NEWTON, Mass.--(BUSINESS WIRE)--
Hospitality Properties Trust (NYSE: HPT) today announced its financial
results for the quarter and nine months ended September 30, 2013.
Results for the Quarter Ended September 30, 2013:
Normalized funds from operations, or Normalized FFO, for the quarter
ended September 30, 2013 were $105.8 million, or $0.76 per share,
compared to Normalized FFO for the quarter ended September 30, 2012 of
$91.5 million, or $0.74 per share.
Net income available for common shareholders was $16.7 million, or $0.12
per share, for the quarter ended September 30, 2013 compared to $29.5
million, or $0.24 per share, for the quarter ended September 30, 2012.
Net income available for common shareholders for the quarter ended
September 30, 2013 was reduced by $5.6 million, or $0.04 per share, due
to the liquidation preference for HPT's preferred shares that were
redeemed during that period exceeding the carrying value for those
preferred shares and includes a $5.8 million, or $0.04 per share, loss
on asset impairment recognized in connection with the taking of one of
HPT's travel center properties by eminent domain proceedings. Net income
available for common shareholders for the quarter ended September 30,
2012 included a $10.6 million, or $0.09 per share, gain on sale of real
estate and was reduced by $5.0 million, or $0.04 per share, due to the
liquidation preference for HPT's preferred shares that were redeemed
during that period exceeding the carrying value for those preferred
shares.
The weighted average number of common shares outstanding was 139.8
million and 123.6 million for the quarters ended September 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 September 30, 2013 and 2012 appears later in this press
release.
Results for the Nine Months Ended September 30, 2013:
Normalized FFO for the nine months ended September 30, 2013 were $307.0
million, or $2.27 per share, compared to Normalized FFO for the nine
months ended September 30, 2012 of $280.9 million, or $2.27 per share.
Net income available for common shareholders was $73.4 million, or $0.54
per share, for the nine months ended September 30, 2013 compared to
$85.3 million, or $0.69 per share, for the nine months ended September
30, 2012. Net income available for common shareholders for the nine
months ended September 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, was reduced by $5.6
million, or $0.04 per share, due to the liquidation preference for HPT's
preferred shares that were redeemed during that period exceeding the
carrying value for those preferred shares and includes an $8.0 million,
or $0.06 per share, loss on asset impairment recognized in connection
with the taking of one of HPT's travel center properties by eminent
domain proceedings and its plan to sell one hotel. Net income available
for common shareholders for the nine months ended September 30, 2012,
included a $10.6 million, or $0.09 per share, gain on sale of real
estate and was reduced by $8.0 million, or $0.06 per share, due to the
liquidation preference for HPT's preferred shares that were redeemed
during that period exceeding the carrying value for those preferred
shares.
The weighted average number of common shares outstanding was 135.0
million and 123.6 million for the nine months ended September 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 nine
months ended September 30, 2013 and 2012 appears later in this press
release.
Hotel Portfolio Performance:
For the quarter ended September 30, 2013 compared to the same period in
2012 for HPT's 287 comparable hotels: average daily rate, or ADR,
increased 3.2% to $104.72; occupancy increased 3.4 percentage points to
75.9%; and revenue per available room, or RevPAR, increased 8.1% to
$79.48.
During the quarter ended September 30, 2013, HPT had 33 comparable
hotels under renovation for all or part of the quarter. For the quarter
ended September 30, 2013 compared to the same period in 2012 for HPT's
254 comparable hotels not under renovation: ADR increased 3.0% to
$107.09; occupancy increased 4.1 percentage points to 77.8%; and RevPAR
increased 8.7% to $83.32.
For the nine months ended September 30, 2013 compared to the same period
in 2012 for HPT's 285 comparable hotels: ADR increased 3.0% to $102.87;
occupancy increased 3.1 percentage points to 73.0%; and RevPAR increased
7.6% to $75.10.
During the nine months ended September 30, 2013, HPT had 67 comparable
hotels under renovation for all or part of the period. For the nine
months ended September 30, 2013 compared to the same period in 2012 for
HPT's 218 comparable hotels not under renovation: ADR increased 2.6% to
$103.89; occupancy increased 5.2 percentage points to 75.2%; and RevPAR
increased 10.2% to $78.13.
