Third Quarter Net Income of $0.30 per
share
Normalized FFO of $1.03 per share for the
Third Quarter
Comparable Hotel RevPAR for the Third
Quarter Grows 3.8% Year Over Year
Hospitality Properties Trust (Nasdaq: HPT) today announced its
financial results for the quarter and nine months ended
September 30, 2016.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015
($ in thousands,
except per share and RevPAR data)
Net income available for common shareholders $ 46,646 $
56,019 $ 144,426 $ 170,414 Net income available for common
shareholders per share $ 0.30 $ 0.37 $ 0.94 $ 1.13
Adjusted EBITDA (1)
$ 210,514 $ 192,713 $ 613,825 $ 551,167 Normalized FFO available
for common shareholders (1) $ 162,135 $ 149,692 $ 468,003 $ 422,580
Normalized FFO available for common
shareholders per share (1)
$ 1.03 $ 0.99 $ 3.05 $ 2.80
Portfolio
Performance
Comparable hotel RevPAR $ 101.77 $ 98.02 $ 98.37 $ 94.15 Comparable
hotel RevPAR growth 3.8% — 4.5% — RevPAR (all hotels) $ 101.35 $
97.95 $ 97.35 $ 94.33 RevPAR growth (all hotels) 3.5% — 3.2% —
Coverage of HPT’s minimum returns and rents for hotels 1.25x 1.18x
1.18x 1.13x Coverage of HPT's minimum rents for travel centers
1.78x 1.74x 1.59x 1.79x
(1) Reconciliations of net income 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
available for common shareholders determined in accordance with
GAAP to funds from operations, or FFO available for common
shareholders, and Normalized FFO available for common shareholders,
for the quarters and nine months ended September 30, 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 properties this quarter. HPT’s comparable
hotel RevPAR growth of 3.8% exceeded the industry for the 15th
consecutive quarter and aggregate coverage of our minimum returns
and rents improved compared to the same quarter last year. During
the quarter, we also raised $372 million of net proceeds from a
common equity offering and principally used the net proceeds to
repay debt.”
Results for the Three and Nine Months Ended
September 30, 2016 and Recent Activities:
- Net Income Available for Common
Shareholders: Net income available for common shareholders for
the quarter ended September 30, 2016 was $46.6 million, or
$0.30 per diluted share, compared to net income available for
common shareholders of $56.0 million, or $0.37 per diluted share,
for the quarter ended September 30, 2015. Net income available
for common shareholders includes $25.0 million, or $0.16 per
diluted share, and $8.6 million, or $0.06 per diluted share, of
estimated business management incentive fee expense for the
quarters ended September 30, 2016 and 2015, respectively. The
weighted average number of diluted common shares outstanding was
157.3 million and 151.4 million for the quarters ended
September 30, 2016 and 2015, respectively.Net income available
for common shareholders for the nine months ended
September 30, 2016 was $144.4 million, or $0.94 per diluted
share, compared to net income available for common shareholders of
$170.4 million, or $1.13 per diluted share, for the nine months
ended September 30, 2015. Net income available for common
shareholders for the nine months ended September 30, 2016
includes $56.3 million, or $0.37 per diluted share, of estimated
business management incentive fee expense. Net income available for
common shareholders for the nine months ended September 30,
2015 includes $17.4 million, or $0.12 per diluted share, of
estimated business management incentive fee expense and an $11.0
million, or $0.07 per diluted share, gain on the sale of real
estate. The weighted average number of diluted common shares
outstanding was 153.4 million and 150.9 million for the nine months
ended September 30, 2016 and 2015, respectively.
- Adjusted EBITDA: Adjusted EBITDA
for the quarter ended September 30, 2016 compared to the same
period in 2015 increased 9.2% to $210.5 million.Adjusted EBITDA for
the nine months ended September 30, 2016 compared to the same
period in 2015 increased 11.4% to $613.8 million.
- Normalized FFO Available for Common
Shareholders: Normalized FFO available for common shareholders
for the quarter ended September 30, 2016 were $162.1 million,
or $1.03 per diluted share, compared to Normalized FFO available
for common shareholders of $149.7 million, or $0.99 per diluted
share, for the quarter ended September 30, 2015.Normalized FFO
available for common shareholders for the nine months ended
September 30, 2016 were $468.0 million, or $3.05 per diluted
share, compared to Normalized FFO available for common shareholders
of $422.6 million, or $2.80 per diluted share, for the nine months
ended September 30, 2015.
