Hersha Hospitality Trust (NYSE: HT), owner of select service and
upscale hotels in major metropolitan markets, today announced
results for the fourth quarter ended December 31, 2011.
Fourth Quarter 2011 Operating Results
For the quarter ended December 31, 2011, revenue per available
room (“RevPAR”) for the Company's consolidated hotels, 52 hotels as
of December 31, 2011, compared to 49 hotels as of December 31,
2010, was up 8.8% to $116.79, compared to $107.36 in the prior year
period. The Company’s average daily rate (“ADR”) for its
consolidated hotels increased by 4.1% to $162.46, while occupancy
for its consolidated hotels increased by 309 basis points to
71.89%.
Hotel EBITDA for the Company’s consolidated hotels grew
approximately 26.1%, or $6.2 million, to $29.8 million for the
quarter ended December 31, 2011 compared to the same period in
2010. Hotel EBITDA margins expanded 280 basis points to 39.3% in
the fourth quarter of 2011.
On a same-store basis (46 hotels), RevPAR for the Company’s
consolidated hotels for the quarter ended December 31, 2011 was up
8.4% to $118.75, compared to $109.51 in the prior year period. ADR
for the Company’s same-store consolidated hotels increased by 3.0%
to $162.52, while occupancy for its same-store consolidated hotels
increased by 368 basis points to 73.07%. Hotel EBITDA for the
Company’s same-store consolidated hotels for the quarter ended
December 31, 2011 increased approximately 15.6%, or $3.6 million,
to $26.8 million compared to the quarter ended December 31,
2010.
Hotel EBITDA margins for the Company’s same-store consolidated
hotels increased 260 basis points to 39.7% in the fourth quarter of
2011, compared to 37.1% in the fourth quarter of 2010. The benefit
of ADR-driven RevPAR growth was partially offset by the bankruptcy
of American Airlines and the related bad debt expense charge taken
at the Company’s two JFK hotels. This bad debt expense impacted the
Company’s total portfolio and same store margins by approximately
20 and 30 basis points, respectively, during the quarter.
Mr. Jay H. Shah, the Company’s Chief Executive Officer, stated,
“In 2011 Hersha delivered solid performance as anticipated, with
rate-driven RevPAR growth resulting in robust EBITDA margins. We
made tremendous progress on our strategy to evolve our portfolio
into one with higher anticipated earnings power and growth
prospects as we further increased our presence in urban gateway
markets, as we entered Los Angeles and Miami while divesting a
non-core portfolio. Our current urban pure play portfolio consists
of high quality, young hotels, with additional opportunity for
improving metrics as it stabilizes further. We expect to drive
RevPAR growth and margin expansion as we move through this lodging
recovery. Furthermore, our sound balance sheet with manageable
maturities positions us well to concentrate on maximizing
operational growth while pursuing attractive opportunities.”
New York City and Manhattan
The New York City consolidated hotel portfolio, which includes
the five boroughs, consisted of 14 hotels as of December 31, 2011.
For the fourth quarter of 2011, the Company’s same-store New York
City consolidated hotel portfolio (13 hotels) recorded a 6.6%
increase in RevPAR to $199.78 driven by a 3.8% increase in ADR to
$221.77 and a 239 basis point increase in occupancy to 90.09%.
Hotel EBITDA margins grew 180 basis points to 47.0%, including the
negative impact of the American Airlines bankruptcy discussed
above.
The Manhattan consolidated hotel portfolio, consisted of 11
hotels as of December 31, 2011. For the fourth quarter of 2011, the
Company’s same-store Manhattan consolidated hotel portfolio (10
hotels) recorded a 6.9% increase in RevPAR to $217.80 driven by a
5.2% increase in ADR to $238.14 and a 143 basis point increase in
occupancy to 91.46%. Hotel EBITDA margins grew 340 basis points to
50.0% due primarily to the ADR-driven growth and continued cost
controls at the properties.
Fourth Quarter 2011 Financial Results
For the fourth quarter ended December 31, 2011, net loss
applicable to common shareholders was $(2.8) million compared to
$(8.8) million for the comparable quarter of 2010. During the third
quarter, the Company took a major step in executing its non-core
disposition plan by entering into contracts to sell 18 assets in
order to reposition the portfolio and recycle capital towards
anticipated high growth urban gateway markets. Results presented in
this release exclude these 18 assets as they are classified under
discontinued operations.
