Normalized FFO Per Diluted Share Increases
9.2% Year Over Year to $0.83
Comparable Hotel RevPAR Growth of
10.1%
Hospitality Properties Trust (NYSE: HPT) today announced its
financial results for the quarter ended March 31, 2015, compared to
the results for the prior year comparable period:
First Quarter 2015 2014
($ in thousands,
except per share andRevPAR data)
Net income available for common shareholders $ 36,415 $
32,384 Net income available for common shareholders per share
(basic and diluted) $ 0.24 $ 0.22 Adjusted EBITDA (1) $ 168,635 $
154,951 Adjusted EBITDA growth 8.8% — Normalized FFO (1) $ 125,989
$ 113,060 Normalized FFO per share (diluted) (1) $ 0.83 $ 0.76
Portfolio
Performance
Comparable hotel RevPAR $ 85.68 $ 77.80 Comparable hotel RevPAR
growth 10.1% — RevPAR (all hotels) $ 86.36 $ 78.27 RevPAR growth
(all hotels) 10.3% — Coverage of HPT’s minimum returns and rents
(all hotels) 0.93x 0.75x Coverage of HPT's minimum rents (all
travel centers) 1.93x 1.54x
(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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended March 31, 2015 2014 Revenues: Hotel
operating revenues (1) $ 369,596 $ 329,936 Rental income (1) 64,751
63,386 FF&E reserve income (2) 1,165 928 Total
revenues 435,512 394,250 Expenses: Hotel
operating expenses (1) 257,658 230,617 Depreciation and
amortization 78,969 78,287 General and administrative (3) 21,304
11,465 Acquisition related costs (4) 338 61 Total
expenses 358,269 320,430 Operating income
77,243 73,820 Interest income 11 25
Interest expense (including amortization
of deferred financing costs and debt discounts of$1,458 and $1,319,
respectively)
(35,454) (34,856) Loss on early extinguishment of debt (5) - (726)
Income before income taxes and equity in earnings (losses) of an
investee 41,800 38,263 Income tax expense (291) (616) Equity in
earnings (losses) of an investee 72 (97) Net income 41,581 37,550
Preferred distributions (5,166) (5,166) Net income
available for common shareholders $ 36,415 $ 32,384 Weighted
average common shares outstanding (basic) 149,792
149,573 Weighted average common shares outstanding (diluted)
150,906 149,691 Net income available for common
shareholders per common share: Basic and diluted $ 0.24 $ 0.22
HOSPITALITY PROPERTIES TRUST
RECONCILIATIONS OF FUNDS FROM
OPERATIONS,
NORMALIZED FUNDS FROM OPERATIONS,
EBITDA AND ADJUSTED EBITDA
(amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended March 31, 2015 2014 Calculation of Funds
from Operations (FFO) and Normalized FFO: (6) Net income available
for common shareholders $ 36,415 $ 32,384 Add: Depreciation and
amortization 78,969 78,287 FFO 115,384 110,671 Add:
Acquisition related costs (4) 338 61 Estimated business management
incentive fees (3) 9,027 728 Loss on early extinguishment of debt
(5) - 726 Deferred percentage rent (7) 1,240 874
Normalized FFO $ 125,989 $ 113,060 Weighted average common
shares outstanding (basic) 149,792 149,573 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 andoutstanding,
aggregate liquidation preference of $290,000
280,107 280,107
Common shares of beneficial interest, $.01
par value; 200,000,000 shares authorized; 149,950,760and
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 TrustKatie Strohacker,
617-796-8232Director, Investor Relations
Hospitality Properties (NASDAQ:HPT)
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Hospitality Properties (NASDAQ:HPT)
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