- Hotel RevPAR (comparable
hotels): For the quarter ended September 30, 2016 compared
to the same period in 2015 for HPT’s 293 hotels that were owned
continuously since July 1, 2015: average daily rate, or ADR,
increased 3.3% to $126.58; occupancy increased 0.4 percentage
points to 80.4%; and revenue per available room, or RevPAR,
increased 3.8% to $101.77.For the nine months ended
September 30, 2016 compared to the same period in 2015 for
HPT’s 291 hotels that were owned continuously since January 1,
2015: ADR increased 3.4% to $125.95; occupancy increased 0.8
percentage points to 78.1%; and RevPAR increased 4.5% to
$98.37.
- Hotel RevPAR (all hotels): For
the quarter ended September 30, 2016 compared to the same
period in 2015 for HPT’s 305 hotels: ADR increased 3.0% to $126.69;
occupancy increased 0.4 percentage points to 80.0%; and RevPAR
increased 3.5% to $101.35.For the nine months ended
September 30, 2016 compared to the same period in 2015 for
HPT’s 305 hotels: ADR increased 3.1% to $125.94; occupancy
increased 0.1 percentage points to 77.3%; and RevPAR increased 3.2%
to $97.35.
- Coverage of Minimum Returns and
Rents: For the quarter ended September 30, 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
1.25x from 1.18x for the quarter ended September 30, 2015.For
the nine months ended September 30, 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 1.18x from 1.13x for
the nine months ended September 30, 2015.For the quarter ended
September 30, 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 increased to 1.78x from
1.74x for the quarter ended September 30, 2015.For the nine
months ended September 30, 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
1.59x from 1.79x for the nine months ended September 30,
2015.As of September 30, 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.
- Recent Property Acquisition
Activities: On September 30, 2016, HPT acquired from
TravelCenters of America LLC (Nasdaq: TA), or TA, a newly developed
travel center located in Caryville, TN for $16.6 million, excluding
acquisition related costs. HPT added this TA branded travel center
to its TA No. 2 lease.As previously disclosed, in July 2016, HPT
entered into an agreement to acquire a full service hotel with 236
rooms located in Milpitas, CA for $52.0 million. The agreement was
subsequently terminated and in October 2016 HPT entered into a new
agreement to acquire this hotel for $46.0 million, excluding
acquisition related costs. HPT currently expects to complete this
acquisition during the fourth quarter of 2016. HPT plans to add
this hotel to its management agreement with Sonesta International
Hotels Corporation, or Sonesta.In October 2016, HPT entered into an
agreement to acquire a full service hotel with 101 rooms located in
Addison, TX for a purchase price of $9.0 million, excluding
acquisition related costs. HPT currently expects to complete this
acquisition in the first quarter of 2017. HPT plans to add this
Radisson branded hotel to its management agreement with Carlson
Hotels Worldwide, or Carlson.In November 2016, HPT entered into an
agreement to acquire a full service hotel with 483 rooms located in
Chicago, IL for a purchase price of $86.7 million, excluding
acquisition related costs. HPT currently expects to complete this
acquisition in the first quarter of 2017. HPT plans to add this
Kimpton branded hotel to its management agreement with
InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG
(ADRs)), or InterContinental.
Financing Activities:
In August 2016, HPT issued 12,650,000 common shares in a
public offering at a price of $30.75 per share. The net
proceeds from this offering of approximately $372.0
million after payment of the underwriters' discount and other
offering expenses were used to repay amounts outstanding under
HPT's revolving credit facility and for general business
purposes.
In September 2016, HPT redeemed at par plus accrued
interest all $300.0 million of its 5.625% senior notes
due 2017 using cash on hand and borrowings under its revolving
credit facility.
Tenants and Managers: As of September 30, 2016, HPT
had nine operating agreements with seven hotel operating companies
for 305 hotels with 46,347 rooms, which represented 65% of HPT’s
total annual minimum returns and rents, and five lease agreements
with one travel center operating company for 198 travel centers,
which represented 35% of HPT’s total annual minimum returns and
rents.
