- Comparable Portfolio RevPAR Growth of 2.6%
-
- Sells 7 Hotels to Cindat at a 5.4%
Capitalization Rate -
- Issues Preferred Shares at Lowest Coupon in
Company History -
- Repurchases $36.8 Million of Common Shares
-
- Continues Capital Recycling Via Suburban
Boston Asset Sales -
Hersha Hospitality Trust (NYSE: HT) (“Hersha” or the “Company”),
owner of upscale hotels in urban gateway markets, today announced
results for the second quarter ended June 30, 2016.
Second Quarter 2016 Financial Results
Net income applicable to common shareholders was $102.2 million,
or $2.33 per diluted common share, in second quarter 2016, compared
to net income applicable to common shareholders of $15.6 million,
or $0.32 per diluted common share, in second quarter 2015. The
increase in second quarter 2016 net income was the result of the
gain recognized from the Company’s contribution and sale of seven
premium limited service hotels in Manhattan to the Company’s joint
venture with an affiliate of Cindat Capital Management Limited
(“Cindat”).
Adjusted Funds from Operations (“AFFO”) per diluted common share
and unit of limited partnership interest in Hersha Hospitality
Limited Partnership (“OP Unit”) was $0.89 in second quarter 2016, a
17.1% increase from AFFO of $0.76 per diluted common share and OP
Unit reported in second quarter 2015. AFFO in second quarter 2016
increased by $2.4 million, or 6.2%, to $41.2 million, compared to
$38.8 million in second quarter 2015. The Company’s weighted
average diluted common shares and OP Units outstanding were
approximately 46.0 million as of June 30, 2016, compared to
approximately 50.9 million as of June 30, 2015.
Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “The
Company’s portfolio-wide performance during the second quarter was
driven by strong fundamentals in our West Coast, Philadelphia and
Washington, DC hotel clusters. While our comparable portfolio’s
2.6% RevPAR growth reflected weaker than anticipated business
transient trends and a lack of pricing power in New York City.
Excluding our New York City portfolio, we reported more robust 5.0%
RevPAR growth during the second quarter. We remain constructive
with regards to the back half of 2016 based on a favorable
macroeconomic environment, healthy employment, and increasing
consumer spending, coupled with positive demand trends and solid
convention calendars in the majority of our markets. Moving
forward, we will continue to utilize hands-on asset and revenue
management strategies to leverage the industry’s positive
fundamentals to drive outperformance and profitability across our
six gateway markets.”
Mr. Shah continued, “Year-to-date in 2016 we have executed
several unique entrepreneurial initiatives to drive results and
position the Company to benefit from opportunities created by
potential dislocation in the markets. We capitalized on demand from
international capital sources seeking cash flowing real estate in
U.S. gateway markets through our transformative joint-venture with
Cindat, a China-based investment management platform. We leveraged
the best preferred market in years, redeeming our $115.0 million
8.0% Series B Preferred Shares and raising $192.5 million through
the issuance of 6.5% Series D Preferred Shares. We also took
advantage of continued interest from local and offshore real estate
investors in stabilized, select service assets in suburban markets,
and sold a suburban Philadelphia hotel, while entering into an
agreement to sell two assets in Suburban Boston at very attractive
terms. In addition, we utilized a significant portion of remaining
1031 Exchange proceeds from the Cindat transaction to acquire the
very well-located Envoy Hotel in Boston’s flourishing Innovation
District subsequent to the end of the second quarter. Simultaneous
to these transactions, we remained true to our value creation
philosophy and commitment to total shareholder returns and
repurchased $36.8 million of our common shares. The activities of
our busy second quarter furthered our strategy of crafting a
differentiated portfolio, recycling investment capital and creating
financial flexibility to execute our business plan and act in an
opportunistic manner.”
Second Quarter 2016 Operating Results
The best performing market during the second quarter was the
Company’s comparable Philadelphia portfolio, which reported 8.8%
revenue per available room (“RevPAR”) growth. The Company’s
comparable West Coast and Washington, DC portfolios reported 7.4%
and 6.1% RevPAR growth, respectively.
RevPAR at the Company's 43 comparable hotels increased 2.6% to
$187.00 in second quarter 2016. The Company’s average daily rate
(“ADR”) for the comparable hotel portfolio increased 1.8% to
$213.22, while occupancy increased 66 basis points to 87.7%. Gross
Operating Profit (“GOP“) margins increased 20 basis points to
51.4%. However, Hotel EBITDA margins for the comparable hotel
portfolio were flat at 41.7% primarily due to property tax
increases.
