Hersha Hospitality Trust (NYSE: HT) (“Hersha,” “Company,” “we” or
“our”), owner of high-quality hotels in urban gateway markets and
regional resort destinations, today announced results for the full
year and fourth quarter ended December 31, 2020.
Fourth Quarter 2020 Financial
Results
Net loss applicable to common shareholders was
approximately ($190.5 million), or ($4.93) per diluted common
share, in 2020, compared to net loss applicable to common
shareholders of approximately ($27.8 million), or ($0.74) per
diluted common share, in 2019. Net loss applicable to common
shareholders was ($44.8 million), or ($1.16) per diluted common
share, in the fourth quarter 2020, compared to net loss applicable
to common shareholders of approximately ($9.3 million), or ($0.24)
per diluted common share, in fourth quarter 2019. The decrease in
full year and fourth quarter 2020 net income and net income per
diluted common share was due to the ongoing COVID-19 pandemic and
its impact on the hospitality industry.
AFFO in the fourth quarter 2020 decreased to
($10.1 million), compared to $21.9 million in the fourth quarter
2019. AFFO per diluted common share and OP Unit in the fourth
quarter 2020 was ($0.23). Fourth quarter 2020 AFFO results were
positively impacted by $8.1 million in business interruption
proceeds related to Hurricane Irma’s impact on our South Florida
portfolio. 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, “As we move forward from the extraordinary
challenges our industry encountered last year, we remain confident
that our purpose-built portfolio of high-quality, recently
renovated, transient hotels, gives us the ability to outperform
through the recovery. One of the silver linings of 2020 was our
franchise model and close collaborative relationship with our
operating partners, which gave us ample autonomy and control to
make material changes to our operating model to preserve cash. In
addition to creating sustainable cost savings in our expense
structure, our operating model enabled us to reopen every one of
our wholly owned hotels by the end of last year. Our operating
results in January provide credible signs that the resumption in
travel demand has begun as leisure bookings accelerated across the
portfolio and property-level cash flow turned positive for the
first time since March of last year.”
Mr. Shah continued, “Last week, we announced
several strategic steps to provide us with near and medium-term
financial flexibility. Our announced asset sales and
our unsecured notes facility with affiliates of the Merchant
Banking business of The Goldman Sachs Group, Inc. (“GS Purchasers”)
allows us to simultaneously pay down our 2021 term loan, amend the
Revolving Credit Facility agreement, and extend the covenant waiver
holiday through March 31, 2022. Our bespoke solution with the GS
Purchasers in conjunction with our selling certain older, more
mature assets from our various clusters, addresses our financing
and liquidity needs with no equity dilution. Our successful sales
of these hotels at attractive pricing completes our asset sales
strategy and highlights the liquidity and inherent real estate
value of our portfolio.”
Mr. Shah concluded, “During the disruption from
these historic times, we took the opportunity to zero-base budget
our assets, dispose of lower growth, higher cost hotels to reduce
leverage, equitize the portfolio with non-dilutive, highly flexible
near-term financing, and successfully amend our revolving credit
facility. We begin 2021 on stronger footing with a keen focus on
operational performance as demand returns, and accretive
opportunities that will emerge in the recovery.”
Strategic Capital
Commitment
The Company closed on the previously announced
unsecured notes placement with West Street Strategic Solutions Fund
I, L.P. and Broad Street Credit Holdings LLC, each of which is an
affiliate of the Merchant Banking business of The Goldman Sachs
Group, Inc. (“GS Purchasers”). The unsecured notes facility the
Company entered into with the GS Purchasers provides an initial
$150 million draw at closing and an incremental $50 million delayed
draw that can be drawn at the Company’s discretion in minimum
installments of $25 million at any point on or prior to September
30, 2021.
Asset Sales
Year to-date 2021, the Company has completed the
sale of or entered into binding sales contracts on four
consolidated hotels for a total sale price of $178.5 million,
before customary closing costs:
- The 245-room Courtyard Downtown San
Diego, CA
- The 140-room Residence Inn in
Coconut Grove, FL
- The 153-room Capitol Hill Hotel in
Washington, DC
- The 112-room Holiday Inn Express in
Cambridge, MA
These binding contracts, in addition to the
previously announced sales of the Duane Street Hotel and Sheraton
Wilmington, will generate net proceeds totaling $191.0 million,
before customary closing costs. In conjunction with the proceeds
from the committed GS Purchasers notes facility the Company will
utilize portions of the Asset Sales proceeds to satisfy its 2021
Term Loan.
