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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hospitality Properties Trust | NASDAQ:HPT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 25.28 | 25.00 | 25.51 | 0 | 01:00:00 |
Normalized FFO for the First Quarter Increases 12% Year Over Year to $0.93 Per Share
First Quarter Comparable Hotel RevPAR Grows 4.4% Year Over Year
Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter ended March 31, 2016, compared to the results for the prior year comparable period:
Three Months Ended March 31, 2016 2015($ in thousands, except per share andRevPAR data)
Net income available for common shareholders $ 46,885 $ 36,415 Net income available for common shareholders per share (basic and diluted) $ 0.31 $ 0.24 Adjusted EBITDA (1) $ 187,963 $ 168,635 Normalized FFO available for common shareholders (1) $ 140,414 $ 125,989 Normalized FFO available for common shareholders per share (diluted) (1) $ 0.93 $ 0.83Portfolio Performance
Comparable hotel RevPAR $ 90.10 $ 86.31 Comparable hotel RevPAR growth 4.4% - RevPAR (all hotels) $ 88.53 $ 86.21 RevPAR growth (all hotels) 2.7% - Coverage of HPT’s minimum returns and rents for hotels 0.95x 0.93x Coverage of HPT's minimum rents for travel centers 1.39x 1.92x(1) Reconciliations of net income available for common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, to earnings before interest, taxes, depreciation and amortization, or EBITDA, and EBITDA as adjusted, or Adjusted EBITDA, and net income to funds from operations, or FFO, and Normalized FFO available for common shareholders, for the quarters ended March 31, 2016 and 2015 appear later in this press release.
John Murray, President and Chief Operating Officer of HPT, made the following statement regarding today’s announcement:
“We are pleased with the continued strong performance from our hotel and travel center portfolios which resulted in 12% FFO per share growth this quarter compared to last year. Our comparable hotel RevPAR growth remains above historic long term average growth levels and exceeded the hotel industry’s performance for the thirteenth consecutive quarter. Our results are especially noteworthy because they were achieved in the first calendar quarter which has historically produced weaker seasonal results at both our hotels and travel centers. This performance, coupled with our disciplined investment activity and favorable outlook gave HPT’s Board the confidence to recently increase HPT’s quarterly common dividend to $0.51 per share, or $2.04 per share per year.”
First Quarter Results and Recent Activities:
Tenants and Managers: As of March 31, 2016, HPT had nine operating agreements with seven hotel operating companies for 305 hotels with 46,347 rooms, which represented 66% of HPT’s total annual minimum returns and rents.
Conference Call:
On Tuesday, May 10, 2016, at 10:00 a.m. Eastern Time, John Murray, President and Chief Operating Officer, and Mark Kleifges, Chief Financial Officer and Treasurer, will host a conference call to discuss the results for the quarter ended March 31, 2016. The conference call telephone number is (877) 329-3720. Participants calling from outside the United States and Canada should dial (412) 317-5434. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through Tuesday, May 17, 2016. To hear the replay, dial (412) 317-0088. The replay pass code is 10084013.
A live audio webcast of the conference call will also be available in a listen only mode on HPT’s website, which is located at www.hptreit.com. Participants wanting to access the webcast should visit HPT’s website about five minutes before the call. The archived webcast will be available for replay on HPT’s website for about one week after the call. The transcription, recording and retransmission in any way of HPT’s first quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s First Quarter 2016 Supplemental Operating and Financial Data is available for download at HPT’s website, www.hptreit.com. HPT’s website is not incorporated as part of this press release.
Hospitality Properties Trust is a real estate investment trust, or REIT, which owns a diverse portfolio of hotels and travel centers located in 45 states, Puerto Rico and Canada. HPT’s properties are operated under long term management or lease agreements. HPT is managed by the operating subsidiary of The RMR Group Inc. (NASDAQ: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.
