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Monday, November 10, 2008
Hospitality Properties Trust Announces 2008 Third Quarter Results
Comtex
NEWTON, Mass., Nov 10, 2008 (BUSINESS WIRE) ----Hospitality Properties Trust (NYSE: HPT) today announced its operating results for the quarter and nine months ended September 30, 2008.
Results for the quarter and nine months ended September 30, 2008:
HPT's net income available for common shareholders for the three and nine month periods ended September 30, 2008 compared to the same periods in 2007 were as follows:
Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 (in thousands, except per share data) Net income available for common shareholders $ 32,915 $ 142,390 $ 56,652 $ 228,215 Net income available for common shareholders per share $ 0.35 $ 1.52 $ 0.60 $ 2.46 Weighted average common shares outstanding 93,954 93,872 93,930 92,845
Net income available for common shareholders for the quarter ended September 30, 2007, includes a $95.7 million, or $1.02 per share, gain from the sale of real estate. During the quarter ended September 30, 2008, TravelCenters of America LLC (NYSE Alternext:TA), or TA, exercised its option to defer up to $5 million of rent per month under the previously announced rent deferral agreement, which resulted in a $15 million, or $0.16 per share, reduction in net income available for common shareholders. The results for the quarter ended September 30, 2008 also reflect the non-accrual of $3.5 million, or $0.04 per share, of straight line rent under HPT's lease with TA for 145 travel centers.
Net income available for common shareholders for the nine months ended September 30, 2007 includes a $95.7 million, or $1.03 per share, gain from the sale of real estate and $2.7 million, or $0.03 per share, of costs associated with the spin off of TA to HPT's shareholders on January 31, 2007. The results for the nine months ended September 30, 2008 include the impact of the $15 million, or $0.16 per share, rent deferral described above and a non-cash impairment charge of $53.2 million, or $0.57 per share, related to the write down of certain intangible assets arising from HPT's January 2007 acquisition of TravelCenters of America, Inc. to their estimated fair market value. The year to date 2008 results also reflect the non-accrual of $7 million, or $0.07 per share, of straight line rent for the quarters ended June 30, 2008 and September 30, 2008, related to HPT's lease with TA for 145 travel centers, and a non-cash charge of $19.6 million, or $0.21 per share, to record a reserve for the straight line rent receivable recorded in periods prior to April 1, 2008.
HPT's funds from operations, or FFO, for the three and nine month periods ended September 30, 2008 compared to the same periods in 2007 were as follows:
Quarter Ended September 30, Nine Months Ended September 30, 2008 2007 2008 2007 (in thousands, except per share data) Funds from operations $ 99,758 $ 113,572 $ 308,153 $ 323,575 FFO per share $ 1.06 $ 1.21 $ 3.28 $ 3.49 Weighted average common shares outstanding 93,954 93,872 93,930 92,845
FFO for the quarter ended September 30, 2008 was affected by TA's deferral of rent and the non-accrual of straight line rent discussed above.
FFO for the nine months ended September 30, 2008 was affected by TA's deferral of rent, the non-accrual of straight line rent and the non-cash charge to record a reserve for straight line rent discussed above. See page 5 for a reconciliation of FFO to net income available to common shareholders.
Hotel Portfolio Performance:
For the quarter and nine months ended September 30, 2008 compared to the same periods last year, hotels owned by HPT produced revenue per available room, or RevPAR, average daily rate, or ADR, and occupancy as follows:
Quarter Ended September 30, Nine Months Ended September 30, 2008 2007 Change 2008 2007 Change RevPAR $ 79.92 $ 79.70 0.3 % $ 79.80 $ 78.57 1.6 % ADR $ 106.99 $ 105.42 1.5 % $ 109.76 $ 107.19 2.4 % Occupancy 74.7 % 75.6 % -0.9 pt 72.7 % 73.3 % -0.6 pt
Common Dividend:
On October 2, 2008, HPT announced a regular quarterly common dividend of $0.77 per share payable to shareholders of record on October 15, 2008; this dividend will be paid on or about November 17, 2008.
Conference Call:
On Tuesday, November 11, 2008, at 11:00 a.m. Eastern Time, John Murray, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the results for the quarter and nine months ended September 30, 2008.
The conference call telephone number is (800) 811-8830. Participants calling from outside the United States and Canada should dial (913) 312-1267. 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, November 18, 2008. To hear the replay, dial (888) 203-1112. The replay pass code is 7613249.
A live audio webcast of the conference call will also be available in a listen only mode on the company's web site, which is located at www.hptreit.com. Participants wanting to access the webcast should visit the company's web site about five minutes before the call. The archived webcast will be available for replay on HPT's web site for about one week after the call.
Supplemental Data:
A copy of HPT's Third Quarter 2008 Supplemental Operating and Financial Data is available for download at HPT's web site, www.hptreit.com.
Hospitality Properties Trust is a real estate investment trust, or REIT, which owns 290 hotels and 185 travel centers located in 44 states, Puerto Rico and Canada. HPT is headquartered in Newton, Massachusetts.
