Normalized FFO Per Diluted Share Increases 9.2% Year Over Year to
$0.83
Comparable Hotel RevPAR Growth of 10.1%
NEWTON, Mass.--(BUSINESS WIRE)--
Hospitality Properties Trust (NYSE: HPT) today announced its financial
results for the quarter ended March 31, 2015, compared to the results
for the prior year comparable period:
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First Quarter
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2015
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2014
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($ in thousands, except per share and RevPAR
data)
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Net income available for common shareholders
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$
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36,415
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$
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32,384
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Net income available for common shareholders per share (basic and
diluted)
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$
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0.24
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$
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0.22
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Adjusted EBITDA (1)
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$
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168,635
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$
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154,951
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Adjusted EBITDA growth
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8.8%
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—
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Normalized FFO (1)
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$
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125,989
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$
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113,060
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Normalized FFO per share (diluted) (1)
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$
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0.83
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$
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0.76
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Portfolio Performance
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Comparable hotel RevPAR
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$
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85.68
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$
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77.80
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Comparable hotel RevPAR growth
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10.1%
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—
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RevPAR (all hotels)
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$
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86.36
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$
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78.27
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RevPAR growth (all hotels)
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10.3%
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—
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Coverage of HPT's minimum returns and rents (all hotels)
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0.93x
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0.75x
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Coverage of HPT's minimum rents (all travel centers)
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1.93x
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1.54x
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(1) Reconciliations of net income available for common shareholders
determined in accordance with U.S. generally accepted accounting
principles, or GAAP, to funds from operations, or FFO, and Normalized
FFO, and net income to earnings before interest, taxes, depreciation and
amortization, or EBITDA, and Adjusted EBITDA appear later in this press
release.
John Murray, President and Chief Operating Officer of Hospitality
Properties Trust, made the following statement regarding today's
announcement:
"We are pleased with the strong performance from our hotel and travel
center portfolios which resulted in Normalized FFO per diluted share
growth of 9.2%. Our RevPAR growth of 10.3% exceeded the hotel industry's
performance for the ninth consecutive quarter."
First Quarter Results and Recent Activities:
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Net Income Available for Common Shareholders: Net income
available for common shareholders for the quarter ended March 31, 2015
was $36.4 million, or $0.24 per basic and diluted share, compared to
$32.4 million, or $0.22 per basic and diluted share, for the quarter
ended March 31, 2014. The weighted average number of basic and diluted
common shares outstanding was 149.8 million and 150.9 million,
respectively, for the quarter ended March 31, 2015 and 149.6 million
and 149.7 million, respectively, for the quarter ended March 31, 2014.
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Adjusted EBITDA: Adjusted EBITDA for the quarter ended March
31, 2015 compared to the same period in 2014 increased 8.8% to $168.6
million.
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Normalized FFO: Normalized FFO for the quarter ended March 31,
2015 were $126.0 million, or $0.83 per diluted share, compared to
Normalized FFO for the quarter ended March 31, 2014 of $113.1 million,
or $0.76 per basic and diluted share. The 9.2% increase in Normalized
FFO per diluted share is due primarily to increases in annual minimum
returns and rents that resulted from HPT's funding of improvements to
its hotels and travel centers and increases in FF&E reserve income and
deposits under HPT's hotel agreements.
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Comparable Hotel RevPAR: For the quarter ended March 31, 2015
compared to the same period in 2014 for HPT's 290 hotels that were
owned continuously since January 1, 2014: average daily rate, or ADR,
increased 8.3% to $119.33; occupancy increased 1.2 percentage points
to 71.8%; and revenue per available room, or RevPAR, increased 10.1%
to $85.68.
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RevPAR (all hotels): For the quarter ended March 31, 2015
compared to the same period in 2014 for HPT's 292 hotels: ADR
increased 8.3% to $119.94; occupancy increased 1.3 percentage points
to 72.0%; and RevPAR increased 10.3% to $86.36.
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Hotel Coverage of Minimum Returns and Rents: For the three
months ended March 31, 2015, the aggregate coverage ratio of (x) total
property level revenues minus FF&E reserve escrows, if any, and all
property level expenses which are not subordinated to minimum returns
and minimum rent payments to HPT to (y) HPT's minimum returns and
rents due from hotels increased to 0.93x from 0.75x for the three
months ended March 31, 2014.
