impairment
in the three months ended June 30, 2013 in connection with its plan to
sell one hotel. HPT recorded an $889, or $0.01 per share, loss on asset
impairment in the six months ended June 30, 2012 in connection with its
decision to remove certain of its hotels from held for sale status.
(5) HPT recorded a $6,868, or $0.05 per share, income tax benefit in the
three months ended June 30, 2013 in connection with the restructuring of
certain of its TRSs.
(6) On February 13, 2012, HPT redeemed all of its outstanding Series B
Preferred Shares at their liquidation preference of $25 per share, plus
accumulated and unpaid distributions. The liquidation preference of the
redeemed shares exceeded HPT's carrying amount for the redeemed shares
as of the date of redemption by $2,944, or $0.02 per share, and HPT
reduced net income available to common shareholders for the six months
ended June 30, 2012, by that excess amount.
(7) HPT calculates FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income, calculated in
accordance with GAAP, excluding loss on impairment of real estate
assets, plus real estate depreciation and amortization, as well as other
adjustments currently not applicable to HPT. HPT's calculation of
Normalized FFO differs from NAREIT's definition of FFO because it
includes estimated percentage rent in the period to which it estimates
that it relates rather than when it is recognized as income in
accordance with GAAP and excludes the excess of liquidation preference
over carrying value of preferred shares redeemed, acquisition related
costs and the deferred income tax benefit described above. HPT considers
FFO and Normalized FFO to be appropriate measures of operating
performance for a REIT, along with net income, net income available for
common shareholders, operating income and cash flow from operating
activities. HPT believes that FFO and Normalized FFO provide useful
information to investors because by excluding the effects of certain
historical amounts, such as depreciation expense, FFO and Normalized FFO
may facilitate a comparison of HPT's operating performance between
periods and between HPT and other REITs. FFO and Normalized FFO are
among the factors considered by HPT's Board of Trustees when determining
the amount of distributions to its shareholders. Other factors include,
but are not limited to, requirements to maintain HPT's status as a REIT,
limitations in its revolving credit facility and term loan agreements
and public debt covenants, the availability of debt and equity capital
to HPT, HPT's expectation of its future capital requirements and
operating performance, and its expected needs and availability of cash
to pay its obligations. FFO and Normalized FFO do not represent cash
generated by operating activities in accordance with GAAP and should not
be considered as alternatives to net income, operating income, net
income available for common shareholders or cash flow from operating
activities, determined in accordance with GAAP, or as indicators of
HPT's financial performance or liquidity, nor are these measures
necessarily indicative of sufficient cash flow to fund all of HPT's
needs. HPT believes FFO and Normalized FFO may facilitate an
understanding of its consolidated historical operating results. These
measures should be considered in conjunction with net income, operating
income, net income available for common shareholders and cash flow from
operating activities as presented in HPT's Condensed Consolidated
Statements of Income and Comprehensive Income and Condensed Consolidated
Statements of Cash Flows. Other REITs and real estate companies may
calculate FFO and Normalized FFO differently than HPT does.
(8) In calculating net income in accordance with GAAP, HPT recognizes
percentage rental income received for the first, second and third
quarters in the fourth quarter, which is when all contingencies have
been met and the income is earned. Although HPT defers recognition of
this revenue until the fourth quarter for purposes of calculating net
income, HPT includes these estimated amounts in the calculation of
Normalized FFO for each quarter of the year. The fourth quarter
Normalized FFO calculation excludes the amounts recognized during the
first three quarters.
|
Hospitality Properties Trust
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(amounts in thousands, except share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties:
|
|
|
|
|
|
|
|
Land
|
|
$
|
1,469,913
|
|
|
$
|
1,453,399
|
|
|
Buildings, improvements and equipment
|
|
|
5,730,015
|
|
|
|
5,445,710
|
|
|
|
|
|
|
|
7,199,928
|
|
|
|
6,899,109
|
|
Accumulated depreciation
|
|
|
(1,656,481
|
)
|
|
|
(1,551,160
|
)
|
|
|
|
|
|
|
5,543,447
|
|
|
|
5,347,949
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
200,737
|
|
|
|
20,049
|
|
Restricted cash (FF&E reserve escrow)
|
|
|
34,800
|
|
|
|
40,744
|
|
Other assets, net
|
|
|
260,890
|
|
|
|
226,383
|
|
|
|
|
|
|
$
|
6,039,874
|
|
|
$
|
5,635,125
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
90,000
|
|
|
$
|
320,000
|
|
Unsecured term loan
|
|
|
400,000
|
|
|
|
400,000
|
|
Senior notes, net of discounts
|
|
|
2,294,526
|
|
|
|
1,993,880
|
|
Convertible senior notes, net of discounts
|
|
|
8,478
|
|
|
|
8,478
|
|
Security deposits
|
|
|
26,579
|
|
|
|
26,577
|
|
Accounts payable and other liabilities
|
|
|
120,498
|
|
|
|
132,032
|
|
Due to related persons
|
|
|
16,842
|
|
|
|
13,696
|
|
Dividends payable
|
|
|
6,664
|
|
|
|
6,664
|
|
|
Total liabilities
|
|
|
2,963,587
|
|
|
|
2,901,327
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Preferred shares of beneficial interest; no par value; 100,000,000
|
|
|
|
|
|
|
|
shares authorized:
|
|
|
|
|
|
|
|
|
Series C preferred shares; 7% cumulative redeemable; 6,700,000 shares
|
|
|
|
|
|
|
|
|
|
issued and outstanding, aggregate liquidation preference $167,500
|
|
|
161,873
|
|
|
|
161,873
|
|
|
|
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000
shares
|
|
|
|
|
|
|
|
|
|
issued and outstanding, aggregate liquidation preference $290,000
|
|
|
280,107
|
|
|
|
280,107
|
|
|
Common shares of beneficial interest, $.01 par value;
|
|
|
|
|
|
|
|
|
200,000,000 shares authorized; 139,737,424 and
|
|
|
|
|
|
|
|
|
123,637,424 shares issued and outstanding, respectively
|
|
|
1,397
|
|
|
|
1,236
|
|
|
Additional paid in capital
|
|
|
3,851,825
|
|
|
|
3,458,144
|
|
|
Cumulative net income
|
|
|
2,457,735
|
|
|
|
2,384,876
|
|
|
Cumulative other comprehensive income
|
|
|
18,539
|
|
|
|
2,770
|
|
|
Cumulative preferred distributions
|
|
|
(269,620
|
)
|
|
|
(253,426
|
)
|
|
Cumulative common distributions
|
|
|
(3,425,569
|
)
|
|
|
(3,301,782
|
)
|
|
|
Total shareholders' equity
|
|
|
3,076,287
|
|
|
|
2,733,798
|
|
|
|
|
|
|
$
|
6,039,874
|
|
|
$
|
5,635,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 617-796-8232
Vice
President, Investor Relations
or
Carlynn Finn, 617-796-8232
Senior
Manager, Investor Relations
www.hptreit.com