Adjusted Funds from Operations (“AFFO”) in the fourth quarter
increased by $4.6 million to $16.5 million, compared to $11.9
million in the fourth quarter of 2010. AFFO per diluted common
share and unit of limited partnership interest in Hersha
Hospitality Limited Partnership (“OP Unit”) was $0.09, compared to
$0.07 for the same quarter of 2010. The Company’s weighted average
diluted common shares and OP Units outstanding was approximately
180.3 million in the fourth quarter of 2011, up from approximately
174.2 million in the comparable quarter of 2010.
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 measure, is included at the end
of this release.
Full Year 2011 Financial and Operating Results
For the year ended December 31, 2011, net loss applicable to
common shareholders was $(35.7) million, compared to a net loss of
$(21.2) million for the comparable 2010 year. This increase in loss
was primarily due to impairment charges recorded on assets in our
non-core portfolio. AFFO increased by $19.4 million to $68.7
million, compared to $49.3 million for the full 2010 year. AFFO per
diluted common share and limited partnership unit was $0.38
compared to $0.34 for the 2010 year.
RevPAR for the Company's consolidated hotels, 53 hotels in 2011
compared to 51 hotels in 2010, was up 7.9% to $113.66 in 2011
compared to $105.31 in the prior year period. The Company’s ADR
increased by 6.7% to $154.01 and occupancy increased by 82 basis
points to 73.80% from 72.98%. Hotel EBITDA for the Company’s
consolidated hotels was $109.1 million for the year ended December
31, 2011 compared to $88.3 million for the same period in 2010.
Hotel EBITDA margins improved 140 basis points year over year from
37.2% to 38.6%.
Financing
As of December 31, 2011, the Company had $51.0 million of
borrowings on its $250.0 million secured credit facility, $51.9
million in cash and escrows. In 2012 the Company has $52.0 million
of debt maturities. Excluding borrowings under the Company’s
secured credit facility, approximately 95.8% of the Company’s
consolidated debt as of December 31, 2011 is fixed rate debt or
effectively fixed through interest rate swaps and caps and has a
weighted average interest rate of approximately 5.71%. The weighted
average life to maturity of total consolidated debt is
approximately 5.2 years, excluding borrowings under the Company’s
secured credit facility.
Subsequent Events
In February 2012, the Company closed on the previously announced
sale of 14 of the 18 non-core assets. The Company expects to
complete the sale of the remaining four assets by the end of the
first quarter, pending completion of the loan assumption process.
The sales are part of an ongoing portfolio transformation as the
Company recycles its capital into anticipated higher growth urban
gateway markets. The sale of the 14 assets generated net proceeds
of $40.5 million, reduced the Company’s consolidated mortgage debt
by $42.5 million and reduced its proportionate share of
unconsolidated mortgage debt by $13.8 million.
Outlook for 2012
The Company is introducing its operating expectations for 2012
for its core portfolio as the Company continues to experience
strong year over year trends. Based on management’s current
outlook, the Company is issuing the following operating
expectations for 2012 as follows:
- Total consolidated portfolio RevPAR
growth for 2012 in the range of a 6.0% to 8.0% increase versus
2011.
- Total consolidated portfolio Hotel
EBITDA margins to remain consistent with 2011 Hotel EBITDA margins.
Total portfolio Hotel EBITDA margins are expected to be impacted by
the addition of two new hotels in New York City, the Hyatt Union
Square and the Hampton Inn Pearl Street and the commencement of
operations at the Sheraton Wilmington South. Excluding these hotels
the Company would anticipate improvement of 100 basis points to 125
basis points.
- Same-store consolidated RevPAR growth
for 2012 in the range of a 5.0% to 7.0% increase versus 2011.
- Same-store consolidated Hotel EBITDA
margin improvement of 75 basis points to 125 basis points.
Dividend
For the fourth quarter of 2011, the Company paid dividends of
$0.06 per common share and OP Unit and $0.50 per Series A and
Series B preferred share.
Fourth Quarter 2011 Earnings Release and Conference
Call
The Company will host a conference call to discuss its financial
results at 9:00 AM Eastern time on Friday, February 24, 2012. A
live webcast of the conference call will be available online on the
Company’s website at www.hersha.com. The conference call can be
accessed by dialing (888) 428-9473 or (719) 325-2315 for
international participants. A replay of the call will be available
from 12:00 noon Eastern time on February 24, 2012, through midnight
Eastern time on March 9, 2012. The replay can be accessed by
dialing (877) 870-5176 or (858) 384-5517 for international
participants. The passcode for the call and the replay is 1533747.