- Marriott Agreements: As of
September 30, 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 $68.6 million as of September 30, 2016
(approximately $17.2 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 flows after payment of operating expenses and
funding of the FF&E reserve. During the three months ended
September 30, 2016, HPT realized returns under its Marriott
No. 1 agreement of $21.5 million. HPT’s Marriott No. 234 agreement
includes 68 hotels and requires annual minimum returns to HPT of
$106.2 million as of September 30, 2016 (approximately $26.6
million per quarter). During the three months ended
September 30, 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
September 30, 2016, the available security deposit was
replenished by $4.2 million from a share of hotel cash flows in
excess of the minimum returns due to HPT for the period. At
September 30, 2016, the available security deposit from
Marriott for the Marriott No. 234 agreement was $17.4 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 September 30, 2016 of $2.5 million was paid to HPT.
During the quarter ended September 30, 2016, Marriott notified HPT
it does not intend to extend its lease for the Kauai resort hotel
when it expires on December 31, 2019. HPT intends to have
discussions with Marriott about the future of this hotel.
- InterContinental Agreement: As
of September 30, 2016, 94 of HPT’s hotels were operated by
subsidiaries of InterContinental under one agreement requiring
annual minimum returns and rents to HPT of $160.3 million
(approximately $40.1 million per quarter). During the three months
ended September 30, 2016, HPT realized returns and rents under
its InterContinental agreement of $43.6 million. HPT’s
InterContinental agreement is partially secured by a security
deposit. During the three months ended September 30, 2016, the
available security deposit was replenished by $7.0 million from a
share of hotel cash flows in excess of the returns and rents due to
HPT for the period. At September 30, 2016, the available
InterContinental security deposit which HPT held to pay future
payment shortfalls was $71.0 million.
- Other Hotel Agreements: As of
September 30, 2016, HPT’s remaining 89 hotels are operated
under five agreements: one management agreement with Sonesta (33
hotels), requiring annual minimum returns of $86.0 million as of
September 30, 2016 (approximately $21.5 million per quarter);
one management agreement with a subsidiary of Wyndham
Worldwide Corporation (NYSE: WYN), or Wyndham (22
hotels), requiring annual minimum returns and rents of $28.2
million (approximately $7.1 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 September 30,
2016 (approximately $5.5 million per quarter); one management
agreement with a subsidiary of Carlson (11 hotels), requiring
annual minimum returns of $12.9 million as of September 30,
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
September 30, 2016 (approximately $1.9 million per quarter).
Minimum returns and rents due to 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 that agreement are limited to available hotel
cash flows after payment of operating expenses. The payments due to
HPT under these agreements for the three months ended
September 30, 2016 were paid to HPT.
- Travel Center Agreements: As of
September 30, 2016, HPT’s 198 travel centers located along the
U.S. Interstate Highway system were leased to TA under five lease
agreements, which required aggregate annual minimum rents of $271.2
million (approximately $67.8 million per quarter). As of
September 30, 2016, all payments due to HPT from TA under
these leases were current.
Conference Call:
On Wednesday, November 9, 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
September 30, 2016. The conference call telephone number is
(877) 329-4297. Participants calling from outside the United States
and Canada should dial (412) 317-5435. 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 Wednesday,
November 16, 2016. To hear the replay, dial (412) 317-0088. The
replay pass code is 10092992.
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 third quarter conference call is
strictly prohibited without the prior written consent of
HPT.
Supplemental Data:
A copy of HPT’s Third 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”, "WILL", “MAY” AND NEGATIVES OR
DERIVATIVES OF THESE 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:
- AS OF SEPTEMBER 30, 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, CERTAIN OF THESE GUARANTEES AND
SECURITY DEPOSITS ARE LIMITED IN AMOUNT AND DURATION, AND ALL THE
GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS
TO PAY. THE BALANCE OF HPT’S ANNUAL MINIMUM RETURNS AND RENTS AS OF
SEPTEMBER 30, 2016 WAS NOT GUARANTEED NOR DOES HPT HOLD A
SECURITY DEPOSIT WITH RESPECT TO THOSE AMOUNTS. HPT CANNOT BE SURE
WITH REGARD TO THE FUTURE PERFORMANCE OF HPT’S PROPERTIES, WHETHER
SUCH PERFORMANCE 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 HELD BY HPT
ARE NOT SEGREGATED FROM HPT’S OTHER ASSETS AND THE APPLICATION OF
SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS WILL RESULT IN HPT
RECORDING INCOME, BUT WILL NOT RESULT IN HPT RECEIVING ADDITIONAL
CASH,
- HPT HAS ENTERED INTO AGREEMENTS TO
ACQUIRE THREE HOTELS FOR AN AGGREGATE PURCHASE PRICE OF $141.7
MILLION, AND HPT EXPECTS TO COMPLETE THESE TRANSACTIONS DURING THE
FOURTH QUARTER OF 2016 AND FIRST QUARTER OF 2017 AND TO ADD THESE
HOTELS TO ITS EXISTING MANAGEMENT AGREEMENTS WITH SONESTA, CARLSON
AND INTERCONTINENTAL. THESE TRANSACTIONS ARE SUBJECT TO CONDITIONS.
