Normalized FFO for the First Quarter Increases 12% Year Over Year
to $0.93 Per Share
First Quarter Comparable Hotel RevPAR Grows 4.4% Year Over Year
NEWTON,Mass.--(BUSINESS WIRE)--
Hospitality Properties Trust (NYSE: HPT) today announced its financial
results for the quarter ended March 31, 2016, compared to the results
for the prior year comparable period:
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Three Months Ended March 31,
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2016
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2015
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($ 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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46,885
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$
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36,415
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Net income available for common shareholders per share (basic and
diluted)
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$
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0.31
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$
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0.24
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Adjusted EBITDA (1)
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$
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187,963
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$
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168,635
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Normalized FFO available for common shareholders (1)
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$
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140,414
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$
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125,989
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Normalized FFO available for common shareholders per share (diluted)
(1)
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$
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0.93
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$
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0.83
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Portfolio Performance
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Comparable hotel RevPAR
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$
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90.10
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$
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86.31
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Comparable hotel RevPAR growth
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4.4%
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RevPAR (all hotels)
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$
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88.53
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$
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86.21
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RevPAR growth (all hotels)
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2.7%
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Coverage of HPT’s minimum returns and rents for hotels
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0.95x
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0.93x
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Coverage of HPT's minimum rents for travel centers
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1.39x
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1.92x
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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 earnings before interest, taxes, depreciation
and amortization, or EBITDA, and EBITDA as adjusted, or Adjusted EBITDA,
and net income to funds from operations, or FFO, and Normalized FFO
available for common shareholders, for the quarters ended March 31, 2016
and 2015 appear later in this press release.
John Murray, President and Chief Operating Officer of HPT, made the
following statement regarding today’s announcement:
“We are pleased with the continued strong performance from our hotel and
travel center portfolios which resulted in 12% FFO per share growth this
quarter compared to last year. Our comparable hotel RevPAR growth
remains above historic long term average growth levels and exceeded the
hotel industry’s performance for the thirteenth consecutive quarter. Our
results are especially noteworthy because they were achieved in the
first calendar quarter which has historically produced weaker seasonal
results at both our hotels and travel centers. This performance, coupled
with our disciplined investment activity and favorable outlook gave
HPT’s Board the confidence to recently increase HPT’s quarterly common
dividend to $0.51 per share, or $2.04 per share per year.”
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, 2016
was $46.9 million, or $0.31 per diluted share, compared to net income
available for common shareholders of $36.4 million, or $0.24 per
diluted share, for the quarter ended March 31, 2015. The weighted
average number of diluted common shares outstanding was 151.4 million
and 150.9 million for the quarters ended March 31, 2016 and 2015,
respectively.
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Adjusted EBITDA: Adjusted EBITDA for the quarter ended March
31, 2016 compared to the same period in 2015 increased 11.5% to $188.0
million.
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Normalized FFO Available for Common Shareholders: Normalized
FFO available for common shareholders for the quarter ended March 31,
2016 were $140.4 million, or $0.93 per diluted share, compared to
Normalized FFO available for common shareholders of $126.0 million, or
$0.83 per diluted share for the quarter ended March 31, 2015. The 12%
increase in Normalized FFO per diluted share is due primarily to the
impact of HPT’s hotel and travel center acquisitions since January 1,
2015, the increase in returns realized due to the improvement in
operating results at certain of HPT’s hotels, and increases in FF&E
reserve income and deposits under HPT’s hotel operating agreements.
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Comparable Hotel RevPAR: For the quarter ended March 31, 2016
compared to the same period in 2015 for HPT’s 291 hotels that it owned
continuously since January 1, 2015: average daily rate, or ADR,
increased 4.0% to $124.79; occupancy increased 0.3 percentage points
to 72.2%; and revenue per available room, or RevPAR, increased 4.4% to
$90.10.
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RevPAR (all hotels): For the quarter ended March 31, 2016
compared to the same period in 2015 for HPT’s 305 hotels: ADR
increased 3.6% to $124.16; occupancy decreased 0.6 percentage points
to 71.3%; and RevPAR increased 2.7% to $88.53. Some of the hotels
recently acquired are currently undergoing renovations.
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Coverage of Minimum Returns and Rents: For the quarter ended
March 31, 2016, the aggregate coverage ratio of (x) total hotel
revenues minus all hotel expenses and FF&E reserve escrows 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
0.95x from 0.93x for the quarter ended March 31, 2015.