Tenants and Managers:
As of September 30, 2013, HPT had nine operating agreements with seven
hotel operating companies for 291 hotels with 44,015 rooms which
represent 67% of HPT's total annual minimum returns and rents.
-
During the three months ended September 30, 2013, 122 hotels owned by
HPT were operated by subsidiaries of Marriott International, Inc.
(NASDAQ: MAR), or Marriott, under three contracts. Marriott contract
No. 1 includes 53 hotels and provides for annual minimum return
payments to HPT of up to $67.5 million. Because there is no guarantee
or security deposit for this contract, the minimum returns HPT
receives under this contract are limited to available hotel cash flow
after payment of operating expenses. During the three months ended
September 30, 2013, HPT realized returns under its Marriott contract
No. 1 of $16.8 million. Marriott contract No. 234 includes 68 hotels
and requires annual minimum returns to HPT of $105.3 million. During
the three months ended September 30, 2013, HPT was paid the
contractual amounts due under contract No. 234 for the period. At
September 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 September 30, 2013 of $2.5 million was paid to
HPT.
-
During the three months ended September 30, 2013, HPT was paid the
contractual amounts due 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 $136.0 million per year. During the three
months ended September 30, 2013, HPT's available security deposit was
replenished by $1.4 million from the net operating results these
hotels generated in excess of the minimum returns due to HPT for the
period. At September 30, 2013, the available security deposit which
HPT held to cover future payment shortfalls was $27.9 million.
-
As of September 30, 2013, HPT's remaining 78 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 (22 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) (1 hotel). Minimum returns and rents due HPT
are partially guaranteed under the Hyatt, Wyndham and Carlson
contracts.
-
For the three months ended September 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 0.92x (0.28x to 1.58x). As of September 30,
2013, approximately 71% 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 September 30, 2013, HPT had two leases with TravelCenters of
America LLC, or TA, for 184 travel centers located along the U.S.
Interstate Highway system which represent 33% of HPT's total annual
minimum returns and rents. As of September 30, 2013, all payments due to
HPT from TA under these leases were current. For the three months ended
September 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 1.76x.
Recent Investment Activities:
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 ($18.3 million remaining as of September 30,
2013) 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.
On September 18, 2013, HPT agreed to acquire a 223 room full service
hotel located in Orlando, FL for $21.0 million, excluding closing costs.
HPT plans to convert this hotel to a "Sonesta" brand hotel and add it to
its management contract with Sonesta, that currently covers 22 hotels.
Recent Financing Activities:
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 June 2013 senior notes
offering.
Conference Call:
On Tuesday, November 5, 2013, at 11:00 a.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 September 30, 2013. The conference call
telephone number is (888) 276-9996. Participants calling from outside
the United States and Canada should dial (612) 332-1214. 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,
November 5, 2013 and will run through Tuesday, November 12, 2013. To
hear the replay, dial (320) 365-3844. The replay pass code is 305210.
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 third
quarter conference call are strictly prohibited without the prior
written consent of HPT.
Supplemental Data:
A copy of HPT's Third 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 September 30, 2013, owned 291 hotels and 184 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 SEPTEMBER
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 $27.9 MILLION AS OF
SEPTEMBER 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 SEPTEMBER 30, 2013, APPROXIMATELY
71% 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 THE GUARANTEES ARE SUBJECT TO THE
GUARANTORS' ABILITY AND WILLINGNESS TO PAY. FURTHER, THE 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 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.
-
THIS PRESS RELEASE STATES THAT HPT AGREED TO ACQUIRE A HOTEL FOR $21.0
MILLION IN ORLANDO, FL. THIS TRANSACTION IS SUBJECT TO VARIOUS TERMS
AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS. THESE
TERMS AND CONDITIONS MAY NOT BE MET. AS A RESULT, THIS TRANSACTION MAY
NOT OCCUR OR MAY BE DELAYED OR ITS TERMS MAY CHANGE.