New York City and Manhattan
The New York City hotel portfolio, which includes the five
boroughs, consisted of 10 hotels as of June 30, 2016. The Company’s
comparable New York City hotel portfolio reported a 3.9% RevPAR
decrease to $219.89 due to a 2.5% ADR decline to $237.16, as new
supply continued to impact rate growth. Occupancy decreased 132
basis points, but remained robust at 92.7%.
The Manhattan hotel portfolio consisted of 7 hotels as of June
30, 2016. The Company’s comparable Manhattan hotel portfolio
reported a 5.5% RevPAR decline to $243.87 as the aforementioned new
supply inhibited rate growth, which drove a 3.1% ADR decline to
$263.58. Occupancy declined 232 basis points to 92.5%,
demonstrating the continued demand resiliency characteristic of the
Manhattan market. The Company’s Manhattan portfolio reported GOP
and EBITDA margins of 56.7% and 43.7%, respectively.
Financing
As of June 30, 2016, the Company maintained significant
financial flexibility with approximately $236.1 million of cash and
cash equivalents and full capacity on the Company’s senior
unsecured credit facility. As of June 30, 2016, 54.0% of the
Company’s consolidated debt was fixed rate debt or hedged through
interest rate swaps and caps. The Company’s total consolidated debt
had a weighted average interest rate of approximately 3.7% and a
weighted average life-to-maturity of approximately 3.6 years.
Preferred Shares
On May 24, 2016, the Company priced a public offering of 6.5%
Series D Cumulative Redeemable Preferred Shares of Beneficial
Interest, par value $.01 per share, for gross proceeds of $175.0
million. Inclusive of the over-allotment exercised by the
underwriters, the Company raised $192.5 million through the 6.5%
Series D Preferred Share issuance.
On June 8, 2016, the Company redeemed its 8.0% Series B
Cumulative Redeemable Preferred Shares of Beneficial Interest. The
redemption price was equal to $25.00 per Series B Preferred Share,
plus accrued and unpaid dividends through the Redemption Date in
the amount of $0.3722 per Series B Preferred Share, for a total
redemption price per Series B Preferred Share equal to
$25.3722.
Dispositions
On April 29, 2016, the Company closed on the joint venture with
Cindat for seven of the Company’s limited service hotels in
Manhattan, for a total purchase price, including closing and
capital improvement costs, of $571.4 million, or $526,000 per key.
The joint venture was structured with Cindat as the preferred joint
venture partner holding a 70.0% ownership stake, while HT retained
a 30.0% equity interest. The purchase price including closing costs
represented a trailing 5.4% economic capitalization rate and an
EBITDA multiple of 16.8x based on 2015 results for the seven
assets.
During the second quarter, the Company also closed on the sale
of the 129-room Hyatt Place in King of Prussia, PA for $13.0
million, or approximately $101,000 per key. The sale price
reflected a trailing economic capitalization rate of 7.8% based on
the hotel’s net operating income for the twelve-month period ended
March 31, 2016, and a hotel EBITDA multiple of 10.9x.
Subsequent Events
In July, the Company acquired the 136-room Envoy Hotel in Boston
for $112.5 million. The fee simple asset, acquired unencumbered of
debt or management, is affiliated with Marriott’s Autograph
Collection, leveraging Marriott’s powerful distribution
capabilities.
The Company has entered into a definitive agreement to sell the
125-room Residence Inn in Framingham, MA and the 96-room Residence
Inn in Norwood, MA for a combined $47.0 million, or approximately
$213,000 per key. The sale price for the two suburban Boston hotels
reflects a blended economic capitalization rate of 7.7% based on
the hotels’ net operating income for the twelve-month period ended
June 30, 2016, and a blended hotel EBITDA multiple of 11.7x. The
hotels are being sold to an offshore entity as a portfolio
unencumbered of debt and management. The sale is anticipated to
close in third quarter 2016, subject to customary closing
conditions. No assurances can be given the sale will close within
the expected time frame or at all.
Share Repurchase Activity
In second quarter 2016, the Company repurchased approximately
2.0 million common shares for an aggregate repurchase price of
$36.8 million. Year-to-date through June 30, 2016, the Company
repurchased approximately 2.1 million common shares for an
aggregate repurchase price of $39.1 million, which represents 4.7%
of the Company common shares outstanding. The Company has
approximately $33.0 million remaining on its $100 Million Share
Repurchase Program.