For
the quarter ended March 31, 2016, the aggregate coverage ratio of (x)
total travel center revenues less travel center expenses to (y) HPT’s
minimum rent due from leased travel centers decreased to 1.39x from
1.92x for the quarter ended March 31, 2015.
As of March 31,
2016, approximately 79% of HPT’s aggregate annual minimum returns and
rents were secured by guarantees or security deposits from HPT’s
managers and tenants pursuant to the terms of HPT’s operating
agreements.
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Recent Property Acquisition Activities: As previously
disclosed, on February 1, 2016, HPT acquired two extended stay hotels
with 262 combined suites located in Cleveland and Westlake, OH for an
aggregate purchase price of $12.0 million, excluding acquisition
related costs. HPT converted these hotels to the Sonesta ES Suites®
hotel brand and added them to its management agreement with Sonesta
International Hotels Corporation, or Sonesta.
On March 16,
2016, HPT acquired the Kimpton Hotel Monaco, a full service lifestyle
hotel with 221 rooms located in Portland, OR for a purchase price of
$114.0 million, excluding acquisition related costs. HPT added this
hotel to its management agreement with InterContinental Hotels Group,
plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental.
On
March 31, 2016, HPT acquired from TravelCenters of America LLC (NYSE:
TA), or TA, a newly developed travel center in Hillsboro, TX for $19.7
million, excluding acquisition related costs. HPT added this TA
branded travel center to its TA No. 4 lease.
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Recent Financing Activities: As previously disclosed, on
February 3, 2016, HPT issued $750.0 million aggregate principal amount
of unsecured senior notes in underwritten public offerings, which
included: $400.0 million aggregate principal amount of 4.25% unsecured
senior notes due 2021 and $350.0 million aggregate principal amount of
5.25% unsecured senior notes due 2026. Net proceeds from these
offerings of $731.5 million after original issue discounts and
offering expenses were used to repay amounts outstanding under HPT’s
unsecured revolving credit facility and for general business purposes.
On
March 11, 2016, HPT redeemed at par plus accrued interest all $275.0
million of its 6.30% senior notes due 2016.
Tenants and Managers: As of March 31, 2016, HPT had nine
operating agreements with seven hotel operating companies for 305 hotels
with 46,347 rooms, which represented 66% of HPT’s total annual minimum
returns and rents.
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Marriott Agreements: During the three months ended March 31,
2016, 122 of HPT’s hotels were operated by subsidiaries of Marriott
International, Inc. (NASDAQ: MAR), or Marriott, under three
agreements. HPT’s Marriott No. 1 agreement includes 53 hotels, and
provides for annual minimum return payments to HPT of $68.4 million as
of March 31, 2016 (approximately $17.1 million per quarter). Because
there is no guarantee or security deposit for this agreement, the
minimum returns HPT receives under this agreement may be 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,
2016, HPT realized returns under its Marriott No. 1 agreement of $17.9
million. HPT’s Marriott No. 234 agreement includes 68 hotels and
requires annual minimum returns to HPT of $106.2 million as of March
31, 2016 (approximately $26.6 million per quarter). During the three
months ended March 31, 2016, HPT realized returns under its Marriott
No. 234 agreement of $26.6 million. HPT’s Marriott No. 234 agreement
is partially secured by a security deposit and a limited guarantee
from Marriott; during the three months ended March 31, 2016, HPT
replenished the available security deposit by $0.8 million from a
share of hotel cash flows in excess of the minimum returns due for the
period. At March 31, 2016, the available security deposit from
Marriott for the Marriott No. 234 agreement was $7.0 million and there
was $30.7 million remaining under Marriott’s guaranty for up to 90% of
the minimum returns due to HPT to cover future payment shortfalls
after the available security deposit is depleted. 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 to HPT for
this hotel for the three months ended March 31, 2016 of $2.5 million
was paid to HPT.
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InterContinental Agreement: During the three months ended March
31, 2016, HPT realized returns and rents of $38.5 million under its
agreement with subsidiaries of InterContinental which includes 94
hotels and requires annual minimum returns/rent to HPT of $160.3
million as of March 31, 2016 (approximately $40.1 million per
quarter). During the three months ended March 31, 2016, HPT
replenished the available security deposit by $0.5 million from a
share of hotel cash flows in excess of the returns and rents due for
the period. In connection with the acquisition of the Kimpton Hotel
Monaco described above, InterContinental provided HPT $9.0 million of
cash to supplement the existing security deposit. At March 31, 2016,
the available InterContinental security deposit which HPT held to pay
future payment shortfalls was $56.7 million.