As of March 31, 2015, approximately 69% of HPT's aggregate annual
minimum returns and rents from its hotels were secured by guarantees or
security deposits from HPT's managers and tenants pursuant to the terms
of HPT's hotel operating agreements.
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Recent Acquisition and Disposition Activities: In March 2015,
HPT acquired a 300 room full service hotel located in Rosemont, IL for
$35.5 million, excluding acquisition related costs. HPT added this
Holiday Inn & Suites branded hotel to its management agreement with a
subsidiary of InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG
(ADRs)), or InterContinental.
In March 2015, HPT entered an agreement to acquire a 364 room full
service hotel located in Denver, CO for $77.3 million, excluding
acquisition related costs. HPT plans to add this Crowne Plaza branded
hotel to its management agreement with InterContinental.
HPT is currently marketing for sale its Courtyard by Marriott hotel in
Norcross, GA which has a net book value of $4.1 million at March 31,
2015.
Tenants and Managers: As of March 31, 2015, HPT had nine
operating agreements with seven hotel operating companies for 292 hotels
with 44,397 rooms, which represented 67% of HPT's total annual minimum
returns and rents.
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Marriott Agreements: During the three months ended March 31,
2015, 122 hotels owned by HPT were operated by subsidiaries of
Marriott International, Inc. (NASDAQ: MAR), or Marriott, under three
agreements. HPT's Marriott No. 1 agreement includes 53 hotels,
including the hotel HPT is currently marketing for sale, and provides
for annual minimum return payments to HPT of up to $68.0 million
(approximately $17.0 million per quarter). Because there is no
guarantee or security deposit for this agreement, the minimum returns
HPT receives under this agreement are limited to available hotel cash
flow after payment of operating expenses and funding of the FF&E
reserve. During the three months ended March 31, 2015, HPT realized
returns under its Marriott No. 1 agreement of $17.0 million. HPT's
Marriott No. 234 agreement includes 68 hotels and requires annual
minimum returns to HPT of $106.2 million (approximately $26.6 million
per quarter). During the three months ended March 31, 2015, HPT
realized returns under its Marriott No. 234 agreement of $25.0
million. Marriott was not required to make any guaranty payments to
HPT during the period because the hotels under the Marriott No. 234
agreement generated returns to HPT in excess of the guaranty threshold
amount for the quarter ended March 31, 2015. At March 31, 2015, there
was $30.7 million remaining under the guaranty for the Marriott No.
234 agreement to cover future payment shortfalls for up to 90% of the
minimum returns due to HPT. HPT's Marriott No. 5 agreement 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 March 31, 2015 of $2.5 million was paid to HPT.
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InterContinental Agreement: During the three months ended March
31, 2015, HPT realized returns/rents of $35.3 million under its
agreement with subsidiaries of InterContinental, which includes 92
hotels and requires annual minimum returns/rent to HPT of $143.6
million (approximately $35.9 million per quarter). During the three
months ended March 31, 2015, HPT replenished the available security
deposit by $0.8 million for the payments HPT received during the
period in excess of the minimum returns due for the period and
InterContinental provided HPT $2.8 million of additional security
deposits in order to maintain the minimum security deposit balance
required under this agreement. At March 31, 2015, the available
security deposit which HPT held to pay future payment shortfalls was
$36.5 million.
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Other Hotel Agreements: As of March 31, 2015, HPT's remaining
78 hotels are operated under five agreements: one management agreement
with Sonesta (22 hotels), requiring annual minimum returns of $72.8
million (approximately $18.2 million per quarter); one management
agreement with a subsidiary of Wyndham Worldwide Corporation (NYSE:
WYN), or Wyndham (22 hotels), requiring annual minimum returns of
$27.5 million (approximately $6.9 million per quarter); one management
agreement with a subsidiary of Hyatt Hotels Corporation (NYSE: H), or
Hyatt (22 hotels), requiring annual minimum returns of $22.0 million
(approximately $5.5 million per quarter); one management agreement
with a subsidiary of Carlson Hotels Worldwide, or Carlson (11 hotels),
requiring annual minimum returns of $12.9 million (approximately $3.2
million per quarter); and one lease with a subsidiary of Morgans Hotel
Group Co. (NASDAQ: MHGC) (1 hotel) requiring annual minimum rent of
$7.6 million (approximately $1.9 million per quarter). Minimum returns
and rents due HPT are partially guaranteed under the Wyndham, Hyatt
and Carlson agreements. There is no guarantee or security deposit for
the Sonesta agreement and the minimum returns HPT receives under this
agreement are limited to available hotel cash flow after payment of
operating expenses. The payments due to HPT under these agreements for
the three months ended March 31, 2015 were paid to HPT.