Dividends
Hersha paid a dividend of $0.4297 per Series C Preferred Share
for the second quarter ended June 30, 2016. The Series C Preferred
Share dividends were paid July 15, 2016 to holders of record as of
July 1, 2016. The Company paid an initial dividend of $0.203125 per
Series D Preferred Share based on a settlement date of May 31, 2016
for the Series D Preferred Shares. The Series D Preferred Share
dividends were paid July 15, 2016 to shareholders of record as of
July 1, 2016.
The Company also declared quarterly cash dividends of $0.28 per
common share and per limited partnership unit for the second
quarter ended June 30, 2016. The common share dividend and OP Unit
distribution were paid July 15, 2016 to holders of record as of
June 30, 2016.
2016 Outlook
The Company is updating its operating and financial expectations
for 2016 to reflect the sale of seven New York City hotels to
Cindat, and the simultaneous formation of the Cindat joint venture,
the issuance of the 6.5% Series D Preferred Shares, the disposition
of the Hyatt Place in King of Prussia, PA, the planned disposition
of two suburban Boston hotels, the acquisition of the Envoy Hotel
in Boston, in addition to the Company’s current view of operating
and economic fundamentals. The Company’s updated outlook does not
build in any additional acquisitions, dispositions or capital
market activities for 2016. Based on management’s current outlook
and assumptions, the Company’s updated full-year 2016 operating
expectations are as follows:
Previous 2016 Outlook Updated 2016
Outlook ($’s in millions except per share amounts)
Low High Low High Net
income $20.0 $30.0 $99.0 $105.0 Net income per share $0.44 $0.67
$2.27 $2.41 Comparable Property RevPAR Growth 4.0% 6.0% 2.5%
3.5% Comparable Property EBITDA Margin Growth 50 bps 75 bps 40 bps
60 bps Adjusted EBITDA $175.0 $185.0 $171.0 $177.0
Adjusted FFO $117.0 $127.0 $109.0 $115.0 Adjusted FFO per share
$2.48 $2.69 $2.38 $2.51
Second Quarter 2016 Conference Call
The Company will host a conference call to discuss these results
at 9:00 a.m. Eastern Time on Thursday, July 28, 2016. Hosting the
call will be Mr. Jay H. Shah, Chief Executive Officer, Mr. Neil H.
Shah, President and Chief Operating Officer, and Mr. Ashish Parikh,
Chief Financial Officer.
A live webcast of the conference call will be available on the
Company’s website at www.hersha.com. The conference call can be
accessed by dialing 1-888-438-5491 or 1-719-325-2491 for
international participants. A replay of the call will be available
from 12:00 p.m. Eastern Time on Thursday, July 28, 2016, through
midnight Eastern Time on Thursday, August 11, 2016. The replay can
be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for
international participants. The passcode for the call and the
replay is 6004920. A replay of the webcast will be available on the
Company’s website for a limited time.
About Hersha Hospitality Trust
Hersha Hospitality Trust (HT) is a self-advised real estate
investment trust in the hospitality sector, which owns and operates
high quality upscale hotels in urban gateway markets. The Company's
56 hotels totaling 8,899 rooms are located in New York, Boston,
Philadelphia, Washington, DC, Miami and select markets on the West
Coast. The Company's shares are traded on The New York Stock
Exchange under the ticker “HT”.
Non-GAAP Financial Measures
An explanation of Funds from Operations (“FFO”), AFFO, Earnings
Before Interest, Taxes, Depreciation and Amortization (“EBITDA”),
Adjusted EBITDA and Hotel EBITDA, as well as reconciliations of
FFO, AFFO, EBITDA and Adjusted EBITDA to net income or loss, the
most directly comparable U.S. GAAP measures, is included at the end
of this release.
Cautionary Statements Regarding Forward Looking
Statements
Certain matters within this press release are discussed using
“forward-looking statements” within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
and, as such, may involve known and unknown risks, uncertainties
and other factors that may cause the actual results or performance
to differ from those projected in the forward-looking statements.