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 September 30,
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
2013
|
|
|
|
2012
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues (1)
|
|
$
|
348,908
|
|
|
|
$
|
251,722
|
|
|
|
|
$
|
990,436
|
|
|
|
$
|
741,775
|
|
Rental income (1)
|
|
|
62,731
|
|
|
|
|
73,915
|
|
|
|
|
|
186,799
|
|
|
|
|
220,863
|
|
FF&E reserve income (2)
|
|
|
636
|
|
|
|
|
4,431
|
|
|
|
|
|
1,828
|
|
|
|
|
12,033
|
|
|
Total revenues
|
|
|
412,275
|
|
|
|
|
330,068
|
|
|
|
|
|
1,179,063
|
|
|
|
|
974,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses (1)
|
|
|
249,862
|
|
|
|
|
184,566
|
|
|
|
|
|
705,054
|
|
|
|
|
527,806
|
|
Depreciation and amortization
|
|
|
76,048
|
|
|
|
|
66,566
|
|
|
|
|
|
221,926
|
|
|
|
|
192,206
|
|
General and administrative
|
|
|
13,094
|
|
|
|
|
10,336
|
|
|
|
|
|
37,156
|
|
|
|
|
32,333
|
|
Acquisition related costs (3)
|
|
|
1,090
|
|
|
|
|
84
|
|
|
|
|
|
3,180
|
|
|
|
|
1,648
|
|
Loss on asset impairment (4)
|
|
|
5,837
|
|
|
|
|
-
|
|
|
|
|
|
8,008
|
|
|
|
|
889
|
|
|
Total expenses
|
|
|
345,931
|
|
|
|
|
261,552
|
|
|
|
|
|
975,324
|
|
|
|
|
754,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
66,344
|
|
|
|
|
68,516
|
|
|
|
|
|
203,739
|
|
|
|
|
219,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
18
|
|
|
|
|
116
|
|
|
|
|
|
97
|
|
|
|
|
233
|
|
Interest expense (including amortization of deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financing costs and debt discounts of $1,584,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1,694, $4,620 and $4,648, respectively)
|
|
|
(37,986)
|
|
|
|
|
(34,854)
|
|
|
|
|
|
(108,188)
|
|
|
|
|
(101,660)
|
|
Gain on sale of real estate (5)
|
|
|
-
|
|
|
|
|
10,602
|
|
|
|
|
|
-
|
|
|
|
|
10,602
|
|
Equity in earnings of an investee
|
|
|
64
|
|
|
|
|
115
|
|
|
|
|
|
219
|
|
|
|
|
236
|
|
Income before income taxes
|
|
|
28,440
|
|
|
|
|
44,495
|
|
|
|
|
|
95,867
|
|
|
|
|
129,200
|
|
Income tax benefit (expense) (6)
|
|
|
(873)
|
|
|
|
|
163
|
|
|
|
|
|
4,559
|
|
|
|
|
(3,908)
|
|
Net income
|
|
|
27,567
|
|
|
|
|
44,658
|
|
|
|
|
|
100,426
|
|
|
|
|
125,292
|
|
Excess of liquidation preference over carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of preferred shares redeemed (7)
|
|
|
(5,627)
|
|
|
|
|
(5,040)
|
|
|
|
|
|
(5,627)
|
|
|
|
|
(7,984)
|
|
Preferred distributions
|
|
|
(5,199)
|
|
|
|
|
(10,138)
|
|
|
|
|
|
(21,393)
|
|
|
|
|
(32,048)
|
|
Net income available for common shareholders
|
|
$
|
16,741
|
|
|
|
$
|
29,480
|
|
|
|
|
$
|
73,406
|
|
|
|
$
|
85,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO:
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
16,741
|
|
|
|
$
|
29,480
|
|
|
|
|
$
|
73,406
|
|
|
|
$
|
85,260
|
|
Add:
|
Depreciation and amortization
|
|
|
76,048
|
|
|
|
|
66,566
|
|
|
|
|
|
221,926
|
|
|
|
|
192,206
|
|
|
Loss on asset impairment (4)
|
|
|
5,837
|
|
|
|
|
-
|
|
|
|
|
|
8,008
|
|
|
|
|
889
|
|
|
Gain on sale of real estate (5)
|
|
|
-
|
|
|
|
|
(10,602)
|
|
|
|
|
|
-
|
|
|
|
|
(10,602)
|
|
FFO
|
|
|
98,626
|
|
|
|
|
85,444
|
|
|
|
|
|
303,340
|
|
|
|
|
267,753
|
|
Add:
|
Deferred percentage rent (9)
|
|
|
464
|
|
|
|
|
919
|
|
|
|
|
|
1,746
|
|
|
|
|
3,481
|
|
|
Acquisition related costs (3)
|
|
|
1,090
|
|
|
|
|
84
|
|
|
|
|
|
3,180
|
|
|
|
|
1,648
|
|
|
Excess of liquidation preference over carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of preferred shares redeemed (7)
|
|
|
5,627
|
|
|
|
|
5,040
|
|
|
|
|
|
5,627
|
|