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Travel Center Agreements: As of March 31, 2015, HPT had two
leases with TravelCenters of America LLC (NYSE: TA), or TA, for 184
travel centers located along the U.S. Interstate Highway system
requiring annual minimum rents of $228.7 million ($57.2 million per
quarter), which represent 33% of HPT's total annual minimum returns
and rents. As of March 31, 2015, all payments due to HPT from TA under
these leases were current. For the three months ended March 31, 2015,
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 increased to 1.93x from 1.54x for the
three months ended March 31, 2014.
Conference Call:
On Thursday, May 7, 2015, 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 March 31, 2015. 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 through Thursday, May
14, 2015. To hear the replay, dial (320) 365-3844. The replay pass code
is 358458.
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 first
quarter conference call is strictly prohibited without the prior written
consent of HPT.
Supplemental Data:
A copy of HPT's First Quarter 2015 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 owns a diverse portfolio of hotels and travel centers located in
44 states, Puerto Rico and Canada. HPT's properties are operated under
long term management or lease agreements. HPT is headquartered in
Newton, Massachusetts.
Please see the following pages for a more detailed statement of HPT's
operating results and financial condition and for an explanation of
HPT's calculation of FFO, Normalized FFO, EBITDA and Adjusted EBITDA.
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 HPT'S FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
HPT EXPECTS THAT, WHILE THE SECURITY DEPOSIT FOR ITS MARRIOTT NO. 234
AGREEMENT IS EXHAUSTED, MARRIOTT WILL PAY HPT UP TO 90% OF ITS MINIMUM
RETURNS UNDER A LIMITED GUARANTY. THIS STATEMENT IMPLIES THAT MARRIOTT
WILL FULFILL ITS OBLIGATION UNDER THIS GUARANTY OR THAT FUTURE
SHORTFALLS WILL NOT EXHAUST THE GUARANTY. HOWEVER, THIS GUARANTY IS
LIMITED IN AMOUNT AND 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 OR AFTER MARRIOTT'S GUARANTY EXPIRES.
-
HPT EXPECTS THAT INTERCONTINENTAL WILL CONTINUE TO PAY THE MINIMUM
RETURNS INCLUDED IN HPT'S MANAGEMENT AGREEMENT WITH INTERCONTINENTAL
AND THAT HPT WILL UTILIZE THE SECURITY DEPOSIT IT HOLDS FOR ANY
PAYMENT SHORTFALLS. HOWEVER, THE SECURITY DEPOSIT HPT HOLDS FOR
INTERCONTINENTAL'S OBLIGATIONS IS FOR A LIMITED AMOUNT AND HPT CAN
PROVIDE NO ASSURANCE THAT THE SECURITY DEPOSIT WILL BE ADEQUATE TO
COVER FUTURE SHORTFALLS IN THE MINIMUM RETURNS DUE HPT FROM ITS HOTELS
MANAGED BY INTERCONTINENTAL. MOREOVER, THIS 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.
-
AS OF MARCH 31, 2015, APPROXIMATELY 69% 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 SECURITY DEPOSITS ARE NOT SEGREGATED
FROM HPT'S OTHER ASSETS AND THE APPLICATION OF SECURITY DEPOSITS TO
COVER SHORTFALLS WILL RESULT IN HPT RECORDING INCOME, BUT WILL NOT
RESULT IN HPT RECEIVING ADDITIONAL CASH.
