Hersha Hospitality Trust (NYSE: HT) (“Hersha,” “Company,” “we” or
“our”), owner of high-quality upscale and lifestyle hotels in urban
gateway markets and resort destinations, today announced results
for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial
Results
Net loss applicable to common shareholders was
approximately ($67.5 million), or ($1.75) per diluted common share,
in the second quarter 2020, compared to net loss applicable to
common shareholders of approximately ($0.4 million), or ($0.02) per
diluted common share, in the second quarter 2019. The
decrease in second quarter 2020 net income and net income per
diluted common share is due to the unprecedented impact on the
travel industry from the COVID-19 pandemic.
AFFO in the second quarter 2020 decreased by
$60.3 million, or 180.2%, to ($26.8 million), compared to $33.4
million in the second quarter 2019. AFFO per diluted common
share and OP Unit in the second quarter 2020 was ($0.62). An
explanation of certain non-GAAP financial measures used in this
press release, including, among others, AFFO, as well as
reconciliations of those non-GAAP financial measures, to GAAP net
income, is included at the end of this press release.
Mr. Jay H. Shah, Hersha’s Chief Executive
Officer, stated, “The second quarter proved to be one of the most
challenging in history and will mark the trough for the U.S.
economy during this crisis. The hotel industry continues to
be significantly impacted by the pandemic, but we saw encouraging
relative performance from the portfolio as a result of the
immediate and aggressive measures implemented in collaboration with
our operating partners to limit our losses. We remain focused
on liquidity preservation and minimizing our cash burn rates
through attentive corporate and hotel level operating strategies
that were executed at the onset of the crisis. Our
relationship with our independent franchise operators allowed us to
enact cost-saving initiatives in real-time to maintain operations
at 21 comparable hotels with a nominal staff in the initial months
following the demand shock. Our unique owner-operator
relationship allowed us to immediately kickstart reopening
strategies in our markets as demand trends improved over the
balance of the second quarter and July. As of August 1st, we
have 33 of 48 hotels open including sought after drive-to
properties such as the Sanctuary Beach Resort in Monterey and core
urban assets such as The Envoy in Boston.”
Mr. Shah continued, “We remain encouraged by the
performance of our drive-to hotels and resorts, which account for
25% of our portfolio EBITDA. We are happy to have this asset mix in
our portfolio during this challenging period, but we remain
confident in the long-term fundamentals of our purpose-built
clusters in core gateway markets. Visitation to urban
destinations is not currently top of mind for travelers, but these
cities are battle-tested in prior demand shocks such as September
11th and the Great Financial Crisis, and their resiliency was
proved out with visitation returning in short order following these
catastrophic events. We expect to have substantially all of
the portfolio hotels operating by the end of September and now more
than ever, our ability to stay nimble and leverage our flexible
operating model in close connection with our independent franchise
operators allows us to reopen and operate our hotels in a
cost-efficient manner, gives us the opportunity to reduce our cash
burn rates and breakeven levels, and sets up our portfolio to
generate cash flow as we continue to navigate this
recovery.”
Second Quarter 2020 Operating
Results
The Company had 21 comparable hotels fully open
and operational throughout the second-quarter, which generated
33.7% occupancy and an average daily rate of $133.47. Our
open New York City hotels, which constitutes the 5 boroughs,
generated 61.0% occupancy during the second-quarter, highlighted by
our select-service offerings in the JFK sub-market and our Hampton
Inn Seaport which ended the quarter with 94.9% occupancy.
On the West Coast, The Sanctuary Beach Resort just north of
Monterey, ended the second quarter with an average daily rate of
$340.28 and occupancy of 71.2%.
As of August 1, 2020, 15 of the Company’s 48
hotels continued to have suspended operations due to the COVID-19
pandemic. We anticipate all but 4 of these closed hotels will
be open by mid-September. Please find additional details of
Hersha’s hotel reopening plan in the quarterly supplemental report
published along with this release on our corporate website.
Cash Burn
Entering the second-quarter, the Company
anticipated it would lose approximately $11 million per month based
on forecasted trends. Burn rates throughout the quarter
improved from $10.5 million in April to $7.8 million during June, a
26% decline, bringing the total cash loss for the second quarter to
$26.9 million, approximately 13% better than forecasted at the
beginning of the quarter.