The sale of the Sheraton Wilmington closed on
December 1, 2020, while the sale of the Courtyard Downtown San
Diego closed on February 19, 2021. The sales of the Residence Inn
Coconut Grove, Capitol Hill Hotel, and Holiday Inn Express
Cambridge are forecasted to close by the end of the first quarter
2021, while the sale of the Duane Street Hotel is expected to close
in the second quarter 2021.
Credit Facility Amendment
In conjunction with the aforementioned asset
sales and the unsecured notes facility from the GS Purchasers, the
Company successfully amended its revolving credit facility and term
loan agreements with its banking group. The amendment eliminates
all term loan maturities until August 2022 and waives all financial
covenants through March 31, 2022.
Fourth Quarter 2020 Operating
Results
The Company had 36 comparable hotels fully open
and operational throughout the fourth-quarter, which generated
33.0% occupancy and an average daily rate of $157.06. The Sanctuary
Beach Resort was our best performing asset during the fourth
quarter, ending the period with an occupancy of 56.4% and an
absolute ADR of $463.43, an increase of 45.4% versus fourth quarter
2019. Our open New York City hotels, which constitutes the 5
boroughs, generated 39.7% occupancy during the fourth quarter,
highlighted by our select-service offerings in the JFK sub-market
and our Nu Hotel in Brooklyn which ended the quarter with 45.7%
occupancy.
Cash Burn and Breakeven
Levels
Total property level cash loss during the fourth
quarter was $5.9 million and total corporate level cash loss was
$19.2 million, 6.5% better than forecasted at the beginning of the
quarter. Monthly cash burn rates for January were
better than expected as the portfolio generated positive EBITDA,
eliminating the property level cash loss and resulting in corporate
level cash loss of $4.3 million, the Company’s lowest corporate
cash burn since the onset of the pandemic.
Based upon performance over the past three
quarters and aggressive cost control measures, the Company’s
forecasted property-level breakeven is expected to occur at 35-40%
occupancy with RevPAR losses approximating 60% from 2019 levels. At
the corporate level, the Company’s breakeven occupancy is expected
to be 55-60% with RevPAR losses approximating 40% from 2019
levels.
Financing
The Company completed the full year and fourth
quarter 2020 with approximately $23.6 million of cash & cash
equivalents and deposits. As of February 1, 2021, the Company had
drawn $138 million of its $250 million Senior Revolving Line of
Credit. The Company’s pro forma consolidated debt has a weighted
average interest rate of approximately 4.54% and a weighted average
life-to-maturity of approximately 3.6 years.
Full-Year 2021 Outlook
Due to the uncertainty surrounding the lodging
industry stemming from the COVID-19 pandemic, the Company will
forego providing full-year 2021 guidance at this time.
Fourth Quarter 2020 Conference
Call
The Company will host a conference call to
discuss these results at 8:00 AM Eastern Time on Wednesday,
February 24, 2021. 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 2142150 approximately 10 minutes in advance of the call. A
replay of the call will be available from 10:00 AM Eastern Time on
Wednesday, February 24, 2021 through 11:59 PM Eastern Time on
Tuesday, March 23, 2021. 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 10150829. 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 hotels in urban gateway markets and
regional resort destinations. The Company's 40 hotels totaling
6,250 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, Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. 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, 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 forecast
breakeven levels and cash burn accurately, 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. Certain
statements contained in this press release, including those that
express a belief, expectation or intention, as well as those that
are not statements of historical fact, are forward-looking
statements within the meaning of the federal securities laws and as
such are based upon the Company’s current beliefs as to the outcome
and timing of future events. Forward-looking statements are
generally identifiable by use of forward-looking terminology such
as “believe,” “expect,” “anticipate,” “estimate,” “plan,”
“continue,” “intend,” “should,” “may” and words of similar import.