THESE CONDITIONS MAY NOT BE SATISFIED. AS A RESULT, THESE
ACQUISITIONS AND THE EXPECTED MANAGEMENT ARRANGEMENTS MAY NOT
OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE, AND
- THIS PRESS RELEASE STATES THAT MARRIOTT
HAS NOTIFIED HPT THAT IT DOES NOT INTEND TO EXTEND ITS LEASE FOR
HPT'S RESORT HOTEL ON KAUAI, HAWAII WHEN THAT LEASE EXPIRES ON
DECEMBER 31, 2019 AND THAT HPT INTENDS TO HAVE DISCUSSIONS WITH
MARRIOTT ABOUT THE FUTURE OF THIS HOTEL. THESE STATEMENTS MAY IMPLY
THAT MARRIOTT WILL NOT OPERATE THIS HOTEL IN THE FUTURE OR THAT HPT
MAY RECEIVE LESS CASH FLOW FROM THIS HOTEL IN THE FUTURE. HPT'S
DISCUSSIONS WITH MARRIOTT HAVE ONLY RECENTLY BEGUN. AT THIS TIME
HPT CANNOT PREDICT HOW ITS DISCUSSIONS WITH MARRIOTT WILL IMPACT
THE FUTURE OF THIS HOTEL. FOR EXAMPLE, THIS HOTEL MAY CONTINUE TO
BE OPERATED BY MARRIOTT ON DIFFERENT CONTRACT TERMS THAN THE
CURRENT LEASE, HPT MAY IDENTIFY A DIFFERENT OPERATOR FOR THIS
HOTEL, OR THE CASH FLOW WHICH HPT RECEIVES FROM ITS OWNERSHIP OF
THIS HOTEL MAY BE DIFFERENT THAN THE RENT HPT NOW RECEIVES. ALSO,
ALTHOUGH THE CURRENT LEASE EXPIRES ON DECEMBER 31, 2019, HPT AND
MARRIOTT MAY AGREE UPON A DIFFERENT TERMINATION DATE.
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 September 30, Nine Months Ended September 30,
2016 2015 2016 2015 Revenues: Hotel operating revenues (1) $
464,173 $ 437,171 $ 1,332,586 $ 1,243,744 Rental income (2) 78,278
73,747 231,830 207,561 FF&E reserve income (3) 1,065
968 3,517 3,159
Total revenues 543,516 511,886
1,567,933 1,454,464 Expenses: Hotel
operating expenses (1) 322,012 308,603 923,239 870,689 Depreciation
and amortization 90,139 84,261 266,192 243,812 General and
administrative (4) 37,739 19,831 91,127 53,820 Acquisition related
costs (5) 156 851 885
1,986 Total expenses 450,046
413,546 1,281,443 1,170,307
Operating income 93,470 98,340 286,490 284,157
Dividend income 626 — 1,375 — Interest income 89 11 227 32
Interest expense (including amortization
of debt issuance costsand debt discounts of $2,122, $1,458, $6,114
and $4,374, respectively)
(41,280 ) (36,628 ) (124,564 ) (107,918 ) Loss on early
extinguishment of debt (6) (158 ) — (228 ) —
Income before income taxes, equity in
earnings (losses) of aninvestee and gain on sale of real estate
52,747 61,723 163,300 176,271 Income tax expense (948 ) (514 )
(3,483 ) (1,445 ) Equity in earnings (losses) of an investee
13 (24 ) 107 71 Income before gain on
sale of real estate 51,812 61,185 159,924 174,897 Gain on sale of
real estate (7) — — — 11,015
Net income 51,812 61,185 159,924 185,912 Preferred
distributions (5,166 ) (5,166 ) (15,498 )
(15,498 ) Net income available for common shareholders $
46,646 $ 56,019 $ 144,426 $ 170,414
Weighted average common shares outstanding (basic)
157,217 151,359 153,357
150,476 Weighted average common shares outstanding (diluted)
157,263 151,386 153,390
150,863 Net income available for common
shareholders per common share: Basic and diluted $ 0.30 $
0.37 $ 0.94 $ 1.13
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
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015
Calculation of Funds from Operations (FFO)
and Normalized FFO availablefor common shareholders: (8)
Net income available for common shareholders $ 46,646 $ 56,019 $
144,426 $ 170,414
Add (Less):
Depreciation and amortization
90,139 84,261 266,192 243,812 Gain on sale of real estate (7)
— — — (11,015 )
FFO available for common shareholders 136,785 140,280 410,618
403,211
Add:
Acquisition related costs (5)
156 851 885 1,986 Estimated business management incentive fees (4)