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(in thousands, except per share data)
(Unaudited)
Quarter Ended September 30, Nine Months Ended September 30,
2008 2007 2008 2007
Revenues:
Hotel operating revenues (1) $ 233,393 $ 240,179
$ 700,399 $ 714,424
Rental income (1)(2) 72,824 87,669
250,341 222,819
FF&E reserve income (3) 6,095 5,785
18,620 16,993
Interest income 271 677
1,177 4,483
Total revenues 312,583 334,310
970,537 958,719
Expenses:
Hotel operating expenses (1) 166,896 174,533
500,743 519,242
Interest (including amortization of deferred financing costs of 36,529 38,038
110,626 102,488
$1,009, $956, $3,056 and $2,608, respectively)
Depreciation and amortization 60,449 57,647
178,277 160,470
General and administrative 7,881 10,848
28,920 27,801
TA spin off costs (4) -- --
-- 2,711
Reserve for straight line rent receivable (5) -- --
19,613 --
Loss on asset impairment (6) -- --
53,225 --
Total expenses 271,755 281,066
891,404 812,712
Income before gain on sale of real estate and income taxes 40,828 53,244
79,133 146,007
Gain on sale of real estate (7) -- --
1,274 --
Income before income taxes 40,828 53,244
80,407 146,007
Income tax expense (443 ) (422 )
(1,345 ) (1,644 )
Income from continuing operations 40,385 52,822
79,062 144,363
Discontinued operations: (8)
Income from discontinued operations -- 1,327
-- 7,440
Gain on sale of real estate used by discontinued operations -- 95,711
-- 95,711
-- 97,038 -- 103,151
Net income 40,385 149,860
79,062 247,514
Preferred distributions (7,470 ) (7,470 )
(22,410 ) (19,299 )
Net income available for common shareholders $ 32,915 $ 142,390
$ 56,652 $ 228,215
Calculation of FFO (9):
Net income available for common shareholders $ 32,915 $ 142,390
$ 56,652 $ 228,215
Add: FF&E deposits not in net income (discontinued operations) (3) -- --
-- 990
Depreciation and amortization (continuing operations) 60,449 57,647
178,277 160,470
Depreciation and amortization (discontinued operations) (8) -- 129
-- 1,636
Deferred percentage rent (continuing operations) 1,283 1,651
4,385 4,748
(10)
Deferred additional returns (continuing operations) (11) 5,111 7,723
16,888 20,516
Loss on asset impairment (continuing operations) (6) -- --
53,225 --
TA spin off costs (continuing operations) (4) -- --
-- 2,711
Less: Gain on sale of real estate (continuing operations) (7) -- --
(1,274 ) --
Gain on sale of real estate (discontinued operations) -- (95,711 )
-- (95,711 )
(8)
Deferred percentage rent (discontinued operations) (8) -- (257 )
-- --
Funds from operations ("FFO") $ 99,758 $ 113,572
$ 308,153 $ 323,575
Weighted average common shares outstanding 93,954 93,872
93,930 92,845
Per common share amounts:
Income from continuing operations available for common shareholders $ 0.35 $ 0.48
$ 0.60 $ 1.35
Income from discontinued operations available for common shareholders $ 0.00 $ 1.03
$ 0.00 $ 1.11
Net income available for common shareholders $ 0.35 $ 1.52
$ 0.60 $ 2.46
FFO (9) $ 1.06 $ 1.21
$ 3.28 $ 3.49
Common distributions declared $ 0.77 $ 0.77
$ 2.31 $ 2.29
(1) At September 30, 2008, each of our 290 hotels are included in
one of eleven operating agreements of which 198 are leased to our
taxable REIT subsidiaries and managed by independent hotel
operating companies and 92 are leased to third parties. Our 185
travel centers are leased under two agreements. Our consolidated
statement of income includes hotel operating revenues and expenses
of managed hotels and rental income from our leased hotels and
travel centers.
(2) During the third quarter of 2008, TravelCenters of America
LLC, or TA, elected to defer $15,000, or $0.16 per share, of rent
in accordance with the previously announced rent deferral
agreement.We have not recognized the deferred rent as revenue
due to uncertainties regarding its payment by TA.
(3) Various percentages of total sales at most of our hotels are
escrowed as reserves for future renovations or refurbishment, or
FF&E Reserve escrows.At September 30, 2008, we own all the FF&E
escrows for our hotels.Through July 26, 2007, we had a security
and remainder interest in the FF&E Reserve escrows for our former
Homestead Studio Suites hotels (see Note 7). When we own the FF&E
Reserve escrows at hotels leased to third parties we report
payments into the escrow as additional rent.When we had a
security and remainder interest in the FF&E Reserve escrows of our
Homestead Studio Suites hotels, deposits were not included in
revenue.We do not report the amounts which are escrowed as FF&E
reserves for our managed hotels as FF&E reserve income in our
consolidated statement of income.
(4) During the first quarter of 2007, we expensed $2,711 of costs
in connection with the spin off of our former subsidiary, TA, to
our shareholders on January 31, 2007.
(5) During the second quarter of 2008, we recorded a $19,613, or
$0.21 per share, non-cash reserve for the straight line rent
receivable relating to our lease with TA for 145 travel centers.