These forward-looking statements may include statements related to,
among other things: the Company’s 2016 outlook for net income
attributable to common shareholders, net income per weighted
average common share and OP Units outstanding, Adjusted EBITDA,
AFFO, AFFO per weighted average common share and OP Unit
outstanding, consolidated and comparable RevPAR growth and
consolidated and comparable EBITDA margin growth, economic and
other assumptions underlying the Company’s 2016 outlook and
assumptions regarding economic growth, labor markets, real estate
values and the economic vibrancy of our target markets, the
Company’s ability to grow operating cash flow, leverage rate-driven
revenue growth, return capital to its shareholders, whether in the
form of increased dividends or otherwise, the Company’s ability to
match or outperform its competitors’ performance, the ability of
the Company’s hotels to achieve stabilized or projected revenue,
the stability of the lodging industry and the markets in which the
Company’s hotel properties are located, the Company’s ability to
generate internal and external growth, the Company’s ability to
increase margins, including hotel EBITDA margins, the expected
increase in the net asset value of the hotels in the Company’s
portfolio as a result of capital being invested by foreign or
domestic investors or for any other reason, and the Company’s
ability to achieve its forecasted stabilization rates.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
the Company’s current beliefs, expectations and assumptions
regarding the future of its business, future plans and strategies,
projections, anticipated events and trends, the economy and other
future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of the Company’s control. The Company’s actual
results and financial condition may differ materially from those
indicated in the forward-looking statements contained in this press
release. Therefore, you should not rely on any of these
forward-looking statements. For a description of factors that may
cause the Company’s actual results or performance to differ from
its forward-looking statements, please review the information under
the heading “Risk Factors” included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2015 filed by the
Company with the Securities and Exchange Commission (“SEC”) and
other documents filed by the Company with the SEC from time to
time. All information provided in this press release, unless
otherwise stated, is as of July 27, 2016, and the Company
undertakes no duty to update this information unless required by
law.
HERSHA HOSPITALITY TRUST
Balance Sheet (unaudited) (in thousands, except shares and
per share data)
June 30, 2016 December 31,
2015 Assets:
Investment in Hotel Properties, Net of
Accumulated Depreciation, Including Consolidation of Variable
Interest Entity Assets of $82,043 and $82,787
$ 1,682,992
$
1,831,119 Investment in Unconsolidated Joint Ventures 17,244 10,316
Cash and Cash Equivalents 236,102 27,955 Escrow Deposits 15,875
19,204 Hotel Accounts Receivable, Net of Allowance for Doubtful
Accounts of $8 and $12 8,467 9,465 Due from Related Parties 14,061
6,243 Intangible Assets, Net of Accumulated Amortization of $3,926
and $3,951 14,372 13,389 Deposits on Hotel Acquisitions - 5,000
Other Assets 37,382 39,958
Total
Assets $ 2,026,495 $ 1,962,649
Liabilities and Equity: Line of Credit $ - $ 27,000
Unsecured Term Loan, Net of Unamortized Deferred Financing Costs
508,633 547,780 Unsecured Notes Payable, Net of Unamortized
Deferred Financing Costs 50,551 50,525
Mortgages Payable, Net Unamortized Premium
and Unamortized Deferred Financing Costs, and Consolidation of
Variable Interest Entity Debt of $51,687 and $52,509
494,606 544,659 Accounts Payable, Accrued Expenses and Other
Liabilities 58,685 59,226 Dividends and Distributions Payable
14,785 16,515 Due to Related Parties 18 8,789 Deferred Gain on
Disposition of Hotel Assets 81,333 -
Total Liabilities $ 1,208,611 $ 1,254,494
Equity: Shareholders' Equity:
Preferred Shares: $.01 Par Value,
29,000,000 Shares Authorized, 3,000,000 Series C and 7,700,000
Series D Shares Issued and Outstanding at June 30, 2016 and
4,600,000 Series B and 3,000,000 Series C Shares Issued and