Financing
The Company completed the second quarter 2020
with approximately $23.2 million of cash and cash
equivalents. At the end of the second-quarter, the Company
had drawn $95 million of its $250 million Senior Revolving Line of
Credit. As of June 30, 2020, 85.0% 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 3.70% and a
weighted average life-to-maturity of approximately 3.2 years.
Rest Assured™
During the second quarter, Hersha launched its
health and safety program, Rest Assured™, at each of its portfolio
hotels. The newly implemented cleanliness program is focused
on utilizing advanced cleaning practices to ensure the well-being
of guests, associates, and the communities in which the Company
operates. These protocols are complemented by innovative
technologies to streamline the guest experience and support
transparent communication before and throughout the duration of
guests’ stays.
Full-Year 2020 Outlook
Due to the uncertainty surrounding the lodging
industry stemming from the COVID-19 pandemic, the Company has
suspended its full-year 2020 guidance.
Second Quarter 2020 Conference
Call
The Company will host a conference call to
discuss these results at 9:00 AM Eastern Time on Thursday, August
6, 2020. 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 audio 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 1-888-317-6003 or
1-412-317-6061 for international participants and entering the
passcode 9039763 approximately 10 minutes in advance of the
call. A replay of the call will be available from 11:00 AM
Eastern Time on Thursday, August 6, 2020, through 11:59 PM Eastern
Time on Saturday, September 5, 2020. The replay can be accessed by
dialing 1-877-344-7529 or 1-412-317-0088 for international
participants. The passcode for the replay is 10145491. 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 and lifestyle hotels in urban
gateway markets and resort destinations. The Company's 48 hotels
totaling 7,644 rooms are located in New York, Washington, DC,
Boston, Philadelphia, South Florida and select markets on the West
Coast. The Company's common shares are traded on The New York Stock
Exchange under the ticker “HT.”
Non-GAAP Financial Measures and Key
Performance Metrics
Common key performance metrics utilized by the
lodging industry are occupancy, average daily rate ("ADR"), and
revenue per available room ("RevPAR"). Occupancy is
calculated as the percentage total rooms sold compared to rooms
available to be sold, while ADR measures the average rate earned
per occupied room, calculate as total room revenue divided by total
rooms sold. RevPAR is a derivative of these two metrics which
shows the total room revenue earned per room available to be
sold. Management uses these metrics in comparison to other
hotels in our self-defined competitive peer set within proximity to
each of our hotel properties.
An explanation of Funds from Operations (“FFO”),
AFFO, Earnings Before Interest, Taxes, Depreciation and
Amortization (“EBITDA”), EBITDAre, Adjusted EBITDA and Hotel
EBITDA, as well as reconciliations of such non-GAAP financial
measures to 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,” including those with regard to the
potential future impact of COVID-19, 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. One of the most significant factors is
the ongoing impact of the current outbreak of COVID-19 on the
United States, regional and global economies, the broader financial
markets, the Company’s customers and employees, governmental
responses thereto and the operation changes the Company has and may
implement in response thereto. The current outbreak of COVID-19 has
also impacted, and is likely to continue to impact, directly or
indirectly, many of the other important factors below. These
forward-looking statements may include statements related to, among
other things: assumptions regarding the impact to international and
domestic business and leisure travel pertaining to any pandemic or
outbreak of disease, including COVID-19, the uncertainty and
economic impact of pandemics, epidemics or other public health
emergencies or fear of such events, such as the recent outbreak of
COVID-19, the impact of and changes to various government programs,
including in response to COVID-19, the timing of the development of
any effective cure or treatment for COVID-19, the Company’s access
to capital on the terms and timing the Company expects, the
restoration of public confidence in domestic and international
travel, permanent structural changes in demand for conference
centers by business and leisure clientele, the Company’s ability to
dispose of selected hotel properties on the terms and timing the
Company expects, if at all, the Company’s ability to reopen
nonoperational hotels on the terms and timing the Company expects,
if at all economic growth, labor markets, real estate values,
lodging fundamentals, corporate travel, and the economic vibrancy
of our target markets, the Company’s ability to grow operating cash
flow, the Company’s ability to match or outperform its competitors’
performance, the ability of the Company’s hotels to achieve
stabilized or projected revenue, cap rates or EBITDA multiples
consistent with our expectations, 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, and the Company’s ability to increase margins,
including hotel EBITDA margins. 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, 2019 and the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2020, each 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, including the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2020. All information provided in this press release,
unless otherwise stated, is as of August 5, 2020, and the Company
undertakes no duty to update this information unless required by
law.
