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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

COMMISSION FILE NUMBER: 001-14765
HERSHA HOSPITALITY TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland   25-1811499
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification No.)
44 Hersha Drive Harrisburg PA   17102
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (717) 236-4400

Former name, former address and former fiscal year, if changed since last report: Not applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A Common Shares of Beneficial Interest, par value $.01 per share HT New York Stock Exchange
6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share HT-PC New York Stock Exchange
6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share HT-PD New York Stock Exchange
6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share HT-PE New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
 



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer Accelerated filer
Non-accelerated filer Small reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No 

As of August 6, 2020, the number of Class A common shares of beneficial interest outstanding was 38,789,371 and there were no Class B common shares of beneficial interest outstanding.



 Hersha Hospitality Trust
Table of Contents
PART I.  FINANCIAL INFORMATION Page
Item 1. Financial Statements.  

4

5

7

8


Item 2.
Item 3.
Item 4.
    
PART II.  OTHER INFORMATION  
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
  


3


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019
[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]



 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 Loans, Net of Unamortized Deferred Financing Costs (Note 5) 697,597    697,183   
Unsecured Notes Payable, Net of Unamortized Deferred Financing Costs (Note 5) 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 Interests - Consolidated Joint Venture (Note 1) $ —    $ 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 $25.00 Per Share (Note 1)
$ 147    $ 147   
Common Shares:  Class A, $.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, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2020 and December 31, 2019
—    —   
Accumulated Other Comprehensive (Loss) 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 (Note 1) 55,715    64,144   
    
Total Equity 751,051    871,801   
    
Total Liabilities and Equity $ 2,054,560    $ 2,122,428   
The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.
4


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Revenue:    
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   
Other Revenues 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 Expenses 14,035    44,607    49,841    84,796   
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 (including Share Based Payments of $1,799 and $3,474, and $4,255 and $5,432 for the three and six months ended June 30, 2020 and 2019, respectively)
4,187    8,100    10,021    13,700   
Loss on Impairment of Assets 1,069    —    1,069    —   
Depreciation and Amortization 24,322    23,964    48,510    48,092   
Total Operating Expenses 58,983    124,785    165,529    240,131   
    
Operating (Loss) Income (41,542)   22,716    (57,951)   22,163   
Interest Income   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 Ventures (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 Allocated to Noncontrolling Interests - Common Units 7,164    49    10,061    1,112   
Loss (Income) Allocated to Noncontrolling Interests - 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)  
The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

5


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Earnings Per Share:        
BASIC        
Loss from Continuing Operations Applicable to Common Shareholders $ (1.75)   $ (0.02)   $ (2.50)   $ (0.35)  
        
DILUTED        
Loss from Continuing Operations 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   
*Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because the effect of including these shares and units in the numerator and denominator would have no impact. In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) applicable to common shareholders.
The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Common Units and Vested LTIP Units 3,943,319    3,379,354    3,891,032    3,344,178   
Unvested Stock Awards and LTIP Units Outstanding 547,315    616,937    267,443    423,399   
Contingently Issuable Share Awards 185,754    320,240    680,979    507,006   
Total Potentially Dilutive Securities Excluded from the Denominator 4,676,388    4,316,531    4,839,454    4,274,583   
The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.
6


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS]

 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Net (Loss) Income $ (71,780)   $ 5,559    $ (97,752)   $ (2,323)  
Other Comprehensive Loss        
Change in Fair Value of Derivative Instruments (2,020)   (4,122)   (33,146)   (5,902)  
Less:  Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income 1,228    (1,112)   2,205    (2,253)  
Total Other Comprehensive Loss $ (792)   $ (5,234)   $ (30,941)   $ (8,155)  
        
Comprehensive (Loss) Income (72,572)   325    (128,693)   (10,478)  
Less:  Comprehensive Loss Attributable to Noncontrolling Interests - Common Units 7,270    465    12,895    1,755   
Less:  Comprehensive Loss (Income) Attributable to Noncontrolling Interests - Consolidated Joint Venture 3,196    (8)   3,196    152   
Less:  Preferred Distributions (6,044)   (6,043)   (12,088)   (12,087)  
Comprehensive Loss Attributable to Common Shareholders $ (68,150)   $ (5,261)   $ (124,690)   $ (20,658)  
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
7


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARES]