-
HPT HAS ENTERED AN AGREEMENT TO ACQUIRE ONE FULL SERVICE HOTEL FOR AN
AGGREGATE PURCHASE PRICE OF $77.3 MILLION EXCLUDING ACQUISITION
RELATED COSTS AND HPT EXPECTS THAT IT WILL ADD THIS HOTEL TO ITS
EXISTING MANAGEMENT AGREEMENT WITH INTERCONTINENTAL. THIS TRANSACTION
IS SUBJECT TO VARIOUS TERMS AND CONDITIONS. THESE TERMS AND CONDITIONS
MAY NOT BE MET. AS A RESULT, THIS ACQUISITION AND THE EXPECTED
MANAGEMENT ARRANGEMENT MAY BE DELAYED OR MAY NOT OCCUR OR THE TERMS
MAY CHANGE.
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HPT IS MARKETING ONE HOTEL IN NORCROSS, GA WITH A CARRYING VALUE OF
$4.1 MILLION FOR SALE. THERE CAN BE NO ASSURANCE THAT HPT WILL
COMPLETE A SALE OF THIS HOTEL OR THAT ANY SUCH SALE WOULD REALIZE NET
PROCEEDS IN AN AMOUNT AT LEAST EQUAL TO THE CARRYING VALUE OF THIS
HOTEL.
THE INFORMATION CONTAINED IN HPT'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS"
IN HPT'S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM HPT'S FORWARD
LOOKING STATEMENTS. HPT'S FILINGS WITH THE SEC ARE AVAILABLE ON THE
SEC'S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, HPT DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
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HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(Unaudited)
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Three Months Ended March 31,
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2015
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2014
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Revenues:
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Hotel operating revenues (1)
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$
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369,596
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$
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329,936
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Rental income (1)
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64,751
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63,386
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FF&E reserve income (2)
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1,165
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928
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Total revenues
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435,512
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394,250
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Expenses:
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Hotel operating expenses (1)
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257,658
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230,617
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Depreciation and amortization
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78,969
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78,287
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General and administrative (3)
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21,304
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11,465
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Acquisition related costs (4)
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338
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61
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Total expenses
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358,269
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320,430
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Operating income
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77,243
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73,820
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Interest income
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11
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25
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Interest expense (including amortization of deferred financing
costs and debt discounts of $1,458 and $1,319, respectively)
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(35,454)
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(34,856)
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Loss on early extinguishment of debt (5)
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-
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(726)
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Income before income taxes and equity in earnings (losses) of an
investee
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41,800
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38,263
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Income tax expense
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(291)
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(616)
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Equity in earnings (losses) of an investee
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72
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(97)
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Net income
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41,581
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37,550
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Preferred distributions
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(5,166)
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(5,166)
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Net income available for common shareholders
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$
|
36,415
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$
|
32,384
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Weighted average common shares outstanding (basic)
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|
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149,792
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|
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149,573
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Weighted average common shares outstanding (diluted)
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150,906
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|
|
|
149,691
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Net income available for common shareholders per common share:
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Basic and diluted
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$
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0.24
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$
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0.22
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|
HOSPITALITY PROPERTIES TRUST
RECONCILIATIONS OF FUNDS FROM OPERATIONS,
NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA
(amounts in thousands, except per share data)
(Unaudited)