(6) During the second quarter of 2008, we recorded a $53,225, or
$0.57 per share, non-cash loss on asset impairment related to the
write down of certain intangible assets arising from our January
2007 TA acquisition to their estimated fair value.
(7) On February 5, 2008, we sold our Park Plaza hotel in North
Phoenix, Arizona for $8,000 and recognized a gain on sale of
$645.On June 18, 2008, we sold our AmeriSuites hotel in Atlantic
Beach, North Carolina for $6,350 and recognized a gain on sale of
$629.
(8) Income from discontinued operations relates to the 18
Homestead Studio Suites hotels that we sold in July 2007.We have
reclassified our consolidated statement of income for all periods
presented to show the results of operations of these hotels which
have been sold as discontinued.
(9) We compute FFO as shown. Our calculation of FFO differs from
the National Association of Real Estate Investment Trusts, or
NAREIT, definition because we include FF&E deposits not included
in net income (loss) (see Note 3), deferred percentage rent (see
Note 10) and deferred additional returns (see Note 11) and exclude
loss on asset impairment (see Note 6) and TA spin off costs (see
Note 4).We consider FFO to be an appropriate measure of
performance for a REIT, along with net income and cash flows from
operating, investing and financing activities. We believe that FFO
provides useful information to investors because by excluding the
effects of certain historical costs, such as depreciation expense,
it may facilitate comparison of operating performance among REITs.
FFO does not represent cash generated by operating activities in
accordance with generally accepted accounting principles, or GAAP,
and should not be considered an alternative to net income or cash
flow from operating activities as a measure of financial
performance or liquidity. FFO is among the important factors
considered by our board of trustees when determining the amount of
distributions to shareholders. Other important factors include,
but are not limited to, requirements to maintain our status as a
REIT, limitations in our revolving credit facility and public debt
covenants, the availability of debt and equity capital to us and
our expectation of our future capital needs and operating
performance.
(10) In calculating net income (loss) we recognize percentage
rental income received for the first, second and third quarters in
the fourth quarter, which is when all contingencies are met and
the income is earned. Although we defer recognition of this
revenue until the fourth quarter for purposes of calculating net
income, we include these amounts in the calculation of FFO for
each quarter of the year. The fourth quarter FFO calculation
excludes the amounts recognized during the first three quarters.
(11) Our share of the operating results of our managed hotels in
excess of the minimum returns due to us, or additional returns,
are generally determined based upon annual calculations. In
calculating net income (loss), we recognize additional returns in
the fourth quarter, which is when all contingencies are met and
the income is earned. Although we defer recognition of this income
until the fourth quarter for purposes of calculating net income
(loss), we include these amounts in the calculation of FFO for
each quarter of the year. The fourth quarter FFO calculation
excludes the amounts recognized during the first three quarters.
Hospitality Properties Trust CONSOLIDATED BALANCE SHEET (dollars in thousands, except share data) September 30, December 31, 2008 2007 (Unaudited) ASSETS Real estate properties, at cost: Land $ 1,392,605 $ 1,377,520 Buildings, improvements and equipment 4,973,679 4,818,711 6,366,284 6,196,231 Accumulated depreciation (1,004,065 ) (849,470 ) 5,362,219 5,346,761 Cash and cash equivalents 9,301 23,401 Restricted cash (FF&E reserve escrow) 37,485 28,134 Other assets, net 186,570 281,011 $ 5,595,575 $ 5,679,307 LIABILITIES AND SHAREHOLDERS' EQUITY Revolving credit facility $ 407,000 $ 158,000 Senior notes, net of discounts 1,693,487 1,842,756 Convertible senior notes 575,000 575,000 Mortgage payable 3,578 3,635 Security deposits 169,414 169,406 Accounts payable and other liabilities 102,322 134,705 Due to affiliate 11,806 4,617 Dividends payable 4,754 4,754 Total liabilities 2,967,361 2,892,873 Commitments and contingencies Shareholders' equity: Preferred shares of beneficial interest; no par value; 100,000,000 shares authorized: Series B preferred shares; 8 7/8% cumulative redeemable; 3,450,000 83,306 83,306 shares issued and outstanding, aggregate liquidation preference $86,250 Series C preferred shares; 7% cumulative redeemable; 12,700,000 306,833 306,833 shares issued and outstanding, aggregate liquidation preference $317,500 Common shares of beneficial interest, $0.01 par value; 150,000,000 940 939 shares authorized; 93,982,385 and 93,892,719 shares issued and outstanding, respectively Additional paid-in capital 3,050,987 3,048,881 Accumulated other comprehensive loss (40 ) -- Cumulative net income 1,790,140 1,711,079 Cumulative preferred distributions (116,171 ) (93,761 ) Cumulative common distributions (2,487,781 ) (2,270,843 ) Total shareholders' equity 2,628,214 2,786,434 $ 5,595,575 $ 5,679,307
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.
SOURCE: Hospitality Properties Trust
Hospitality Properties Trust Timothy A. Bonang, 617-796-8232 Director of Investor Relations or Carlynn Finn, 617-796-8232 Manager of Investor Relations www.hptreit.com
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