 Shareholders' Equity Noncontrolling Interests Redeemable Noncontrolling Interests
 Common Shares Class A Common Shares ($) Class B Common Shares ($) Preferred Shares Preferred Shares ($) Additional Paid-In Capital ($) Accumulated Other Comprehensive Income ($) Distributions in Excess of Net Income ($) Total Shareholders' Equity ($) Common Units and LTIP Units Common Units and LTIP Units ($) Total Equity ($) Consolidated Joint Venture ($)
Balance at March 31, 2020 38,673,242    387    —    14,703,214    147    1,145,450    (26,411)   (362,777)   756,796    4,279,946    59,162    815,958    3,196   
Issuance Costs —    —    —    —    —    (10)   —    —    (10)   —    —    (10)   —   
Share Based Compensation:
Grants 116,129      —    —    —    —    —    —      1,101,924    —      —   
Amortization —    —    —    —    —    655    —    —    655    3,823    4,478    —   
Change in Fair Value of Derivative Instruments —    —    —    —    —    —    (686)   —    (686)   —    (106)   (792)   —   
Adjustment to Record Noncontrolling Interest at Redemption Value —    —    —    —    —    3,196    —    —    3,196    —    —    3,196    (3,196)  
Net Loss —    —    —    —    —    —    —    (64,616)   (64,616)   —    (7,164)   (71,780)   —   
Balance at June 30, 2020 38,789,371    388    —    14,703,214    147    1,149,291    (27,097)   (427,393)   695,336    5,381,870    55,715    751,051    —   
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.











8


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARES]
 Shareholders' Equity Noncontrolling Interests Redeemable Noncontrolling Interests
 Common Shares Class A Common Shares ($) Class B Common Shares ($) Preferred Shares Preferred Shares ($) Additional Paid-In Capital ($) Accumulated Other Comprehensive Income ($) Distributions in Excess of Net Income ($) Total Shareholders' Equity ($) Common Units and LTIP Units Common Units and LTIP Units ($) Total Equity ($) Consolidated Joint Venture ($)
Balance at March 31, 2019 39,213,269    392    —    14,703,214    147    1,151,654    1,534    (291,282)   862,445    4,279,946    64,808    927,253    2,848   
Issuance Costs —    —    —    —    —    (21)   —    —    (21)   —    —    (21)   —   
Dividends and Distributions declared:
Common Shares ($0.28 per share)
—    —    —    —    —    —    —    (10,987)   (10,987)   —    —    (10,987)   —   
Preferred Shares —    —    —    —    —    —    —    (6,044)   (6,044)   —    —    (6,044)   —   
Common Units ($0.28 per share)
—    —    —    —    —    —    —    —    —    —    (580)   (580)   —   
LTIP Units ($0.28 per share)
—    —    —    —    —    —    —    —    —    —    (620)   (620)   —   
Dividend Reinvestment Plan 1,231    —    —    —    —    21    —    —    21    —    —    21    —   
Share Based Compensation:
Grants 26,424      —    —    —    400    —    —    401    —    —    401    —   
Amortization —    —    —    —    —    893    —    —    893    —    1,430    2,323    —   
Change in Fair Value of Derivative Instruments —    —    —    —    —    —    (4,819)   —    (4,819)   —    (415)   (5,234)   —   
Adjustment to Record Noncontrolling Interest at Redemption Value —    —    —    —    —    (8)   —    —    (8)   —    —    (8)    
Net Income —    —    —    —    —    —    —    5,608    5,608    (49)   5,559    —   
Balance at June 30, 2019 39,240,924    393    —    14,703,214    147    1,152,939    (3,285)   (302,705)   847,489    4,279,946    64,574    912,063    2,856   
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.




9


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARES]


Shareholders' Equity Noncontrolling Interests Redeemable Noncontrolling Interests
Common Shares Class A Common Shares ($) Class B Common Shares ($) Preferred Shares Preferred Shares ($) Additional Paid-In Capital ($) Accumulated Other Comprehensive Income ($) Distributions in Excess of Net Income ($) Total Shareholders' Equity ($) Common Units and LTIP Units Common Units and LTIP Units ($) Total Equity ($) Consolidated Joint Venture ($)
Balance at December 31, 2019 38,652,650    387    —    14,703,214    147    1,144,808    1,010    (338,695)   807,657    4,279,946    64,144    871,801    3,196   
Issuance Costs —    —    —    —    —    (30)   —    —    (30)   —    —    (30)   —   
Dividends and Distributions declared:
Preferred Shares —    —    —    —    —    —    —    (1,007)   (1,007)   —    —    (1,007)   —   
Dividend Reinvestment Plan 1,094    —    —    —    —    14    —    —    14    —    —    14    —   
Share Based Compensation:
Grants 135,627      —    —    —    —    —    —      1,101,924    —      —   
Amortization —    —    —    —    —    1,303    —    —    1,303    4,466    5,769    —   
Change in Fair Value of Derivative Instruments —    —    —    —    —    —    (28,107)   —    (28,107)   —    (2,834)   (30,941)   —   
Adjustment to Record Noncontrolling Interest at Redemption Value —    —    —    —    —    3,196    —    —    3,196    —    —    3,196    (3,196)  
Net Loss —    —    —    —    —    —    —    (87,691)   (87,691)   —    (10,061)   (97,752)   —   
Balance at June 30, 2020 38,789,371    388    —    14,703,214    147    1,149,291    (27,097)   (427,393)   695,336    5,381,870    55,715    751,051    —   