|
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|
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
Balance Sheet (unaudited) |
|
|
|
|
|
|
(in
thousands, except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Assets: |
|
|
|
|
|
|
Investment in Hotel Properties, Net of Accumulated
Depreciation |
|
$ |
1,902,464 |
|
|
$ |
1,975,973 |
|
Investment in Unconsolidated Joint Ventures |
|
|
7,527 |
|
|
|
8,446 |
|
Cash and Cash Equivalents |
|
|
23,228 |
|
|
|
27,012 |
|
Escrow Deposits |
|
|
7,374 |
|
|
|
9,973 |
|
Hotel Accounts Receivable |
|
|
3,801 |
|
|
|
9,213 |
|
Due from Related Parties |
|
|
2,363 |
|
|
|
6,113 |
|
Intangible Assets, Net of Accumulated Amortization of $6,705 and
$6,545 |
|
|
1,876 |
|
|
|
2,137 |
|
Right of Use Assets |
|
|
44,761 |
|
|
|
45,384 |
|
Other Assets |
|
|
20,996 |
|
|
|
38,177 |
|
Hotel Assets Held for Sale |
|
|
40,170 |
|
|
|
- |
|
Total
Assets |
|
$ |
2,054,560 |
|
|
$ |
2,122,428 |
|
|
|
|
|
|
|
|
Liabilities
and Equity: |
|
|
|
|
|
|
Line of Credit |
|
$ |
95,000 |
|
|
$ |
48,000 |
|
Term Loan, Net of Unamortized Deferred Financing Costs |
|
|
697,597 |
|
|
|
697,183 |
|
Unsecured Notes Payable, Net of Unamortized Deferred Financing
Costs |
|
|
50,763 |
|
|
|
50,736 |
|
Mortgages Payable, Net of Unamortized Premium and Unamortized
Deferred Financing Costs |
|
|
331,771 |
|
|
|
332,280 |
|
Lease Liabilities |
|
|
54,217 |
|
|
|
54,548 |
|
Accounts Payable, Accrued Expenses and Other Liabilities |
|
|
74,161 |
|
|
|
47,626 |
|
Dividends and Distributions Payable |
|
|
- |
|
|
|
17,058 |
|
Total
Liabilities |
|
$ |
1,303,509 |
|
|
$ |
1,247,431 |
|
|
|
|
|
|
|
|
Redeemable
Noncontrolling Interest - Consolidated Joint Venture |
|
$ |
- |
|
|
$ |
3,196 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Shareholders' Equity: |
|
|
|
|
|
|
Preferred Shares: $.01 Par Value, 29,000,000 Shares Authorized,
3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E
Shares Issued and Outstanding at June 30, 2020 and December 31,
2019, with Liquidation Preferences of $25 Per Share |
|
$ |
147 |
|
|
$ |
147 |
|
Common Shares: Class A, $0.01 Par Value, 104,000,000 Shares
Authorized at June 30, 2020 and December 31, 2019; 38,789,371 and
38,652,650 Shares Issued and Outstanding at June 30, 2020 and
December 31, 2019, respectively |
|
|
388 |
|
|
|
387 |
|
Common Shares: Class B, $0.01 Par Value, 1,000,000 Shares
Authorized, None Issued and Outstanding at June 30, 2020 and
December 31, 2019 |
|
|
- |
|
|
|
- |
|
Accumulated Other Comprehensive Income |
|
|
(27,097 |
) |
|
|
1,010 |
|
Additional Paid-in Capital |
|
|
1,149,291 |
|
|
|
1,144,808 |
|
Distributions in Excess of Net Income |
|
|
(427,393 |
) |
|
|
(338,695 |
) |
Total Shareholders' Equity |
|
|
695,336 |
|
|
|
807,657 |
|
|
|
|
|
|
|
|
Noncontrolling Interests - Common Units and LTIP Units |
|
|
55,715 |
|
|
|
64,144 |
|
|
|
|
|
|
|
|
Total Equity |
|
|
751,051 |
|
|
|
871,801 |
|
|
|
|
|
|
|
|
Total
Liabilities and Equity |
|
$ |
2,054,560 |
|
|
$ |
2,122,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
|
|
|
|
|
Summary Results (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(in
thousands, except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
June 30, 2020 |
|
|
June 30, 2019 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Room |
$ |
15,139 |
|
|
$ |
118,980 |
|
|
$ |
86,222 |
|
|
$ |
210,465 |
|
Food & Beverage |
|
136 |
|
|
|
18,253 |
|
|
|
10,211 |
|
|
|
32,481 |
|
Other Operating Revenues |
|
2,137 |
|
|
|
10,280 |
|
|
|
10,917 |
|
|
|
19,210 |
|
Total Hotel Operating Revenues |
|
17,412 |
|
|
|
147,513 |
|