Such forward-looking statements relate to future events, the
Company’s plans, strategies, prospects and future financial
performance, and involve known and unknown risks that are difficult
to predict, uncertainties and other factors which may cause the
Company’s actual results, performance or achievements or industry
results to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are not
guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed in any forward-looking
statement, including with respect to the disposition of hotel
properties, the amendments to the Company’s revolving credit
facility and term loan agreements and the placement of unsecured
notes with the GS Purchasers. There can be no assurance that the
disposition of hotel properties, the amendments to the Company’s
revolving credit facility and term loan agreements or the placement
of unsecured notes with the GS Purchasers will be consummated on
the terms and timing expected, if at all. 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 most recent Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q
filed by the Company with the Securities and Exchange Commission
(“SEC”) and other documents filed by the Company with the SEC from
time to time. All information provided in this press release,
unless otherwise stated, is as of February 23, 2021, and the
Company undertakes no duty to update this information unless
required by law.
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
Balance Sheet (unaudited) |
|
|
|
|
|
|
(in
thousands, except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Assets: |
|
|
|
|
|
|
Investment in Hotel Properties, Net of Accumulated
Depreciation |
|
$ |
1,784,838 |
|
|
$ |
1,975,973 |
|
Investment in Unconsolidated Joint Ventures |
|
|
6,633 |
|
|
|
8,446 |
|
Cash and Cash Equivalents |
|
|
16,637 |
|
|
|
27,012 |
|
Escrow Deposits |
|
|
6,970 |
|
|
|
9,973 |
|
Hotel Accounts Receivable |
|
|
5,690 |
|
|
|
9,213 |
|
Due from Related Parties |
|
|
2,641 |
|
|
|
6,113 |
|
Intangible Assets, Net of Accumulated Amortization of $6,840 and
$6,545 |
|
|
1,739 |
|
|
|
2,137 |
|
Right of Use Assets |
|
|
44,126 |
|
|
|
45,384 |
|
Other Assets |
|
|
15,494 |
|
|
|
38,177 |
|
Hotel Assets Held for Sale |
|
|
96,220 |
|
|
|
- |
|
Total
Assets |
|
$ |
1,980,988 |
|
|
$ |
2,122,428 |
|
|
|
|
|
|
|
|
Liabilities
and Equity: |
|
|
|
|
|
|
Line of Credit |
|
$ |
133,053 |
|
|
$ |
48,000 |
|
Term Loan, Net of Unamortized Deferred Financing Costs |
|
|
681,744 |
|
|
|
697,183 |
|
Unsecured Notes Payable, Net of Unamortized Deferred Financing
Costs |
|
|
50,789 |
|
|
|
50,736 |
|
Mortgages Payable, Net of Unamortized Premium and Unamortized
Deferred Financing Costs |
|
|
330,848 |
|
|
|
332,280 |
|
Lease Liabilities |
|
|
53,852 |
|
|
|
54,548 |
|
Accounts Payable, Accrued Expenses and Other Liabilities |
|
|
58,453 |
|
|
|
47,626 |
|
Dividends and Distributions Payable |
|
|
- |
|
|
|
17,058 |
|
Total
Liabilities |
|
$ |
1,308,739 |
|
|
$ |
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 December 31, 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 December 31, 2020 and December 31, 2019; 38,843,482
and 38,652,650 Shares Issued and Outstanding at December 31, 2020
and December 31, 2019, respectively |
|
|
389 |
|
|
|
387 |