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Three Months Ended March 31,
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2015
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2014
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Calculation of Funds from Operations (FFO) and Normalized FFO: (6)
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Net income available for common shareholders
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|
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|
$
|
36,415
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$
|
32,384
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Add:
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Depreciation and amortization
|
|
|
|
|
|
|
|
|
78,969
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|
|
|
78,287
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FFO
|
|
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115,384
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|
|
|
110,671
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Add:
|
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|
|
|
Acquisition related costs (4)
|
|
|
|
|
|
|
|
|
338
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|
|
|
61
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|
|
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|
Estimated business management incentive fees (3)
|
|
|
|
|
|
|
|
|
9,027
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|
|
|
728
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|
|
|
|
|
Loss on early extinguishment of debt (5)
|
|
|
|
|
|
|
|
|
-
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|
|
|
726
|
|
|
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|
|
Deferred percentage rent (7)
|
|
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|
|
|
|
|
|
1,240
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|
|
|
874
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Normalized FFO
|
|
|
|
|
|
|
|
$
|
125,989
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|
|
$
|
113,060
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|
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|
|
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|
Weighted average common shares outstanding (basic)
|
|
|
|
|
|
|
|
|
149,792
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|
|
|
149,573
|
Weighted average common shares outstanding (diluted)
|
|
|
|
|
|
|
|
|
150,906
|
|
|
|
149,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted per common share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO (basic)
|
|
|
|
|
|
|
|
$
|
0.77
|
|
|
$
|
0.74
|
|
|
|
|
|
FFO (diluted)
|
|
|
|
|
|
|
|
$
|
0.76
|
|
|
$
|
0.74
|
|
|
|
|
|
Normalized FFO (basic)
|
|
|
|
|
|
|
|
$
|
0.84
|
|
|
$
|
0.76
|
|
|
|
|
|
Normalized FFO (diluted)
|
|
|
|
|
|
|
|
$
|
0.83
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
Calculation of EBITDA and Adjusted EBITDA: (8)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
41,581
|
|
|
$
|
37,550
|
Add:
|
|
|
|
|
Interest expense
|
|
|
|
|
|
35,454
|
|
|
|
34,856
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
291
|
|
|
|
616
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
78,969
|
|
|
|
78,287
|
EBITDA
|
|
|
|
|
|
156,295
|
|
|
|
151,309
|
Add:
|
|
|
|
|
Acquisition related costs (4)
|
|
|
|
|
|
338
|
|
|
|
61
|
|
|
|
|
|
General and administrative expense paid in common shares (3)(9)
|
|
|
|
|
|
10,762
|
|
|
|
1,981
|
|
|
|
|
|
Loss on early extinguishment of debt (5)
|
|
|
|
|
|
-
|
|
|
|
726
|
|
|
|
|
|
Deferred percentage rent (7)
|
|
|
|
|
|
1,240
|
|
|
|
874
|
Adjusted EBITDA
|
|
|
|
|
$
|
168,635
|
|
|
$
|
154,951
|
|
|
|
|
|
|
|
|
|
|
|
(1) At March 31, 2015, HPT owned 292 hotels; 289 of these hotels are
leased by HPT to its taxable REIT subsidiaries, or TRSs, and managed by
hotel operating companies and three hotels are leased to hotel operating
companies. At March 31, 2015, HPT also owned 184 travel centers; all 184
of these travel centers 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, $15,492 and $28,095, less than the minimum returns due to HPT
in the three months ended March 31, 2015 and 2014, 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 $4,006 and
$10,876 in the three months ended March 31, 2015 and 2014, 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 $11,486 and $17,219 in the three months ended March 31,
2015 and 2014, 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) Incentive fees under HPT's business management agreement are payable
in common shares after the end of each calendar year and are calculated
based on common share total return, as defined. In calculating net
income in accordance with GAAP, HPT recognizes estimated business
management incentive fee expense, if any, each quarter. Although HPT
recognizes this expense, if any, each quarter for purposes of
calculating net income, HPT does not include these amounts in the
calculation of Normalized FFO until the fourth quarter, which is when
the actual expense amount for the year is determined. HPT recorded
$9,027 and $728 of estimated business management incentive fees during
the three months ended March 31, 2015 and 2014, respectively, which are
included in general and administrative expense in its condensed
consolidated financial statements.
(4) Represents costs associated with HPT's hotel acquisition activities.
(5) HPT recorded a $726 loss on early extinguishment of debt in the
first quarter of 2014 in connection with amending the terms of its
unsecured revolving credit facility and unsecured term loan and the
redemption of its 7.875% senior unsecured notes due 2014.
(6) 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 available for
common shareholders, 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 HPT
estimates that it relates rather than when it is recognized as income in
accordance with GAAP and includes business management incentive fees, if
any, only in the fourth quarter versus the quarter they are recognized
as expense in accordance with GAAP and excludes acquisition related
costs and loss on early extinguishment of debt. 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 with other REITs. FFO and Normalized FFO are among the factors
considered by HPT's Board of Trustees when determining the amount of
distributions to 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 agreement 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 HPT's expected needs for 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. 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.
(7) 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 and Adjusted EBITDA for each quarter of the year. The
fourth quarter Normalized FFO and Adjusted EBITDA calculations exclude
the amounts recognized during the first three quarters.