|
|
107,350 |
|
|
|
262,156 |
|
Other Revenue |
|
29 |
|
|
|
(12 |
) |
|
|
228 |
|
|
|
138 |
|
Total
Revenues |
|
17,441 |
|
|
|
147,501 |
|
|
|
107,578 |
|
|
|
262,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Room |
|
3,622 |
|
|
|
24,013 |
|
|
|
22,714 |
|
|
|
46,103 |
|
Food & Beverage |
|
721 |
|
|
|
13,990 |
|
|
|
11,342 |
|
|
|
26,822 |
|
Other Operating Revenues |
|
14,035 |
|
|
|
44,607 |
|
|
|
49,841 |
|
|
|
84,796 |
|
Total Hotel Operating Expenses |
|
18,378 |
|
|
|
82,610 |
|
|
|
83,897 |
|
|
|
157,721 |
|
Hotel Ground Rent |
|
1,058 |
|
|
|
1,114 |
|
|
|
2,121 |
|
|
|
2,224 |
|
Real Estate and Personal Property Taxes and Property Insurance |
|
9,969 |
|
|
|
8,997 |
|
|
|
19,911 |
|
|
|
18,394 |
|
General and Administrative |
|
2,388 |
|
|
|
4,626 |
|
|
|
5,766 |
|
|
|
8,268 |
|
Share Based Compensation |
|
1,799 |
|
|
|
3,474 |
|
|
|
4,255 |
|
|
|
5,432 |
|
Depreciation and Amortization |
|
24,322 |
|
|
|
23,964 |
|
|
|
48,510 |
|
|
|
48,092 |
|
Loss on Impairment of Assets |
|
1,069 |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Total
Operating Expenses |
|
58,983 |
|
|
|
124,785 |
|
|
|
165,529 |
|
|
|
240,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(Loss) Income |
|
(41,542 |
) |
|
|
22,716 |
|
|
|
(57,951 |
) |
|
|
22,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
2 |
|
|
|
58 |
|
|
|
38 |
|
|
|
141 |
|
Interest Expense |
|
(13,481 |
) |
|
|
(13,325 |
) |
|
|
(26,488 |
) |
|
|
(26,223 |
) |
Other Expense |
|
(385 |
) |
|
|
(124 |
) |
|
|
(457 |
) |
|
|
(83 |
) |
Loss on Debt Extinguishment |
|
- |
|
|
|
(34 |
) |
|
|
- |
|
|
|
(34 |
) |
(Loss)
Income before Results from Unconsolidated Joint Venture Investments
and Income Taxes |
|
(55,406 |
) |
|
|
9,291 |
|
|
|
(84,858 |
) |
|
|
(4,036 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Income from Unconsolidated Joint Venture Investments |
|
(502 |
) |
|
|
299 |
|
|
|
(1,520 |
) |
|
|
480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Income before Income Taxes |
|
(55,908 |
) |
|
|
9,590 |
|
|
|
(86,378 |
) |
|
|
(3,556 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
(Expense) Benefit |
|
(15,872 |
) |
|
|
(4,031 |
) |
|
|
(11,374 |
) |
|
|
1,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income |
|
(71,780 |
) |
|
|
5,559 |
|
|
|
(97,752 |
) |
|
|
(2,323 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss (Income) Allocated to Noncontrolling Interests |
|
|
|
|
|
|
|
|
|
|
|
Common Units |
|
7,164 |
|
|
|
49 |
|
|
|
10,061 |
|
|
|
1,112 |
|
Consolidated Joint Venture |
|
3,196 |
|
|
|
(8 |
) |
|
|
3,196 |
|
|
|
152 |
|
Preferred Distributions |
|
(6,044 |
) |
|
|
(6,043 |
) |
|
|
(12,088 |
) |
|
|
(12,087 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(67,464 |
) |
|
$ |
(443 |
) |
|
$ |
(96,583 |
) |
|
$ |
(13,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
Share: |
|
|
|
|
|
|
|
|
|
|
|
BASIC |
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(1.75 |
) |
|
$ |
(0.02 |
) |
|
$ |
(2.50 |
) |
|
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED |
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(1.75 |
) |
|
$ |
(0.02 |
) |
|
$ |
(2.50 |
) |
|
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
38,609,922 |
|
|
|
39,127,385 |
|
|
|
38,587,011 |
|
|
|
39,121,421 |
|
Diluted |
|
38,609,922 |
|
|
|
39,127,385 |
|
|
|
38,587,011 |
|
|
|
39,121,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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
December 2018 Financial Standards White Paper 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
depreciation and amortization related to real estate, gains and