|
|
|
7,984
|
|
Less:
|
Deferred income tax benefit (6)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
(6,868)
|
|
|
|
|
-
|
|
Normalized FFO
|
|
$
|
105,807
|
|
|
|
$
|
91,487
|
|
|
|
|
$
|
307,025
|
|
|
|
$
|
280,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
139,764
|
|
|
|
|
123,577
|
|
|
|
|
|
135,030
|
|
|
|
|
123,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
$
|
0.12
|
|
|
|
$
|
0.24
|
|
|
|
|
$
|
0.54
|
|
|
|
$
|
0.69
|
|
|
FFO (8)
|
|
$
|
0.71
|
|
|
|
$
|
0.69
|
|
|
|
|
$
|
2.25
|
|
|
|
$
|
2.17
|
|
|
Normalized FFO (8)
|
|
$
|
0.76
|
|
|
|
$
|
0.74
|
|
|
|
|
$
|
2.27
|
|
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes on page 8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) At September 30, 2013, HPT owned 291 hotels; 288 of these hotels are
leased by HPT to its taxable REIT subsidiaries and managed by hotel
operating companies and three hotels are leased to hotel operating
companies. At September 30, 2013, HPT also owned 184 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,
$15,258 and $20,300, less than the minimum returns due to HPT in the
three months ended September 30, 2013 and 2012, respectively, and
$44,475 and $46,697 less than the minimum returns due to HPT in the nine
months ended September 30, 2013 and 2012, respectively. When the
managers of these hotels 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 $4,445 and $12,791 in the
three months ended September 30, 2013 and 2012, respectively, and
$12,597 and $30,483 in the nine months ended September 30, 2013 and
2012, respectively. HPT had shortfalls at certain of its managed hotel
portfolios not funded by the managers of these hotels under the terms of
its operating agreements of $10,813 and $9,840 in the three months ended
September 30, 2013 and 2012, respectively, and $31,878 and $16,210 in
the nine months ended September 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 $5,837, or $0.04 per share, loss on asset impairment
in the three months ended September 30, 2013 in connection with an
eminent domain taking of its travel center in Roanoke, VA by the
Virginia Department of Transportation. 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 three months
ended March 31, 2012 in connection with its decision to remove certain
of its hotels from held for sale status.
(5) HPT recorded a $10,602, or $0.09 per share, gain on sale of real
estate in the three months ended September 30, 2012 in connection with
the sales of three of its hotels.
(6) HPT recorded a $6,868, or $0.05 per share, income tax benefit in the
nine months ended September 30, 2013 in connection with the
restructuring of certain of its TRSs.
(7) On July 1, 2013, HPT redeemed all of its outstanding Series C
Preferred Shares at their liquidation preference of $25 per share, plus
accumulated and unpaid distributions. The liquidation preference of the
redeemed shares exceeded the carrying amount for the redeemed shares as
of the date of redemption by $5,627, or $0.04 per share, and HPT reduced
net income available to common shareholders for the three months ended
September 30, 2013, by that excess amount. 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 the 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 three months ended March 31,
2012, by that excess amount. On September 10, 2012, HPT redeemed
6,000,000 of its Series C Preferred Shares at their liquidation
preference of $25 per share, plus accumulated and unpaid distributions.