|
|
|
|
|
|
|
|
|
|
Common Shares: Class B, $0.01 Par Value, 1,000,000 Shares
Authorized, None Issued and Outstanding at December 31, 2020 and
December 31, 2019 |
|
|
- |
|
|
|
- |
|
Accumulated Other Comprehensive (Loss) Income |
|
|
(19,275 |
) |
|
|
1,010 |
|
Additional Paid-in Capital |
|
|
1,150,985 |
|
|
|
1,144,808 |
|
Distributions in Excess of Net Income |
|
|
(509,243 |
) |
|
|
(338,695 |
) |
Total Shareholders' Equity |
|
|
623,003 |
|
|
|
807,657 |
|
|
|
|
|
|
|
|
Noncontrolling Interests - Common Units and LTIP Units |
|
|
49,246 |
|
|
|
64,144 |
|
|
|
|
|
|
|
|
Total Equity |
|
|
672,249 |
|
|
|
871,801 |
|
|
|
|
|
|
|
|
Total
Liabilities and Equity |
|
$ |
1,980,988 |
|
|
$ |
2,122,428 |
|
|
|
|
|
|
|
|
HERSHA HOSPITALITY TRUST |
|
|
|
|
|
|
|
|
|
|
|
Summary Results (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(in
thousands, except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Room |
$ |
28,492 |
|
|
$ |
105,324 |
|
|
$ |
142,260 |
|
|
$ |
424,698 |
|
Food & Beverage |
|
2,766 |
|
|
|
17,028 |
|
|
|
15,418 |
|
|
|
65,379 |
|
Other Operating Revenues |
|
4,114 |
|
|
|
10,241 |
|
|
|
18,765 |
|
|
|
39,591 |
|
Total Hotel Operating Revenues |
|
35,372 |
|
|
|
132,593 |
|
|
|
176,443 |
|
|
|
529,668 |
|
Other Revenue |
|
(36 |
) |
|
|
78 |
|
|
|
217 |
|
|
|
292 |
|
Total
Revenues |
|
35,336 |
|
|
|
132,671 |
|
|
|
176,660 |
|
|
|
529,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Room |
|
8,637 |
|
|
|
23,385 |
|
|
|
38,787 |
|
|
|
93,488 |
|
Food & Beverage |
|
2,513 |
|
|
|
13,393 |
|
|
|
16,199 |
|
|
|
52,820 |
|
Other Operating Revenues |
|
17,464 |
|
|
|
42,856 |
|
|
|
85,270 |
|
|
|
171,128 |
|
Total Hotel Operating Expenses |
|
28,614 |
|
|
|
79,634 |
|
|
|
140,256 |
|
|
|
317,436 |
|
Gain on Insurance Settlements |
|
(8,960 |
) |
|
|
- |
|
|
|
(8,960 |
) |
|
|
- |
|
Property Losses in Excess of Insurance Recoveries |
|
- |
|
|
|
12 |
|
|
|
- |
|
|
|
12 |
|
Hotel Ground Rent |
|
1,118 |
|
|
|
1,129 |
|
|
|
4,301 |
|
|
|
4,581 |
|
Real Estate and Personal Property Taxes and Property Insurance |
|
10,420 |
|
|
|
9,490 |
|
|
|
40,928 |
|
|
|
38,601 |
|
General and Administrative |
|
2,363 |
|
|
|
3,756 |
|
|
|
10,590 |
|
|
|
15,628 |
|
Share Based Compensation |
|
3,297 |
|
|
|
3,362 |
|
|
|
9,488 |
|
|
|
10,803 |
|
Acquisition and Terminated Transaction Costs |
|
4,419 |
|
|
|
- |
|
|
|
4,419 |
|
|
|
- |
|
Depreciation and Amortization |
|
24,393 |
|
|
|
24,345 |
|
|
|
96,958 |
|
|
|
96,529 |
|
Loss on Impairment of Assets |
|
- |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Total
Operating Expenses |
|
65,664 |
|
|
|
121,728 |
|
|
|
299,049 |
|
|
|
483,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(Loss) Income |
|
(30,328 |
) |
|
|
10,943 |
|
|
|
(122,389 |
) |
|
|
46,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
- |
|
|
|
46 |
|
|
|
39 |
|
|
|
253 |
|
Interest Expense |
|
(13,441 |
) |
|
|
(13,047 |
) |
|
|
(53,279 |
) |
|
|
(52,205 |
) |
Other Income (Expense) |
|
8 |
|
|
|
(255 |
) |
|
|
(522 |
) |
|
|
(584 |
) |
Gain on Disposition of Hotel Properties |
|
1,158 |
|
|
|
- |
|
|
|
1,158 |
|
|
|
- |
|
Loss on Debt Extinguishment |
|
- |
|
|
|
(15 |
) |
|
|
- |
|
|
|
(280 |
) |
Loss before
Results from Unconsolidated Joint Venture Investments and Income