losses from the sale of certain real estate assets, gains and
losses from change in control, and impairment write-downs of
certain real estate assets and investments in entities when the
impairment is directly attributable to decreases in the value of
depreciable real estate held by an entity. 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:
- deducting or adding back income tax benefit or expense;
- adding back non-cash share-based compensation expense;
- adding back acquisition and terminated transaction
expenses;
- adding back contingent considerations;
- adding back amortization of discounts, premiums, and deferred
financing costs;
- adding back amortization of amended interest rate swap
liability;
- 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 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 evaluate our performance by reviewing AFFO, in addition to FFO,
because we believe that adjusting FFO to exclude certain recurring
and non-recurring items as described above provides useful
supplemental information regarding our ongoing operating
performance and that the presentation of AFFO, when combined with
the primary GAAP presentation of net income (loss), more completely
describes our operating performance. 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 OP Units because our OP 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 OP Units. 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2020 |
|
|
June 30, 2019 |
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common shares |
|
$ |
(67,464 |
) |
|
$ |
(443 |
) |
|
$ |
(96,583 |
) |
|
$ |
(13,146 |
) |
Loss allocated to noncontrolling interest |
|
|
(10,360 |
) |
|
|
(41 |
) |
|
|
(13,257 |
) |
|
|
(1,264 |
) |
Loss (Income) from unconsolidated joint ventures |
|
|
502 |
|
|
|
(299 |
) |
|
|
1,520 |
|
|
|
(480 |
) |
Loss from impairment of depreciable assets |
|
|
1,069 |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Depreciation and amortization |
|
|
24,322 |
|
|
|
23,964 |
|
|
|
48,510 |
|
|
|
48,092 |
|
Funds from consolidated hotel operations applicable to common
shares and Partnership units |
|
|
(51,931 |
) |
|
|
23,181 |
|
|
|
(58,741 |
) |
|
|
33,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from unconsolidated joint venture investments |
|
|
(502 |
) |
|
|
299 |
|
|
|
(1,520 |
) |
|
|
480 |
|
Unrecognized pro rata interest in loss of unconsolidated joint
ventures |
|
|
(512 |
) |
|
|
(35 |
) |
|
|
(361 |
) |
|
|
(3,008 |
) |
Depreciation and amortization of difference between purchase price
and historical cost |
|
|
21 |
|
|
|
23 |
|
|
|
42 |
|
|
|
47 |
|
Interest in depreciation and amortization of unconsolidated joint
ventures |
|
|
393 |
|
|
|
1,292 |
|
|
|
795 |
|
|
|
2,574 |
|
Funds from unconsolidated joint venture operations applicable to
common shares and Partnership units |
|
|
(600 |
) |
|
|
1,579 |
|
|
|
(1,044 |
) |
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from
Operations applicable to common shares and Partnership units |
|
|
(52,531 |
) |
|
|
24,760 |
|
|
|
(59,785 |
) |
|
|
33,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
15,872 |
|
|
|
4,031 |
|
|
|
11,374 |
|
|
|
(1,233 |
) |
Non-cash share based compensation expense |
|
|
1,799 |
|
|
|
3,474 |
|
|
|
4,255 |
|
|
|
5,432 |
|
Straight-line amortization of lease expense |
|
|
146 |
|
|
|
162 |
|
|
|
294 |
|
|
|
325 |
|
Amortization of discounts, premiums and deferred financing
costs |
|
|
585 |
|
|
|
439 |
|
|
|
1,031 |
|
|
|
891 |
|
Amortization of amended interest rate swap liability |
|
|
1,217 |
|
|
|
- |
|
|
|