25,036 8,561 56,272 17,383 Loss on early extinguishment of debt (6)
158 — 228 —
Normalized FFO available for common shareholders $ 162,135 $
149,692 $ 468,003 $ 422,580 Weighted
average common shares outstanding (basic) 157,217
151,359 153,357 150,476
Weighted average common shares outstanding (diluted) 157,263
151,386 153,390 150,863
Basic and diluted per common share amounts: FFO
available for common shareholders (basic) $ 0.87 $ 0.93 $ 2.68 $
2.68 FFO available for common shareholders (diluted) $ 0.87 $ 0.93
$ 2.68 $ 2.67 Normalized FFO available for common shareholders
(basic) $ 1.03 $ 0.99 $ 3.05 $ 2.81 Normalized FFO available for
common shareholders (diluted) $ 1.03 $ 0.99 $ 3.05 $ 2.80
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015 Calculation of EBITDA and
Adjusted EBITDA: (9) Net income $ 51,812 $ 61,185 $ 159,924 $
185,912
Add:
Interest expense
41,280 36,628 124,564 107,918 Income tax expense 948 514 3,483
1,445 Depreciation and amortization 90,139
84,261 266,192 243,812 EBITDA
184,179 182,588 554,163 539,087
Add (less):
Acquisition related costs (5)
156 851 885 1,986 General and administrative expense paid in common
shares (10) 985 713 2,277 3,726 Estimated business management
incentive fees (4) 25,036 8,561 56,272 17,383 Loss on early
extinguishment of debt (6) 158 — 228 — Gain on sale of real estate
(7) — — — (11,015
) Adjusted EBITDA $ 210,514 $ 192,713 $ 613,825
$ 551,167
(1) At September 30, 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
September 30, 2016, HPT also owned 198 travel centers; all 198
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, $2,248 and $6,560 less than
the minimum returns due to HPT in the three months ended
September 30, 2016 and 2015, respectively, and $12,618 and
$17,395 less than the minimum returns due to HPT in the nine months
ended September 30, 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. There was no reduction to hotel operating expenses in the
three months ended September 30, 2016 or 2015 and reductions
of $592 and $1,295 in the nine months ended September 30, 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 $2,248 and $6,560 in the three months ended September
30, 2016 and 2015, respectively, and $12,026 and $16,100 in the
nine months ended September 30, 2016 and 2015, respectively,
which represent the unguaranteed portions of HPT's minimum returns
from Sonesta. Certain of HPT’s managed hotel portfolios had net
operating results that were, in the aggregate, $35,123 and $28,969
more than the minimum returns due to HPT in the three months ended
September 30, 2016 and 2015, respectively, and $80,867 and
$65,973 more than the minimum returns due to HPT in the nine months
ended September 30, 2016 and 2015, respectively. Certain of
HPT’s guarantees and its security deposits may be replenished by a
share of these excess 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 were increased by $15,103 and $11,970 in the three months
ended September 30, 2016 and 2015, respectively, and $33,897
and $27,551 in the nine months ended September 30, 2016 and
2015, respectively, as a result of such replenishments.
(2) Rental income includes $2,932 and $3,752 in the three months
ended September 30, 2016 and 2015, respectively, and $10,377
and $5,807 in the nine months ended September 30, 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. 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. Rental income
for the nine months ended September 30, 2015 includes $2,048 of
percentage rent recorded because the amount was no longer
contingent as a result of HPT’s lease modifications with TA.