Please see the following pages for a more detailed statement of HPT’s operating results and financial condition and for an explanation of HPT’s calculation of FFO available for common shareholders and Normalized FFO available for common shareholders, EBITDA and Adjusted EBITDA.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER HPT USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “MAY” OR SIMILAR EXPRESSIONS, HPT IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON HPT’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY HPT’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
THE INFORMATION CONTAINED IN HPT’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN HPT’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM HPT’S FORWARD LOOKING STATEMENTS. HPT’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, HPT DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
HOSPITALITY PROPERTIES TRUST CONDENSED CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per share data) (Unaudited) Three Months Ended March 31, 2016 2015 Revenues: Hotel operating revenues (1) $ 396,503 $ 369,596 Rental income (2) (3) 76,259 64,751 FF&E reserve income (4) 1,356 1,165 Total revenues 474,118 435,512 Expenses: Hotel operating expenses (1) 276,305 257,658 Depreciation and amortization 87,271 78,969 General and administrative (5) 16,023 21,304 Acquisition related costs (6) 612 338 Total expenses 380,211 358,269 Operating income 93,907 77,243 Interest income 98 11Interest expense (including amortization of debt issuance costs and debt discounts of$1,865 and $1,458, respectively)
(41,586) (35,454) Loss on early extinguishment of debt (7) (70) - Income before income taxes and equity in earnings of an investee 52,349 41,800 Income tax expense (375) (291) Equity in earnings of an investee 77 72 Net income 52,051 41,581 Preferred distributions (5,166) (5,166) Net income available for common shareholders $ 46,885 $ 36,415 Weighted average common shares outstanding (basic) 151,402 149,792 Weighted average common shares outstanding (diluted) 151,415 150,906 Net income available for common shareholders per common share: Basic and diluted $ 0.31 $ 0.24See Notes on pages 9 and 10
HOSPITALITY PROPERTIES TRUST RECONCILIATIONS OF FUNDS FROM OPERATIONS, NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA (amounts in thousands, except per share data) (Unaudited) Three Months Ended March 31, 2016 2015Calculation of Funds from Operations (FFO) and Normalized FFO available for commonshareholders: (8)
Net income available for common shareholders $ 46,885 $ 36,415 Add: Depreciation and amortization 87,271 78,969 FFO available for common shareholders 134,156 115,384 Add: Acquisition related costs (6) 612 338 Estimated business management incentive fees (5) 5,316 9,027 Loss on early extinguishment of debt (7) 70 - Deferred percentage rent (3) 260 1,240 Normalized FFO available for common shareholders $ 140,414 $ 125,989 Weighted average common shares outstanding (basic) 151,402 149,792 Weighted average common shares outstanding (diluted) 151,415 150,906 Basic and diluted per common share amounts: FFO available for common shareholders (basic) $ 0.89 $ 0.77 FFO available for common shareholders (diluted) $ 0.89 $ 0.76 Normalized FFO available for common shareholders (basic) $ 0.93 $ 0.84 Normalized FFO available for common shareholders (diluted) $ 0.93 $ 0.83 Three Months Ended March 31, 2016 2015 Calculation of EBITDA and Adjusted EBITDA: (9) Net income $ 52,051 $ 41,581 Add: Interest expense 41,586 35,454 Income tax expense 375 291 Depreciation and amortization 87,271 78,969 EBITDA 181,283 156,295 Add: Acquisition related costs (6) 612 338 General and administrative expense paid in common shares (10) 422 1,735 Estimated business management incentive fees (5) 5,316 9,027 Loss on early extinguishment of debt (7) 70 - Deferred percentage rent (3) 260 1,240 Adjusted EBITDA $ 187,963 $ 168,635See Notes on pages 9 and 10
(1) At March 31, 2016, HPT owned 305 hotels; 302 of these hotels are managed by hotel operating companies and three hotels are leased to hotel operating companies. At March 31, 2016, HPT also owned 194 travel centers; all 194 of these travel centers are leased to a travel center operating company under five lease agreements. HPT’s condensed consolidated statements of income include hotel operating revenues and expenses of managed hotels and rental income from its leased hotels and travel centers. Certain of HPT’s managed hotels had net operating results that were, in the aggregate, $16,429 and $15,492 less than the minimum returns due to HPT in the three months ended March 31, 2016 and 2015, respectively. When the managers of these hotels fund the shortfalls under the terms of HPT’s operating agreements or their guarantees, HPT reflects such fundings (including security deposit applications) in its condensed consolidated statements of income as a reduction of hotel operating expenses. Hotel operating expenses were reduced by $4,377 and $4,006 in the three months ended March 31, 2016 and 2015, respectively, as a result of such fundings. HPT had shortfalls at certain of its managed hotel portfolios not funded by the managers of these hotels under the terms of its operating agreements of $12,052 and $11,486 in the three months ended March 31, 2016 and 2015, respectively, which represent the unguaranteed portions of HPT’s minimum returns from Sonesta. Certain guarantee payments and the amounts of certain security deposits received by HPT may be replenished by future cash flows from the applicable hotel operations pursuant to the terms of the respective operating agreements. When HPT’s guarantees and its security deposits are replenished by cash flows from hotel operations, HPT reflects such replenishments in its condensed consolidated statements of income as an increase to hotel operating expenses. Hotel operating expenses have increased by $2,522 and $3,351 in the three months ended March 31, 2016 and 2015, respectively, as a result of such replenishments.