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Wyndham Agreement: As of March 31, 2016, 22 of HPT’s
hotels were operated under a management agreement with a subsidiary of
Wyndham Worldwide Corporation (NYSE: WYN), or Wyndham, requiring
annual minimum returns of $26.7 million as of March 31, 2016
(approximately $6.7 million per quarter). HPT also leases 48 vacation
units in one of the hotels to Wyndham Vacation Resorts, Inc., a
subsidiary of Wyndham, which requires annual minimum rent of $1.4
million (approximately $0.4 million per quarter). The guarantee
provided by Wyndham with respect to the lease is unlimited. The
guarantee provided by Wyndham with respect to the management agreement
is limited to $35.7 million and as of December 31, 2015, $4.0 million
remained available to cover payment shortfalls of HPT’s minimum
returns due under the management agreement. During the three months
ended March 31, 2016, the hotels under this agreement generated cash
flows that were less than the minimum returns due to HPT and the
remaining guaranty was depleted. HPT currently expects that for the
year ending December 31, 2016, the hotels under this agreement will
produce cash flows in excess of the minimum returns due to HPT under
the management agreement. As of May 9, 2016, all amounts due to HPT
under the management agreement and the lease have been paid to HPT.
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Other Hotel Agreements: As of March 31, 2016, HPT’s remaining
67 hotels are operated under four agreements: one management agreement
with Sonesta (33 hotels), requiring annual minimum returns of $84.0
million as of March 31, 2016 (approximately $21.0 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 as of March 31, 2016 (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 as of March 31, 2016 (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 as of March 31, 2016 (approximately $1.9 million per
quarter). Minimum returns and rents due to HPT are partially
guaranteed under the Hyatt and Carlson agreements. There is no
guarantee or security deposit for the Sonesta agreement and the
minimum returns HPT receives under that 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, 2016 were paid to HPT.
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Travel Center Agreements: As of March 31, 2016, HPT had five
leases with TA for 194 travel centers located along the U.S.
Interstate Highway system requiring aggregate annual minimum rents of
$261.1 million (approximately $65.3 million per quarter), which
represent 34% of HPT’s total annual minimum returns and rents. As of
March 31, 2016, all payments due to HPT from TA under these leases
were current.
Conference Call:
On Tuesday, May 10, 2016, at 10:00 a.m. Eastern Time, John Murray,
President and Chief Operating Officer, and Mark Kleifges, Chief
Financial Officer and Treasurer, will host a conference call to discuss
the results for the quarter ended March 31, 2016. The conference call
telephone number is (877) 329-3720. Participants calling from outside
the United States and Canada should dial (412) 317-5434. No pass code is
necessary to access the call from either number. Participants should
dial in about 15 minutes prior to the scheduled start of the call. A
replay of the conference call will be available through Tuesday, May 17,
2016. To hear the replay, dial (412) 317-0088. The replay pass code is
10084013.