The liquidation preference of the redeemed shares exceeded the carrying
amount for the redeemed shares as of the date of redemption by $5,040,
or $0.02 per share, and HPT reduced net income available to common
shareholders for the three months ended September 30, 2012, by that
excess amount.
(8) 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 any gain or loss on sale of properties
and loss on impairment of real estate assets, plus real estate
depreciation and amortization, as well as certain 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.
(9) 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties:
|
|
|
|
|
|
|
|
|
|
|
Land
|
$
|
1,472,184
|
|
|
|
|
$
|
1,453,399
|
|
|
Buildings, improvements and equipment
|
|
5,853,908
|
|
|
|
|
|
5,445,710
|
|
|
|
|
|
|
|
7,326,092
|
|
|
|
|
|
6,899,109
|
|
Accumulated depreciation
|
|
(1,708,065)
|
|
|
|
|
|
(1,551,160)
|
|
|
|
|
|
|
|
5,618,027
|
|
|
|
|
|
5,347,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
17,118
|
|
|
|
|
|
20,049
|
|
Restricted cash (FF&E reserve escrow)
|
|
30,333
|
|
|
|
|
|
40,744
|
|
Other assets, net
|
|
236,387
|
|
|
|
|
|
226,383
|
|
|
|
|
|
|
$
|
5,901,865
|
|
|
|
|
$
|
5,635,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
$
|
193,000
|
|
|
|
|
$
|
320,000
|
|
Unsecured term loan
|
|
400,000
|
|
|
|
|
|
400,000
|
|
Senior notes, net of discounts
|
|
2,295,027
|
|
|
|
|
|
1,993,880
|
|
Convertible senior notes, net of discounts
|
|
8,478
|
|
|
|
|
|
8,478
|
|
Security deposits
|
|
28,023
|
|
|
|
|
|
26,577
|
|
Accounts payable and other liabilities
|
|
97,585
|
|
|
|
|
|
132,032
|
|
Due to related persons
|
|
15,187
|
|
|
|
|
|
13,696
|
|
Dividends payable
|
|
5,166
|
|
|
|
|
|
6,664
|
|
|
Total liabilities
|
|
3,042,466
|
|
|
|
|
|
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; zero and
6,700,000 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
issued and outstanding, respectively, aggregate liquidation
preference of
|
|
|
|
|
|
|
|
|
|
|
|
|
zero and $167,500, respectively
|
|
-
|
|
|
|
|
|
161,873
|
|
|
|
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000
shares
|
|
|
|
|
|
|
|
|
|
|
|
|
issued and outstanding, aggregate liquidation preference of $290,000
|
|
280,107
|
|
|
|
|
|
280,107
|
|
|
Common shares of beneficial interest, $.01 par value;
|
|
|
|
|
|
|
|
|
|
|
|
200,000,000 shares authorized; 139,831,549 and
|
|
|
|
|
|
|
|
|
|
|
|
123,637,424 shares issued and outstanding, respectively
|
|
1,398
|
|
|
|
|
|
1,236
|
|
|
Additional paid in capital
|
|
3,847,958
|
|
|
|
|
|
3,458,144
|
|
|
Cumulative net income
|
|
2,485,302
|
|
|
|
|
|
2,384,876
|
|
|
Cumulative other comprehensive income
|
|
10,704
|
|
|
|
|
|
2,770
|
|
|
Cumulative preferred distributions
|
|
(274,820)
|
|
|
|
|
|
(253,426)
|
|
|
Cumulative common distributions
|
|
(3,491,250)
|
|
|
|
|
|
(3,301,782)
|
|
|
|
Total shareholders' equity
|
|
2,859,399
|
|
|
|
|
|
2,733,798
|
|
|
|
|
|
|
$
|
5,901,865
|
|
|
|
|
$
|
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
Katie Strohacker, 617-796-8232
Senior
Manager, Investor Relations
www.hptreit.com