Outstanding at December 31, 2015, with Liquidation Preferences of
$25 Per Share
$ 107 $ 76
Common Shares: Class A, $0.01 Par Value,
75,000,000 and 300,000,000 Shares Authorized at June 30, 2016 and
December 31, 2015 respectively, 42,426,365 and 44,457,368 Shares
Issued and Outstanding at June 30, 2016 and December 31, 2015,
respectively
424 444
Common Shares: Class B, $0.01 Par Value,
1,000,000 Shares Authorized, None Issued and Outstanding at March
31, 2016 and December 31, 2015
- - Accumulated Other Comprehensive Loss (687 ) (466 ) Additional
Paid-in Capital 1,118,190 1,086,259 Distributions in Excess of Net
Income (337,743 ) (408,274 ) Total Shareholders'
Equity 780,291 678,039 Noncontrolling Interests:
Noncontrolling Interests - Common Units and LTIP Units 39,683
31,876 Noncontrolling Interests - Consolidated Variable Interest
Entity (2,090 ) (1,760 ) Total Noncontrolling
Interests 37,593 30,116
Total Equity 817,884 708,155
Total Liabilities and Equity $ 2,026,495 $
1,962,649
HERSHA HOSPITALITY TRUST Summary Results
(unaudited) (in thousands, except shares and per share data)
Three Months Ended Six Months Ended June
30, 2016 June 30, 2015 June 30, 2016 June 30,
2015 Revenues: Hotel Operating Revenues $ 127,629 $
127,000 $ 234,476 $ 222,688 Other Revenue 94
30 100 54
Total Revenues
127,723 127,030 234,576
222,742
Operating Expenses: Hotel
Operating Expenses 65,900 64,134 131,618 121,489 Hotel Ground Rent
892 727 1,785 1,455 Real Estate and Personal Property Taxes and
Property Insurance 7,949 8,222 17,105 16,492 General and
Administrative 4,582 3,768 7,576 6,576 Share Based Compensation
1,873 1,655 4,279 3,194 Acquisition and Terminated Transaction
Costs 55 190 1,563 308 Depreciation and Amortization 18,495
18,328 38,555 36,581
Total Operating Expenses 99,746
97,024 202,481 186,095
Operating Income 27,977 30,006 32,095 36,647 Interest
Income 78 51 124 99 Interest Expense (11,281 ) (10,688 ) (23,502 )
(21,323 ) Other Expense (633 ) (156 ) (739 ) (325 ) Gain on
Disposition of Hotel Properties 95,276 - 95,276 - Loss on Debt
Extinguishment (1,049 ) (222 ) (1,091 )
(222 )
Income before Income from
Unconsolidated Joint Venture Investments and Income Taxes
110,368 18,991 102,163 14,876
Income from Unconsolidated
Joint Venture Investments 1,521 526
1,307 252
Income before
Income Taxes 111,889 19,517 103,470 15,128
Income Tax
Benefit 3,070 109 3,070 109
Net Income
114,959 19,626 106,540 15,237 (Income) loss Allocated to
Noncontrolling Interests (4,748 ) (405 ) (4,061 ) 38 Preferred
Distributions (4,000 ) (3,589 ) (7,589 ) (7,178 )
Extinguishment of Issuance Costs Upon
Redemption of Series B Preferred Shares
(4,021 ) - (4,021 ) -
Net Income Applicable to Common Shareholders $
102,190 $ 15,632 $ 90,869 $ 8,097
Earnings per
Share:
BASIC Net Income Applicable to Common Shareholders $
2.35 $ 0.32 $ 2.06 $ 0.16
DILUTED Net Income Applicable to Common Shareholders
$ 2.33 $ 0.32 $ 2.04 $ 0.16
Weighted Average
Common Shares Outstanding:
Basic 43,427,726 48,530,716 43,903,526 49,053,846 Diluted
43,863,577 49,043,914 44,384,969 49,576,322
Non-GAAP Measures
FFO and AFFO
The National Association of Real Estate Investment Trusts
(“NAREIT”) developed Funds from Operations (“FFO”) as a non-GAAP
financial measure of performance of an equity REIT in order to
recognize that income-producing real estate historically has not
depreciated on the basis determined under GAAP. We calculate FFO
applicable to common shares and Common Units in accordance with the
April 2002 National Policy Bulletin of NAREIT, which we refer to as
the White Paper. The White Paper defines FFO as net income (loss)
(computed in accordance with GAAP) excluding extraordinary items as
defined under GAAP and gains or losses from sales of previously
depreciated assets, plus certain non-cash items, such as loss from
impairment of assets and depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Our
interpretation of the NAREIT definition is that non-controlling
interest in net income (loss) should be added back to (deducted
from) net income (loss) as part of reconciling net income (loss) to
FFO. Our FFO computation may not be comparable to FFO reported by
other REITs that do not compute FFO in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than we do.