(2) Rental income includes $3,752 and $545 in the three months ended March 31, 2016 and 2015, respectively, of adjustments necessary to record scheduled rent increases under certain of HPT’s leases, the deferred rent obligations under HPT’s travel center leases and the estimated future payments to HPT under its travel center leases for the cost of removing underground storage tanks on a straight line basis.
(3) In calculating net income in accordance with GAAP, HPT generally recognizes percentage rental income received for the first, second and third quarters in the fourth quarter, which is when all contingencies have been met and the income is earned. HPT includes estimated amounts of percentage rent in the calculation of Normalized FFO and Adjusted EBITDA for each quarter of the year. The fourth quarter Normalized FFO and Adjusted EBITDA calculations exclude the estimated amounts of percentage rent recognized during the first three quarters.
(4) Various percentages of total sales at certain of HPT’s hotels are escrowed as reserves for future renovations or refurbishment, or FF&E reserve escrows. HPT owns all the FF&E reserve escrows for its hotels. HPT reports deposits by its tenants into the escrow accounts under its three hotel leases as FF&E reserve income. HPT does not report the amounts which are escrowed as FF&E reserves for its managed hotels as FF&E reserve income.
(5) Incentive fees under HPT’s business management agreement are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in HPT’s condensed consolidated statements of income. In calculating net income in accordance with GAAP, HPT recognizes estimated business management incentive fee expense, if any, each quarter. Although HPT recognizes this expense, if any, each quarter for purposes of calculating net income, HPT does not include these amounts in the calculation of Normalized FFO available for common shareholders or Adjusted EBITDA until the fourth quarter, which is when the actual incentive fee expense amount for the year is determined. HPT recorded $5,316 and $9,027 of estimated incentive fees during the three months ended March 31, 2016 and 2015, respectively.
HPT recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price HPT paid for its investment in RMR common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035, the then 20 year life of HPT's business management agreement with the operating subsidiary of RMR as a reduction to business management fees, which are included in general and administrative expense. General and administrative expense was reduced by $896 during the three months ended March 31, 2016 as a result of this amortization.
(6) Represents costs associated with HPT’s acquisition activities.
(7) HPT recorded a $70 loss on early extinguishment of debt in the first quarter of 2016 in connection with the redemption of certain senior unsecured notes.