2,184 |
|
|
|
- |
|
Deferred financing costs and debt premium written off in debt
extinguishment |
|
|
- |
|
|
|
34 |
|
|
|
- |
|
|
|
34 |
|
Interest in amortization and write-off of deferred financing costs
of unconsolidated joint venture |
|
|
9 |
|
|
|
202 |
|
|
|
19 |
|
|
|
404 |
|
Preferred Distributions in arrears |
|
|
6,044 |
|
|
|
- |
|
|
|
12,088 |
|
|
|
- |
|
Operating loss incurred on properties closed |
|
|
- |
|
|
|
329 |
|
|
|
983 |
|
|
|
627 |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
24 |
|
|
|
- |
|
|
|
(28 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Funds from Operations |
|
$ |
(26,835 |
) |
|
$ |
33,431 |
|
|
$ |
(27,585 |
) |
|
$ |
39,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per
Diluted Weighted Average Common Shares and Partnership Units
Outstanding |
|
$ |
(0.62 |
) |
|
$ |
0.77 |
|
|
$ |
(0.64 |
) |
|
$ |
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Weighted Average Common Shares and Partnership Units
Outstanding |
|
|
43,286,310 |
|
|
|
43,443,916 |
|
|
|
43,426,465 |
|
|
|
43,396,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre and Adjusted
EBITDA
Earnings before interest expense, income taxes,
depreciation and amortization (“EBITDA”) is a supplemental measure
of our operating performance and facilitates comparisons between us
and other lodging REITs, hotel owners who are not REITs and other
capital-intensive companies. NAREIT adopted EBITDA for real estate
(“EBITDAre”) a measure calculated by adding gains from the
disposition of hotel operations, in order to promote an
industry-wide measure of REIT operating performance. We also adjust
EBITDAre for interest in amortization and write-off of deferred
financing costs of our unconsolidated joint ventures, deferred
financing costs write-offs in debt extinguishment, non-cash
share-based compensation expense, acquisition and terminated
transaction costs and net operating loss incurred on non-operation
properties to calculate Adjusted EBITDA.
Our EBITDAre and Adjusted EBITDA computation may
not be comparable to EBITDAre or Adjusted EBITDA reported by other
companies that interpret the definition of EBITDA differently than
we do. Management believes Adjusted EBITDA and EBITDAre to be
meaningful measures of a REIT's performance because they are widely
followed by industry analysts, lenders and investors and that they
should be considered along with, but not as an alternative to, GAAP
net income (loss) as a measure of the Company's operating
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(71,780 |
) |
|
$ |
5,559 |
|
|
$ |
(97,752 |
) |
|
$ |
(2,323 |
) |
Loss (income) from unconsolidated joint ventures |
|
|
502 |
|
|
|
(299 |
) |
|
|
1,520 |
|
|
|
(480 |
) |
Interest expense |
|
|
13,481 |
|
|
|
13,325 |
|
|
|
26,488 |
|
|
|
26,223 |
|
Non-operating interest income |
|
|
(2 |
) |
|
|
(58 |
) |
|
|
(38 |
) |
|
|
(141 |
) |
Income tax expense (benefit) |
|
|
15,872 |
|
|
|
4,031 |
|
|
|
11,374 |
|
|
|
(1,233 |
) |
Depreciation and amortization |
|
|
24,322 |
|
|
|
23,964 |
|
|
|
48,510 |
|
|
|
48,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from
consolidated hotel operations |
|
|
(17,605 |
) |
|
|
46,522 |
|
|
|
(9,898 |
) |
|
|
70,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from impairment of depreciable assets |
|
|
1,069 |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre
from consolidated hotel operations |
|
|
(16,536 |
) |
|
|
46,522 |
|
|
|
(8,829 |
) |
|
|
70,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from unconsolidated joint venture investments |
|
|
(502 |
) |
|
|
299 |