(8) HPT calculates EBITDA and Adjusted EBITDA as shown above. HPT
considers EBITDA and Adjusted EBITDA to be appropriate measures of its
operating performance, along with net income, net income available for
common shareholders, operating income and cash flow from operating
activities. HPT believes that EBITDA and Adjusted EBITDA provide useful
information to investors because by excluding the effects of certain
historical amounts, such as interest, depreciation and amortization
expense, EBITDA and Adjusted EBITDA may facilitate a comparison of
current operating performance with past operating performance. EBITDA
and Adjusted EBITDA do not represent cash generated by operating
activities in accordance with GAAP and should not be considered an
alternative to net income, net income available for common shareholders,
operating income or cash flow from operating activities, determined in
accordance with GAAP, or as an indicator of financial performance or
liquidity, nor are these measures necessarily indicative of sufficient
cash flow to fund all of HPT's needs. 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 EBITDA
and Adjusted EBITDA differently than HPT does.
(9) Amounts represent the portion of business management fees that are
payable in HPT's common shares as well as equity based compensation for
HPT's trustees, its officers and certain employees of HPT's manager.
|
|
|
|
|
|
|
|
|
|
|
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
2014
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties, at cost:
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
$
|
1,486,589
|
|
|
$
|
1,484,210
|
Buildings, improvements and equipment
|
|
|
|
|
|
6,220,736
|
|
|
|
6,171,983
|
Total real estate properties, gross
|
|
|
|
|
|
7,707,325
|
|
|
|
7,656,193
|
Accumulated depreciation
|
|
|
|
|
|
(2,021,771)
|
|
|
|
(1,982,033)
|
Total real estate properties, net
|
|
|
|
|
|
5,685,554
|
|
|
|
5,674,160
|
Cash and cash equivalents
|
|
|
|
|
|
15,570
|
|
|
|
11,834
|
Restricted cash (FF&E reserve escrow)
|
|
|
|
|
|
36,549
|
|
|
|
33,982
|
Due from related persons
|
|
|
|
|
|
41,775
|
|
|
|
40,253
|
Other assets, net
|
|
|
|
|
|
252,958
|
|
|
|
222,333
|
Total assets
|
|
|
|
|
$
|
6,032,406
|
|
|
$
|
5,982,562
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
|
|
|
$
|
89,000
|
|
|
$
|
18,000
|
Unsecured term loan
|
|
|
|
|
|
400,000
|
|
|
|
400,000
|
Senior unsecured notes, net of discounts
|
|
|
|
|
|
2,412,600
|
|
|
|
2,412,135
|
Convertible senior unsecured notes
|
|
|
|
|
|
8,478
|
|
|
|
8,478
|
Security deposits
|
|
|
|
|
|
36,661
|
|
|
|
33,069
|
Accounts payable and other liabilities
|
|
|
|
|
|
93,378
|
|
|
|
106,903
|
Due to related persons
|
|
|
|
|
|
16,225
|
|
|
|
8,658
|
Dividends payable
|
|
|
|
|
|
5,166
|
|
|
|
5,166
|
Total liabilities
|
|
|
|
|
|
3,061,508
|
|
|
|
2,992,409
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
Preferred shares of beneficial interest, no par value; 100,000,000
shares authorized:
|
|
|
|
|
|
|
|
|
|
|
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; 149,950,760 and 149,920,449 shares issued
and outstanding, respectively
|
|
|
|
|
|
1,500
|
|
|
|
1,499
|
Additional paid in capital
|
|
|
|
|
|
4,119,816
|
|
|
|
4,118,551
|
Cumulative net income
|
|
|
|
|
|
2,756,820
|
|
|
|
2,715,239
|
Cumulative other comprehensive income
|
|
|
|
|
|
42,334
|
|
|
|
25,804
|
Cumulative preferred distributions
|
|
|
|
|
|
(305,815)
|
|
|
|
(300,649)
|
Cumulative common distributions
|
|
|
|
|
|
(3,923,864)
|
|
|
|
(3,850,398)
|
Total shareholders' equity
|
|
|
|
|
|
2,970,898
|
|
|
|
2,990,153
|
Total liabilities and shareholders' equity
|
|
|
|
|
$
|
6,032,406
|
|
|
$
|
5,982,562
|
|
|
|
|
|
|
|
|
|
|
|
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
Katie Strohacker, 617-796-8232
Director,
Investor Relations
Source: Hospitality Properties Trust