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 2016 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
45 states, Puerto Rico and Canada. HPT’s properties are operated under
long term management or lease agreements. HPT is managed by the
operating subsidiary of The RMR Group Inc. (NASDAQ: RMR), an alternative
asset management company that 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 available for common shareholders and
Normalized FFO available for common shareholders, 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”, “MAY” 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:
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AS OF MARCH 31, 2016, APPROXIMATELY 79% OF HPT’S AGGREGATE ANNUAL
MINIMUM RETURNS AND RENTS WERE SECURED BY GUARANTEES OR 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. THE BALANCE OF HPT’S ANNUAL MINIMUM RETURNS AND RENTS AS OF MARCH
31, 2016 WAS NOT GUARANTEED NOR DOES HPT HOLD A SECURITY DEPOSIT WITH
RESPECT TO THOSE AMOUNTS. HPT CAN PROVIDE NO ASSURANCE WITH REGARD TO
THE FUTURE PERFORMANCE OF HPT’S PROPERTIES AND WHETHER THEY WILL COVER
HPT’S MINIMUM RETURNS AND RENTS, WHETHER THE GUARANTEES OR SECURITY
DEPOSITS WILL BE ADEQUATE TO COVER FUTURE SHORTFALLS IN THE MINIMUM
RETURNS OR RENTS DUE TO HPT, OR REGARDING HPT’S MANAGERS’, TENANTS’ OR
GUARANTORS’ FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY
DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITY OR WILLINGNESS TO PAY
MINIMUM RETURNS AND RENTS OWED TO HPT. MOREOVER, 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,
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HPT’S COMPARABLE REVPAR GROWTH HAS EXCEEDED THE HOTEL INDUSTRY’S
PERFORMANCE FOR THIRTEEN CONSECUTIVE QUARTERS. THIS STATEMENT MAY
IMPLY THAT HPT’S COMPARABLE REVPAR WILL CONTINUE TO GROW AND EXCEED
THE INDUSTRY’S PERFORMANCE. HPT’S HOTEL BUSINESS IS SUBJECT TO VARIOUS
RISKS, SOME OF WHICH ARE BEYOND HPT’S CONTROL. THERE CAN BE NO
ASSURANCE THAT HPT’S COMPARABLE REVPAR WILL CONTINUE TO GROW, OR THAT
HPT’S REVPAR RESULTS WILL CONTINUE TO EXCEED THE INDUSTRY’S
PERFORMANCE. THE COMPARABLE REVPAR AT HPT’S HOTELS IN THE FUTURE MAY
NOT EXCEED HOTEL INDUSTRY PERFORMANCE MEASURES AND IT MAY DECLINE,
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HPT’S QUARTERLY DIVIDEND WAS RECENTLY INCREASED TO $0.51 PER SHARE
($2.04 PER SHARE PER YEAR. A POSSIBLE IMPLICATION OF THIS STATEMENT IS
THAT HPT WILL CONTINUOUSLY PAY QUARTERLY DIVIDENDS OF $0.51 PER SHARE
PER QUARTER OR $2.04 PER SHARE PER YEAR IN THE FUTURE. HPT'S DIVIDEND
RATES ARE SET AND RESET FROM TIME TO TIME BY HPT'S BOARD OF TRUSTEES.
HPT’S BOARD CONSIDERS MANY FACTORS WHEN SETTING DIVIDEND RATES
INCLUDING HPT'S HISTORICAL AND PROJECTED INCOME, NORMALIZED FFO, THE
THEN CURRENT AND EXPECTED NEEDS AND AVAILABILITY OF CASH TO PAY HPT'S
OBLIGATIONS, DISTRIBUTIONS WHICH MAY BE REQUIRED TO BE PAID TO
MAINTAIN HPT'S TAX STATUS AS A REIT AND OTHER FACTORS DEEMED RELEVANT
BY HPT'S BOARD OF TRUSTEES IN ITS DISCRETION. ACCORDINGLY, FUTURE
DIVIDEND RATES MAY BE INCREASED, DECREASED OR EVEN ELIMINATED AND
THERE IS NO ASSURANCE AS TO THE RATE AT WHICH FUTURE DIVIDENDS WILL BE
PAID, AND
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HPT CURRENTLY EXPECTS THAT ITS HOTELS MANAGED BY WYNDHAM WILL PRODUCE
CASH FLOWS IN EXCESS OF THE MINIMUM RETURNS DUE TO HPT DURING 2016.
WYNDHAM’S MANAGEMENT OF HPT’S HOTELS HAS HISTORICALLY NOT PRODUCED
CASH FLOWS EQUAL TO OR IN EXCESS OF THE MINIMUM RETURNS CONTRACTUALLY
DUE TO HPT AND THE FULL AMOUNT OF WYNDHAM’S CONTRACTUAL GUARANTEE WAS
DEPLETED DURING THE QUARTER ENDED MARCH 31, 2016. THERE IS NO
ASSURANCE THAT WYNDHAM’S MANAGEMENT OF HPT OWNED HOTELS WILL PRODUCE
THE CONTRACTUAL MINIMUM RETURNS DUE TO HPT AND HPT DOES NOT KNOW
WHETHER WYNDHAM WILL PAY THE MINIMUM RETURNS DESPITE THE DEPLETED
GUARANTEE OR IF WYNDHAM WILL DEFAULT THE PAYMENTS DUE TO HPT.