|
|
|
(1,520 |
) |
|
|
480 |
|
Unrecognized pro rata interest in loss of unconsolidated joint
ventures |
|
|
(512 |
) |
|
|
(36 |
) |
|
|
(361 |
) |
|
|
(3,009 |
) |
Depreciation and amortization of difference between purchase price
and historical cost |
|
|
21 |
|
|
|
23 |
|
|
|
42 |
|
|
|
47 |
|
Adjustment for interest in interest expense, depreciation and
amortization of unconsolidated joint ventures |
|
|
599 |
|
|
|
3,409 |
|
|
|
1,198 |
|
|
|
6,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre
from unconsolidated joint venture operations |
|
|
(394 |
) |
|
|
3,695 |
|
|
|
(641 |
) |
|
|
4,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre |
|
|
(16,930 |
) |
|
|
50,217 |
|
|
|
(9,470 |
) |
|
|
74,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share based compensation expense |
|
|
1,799 |
|
|
|
3,474 |
|
|
|
4,255 |
|
|
|
5,432 |
|
Straight-line amortization of lease expense |
|
|
146 |
|
|
|
162 |
|
|
|
294 |
|
|
|
325 |
|
Deferred financing costs and debt premium written off in debt
extinguishment |
|
|
- |
|
|
|
34 |
|
|
|
- |
|
|
|
34 |
|
Interest in amortization and write-off of deferred financing costs
of unconsolidated joint venture |
|
|
9 |
|
|
|
202 |
|
|
|
19 |
|
|
|
404 |
|
Operating loss incurred on properties closed due to physical
damage |
|
|
- |
|
|
|
329 |
|
|
|
983 |
|
|
|
627 |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
24 |
|
|
|
- |
|
|
|
(28 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
(14,952 |
) |
|
$ |
54,418 |
|
|
$ |
(3,947 |
) |
|
$ |
81,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. In
addition, our Hotel EBITDA computation may not be comparable to
Hotel EBITDA or other similar metrics reported by other companies
that interpret the definition of Hotel EBITDA differently than we
do. Management believes Hotel EBITDA to be a meaningful measure of
performance of a portfolio of hotels because it is followed by
industry analysts, lenders and investors and that it should be
considered along with, but not as an alternative to, operating
income (loss) as reported in our unaudited summary results as a
measure of our hotel portfolio’s operating performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
|
|
|
|
|
|
Hotel EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(41,542 |
) |
|
$ |
22,716 |
|
|
$ |
(57,951 |
) |
|
$ |
22,163 |
|
Other revenue |
|
|
(29 |
) |
|
|
12 |
|
|
|
(228 |
) |
|
|
(138 |
) |
Loss from impairment of depreciable assets |
|
|
1,069 |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Depreciation and amortization |
|
|
24,322 |
|
|
|
23,964 |
|
|
|
48,510 |
|
|
|
48,092 |
|
General and administrative |
|
|
2,388 |
|
|
|
4,626 |
|
|
|
5,766 |
|
|
|
8,268 |
|
Share based compensation |
|
|
1,799 |
|
|
|
3,474 |
|
|
|
4,255 |
|
|
|
5,432 |
|
Straight-line amortization of ground lease expense |
|
|
146 |
|
|
|
162 |
|
|
|
294 |
|
|
|
325 |
|
Costs accrued for furloughed employees |
|
|
- |
|
|
|
- |
|
|
|
893 |
|
|
|
- |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
24 |
|
|
|
- |
|
|
|
(28 |
) |
|
|
- |
|
Other |
|
|
(831 |
) |
|
|
(297 |
) |
|
|
172 |
|
|
|
(478 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA |
|
$ |
(12,654 |
) |
|
$ |
54,657 |
|
|
$ |
2,752 |
|
|
$ |
83,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Contact: Ashish Parikh, Chief Financial
OfficerGreg Costa, Investor Relations DirectorPhone:
215-238-1046
Hersha Hospitality (NYSE:HT)
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Hersha Hospitality (NYSE:HT)
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From Apr 2023 to Apr 2024