Taxes |
|
(42,603 |
) |
|
|
(2,328 |
) |
|
|
(174,993 |
) |
|
|
(6,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
Income from Unconsolidated Joint Venture Investments |
|
(749 |
) |
|
|
173 |
|
|
|
(2,938 |
) |
|
|
691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
Income Taxes |
|
(43,352 |
) |
|
|
(2,155 |
) |
|
|
(177,931 |
) |
|
|
(5,755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Benefit (Expense) |
|
17 |
|
|
|
(1,876 |
) |
|
|
(11,329 |
) |
|
|
(92 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
(43,335 |
) |
|
|
(4,031 |
) |
|
|
(189,260 |
) |
|
|
(5,847 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss Allocated to Noncontrolling Interests |
|
|
|
|
|
|
|
|
|
|
|
Common Units |
|
4,626 |
|
|
|
812 |
|
|
|
19,698 |
|
|
|
2,366 |
|
Consolidated Joint Venture |
|
- |
|
|
|
- |
|
|
|
3,217 |
|
|
|
(188 |
) |
Preferred Distributions |
|
(6,044 |
) |
|
|
(6,043 |
) |
|
|
(24,176 |
) |
|
|
(24,174 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(44,753 |
) |
|
$ |
(9,262 |
) |
|
$ |
(190,521 |
) |
|
$ |
(27,843 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
Share: |
|
|
|
|
|
|
|
|
|
|
|
BASIC |
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(1.16 |
) |
|
$ |
(0.24 |
) |
|
$ |
(4.93 |
) |
|
$ |
(0.74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED |
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Applicable to Common Shareholders |
$ |
(1.16 |
) |
|
$ |
(0.24 |
) |
|
$ |
(4.93 |
) |
|
$ |
(0.74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
38,640,604 |
|
|
|
38,516,879 |
|
|
|
38,613,563 |
|
|
|
38,907,894 |
|
Diluted |
|
38,640,604 |
|
|
|
38,516,879 |
|
|
|
38,613,563 |
|
|
|
38,907,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common shares |
|
$ |
(44,753 |
) |
|
$ |
(9,262 |
) |
|
$ |
(190,521 |
) |
|
$ |
(27,843 |
) |
Loss allocated to noncontrolling interest |
|
|
(4,626 |
) |
|
|
(812 |
) |
|
|
(22,915 |
) |
|
|
(2,178 |
) |
Loss (Income) from unconsolidated joint ventures |
|
|
749 |
|
|
|
(173 |
) |
|
|
2,938 |
|
|
|
(691 |
) |
Gain on disposition of hotel properties |
|
|
(1,158 |
) |
|
|
- |
|
|
|
(1,158 |
) |
|
|
- |
|
Loss from impairment of depreciable assets |
|
|
- |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Depreciation and amortization |
|
|
24,393 |
|
|
|
24,345 |
|
|
|
96,958 |
|
|
|
96,529 |
|
Funds from consolidated hotel operations applicable to common
shares and Partnership units |
|
|
(25,395 |
) |
|
|
14,098 |
|
|
|
(113,629 |
) |
|
|
65,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from unconsolidated joint venture investments |
|
|
(749 |
) |
|
|
173 |
|
|
|
(2,938 |
) |
|
|
691 |
|
Unrecognized pro rata interest in loss of unconsolidated joint
ventures |
|
|
(500 |
) |
|
|
(583 |
) |
|
|
(1,416 |
) |
|
|
(4,247 |
) |
Depreciation and amortization of difference between purchase price
and historical cost |
|
|
20 |
|
|
|
23 |
|
|
|
83 |
|
|
|
96 |
|
Interest in depreciation and amortization of unconsolidated joint
ventures |
|
|
619 |
|
|
|
1,355 |
|
|
|
1,828 |
|
|
|
5,234 |
|
Funds from unconsolidated joint venture operations applicable to
common shares and Partnership units |
|
|
(610 |
) |
|
|
968 |
|
|
|
(2,443 |
) |
|
|
1,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from