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
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(amounts in thousands, except per share data)
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(Unaudited)
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Three Months Ended March 31,
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2016
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2015
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Revenues:
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Hotel operating revenues (1)
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$
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396,503
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$
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369,596
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Rental income (2) (3)
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76,259
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64,751
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FF&E reserve income (4)
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1,356
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|
|
1,165
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Total revenues
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474,118
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|
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435,512
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Expenses:
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Hotel operating expenses (1)
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276,305
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257,658
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Depreciation and amortization
|
|
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|
87,271
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|
|
78,969
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General and administrative (5)
|
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|
|
16,023
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|
|
21,304
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Acquisition related costs (6)
|
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|
|
|
612
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|
|
338
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Total expenses
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|
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380,211
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358,269
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|
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Operating income
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|
93,907
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|
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77,243
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|
|
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|
|
|
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Interest income
|
|
|
|
|
98
|
|
|
11
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Interest expense (including amortization of debt issuance costs
and debt discounts of $1,865 and $1,458, respectively)
|
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(41,586)
|
|
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(35,454)
|
Loss on early extinguishment of debt (7)
|
|
|
|
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(70)
|
|
|
-
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Income before income taxes and equity in earnings of an investee
|
|
|
|
|
52,349
|
|
|
41,800
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Income tax expense
|
|
|
|
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(375)
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|
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(291)
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Equity in earnings of an investee
|
|
|
|
|
77
|
|
|
72
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Net income
|
|
|
|
|
52,051
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|
|
41,581
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Preferred distributions
|
|
|
|
|
(5,166)
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|
|
(5,166)
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Net income available for common shareholders
|
|
|
|
$
|
46,885
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$
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36,415
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|
|
|
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|
Weighted average common shares outstanding (basic)
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|
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151,402
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|
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149,792
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Weighted average common shares outstanding (diluted)
|
|
|
|
|
151,415
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|
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150,906
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|
|
|
|
|
|
|
|
|
Net income available for common shareholders per common share:
|
|
|
|
|
|
|
|
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Basic and diluted
|
|
|
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$
|
0.31
|
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$
|
0.24
|
|
|
|
|
|
|
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|
See Notes on pages 9 and 10
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|
HOSPITALITY PROPERTIES TRUST
|
RECONCILIATIONS OF FUNDS FROM OPERATIONS,
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NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA
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(amounts in thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2016
|
|
|
2015
|