The GAAP measure that we believe to be most directly comparable
to FFO, net income (loss) applicable to common shareholders,
includes loss from the impairment of certain depreciable assets,
our investment in unconsolidated joint ventures and land,
depreciation and amortization expenses, gains or losses on property
sales, non-controlling interest and preferred dividends. In
computing FFO, we eliminate these items because, in our view, they
are not indicative of the results from our property operations. We
determined that the loss from the impairment of certain depreciable
assets, including investments in unconsolidated joint ventures and
land, was driven by a measurable decrease in the fair value of
certain hotel properties and other assets as determined by our
analysis of those assets in accordance with applicable GAAP. As
such, these impairments have been eliminated from net income (loss)
to determine FFO.
Hersha also presents Adjusted Funds from Operations (AFFO),
which reflects FFO in accordance with the NAREIT definition further
adjusted by:
- adding back non-cash share based
compensation expense;
- adding back acquisition and terminated
transaction expenses;
- adding back contingent
considerations;
- adding back amortization of deferred
financing costs;
- adding back adjustments for the
amortization of discounts and premiums;
- adding back write-offs of deferred
financing costs on debt extinguishment, both for consolidated and
unconsolidated properties;
- adding back straight-line amortization
of ground lease expense and prior period tax assessment expenses;
and
- adding back unconsolidated joint
venture management company transaction costs and state and local
tax expense related to prior period assessment.
FFO and AFFO do not represent cash flows from operating
activities in accordance with GAAP and should not be considered an
alternative to net income as an indication of the Company’s
performance or to cash flow as a measure of liquidity or ability to
make distributions. We consider FFO and AFFO to be meaningful,
additional measures of our operating performance because they
exclude the effects of the assumption that the value of real estate
assets diminishes predictably over time, and because they are
widely used by industry analysts as performance measures. We show
both FFO from consolidated hotel operations and FFO from
unconsolidated joint ventures because we believe it is meaningful
for the investor to understand the relative contributions from our
consolidated and unconsolidated hotels. The display of both FFO
from consolidated hotels and FFO from unconsolidated joint ventures
allows for a detailed analysis of the operating performance of our
hotel portfolio by management and investors. We present FFO and
AFFO applicable to common shares and Partnership units because our
Partnership units are redeemable for common shares. We believe it
is meaningful for the investor to understand FFO and AFFO
applicable to all common shares and Partnership units.
Certain amounts related to depreciation and amortization and
depreciation and amortization from discontinued operations in the
prior year FFO reconciliation have been recast to conform to the
current year presentation. In addition, based on guidance provided
by NAREIT, we have eliminated loss from the impairment of certain
depreciable assets, including investments in unconsolidated joint
ventures and land, from net (income) loss to arrive at FFO in each
year presented. The following table reconciles FFO and AFFO for the
periods presented to the most directly comparable GAAP measure, net
income (loss) applicable to common shares, for the same
periods:
HERSHA
HOSPITALITY TRUST Funds from Operations (FFO) and Adjusted
Funds from Operations (AFFO) (in thousands, except shares and
per share data)
Three Months Ended Six Months
Ended June 30, 2016 June 30, 2015 June 30,
2016 June 30, 2015 Net income applicable to
common shares $ 102,190 $ 15,632 $ 90,869 $ 8,097 Income (loss)
allocated to noncontrolling interest 4,748 405 4,061 (38 ) Income
from unconsolidated joint ventures (1,521 ) (526 ) (1,307 ) (252 )
Gain on disposition of hotel properties (95,276 ) - (95,276 ) -
Depreciation and amortization 18,495 18,328
38,555 36,581
Funds from consolidated hotel
operations applicable to common shares and Partnership
units
28,636 33,839 36,902
44,388 Income from unconsolidated joint
venture investments 1,521 526 1,307 252
Depreciation and amortization of purchase
price in (deficit) excess of historical cost
(91 ) 121 29 241
Interest in depreciation and amortization
of unconsolidated joint ventures
3,434 1,680 4,711
2,773
Funds from unconsolidated joint venture
operations applicable to common shares and Partnership
units
4,864 2,327 6,047 3,266
Funds from Operations
applicable to common shares and Partnership units 33,500 36,166
42,949 47,654 Add: Non-cash extinguishment of issuance costs
upon redemption of Series B Preferred Shares 4,021 - 4,021 -
Non-cash share based compensation expense 1,873 1,655 4,279 3,194
Acquisition and terminated transaction costs 55 190 1,563 308
Amortization of deferred financing costs 640 657 1,300 1,377
Interest in amortization of deferred financing costs of
unconsolidated joint venture 239 - 239 - Amortization of discounts
and premiums (388 ) (256 ) (775 ) (509 ) Deferred financing costs
written off in debt extinguishment 1,049 222 1,091 222
Straight-line amortization of ground lease expense 161
122 323 245
Adjusted Funds from Operations $ 41,150 $ 38,756
$ 54,990 $ 52,491
AFFO per Diluted Weighted Average Common
Shares and Partnership Units Outstanding
$ 0.89 $ 0.76 $ 1.18 $ 1.02
Diluted Weighted Average Common Shares and Partnership Units
Outstanding 46,047,585 50,940,423 46,505,229 51,443,025
Adjusted EBITDA
Adjusted Earnings Before Interest, Taxes, and Depreciation and
Amortization (EBITDA) is a non-GAAP financial measure within the
meaning of the Securities and Exchange Commission rules. Our
interpretation of Adjusted EBITDA is that EBITDA derived from our
investment in unconsolidated joint ventures should be added back to
net income (loss) as part of reconciling net income (loss) to
Adjusted EBITDA. Our Adjusted EBITDA computation may not be
comparable to EBITDA or Adjusted EBITDA reported by other companies
that interpret the definition of EBITDA differently than we do.