A replay of the webcast will be available on the Company’s website
for a limited time.
About Hersha Hospitality
Hersha Hospitality Trust is a self-advised real estate
investment trust, which owns 66 hotels in major markets including
New York, Washington, Boston, Philadelphia, Los Angeles and Miami.
HT focuses on upscale and mid-priced hotels in urban gateway
markets.
Forward Looking Statement
Certain matters within this press release are discussed using
forward-looking language as specified in 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 statement. These forward-looking statements may
include statements related to the Company’s ability to outperform,
the ongoing recovery 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 completion of
acquisitions under contract, the Company’s ability to identify and
complete the acquisition of hotel properties in new markets, the
Company’s ability to enter into contracts for and complete the
disposition of non-core assets, the Company’s ability to complete
the hotel redevelopment projects, the Company’s ability to increase
margins, including Hotel EBITDA margins, and the Company’s
operating expectations for the full 2012 calendar year. 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, 2011 to be filed by the Company with the
Securities and Exchange Commission on or about February 24, 2012
and other documents filed by the Company with the Securities and
Exchange Commission.
HERSHA HOSPITALITY TRUST Balance Sheet
(unaudited) (in thousands, except shares and per share data)
December 31, 2011 December
31, 2010 Assets: Investment in Hotel Properties, net of
Accumulated Depreciation $ 1,340,876 $ 1,245,851 Investment in
Unconsolidated Joint Ventures 38,839 35,561 Development Loans
Receivable 35,747 41,653 Cash and Cash Equivalents 24,568 65,596
Escrow Deposits 27,321 17,384 Hotel Accounts Receivable, net of
allowance for doubtful accounts of $495 and $31 11,353 9,611
Deferred Financing Costs, net of Accumulated Amortization of $9,138
and $5,852 9,023 10,204 Due from Related Parties 6,189 5,069
Intangible Assets, net of Accumulated Amortization of $1,357 and
$1,084 8,013 7,934 Deposits on Hotel Acquisitions 19,500 5,500
Other Assets 15,651 12,914 Hotel Assets Held for Sale 93,829 -
Total Assets $ 1,630,909 $ 1,457,277
Liabilities and Equity: Line of Credit $
51,000 $ 46,000 Mortgages and Notes Payable, net of unamortized
discount of $667 and $983 707,374 648,720 Accounts Payable, Accrued
Expenses and Other Liabilities 31,140 28,601 Dividends and
Distributions Payable 13,908 9,805 Due to Related Parties 2,932 939
Liabilities Related to Assets Held for Sale 61,758 -
Total Liabilities 868,112 734,065
Redeemable Noncontrolling Interests - Common
Units $ 14,955 $ 19,894
Equity: Shareholders'
Equity:
Preferred Shares: 8% Series A, $.01 Par
Value, 29,000,000 shares authorized, 2,400,000 Shares Issued and
Outstanding (Aggregate Liquidation Preference $60,000) at December
31, 2011 and December 31, 2010
24 24
Preferred Shares: 8% Series B, $.01 Par
Value, 4,600,000 shares authorized, 4,600,000 Shares Issued and
Outstanding (Aggregate Liquidation Preference $115,000) at December
31, 2011 and none issued and outstanding at December 31, 2010
46 -
Common Shares: Class A, $.01 Par Value,
300,000,000 Shares Authorized at December 31, 2011 and December 31,
2010, 169,969,973 and 169,205,638 Shares Issued and Outstanding at
December 31, 2011 and December 31, 2010, respectively
1,699 1,692
Common Shares: Class B, $.01 Par Value,
1,000,000 Shares Authorized, None Issued and Outstanding
- - Accumulated Other Comprehensive Loss (1,151 ) (338 ) Additional
Paid-in Capital 1,041,027 918,215 Distributions in Excess of Net
Income (310,974 ) (236,159 ) Total Shareholders'
Equity 730,671 683,434 Noncontrolling Interests:
Noncontrolling Interests - Common Units 16,864 19,410
Noncontrolling Interests - Consolidated Joint Ventures 307