Operations applicable to common shares and Partnership units |
|
|
(26,005 |
) |
|
|
15,066 |
|
|
|
(116,072 |
) |
|
|
67,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
|
|
(17 |
) |
|
|
1,876 |
|
|
|
11,329 |
|
|
|
92 |
|
Non-cash share based compensation expense |
|
|
3,297 |
|
|
|
3,362 |
|
|
|
9,488 |
|
|
|
10,803 |
|
Straight-line amortization of lease expense |
|
|
131 |
|
|
|
150 |
|
|
|
564 |
|
|
|
603 |
|
Acquisition and terminated transaction costs |
|
|
4,419 |
|
|
|
- |
|
|
|
4,419 |
|
|
|
- |
|
Amortization of discounts, premiums and deferred financing
costs |
|
|
1,288 |
|
|
|
441 |
|
|
|
3,235 |
|
|
|
1,758 |
|
Amortization of amended interest rate swap liability |
|
|
811 |
|
|
|
775 |
|
|
|
4,061 |
|
|
|
851 |
|
Deferred financing costs and debt premium written off in debt
extinguishment |
|
|
- |
|
|
|
15 |
|
|
|
- |
|
|
|
280 |
|
Interest in amortization and write-off of deferred financing costs
of unconsolidated joint venture |
|
|
19 |
|
|
|
202 |
|
|
|
70 |
|
|
|
807 |
|
Preferred Distributions in arrears |
|
|
6,044 |
|
|
|
- |
|
|
|
24,176 |
|
|
|
- |
|
Interest in unconsolidated joint venture write-off of prior period
receivable and accrual of prior period charges |
|
|
- |
|
|
|
356 |
|
|
|
- |
|
|
|
526 |
|
Loss on remediation of damage, excluding impairment of depreciable
assets |
|
|
- |
|
|
|
12 |
|
|
|
- |
|
|
|
12 |
|
Operating loss incurred on properties closed |
|
|
- |
|
|
|
118 |
|
|
|
983 |
|
|
|
929 |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
(38 |
) |
|
|
(433 |
) |
|
|
54 |
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Funds from Operations |
|
$ |
(10,051 |
) |
|
$ |
21,940 |
|
|
$ |
(57,693 |
) |
|
$ |
84,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per
Diluted Weighted Average Common Shares and Partnership Units
Outstanding |
|
$ |
(0.23 |
) |
|
$ |
0.51 |
|
|
$ |
(1.31 |
) |
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Weighted Average Common Shares and Partnership Units
Outstanding |
|
|
44,361,461 |
|
|
|
42,974,693 |
|
|
|
44,066,289 |
|
|
|
43,390,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(43,335 |
) |
|
$ |
(4,031 |
) |
|
$ |
(189,260 |
) |
|
$ |
(5,847 |
) |
Loss (income) from unconsolidated joint ventures |
|
|
749 |
|
|
|
(173 |
) |
|
|
2,938 |
|
|
|
(691 |
) |
Interest expense |
|
|
13,441 |
|
|
|
13,047 |
|
|
|
53,279 |
|
|
|
52,205 |
|
Non-operating interest income |
|
|
- |
|
|
|
(46 |
) |
|
|
(39 |
) |
|
|
(253 |
) |
Income tax (benefit) expense |
|
|
(17 |
) |
|
|
1,876 |
|
|
|
11,329 |
|
|
|
92 |
|
Depreciation and amortization |
|
|
24,393 |
|
|
|
24,345 |
|
|
|
96,958 |
|
|
|
96,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from
consolidated hotel operations |
|
|
(4,769 |
) |
|
|
35,018 |
|
|
|
(24,795 |
) |
|
|
142,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposition of hotel properties |
|
|
(1,158 |
) |
|
|
- |
|
|
|
(1,158 |
) |
|
|
- |
|
Loss from impairment of depreciable assets |
|
|
- |
|
|
|
12 |
|
|
|
1,069 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre
from consolidated hotel operations |
|
|
(5,927 |
) |
|
|
35,030 |
|
|
|
(24,884 |
) |
|
|
142,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from unconsolidated joint venture investments |
|
|
(749 |
) |
|
|