(3) 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.
(4) 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, if any, is determined. HPT recorded
estimated business management incentive fees of $25,036 and $8,561
during the three months ended September 30, 2016 and 2015,
respectively, and $56,272 and $17,383 during the nine months ended
September 30, 2016 and 2015, respectively.
(5) Represents costs associated with HPT’s acquisition
activities.
(6) HPT recorded losses of $158 and $228 on early extinguishment
of debt during the three and nine months ended September 30,
2016, respectively, in connection with the redemption of certain
senior unsecured notes.
(7) HPT recorded an $11,015 gain on sale of real estate during
the nine months ended September 30, 2015 in connection with the
sale of five travel centers.
(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 business management incentive
fees, if any, only in the fourth quarter versus the quarter when
they are recognized as expense in accordance with GAAP due to their
quarterly volatility not necessarily being indicative of HPT’s core
operating performance and the uncertainty as to whether any such
business management incentive fees will ultimately be payable when
all contingencies for determining any such fees are determined at
the end of the calendar year 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 supplemental measures of
operating performance for a REIT, along with net income, net income
available for common shareholders and operating income. 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 credit 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 or
operating income as an indicator of HPT’s operating performance or
as a measure of HPT’s liquidity. These measures should be
considered in conjunction with net income, net income available for
common shareholders and operating income as presented in HPT’s
condensed consolidated statements of income. 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
supplemental measures of its operating performance, along with net
income, net income available for common shareholders and operating
income. 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. In calculating Adjusted EBITDA, HPT
includes business management incentive fees only in the fourth
quarter versus the quarter when they are recognized as expense in
accordance with GAAP due to their quarterly volatility not
necessarily being indicative of HPT’s core operating performance
and the uncertainty as to whether any such business management
incentive fees will ultimately be payable when all contingencies
for determining any such fees are determined at the end of the
calendar year. 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 or operating income as an
indicator of operating performance or as a measure of HPT’s
liquidity. These measures should be considered in conjunction with
net income, net income available for common shareholders and
operating income as presented in HPT’s condensed consolidated
statements of income. 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)
September 30, December 31, 2016 2015 ASSETS Real
estate properties: Land $ 1,550,174 $ 1,529,004 Buildings,
improvements and equipment 7,047,370 6,732,768
Total real estate properties, gross 8,597,544 8,261,772
Accumulated depreciation (2,436,327 ) (2,217,135 )
Total real estate properties, net 6,161,217 6,044,637 Cash and cash
equivalents 9,534 13,682 Restricted cash (FF&E reserve escrow)
60,606 51,211 Due from related persons 62,949 50,987 Other assets,
net 291,826 234,280 Total assets $
6,586,132 $ 6,394,797 LIABILITIES AND
SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $
150,000 $ 465,000 Unsecured term loan, net 398,254 397,756 Senior
unsecured notes, net 2,564,476 2,403,439 Convertible senior
unsecured notes 8,478 8,478 Security deposits 88,524 53,579
Accounts payable and other liabilities 155,433 179,783 Due to
related persons 64,303 69,514 Dividends payable 5,166
5,166 Total liabilities 3,434,634
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 sharesissued and outstanding,
aggregate liquidation preference of $290,000
280,107 280,107
Common shares of beneficial interest, $.01
par value; 200,000,000 sharesauthorized; 164,269,211 and
151,547,288 shares issued and outstanding,respectively
1,643 1,515 Additional paid in capital 4,539,704 4,165,911
Cumulative net income 3,041,581 2,881,657 Cumulative other
comprehensive income (loss) 35,904 (15,523 ) Cumulative preferred
distributions (336,811 ) (321,313 ) Cumulative common distributions
(4,410,630 ) (4,180,272 ) Total shareholders’ equity
3,151,498 2,812,082 Total liabilities
and shareholders’ equity $ 6,586,132 $ 6,394,797
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq.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/20161109005458/en/
Hospitality Properties TrustKatie Strohacker, 617-796-8232Senior
Director, Investor Relations
Hospitality Properties (NASDAQ:HPT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hospitality Properties (NASDAQ:HPT)
Historical Stock Chart
From Apr 2023 to Apr 2024