474 Total Noncontrolling Interests 17,171
19,884 Total Equity 747,842 703,318
Total Liabilities and Equity $ 1,630,909 $ 1,457,277
HERSHA HOSPITALITY TRUST Summary
Results (unaudited) (in thousands, except shares and per share
data)
Three Months Ended
Year Ended
December 31,
2011
December 31,
2010
December 31,
2011
December 31,
2010
Revenues: Hotel Operating Revenues $ 75,677 $ 64,544 $
282,684 $ 237,176 Interest Income from Development Loans 617 1,087
3,427 4,686 Other Revenue 97 74
333 325
Total Revenues 76,391
65,705 286,444 242,187
Operating Expenses: Hotel Operating Expenses
40,822 35,951 153,427 130,823 Hotel Ground Rent 185 256 877 941
Real Estate and Personal Property Taxes
and Property Insurance
4,912 4,746 19,286 17,151 General and Administrative 4,453 3,517
10,950 10,230 Stock Based Compensation 2,825 2,624 7,590 6,649
Acquisition and Terminated Transaction Costs 479 52 2,742 4,802
Loss on Impairment of Assets - 915 - 960 Depreciation and
Amortization 13,090 12,068
50,718 44,223
Total Operating Expenses
66,766 60,129 245,590
215,779
Operating Income 9,625 5,576
40,854 26,408 Interest Income 94 99 457 168 Interest Expense
11,253 10,155 41,702 40,718 Other Expense 107 207 973 463 Loss on
Debt Extinguishment 68 148 123
878
Loss before Income (Loss) from
Unconsolidated Joint Venture Investments and Discontinued
Operations
(1,709 ) (4,835 ) (1,487 ) (15,483 )
Unconsolidated Joint
Ventures Income (Loss) from Unconsolidated Joint Ventures 1,282
(337 ) 210 (1,751 ) Impairment of Investment in Unconsolidated
Joint Venture - - (1,677 ) -
Gain from Remeasurement of Investment in
Unconsolidated Joint Ventures
- - 2,757 4,008
Income (Loss) from Unconsolidated Joint
Venture Investments
1,282 (337 ) 1,290 2,257
Loss from Continuing Operations (427 ) (5,172
) (197 ) (13,226 )
Discontinued Operations Gain
(Loss) on Disposition of Hotel Properties 148 (13 ) 991 347
Impairment of Assets Held for Sale - (1,473 ) (30,248 ) (1,473 )
Income (Loss) from Discontinued Operations 885
(1,516 ) 2,486 (2,850 )
Income (Loss) from
Discontinued Operations 1,033 (3,002 ) (26,771 ) (3,976 )
Net Income (Loss) 606 (8,174 )
(26,968 ) (17,202 ) Loss Allocated to Noncontrolling
Interests 115 543 1,734 845 Preferred Distributions (3,500 )
(1,200 ) (10,499 ) (4,800 )
Net Loss
Applicable to Common Shareholders $ (2,779 ) $ (8,831 ) $
(35,733 ) $ (21,157 )
Earnings per
Share:
BASIC
Loss from Continuing Operations Applicable
to Common Shareholders
$ (0.02 ) $ (0.03 ) $ (0.06 ) $ (0.13 ) Income (Loss) from
Discontinued Operations 0.00 (0.02 )
(0.15 ) (0.03 )
Net Loss Applicable to Common
Shareholders $ (0.02 ) $ (0.05 ) $ (0.21 ) $ (0.16 )
DILUTED
Loss from Continuing Operations Applicable
to Common Shareholders
$ (0.02 ) $ (0.03 ) $ (0.06 ) $ (0.13 ) Income (Loss) from
Discontinued Operations 0.00 (0.02 )
(0.15 ) (0.03 )
Net Loss Applicable to Common
Shareholders $ (0.02 ) $ (0.05 ) $ (0.21 ) $ (0.16 )
Weighted Average
Common Shares Outstanding:
Basic 169,010,448 161,600,788 168,753,382 134,370,172 Diluted
169,010,448 161,600,788 168,753,382 134,370,172
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 noncontrolling
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, noncontrolling 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 write-offs of deferred
financing costs on debt extinguishment, both for consolidated and
unconsolidated properties;
- adding back amortization of deferred
financing costs;
- making adjustments for the amortization
of original issue discount/premium;
- adding back non-cash stock
expense;
- adding back acquisition and terminated
transaction expenses;
- adding back FFO attributed to our
partners in consolidated joint ventures; and
- making adjustments to ground lease
payments, which are required by GAAP to be amortized on a
straight-line basis over the term of the lease, to reflect the
actual lease payment.