Calculation of Funds from Operations (FFO) and Normalized FFO
available for common shareholders: (8)
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders
|
|
|
|
$
|
46,885
|
|
|
$
|
36,415
|
Add:
|
Depreciation and amortization
|
|
|
|
|
87,271
|
|
|
|
78,969
|
FFO available for common shareholders
|
|
|
|
|
134,156
|
|
|
|
115,384
|
Add:
|
Acquisition related costs (6)
|
|
|
|
|
612
|
|
|
|
338
|
|
Estimated business management incentive fees (5)
|
|
|
|
|
5,316
|
|
|
|
9,027
|
|
Loss on early extinguishment of debt (7)
|
|
|
|
|
70
|
|
|
|
-
|
|
Deferred percentage rent (3)
|
|
|
|
|
260
|
|
|
|
1,240
|
Normalized FFO available for common shareholders
|
|
|
|
$
|
140,414
|
|
|
$
|
125,989
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (basic)
|
|
|
|
|
151,402
|
|
|
|
149,792
|
Weighted average common shares outstanding (diluted)
|
|
|
|
|
151,415
|
|
|
|
150,906
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted per common share amounts:
|
|
|
|
|
|
|
|
|
|
|
FFO available for common shareholders (basic)
|
|
|
|
$
|
0.89
|
|
|
$
|
0.77
|
|
FFO available for common shareholders (diluted)
|
|
|
|
$
|
0.89
|
|
|
$
|
0.76
|
|
Normalized FFO available for common shareholders (basic)
|
|
|
|
$
|
0.93
|
|
|
$
|
0.84
|
|
Normalized FFO available for common shareholders (diluted)
|
|
|
|
$
|
0.93
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
Calculation of EBITDA and Adjusted EBITDA: (9)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
52,051
|
|
$
|
41,581
|
Add:
|
Interest expense
|
|
|
|
|
|
41,586
|
|
|
35,454
|
|
Income tax expense
|
|
|
|
|
|
375
|
|
|
291
|
|
Depreciation and amortization
|
|
|
|
|
|
87,271
|
|
|
78,969
|
EBITDA
|
|
|
|
|
|
181,283
|
|
|
156,295
|
Add:
|
Acquisition related costs (6)
|
|
|
|
|
|
612
|
|
|
338
|
|
General and administrative expense paid in common shares (10)
|
|
|
|
|
|
422
|
|
|
1,735
|
|
Estimated business management incentive fees (5)
|
|
|
|
|
|
5,316
|
|
|
9,027
|
|
Loss on early extinguishment of debt (7)
|
|
|
|
|
|
70
|
|
|
-
|
|
Deferred percentage rent (3)
|
|
|
|
|
|
260
|
|
|
1,240
|
Adjusted EBITDA
|
|
|
|
|
$
|
187,963
|
|
$
|
168,635
|
|
See Notes on pages 9 and 10
|
|
(1) At March 31, 2016, HPT owned 305 hotels; 302 of these hotels are
managed by hotel operating companies and three hotels are leased to
hotel operating companies. At March 31, 2016, HPT also owned 194 travel
centers; all 194 of these travel centers are leased to a travel center
operating company under five 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, $16,429 and $15,492 less than the
minimum returns due to HPT in the three months ended March 31, 2016 and
2015, 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. Hotel operating expenses were
reduced by $4,377 and $4,006 in the three months ended March 31, 2016
and 2015, respectively, as a result of such fundings. 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 $12,052 and
$11,486 in the three months ended March 31, 2016 and 2015, respectively,
which represent the unguaranteed portions of HPT’s minimum returns from
Sonesta. Certain guarantee payments and the amounts of certain security
deposits received by HPT may be replenished by future cash flows from
the applicable hotel operations pursuant to the terms of the respective
operating agreements. When HPT’s guarantees and its security deposits
are replenished by cash flows from hotel operations, HPT reflects such
replenishments in its condensed consolidated statements of income as an
increase to hotel operating expenses. Hotel operating expenses have
increased by $2,522 and $3,351 in the three months ended March 31, 2016
and 2015, respectively, as a result of such replenishments.
(2) Rental income includes $3,752 and $545 in the three months ended
March 31, 2016 and 2015, respectively, of adjustments necessary to
record scheduled rent increases under certain of HPT’s leases, the
deferred rent obligations under HPT’s travel center leases and the
estimated future payments to HPT under its travel center leases for the
cost of removing underground storage tanks on a straight line basis.
(3) In calculating net income in accordance with GAAP, HPT generally
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. HPT includes estimated amounts
of percentage rent 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 estimated amounts of
percentage rent recognized during the first three quarters.
(4) 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 tenants into the escrow accounts under its
three hotel leases 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.
(5) Incentive fees under HPT’s business management agreement are payable
after the end of each calendar year, are calculated based on common
share total return, as defined, and are included in general and
administrative expense in HPT’s condensed consolidated statements of
income. 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 available for common
shareholders or Adjusted EBITDA until the fourth quarter, which is when
the actual incentive fee expense amount for the year is determined. HPT
recorded $5,316 and $9,027 of estimated incentive fees during the three
months ended March 31, 2016 and 2015, respectively.
HPT recorded a liability for the amount by which the estimated fair
value for accounting purposes exceeded the price HPT paid for its
investment in RMR common stock in June 2015. A portion of this liability
is being amortized on a straight line basis through December 31, 2035,
the then 20 year life of HPT's business management agreement with the
operating subsidiary of RMR as a reduction to business management fees,
which are included in general and administrative expense. General and
administrative expense was reduced by $896 during the three months
ended March 31, 2016 as a result of this amortization.
(6) Represents costs associated with HPT’s acquisition activities.
(7) HPT recorded a $70 loss on early extinguishment of debt in the first
quarter of 2016 in connection with the redemption of certain senior
unsecured notes.