Management believes Adjusted EBITDA to be a meaningful measure of a
REIT's performance because it is widely followed by industry
analysts, lenders and investors and that it should be considered
along with, but not as an alternative to, net income, cash flow,
FFO and AFFO, as a measure of the Company's operating
performance.
HERSHA
HOSPITALITY TRUST Adjusted EBITDA (in thousands)
Three Months Ended Six Months Ended June 30,
2016 June 30, 2015 June 30, 2016 June 30,
2015 Net income applicable to common shareholders $
102,190 $ 15,632 $ 90,869 $ 8,097 Income (loss) allocated to
noncontrolling interest 4,748 405 4,061 (38 ) Income from
unconsolidated joint ventures (1,521 ) (526 ) (1,307 ) (252 ) Gain
on disposition of hotel properties (95,276 ) - (95,276 ) -
Non-operating interest income (78 ) (44 ) (124 ) (86 )
Distributions to Preferred Shareholders 4,000 3,589 7,589 7,178
Interest expense from continuing operations 11,281 10,688 23,502
21,323 Extinguishment of issuance costs upon redemption of Series B
Preferred Shares 4,021 - 4,021 - Income tax benefit (3,070 ) (109 )
(3,070 ) (109 ) Deferred financing costs written off in debt
extinguishment 1,049 222 1,091 222 Depreciation and amortization
18,495 18,328 38,555 36,581 Acquisition and terminated transaction
costs 55 190 1,563 308 Non-cash share based compensation expense
1,873 1,655 4,279 3,194 Straight-line amortization of ground lease
expense 161 122 323
245
Adjusted EBITDA from consolidated hotel
operations 47,928 50,152
76,076 76,663 Income from
unconsolidated joint venture investments 1,521 526 1,307 252 Add:
Depreciation and amortization of purchase price in (deficit) excess
of historical cost (91 ) 121 29 241
Adjustment for interest in interest
expense, depreciation and amortization of unconsolidated joint
ventures
6,113 3,671 7,839
5,683
Adjusted EBITDA from unconsolidated joint
venture operations 7,543 4,318
9,175 6,176
Adjusted
EBITDA $ 55,471 $ 54,470 $ 85,251 $ 82,839
Hotel EBITDA
Hotel EBITDA is a commonly used measure of performance in the
hotel industry for a specific hotel or group of hotels. We believe
Hotel EBITDA provides a more complete understanding of the
operating results of the individual hotel or group of hotels. We
calculate Hotel EBITDA by utilizing the total revenues generated
from hotel operations less all operating expenses, property taxes,
insurance and management fees, which calculation excludes Company
expenses not specific to a hotel, such as corporate overhead.
Because Hotel EBITDA is specific to individual hotels or groups of
hotels and not to the Company as a whole, it is not directly
comparable to any GAAP measure and should not be relied on as a
measure of performance for our portfolio of hotels taken as a
whole.
Supplemental Schedules
The Company has published supplemental earnings schedules in
order to provide additional disclosure and financial information
for the benefit of the Company’s stakeholders. These can be found
in the Investor Relations section and the “SEC Filings and
Presentations” page of the Company’s website, www.hersha.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160727006629/en/
Hersha Hospitality TrustAshish Parikh, Chief Financial
OfficerPeter Majeski, Manager of Investor Relations &
Finance215-238-1046
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