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 Year
Ended
December 31,
2011
December 31,
2010
December 31,
2011
December 31,
2010
Net loss applicable to common shares $ (2,779 ) $ (8,831 ) $
(35,733 ) $ (21,157 ) Loss allocated to noncontrolling interest
(115 ) (543 ) (1,734 ) (845 ) (Income) loss from unconsolidated
joint ventures (1,282 ) 337 (1,290 ) (2,257 ) (Gain) loss on
disposition of hotel properties (148 ) 13 (991 ) (347 ) Loss from
impairment of depreciable assets - 2,388 30,248 2,433 Depreciation
and amortization 13,090 12,068 50,718 44,223 Depreciation and
amortization from discontinued operations 131 1,879 4,986 7,876 FFO
allocated to noncontrolling interests in consolidated joint
ventures (92 ) 74 147
(307 )
Funds from consolidated hotel
operations applicable to common shares and Partnership
units
8,805 7,385 46,351 29,619 Income (loss) from unconsolidated
joint venture investments 1,282 (337 ) 1,290 2,257 Less: Gain from
remeasurement of investment in unconsolidated joint ventures - -
(2,757 ) (4,008 ) Add: Impairment of investment in unconsolidated
joint ventures - - 1,677 -
Depreciation and amortization of purchase
price in excess of historical cost
336 508 1,965 2,033
Interest in depreciation and amortization
of unconsolidated joint ventures
1,481 716 5,905
3,905
Funds from unconsolidated joint venture
operations applicable to common shares and Partnership
units
3,099 887 8,080 4,187
Funds from Operations applicable to
common shares and Partnership units
11,904 8,272 54,431 33,806 Add: FFO allocated to
noncontrolling interests in consolidated joint ventures 92 (74 )
(147 ) 307 Non-cash stock compensation expense 2,825 2,624 7,590
6,649 Acquisition and terminated transaction costs 479 52 2,742
4,802 Amortization of deferred financing costs 1,028 747 3,535
2,381 Amortization of discounts and premiums 50 54 206 216 Deferred
financing costs written off in debt extinguishment 68 148 123 878
Straight-line amortization of ground lease expense 46
65 230 261
Adjusted Funds from Operations $ 16,492 $ 11,888
$ 68,710 $ 49,300
AFFO per Diluted Weighted Average Common
Shares and Units Outstanding
$ 0.09 $ 0.07 $ 0.38 $ 0.34
Diluted Weighted Average Common Shares and Units Outstanding
180,267,134 174,192,081 181,090,322 146,656,308
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
Year Ended
December 31,
2011
December 31,
2010
December 31,
2011
December 31,
2010
Net loss applicable to common shares $ (2,779 ) $ (8,831 ) $
(35,733 ) $ (21,157 ) Less: (Income) loss from unconsolidated joint
ventures (1,282 ) 337 (1,290 ) (2,257 ) (Gain) loss on disposition
of hotel properties (148 ) 13 (991 ) (347 ) Interest income (94 )
(99 ) (457 ) (168 ) Add: Loss allocated to noncontrolling interest
(115 ) (543 ) (1,734 ) (845 ) Loss from impairment of assets -
2,388 30,248 2,433 Distributions to Preferred Shareholders 3,500
1,200 10,499 4,800 Interest expense from continuing operations
11,253 10,155 41,702 40,718 Interest expense from discontinued
operations 1,137 1,200 4,562 5,150 Deferred financing costs written
off in debt extinguishment 68 148 123 878 Depreciation and
amortization from continuing operations 13,090 12,068 50,718 44,223
Depreciation and amortization from discontinued operations 131
1,879 4,986 7,876 Acquisition and terminated transaction costs 479
52 2,742 4,802 Non-cash stock compensation expense 2,825 2,624
7,590 6,649 Straight-line amortization of ground lease expense
46 65 230 261
Adjusted EBITDA from consolidated hotel
operations 28,111 22,656
113,195 93,016 Income (loss) from
unconsolidated joint venture investments 1,282 (337 ) 1,290 2,257
Less: Gain on remeasurement of investment in unconsolidated joint
ventures - - (2,757 ) (4,008 ) Add: Impairment of investment in
unconsolidated joint ventures - - 1,677 -
Depreciation and amortization of purchase
price in excess of historical cost
336 508 1,965 2,033
Adjustment for interest in interest
expense, depreciation and amortization of unconsolidated joint
ventures
4,544 3,414 17,599
14,951
Adjusted EBITDA from unconsolidated joint
venture operations 6,162 3,585
19,774 15,233
Adjusted
EBITDA $ 34,273 $ 26,241 $ 132,969 $
108,249
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 web site, www.hersha.com.
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