(8) HPT calculates FFO available for common shareholders and Normalized
FFO available for common shareholders as shown above. FFO available for
common shareholders 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 available for
common shareholders differs from NAREIT's definition of FFO available
for common shareholders because HPT 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, HPT includes business
management incentive fees, if any, only in the fourth quarter versus the
quarter when they are recognized as expense in accordance with GAAP and
HPT excludes acquisition related costs and loss on early extinguishment
of debt. HPT considers FFO available for common shareholders and
Normalized FFO available for common shareholders 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 available for common
shareholders and Normalized FFO available for common shareholders
provide useful information to investors because by excluding the effects
of certain historical amounts, such as depreciation expense, FFO
available for common shareholders and Normalized FFO available for
common shareholders may facilitate a comparison of HPT’s operating
performance between periods and with other REITs. FFO available for
common shareholders and Normalized FFO available for common shareholders
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
qualification for taxation as a REIT, limitations in its unsecured
revolving credit facility and unsecured term loan agreement and public
debt covenants, the availability to HPT of debt and equity capital,
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 available for common shareholders and
Normalized FFO available for common shareholders do not represent cash
generated by operating activities in accordance with GAAP and should not
be considered as alternatives to net income, net income available for
common shareholders, operating income 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, net income
available for common shareholders, operating income and cash flow from
operating activities as presented in HPT’s condensed consolidated
statements of income and condensed consolidated statements of cash
flows. Other real estate companies and REITs may calculate FFO available
for common shareholders and Normalized FFO available for common
shareholders differently than HPT does.
(9) 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 HPT’s 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, net income available for
common shareholders, operating income and cash flow from operating
activities as presented in HPT’s condensed consolidated statements of
income and condensed consolidated statements of cash flows. Other real
estate companies and REITs may calculate EBITDA and Adjusted EBITDA
differently than HPT does.
(10) Amounts represent the portion of business management fees that were
payable in HPT’s common shares as well as equity based compensation for
HPT’s trustees, its officers and certain other employees of HPT’s
manager. Beginning June 1, 2015, all business management fees are paid
in cash.
|
HOSPITALITY PROPERTIES TRUST
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(amounts in thousands, except share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties:
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
$
|
1,544,954
|
|
|
$
|
1,529,004
|
Buildings, improvements and equipment
|
|
|
|
|
6,898,854
|
|
|
|
6,740,423
|
Total real estate properties, gross
|
|
|
|
|
8,443,808
|
|
|
|
8,269,427
|
Accumulated depreciation
|
|
|
|
|
(2,290,066)
|
|
|
|
(2,218,499)
|
Total real estate properties, net
|
|
|
|
|
6,153,742
|
|
|
|
6,050,928
|
Cash and cash equivalents
|
|
|
|
|
15,816
|
|
|
|
13,682
|
Restricted cash (FF&E reserve escrow)
|
|
|
|
|
55,891
|
|
|
|
51,211
|
Due from related persons
|
|
|
|
|
55,517
|
|
|
|
50,987
|
Other assets, net
|
|
|
|
|
251,174
|
|
|
|
227,989
|
Total assets
|
|
|
|
$
|
6,532,140
|
|
|
$
|
6,394,797
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
|
|
$
|
230,000
|
|
|
$
|
465,000
|
Unsecured term loan, net
|
|
|
|
|
397,922
|
|
|
|
397,756
|
Senior unsecured notes, net
|
|
|
|
|
2,861,294
|
|
|
|
2,403,439
|
Convertible senior unsecured notes
|
|
|
|
|
8,478
|
|
|
|
8,478
|
Security deposits
|
|
|
|
|
63,831
|
|
|
|
53,579
|
Accounts payable and other liabilities
|
|
|
|
|
150,416
|
|
|
|
179,783
|
Due to related persons
|
|
|
|
|
14,172
|
|
|
|
69,514
|
Dividends payable
|
|
|
|
|
5,166
|
|
|
|
5,166
|
Total liabilities
|
|
|
|
|
3,731,279
|
|
|
|
3,582,715
|
|
|
|
|
|
|
|
|
|
|
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; 151,547,288 shares issued and outstanding
|
|
|
|
|
1,515
|
|
|
|
1,515
|
Additional paid in capital
|
|
|
|
|
4,165,982
|
|
|
|
4,165,911
|
Cumulative net income
|
|
|
|
|
2,933,708
|
|
|
|
2,881,657
|
Cumulative other comprehensive income (loss)
|
|
|
|
|
2,074
|
|
|
|
(15,523)
|
Cumulative preferred distributions
|
|
|
|
|
(326,479)
|
|
|
|
(321,313)
|
Cumulative common distributions
|
|
|
|
|
(4,256,046)
|
|
|
|
(4,180,272)
|
Total shareholders’ equity
|
|
|
|
|
2,800,861
|
|
|
|
2,812,082
|
Total liabilities and shareholders’ equity
|
|
|
|
$
|
6,532,140
|
|
|
$
|
6,394,797
|
|
|
|
|
|
|
|
|
|
|
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160510005397/en/
Source: Hospitality Properties Trust