The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

10


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS, EXCEPT SHARES]

Shareholders' Equity Noncontrolling Interests Redeemable Noncontrolling Interests
Common Shares Class A Common Shares ($) Class B Common Shares ($) Preferred Shares Preferred Shares ($) Additional Paid-In Capital ($) Accumulated Other Comprehensive Income ($) Distributions in Excess of Net Income ($) Total Shareholders' Equity ($) Common Units and LTIP Units Common Units and LTIP Units ($) Total Equity ($) Consolidated Joint Venture ($)
Balance at December 31, 2018 39,458,626    395    —    14,703,214    147    1,155,776    4,227    (267,740)   892,805    3,749,665    62,010    954,815    2,708   
Repurchase of Common Shares (273,538)   (3)   —    —    —    (4,693)   —    —    (4,696)   —    —    (4,696)   —   
Issuance Costs —    —    —    —    —    (21)   —    —    (21)   —    —    (21)   —   
Dividends and Distributions declared:
Common Shares ($0.56 per share)
—    —    —    —    —    —    —    (21,967)   (21,967)   —    —    (21,967)   —   
Preferred Shares —    —    —    —    —    —    —    (12,087)   (12,087)   —    —    (12,087)   —   
Common Units ($0.56 per share)
—    —    —    —    —    —    —    —    —    —    (1,158)   (1,158)   —   
LTIP Units ($0.56 per share)
—    —    —    —    —    —    —    —    —    —    (1,362)   (1,362)   —   
Dividend Reinvestment Plan 2,496    —    —    —    —    42    —    —    42    —    —    42    —   
Share Based Compensation:
Grants 53,340      —    —    —    400    —    —    401    530,281    —    401    —   
Amortization —    —    —    —    —    1,583    —    —    1,583    —    6,839    8,422    —   
Equity Contribution to Consolidated Joint Venture —    —    —    —    —    —    —    —    —    —    —    —    300   
Change in Fair Value of Derivative Instruments —    —    —    —    —    —    (7,512)   —    (7,512)   —    (643)   (8,155)   —   
Adjustment to Record Noncontrolling Interest at Redemption Value —    —    —    —    —    (148)   —    —    (148)   —    —    (148)   148   
Net Loss —    —    —    —    —    —    —    (911)   (911)   (1,112)   (2,023)   (300)  
Balance at June 30, 2019 39,240,924    393    —    14,703,214    147    1,152,939    (3,285)   (302,705)   847,489    4,279,946    64,574    912,063    2,856   

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.



11


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS]

 Six Months Ended June 30,
 2020 2019
Operating Activities:    
Net Loss $ (97,752)   $ (2,323)  
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:    
Loss from Impairment of Assets 1,069    —   
Deferred Taxes 11,390    (1,348)  
Depreciation 48,273    47,791   
Amortization 1,116    1,107   
Loss on Debt Extinguishment —    17   
Equity in Loss (Income) of Unconsolidated Joint Ventures 1,520    (480)  
Distributions from Unconsolidated Joint Ventures —    478   
Loss Recognized on Change in Fair Value of Derivative Instrument 2,205    163   
Share Based Compensation Expense 4,255    5,432   
Change in Assets and Liabilities:    
(Increase) Decrease in:    
Hotel Accounts Receivable 5,412    (325)  
Other Assets 4,884    (1,317)  
Due from Related Parties 3,750    (2,453)  
(Decrease) Increase in:    
Accounts Payable, Accrued Expenses and Other Liabilities (2,479)   129   
Net Cash Provided by (Used in) Operating Activities $ (16,357)   $ 46,871   
    
Investing Activities:    
Capital Expenditures (15,612)   (21,230)  
Cash Paid for Hotel Development Projects 21    (467)  
Contributions to Unconsolidated Joint Ventures (600)   (4,000)  
Distributions from Unconsolidated Joint Ventures —    1,022   
Net Cash Used in Investing Activities $ (16,191)   $ (24,675)  
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.
12


HERSHA HOSPITALITY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 [UNAUDITED]
[IN THOUSANDS]