173 |
|
|
|
(2,938 |
) |
|
|
691 |
|
Unrecognized pro rata interest in loss of unconsolidated joint
ventures |
|
|
(500 |
) |
|
|
(583 |
) |
|
|
(1,416 |
) |
|
|
(4,247 |
) |
Depreciation and amortization of difference between purchase price
and historical cost |
|
|
20 |
|
|
|
23 |
|
|
|
83 |
|
|
|
96 |
|
Adjustment for interest in interest expense, depreciation and
amortization of unconsolidated joint ventures |
|
|
904 |
|
|
|
3,315 |
|
|
|
2,721 |
|
|
|
13,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre
from unconsolidated joint venture operations |
|
|
(325 |
) |
|
|
2,928 |
|
|
|
(1,550 |
) |
|
|
10,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAre |
|
|
(6,252 |
) |
|
|
37,958 |
|
|
|
(26,434 |
) |
|
|
152,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share based compensation expense |
|
|
3,297 |
|
|
|
3,362 |
|
|
|
9,488 |
|
|
|
10,803 |
|
Straight-line amortization of lease expense |
|
|
131 |
|
|
|
150 |
|
|
|
564 |
|
|
|
603 |
|
Acquisition and terminated transaction costs |
|
|
4,419 |
|
|
|
- |
|
|
|
4,419 |
|
|
|
- |
|
Deferred financing costs and debt premium written off in debt
extinguishment |
|
|
- |
|
|
|
15 |
|
|
|
- |
|
|
|
280 |
|
Interest in amortization and write-off of deferred financing costs
of unconsolidated joint venture |
|
|
19 |
|
|
|
202 |
|
|
|
70 |
|
|
|
807 |
|
Interest in unconsolidated joint venture write-off of prior period
receivable and accrual of prior period charges |
|
|
- |
|
|
|
356 |
|
|
|
- |
|
|
|
526 |
|
Operating loss incurred on properties closed due to physical
damage |
|
|
- |
|
|
|
118 |
|
|
|
983 |
|
|
|
929 |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
(38 |
) |
|
|
(433 |
) |
|
|
54 |
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
1,576 |
|
|
$ |
41,728 |
|
|
$ |
(10,856 |
) |
|
$ |
165,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(30,328 |
) |
|
$ |
10,943 |
|
|
$ |
(122,389 |
) |
|
$ |
46,370 |
|
Other revenue |
|
|
36 |
|
|
|
(78 |
) |
|
|
(217 |
) |
|
|
(292 |
) |
Gain on insurance settlement |
|
|
(8,960 |
) |
|
|
- |
|
|
|
(8,960 |
) |
|
|
- |
|
Loss from impairment of depreciable assets |
|
|
- |
|
|
|
12 |
|
|
|
1,069 |
|
|
|
12 |
|
Depreciation and amortization |
|
|
24,393 |
|
|
|
24,345 |
|
|
|
96,958 |
|
|
|
96,529 |
|
General and administrative |
|
|
2,363 |
|
|
|
3,756 |
|
|
|
10,590 |
|
|
|
15,628 |
|
Share based compensation |
|
|
3,297 |
|
|
|
3,362 |
|
|
|
9,488 |
|
|
|
10,803 |
|
Acquisition and terminated transaction costs |
|
|
4,419 |
|
|
|
- |
|
|
|
4,419 |
|
|
|
- |
|
Loss on impairment of assets |
|
|
- |
|
|
|
- |
|
|
|
1,069 |
|
|
|
- |
|
Straight-line amortization of ground lease expense |
|
|
131 |
|
|
|
150 |
|
|
|
564 |
|
|
|
603 |
|
Costs accrued for furloughed employees |
|
|
- |
|
|
|
- |
|
|
|
893 |
|
|
|
- |
|
State and local tax expense related to reassessment of prior period
assessment |
|
|
(38 |
) |
|
|
(433 |
) |
|
|
54 |
|
|
|
(50 |
) |
Other |
|
|
(1,018 |
) |
|
|
177 |
|
|
|
(508 |
) |
|
|
(2,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA |
|
$ |
(5,705 |
) |
|
$ |
42,234 |
|
|
$ |
(6,970 |
) |
|
$ |
166,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, Director of Investor RelationsPhone:
215-238-1046
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