(8) HPT calculates FFO available for common shareholders and Normalized FFO available for common shareholders as shown above. FFO available for common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income available for common shareholders calculated in accordance with GAAP, excluding any gain or loss on sale of properties and loss on impairment of real estate assets, plus real estate depreciation and amortization, as well as certain other adjustments currently not applicable to HPT. HPT’s calculation of Normalized FFO available for common shareholders differs from NAREIT's definition of FFO available for common shareholders because HPT includes estimated percentage rent in the period to which HPT estimates that it relates rather than when it is recognized as income in accordance with GAAP, HPT includes business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP and HPT excludes acquisition related costs and loss on early extinguishment of debt. HPT considers FFO available for common shareholders and Normalized FFO available for common shareholders to be appropriate measures of operating performance for a REIT, along with net income, net income available for common shareholders, operating income and cash flow from operating activities. HPT believes that FFO available for common shareholders and Normalized FFO available for common shareholders provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO available for common shareholders and Normalized FFO available for common shareholders may facilitate a comparison of HPT’s operating performance between periods and with other REITs. FFO available for common shareholders and Normalized FFO available for common shareholders are among the factors considered by HPT’s Board of Trustees when determining the amount of distributions to shareholders. Other factors include, but are not limited to, requirements to maintain HPT’s qualification for taxation as a REIT, limitations in its unsecured revolving credit facility and unsecured term loan agreement and public debt covenants, the availability to HPT of debt and equity capital, HPT’s expectation of its future capital requirements and operating performance, and HPT’s expected needs for and availability of cash to pay its obligations. FFO available for common shareholders and Normalized FFO available for common shareholders do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income available for common shareholders, operating income or cash flow from operating activities determined in accordance with GAAP, or as indicators of HPT’s financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of HPT’s needs. These measures should be considered in conjunction with net income, net income available for common shareholders, operating income and cash flow from operating activities as presented in HPT’s condensed consolidated statements of income and condensed consolidated statements of cash flows. Other real estate companies and REITs may calculate FFO available for common shareholders and Normalized FFO available for common shareholders differently than HPT does.
(9) HPT calculates EBITDA and Adjusted EBITDA as shown above. HPT considers EBITDA and Adjusted EBITDA to be appropriate measures of its operating performance, along with net income, net income available for common shareholders, operating income and cash flow from operating activities. HPT believes that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with HPT’s past operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP or as an indicator of financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of HPT’s needs. These measures should be considered in conjunction with net income, net income available for common shareholders, operating income and cash flow from operating activities as presented in HPT’s condensed consolidated statements of income and condensed consolidated statements of cash flows. Other real estate companies and REITs may calculate EBITDA and Adjusted EBITDA differently than HPT does.
(10) Amounts represent the portion of business management fees that were payable in HPT’s common shares as well as equity based compensation for HPT’s trustees, its officers and certain other employees of HPT’s manager. Beginning June 1, 2015, all business management fees are paid in cash.
HOSPITALITY PROPERTIES TRUST CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) (Unaudited) March 31, December 31, 2016 2015 ASSETS Real estate properties: Land $ 1,544,954 $ 1,529,004 Buildings, improvements and equipment 6,898,854 6,740,423 Total real estate properties, gross 8,443,808 8,269,427 Accumulated depreciation (2,290,066) (2,218,499) Total real estate properties, net 6,153,742 6,050,928 Cash and cash equivalents 15,816 13,682 Restricted cash (FF&E reserve escrow) 55,891 51,211 Due from related persons 55,517 50,987 Other assets, net 251,174 227,989 Total assets $ 6,532,140 $ 6,394,797 LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $ 230,000 $ 465,000 Unsecured term loan, net 397,922 397,756 Senior unsecured notes, net 2,861,294 2,403,439 Convertible senior unsecured notes 8,478 8,478 Security deposits 63,831 53,579 Accounts payable and other liabilities 150,416 179,783 Due to related persons 14,172 69,514 Dividends payable 5,166 5,166 Total liabilities 3,731,279 3,582,715 Commitments and contingencies Shareholders’ equity: Preferred shares of beneficial interest, no par value; 100,000,000 shares authorized:Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000 shares issued andoutstanding, aggregate liquidation preference of $290,000
280,107 280,107Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 151,547,288shares issued and outstanding
1,515 1,515 Additional paid in capital 4,165,982 4,165,911 Cumulative net income 2,933,708 2,881,657 Cumulative other comprehensive income (loss) 2,074 (15,523) Cumulative preferred distributions (326,479) (321,313) Cumulative common distributions (4,256,046) (4,180,272) Total shareholders’ equity 2,800,861 2,812,082 Total liabilities and shareholders’ equity $ 6,532,140 $ 6,394,797A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160510005397/en/
Hospitality Properties TrustKatie Strohacker, 617-796-8232Senior Director, Investor Relations
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