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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 Per Share Increases 12.6% Year Over Year to $0.98
Comparable Hotel RevPAR Growth of 10.7%
Hospitality Properties Trust (NYSE:HPT) today announced its financial results for the quarter and six months ended June 30, 2015, compared to the results for the prior year comparable periods:
Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014($ in thousands, except per share and RevPAR data)
Net income available for common shareholders $ 77,980 $ 48,749 $ 114,395 $ 81,133Net income available for common shareholders per share
$ 0.52 $ 0.33 $ 0.76 $ 0.54 Adjusted EBITDA (1) $ 189,819 $ 172,099 $ 358,454 $ 327,050 Adjusted EBITDA growth 10.3% — 9.6% — Normalized FFO available for common shareholders (1) $ 146,899 $ 129,687 $ 272,888 $ 242,747 Normalized FFO available for common shareholders per share (diluted) (1) $ 0.98 $ 0.87 $ 1.81 $ 1.62Portfolio Performance
Comparable hotel RevPAR $ 98.38 $ 88.86 $ 92.10 $ 83.39 Comparable hotel RevPAR growth 10.7% — 10.4% — RevPAR (all hotels) $ 98.68 $ 89.23 $ 92.50 $ 83.80 RevPAR growth (all hotels) 10.6% — 10.4% — Coverage of HPT’s minimum returns and rents (all hotels) 1.28x 1.10x 1.11x 0.93x Coverage of HPT's minimum rents (all travel centers) 1.73x 1.79x 1.82x 1.66x(1)
Reconciliations of net income available for common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO available for common shareholders, and net income to earnings before interest, taxes, depreciation and amortization, or EBITDA, and Adjusted EBITDA for the quarters and six months ended June 30, 2015 and 2014 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 strong performance from our hotel and travel center portfolios which resulted in Normalized FFO per common share growth of 12.6%. Our RevPAR growth of 10.6% exceeded the hotel industry’s performance for the tenth consecutive quarter and this strength was broad based, with eight of our nine hotel operating agreements exceeding the hotel industry’s RevPAR performance. We were also active on the acquisition front this quarter, expanding both our travel center and hotel portfolios.
During the second quarter, we also announced a transaction involving our manager, RMR, whereby we acquired a 16.2% economic interest in our manager in exchange for $57.8 million and amended the management agreements with RMR to extend the terms for 20 years. We believe this transaction further aligns the interests of RMR management, ourselves and our shareholders, and allows us to continue benefiting from a low cost management structure.”
Results for the Three and Six Months Ended June 30, 2015 and Recent Activities:
Tenants and Managers: As of June 30, 2015, HPT had nine operating agreements with seven hotel operating companies for 293 hotels with 44,761 rooms, which represented 65% of HPT’s total annual minimum returns and rents.
Conference Call:
On Monday, August 10, 2015, at 10:00 a.m. Eastern Time, John Murray, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the results for the quarter ended June 30, 2015. 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 Monday, August 17, 2015. To hear the replay, dial (412) 317-0088. The replay pass code is 10068830.
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 second quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s Second Quarter 2015 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 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, 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” 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 THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
THE INFORMATION CONTAINED IN HPT’S FILINGS WITH THE 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 June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues: Hotel operating revenues (1) $ 436,977 $ 387,248 $ 806,573 $ 717,184 Minimum rent (1) 67,015 63,736 131,766 127,122 Percentage rent (2) 2,048 - 2,048 - FF&E reserve income (3) 1,026 916 2,191 1,844 Total revenues 507,066 451,900 942,578 846,150 Expenses: Hotel operating expenses (1) 304,428 270,778 562,086 501,395 Depreciation and amortization 80,582 78,763 159,551 157,050 General and administrative (4) 12,685 13,166 33,989 24,631 Acquisition related costs (5) 797 162 1,135 223 Total expenses 398,492 362,869 756,761 683,299 Operating income 108,574 89,031 185,817 162,851 Interest income 10 25 21 50Interest expense (including amortization of deferred financingcosts and debt discounts of $1,458 and $1,319, and $2,916and $2,672, respectively)
(35,836) (34,941) (71,290) (69,797) Loss on early extinguishment of debt (6) - - - (726)Income before income taxes, equity in earnings of an investeeand gain on sale of real estate
72,748 54,115 114,548 92,378 Income tax expense (640) (455) (931) (1,071) Equity in earnings of an investee 23 125 95 28 Income before gain on sale of real estate 72,131 53,785 113,712 91,335 Gain on sale of real estate (7) 11,015 130 11,015 130 Net income 83,146 53,915 124,727 91,465 Preferred distributions (5,166) (5,166) (10,332) (10,332) Net income available for common shareholders $ 77,980 $ 48,749 $ 114,395 $ 81,133 Weighted average common shares outstanding (basic) 150,260 149,610 150,028 149,591 Weighted average common shares outstanding (diluted) 150,292 149,789 150,594 149,740 Net income available for common shareholders per common share: Basic and diluted $ 0.52 $ 0.33 $ 0.76 $ 0.54HOSPITALITY PROPERTIES TRUSTRECONCILIATIONS OF FUNDS FROM OPERATIONS,NORMALIZED FUNDS FROM OPERATIONS, EBITDA AND ADJUSTED EBITDA(amounts in thousands, except per share data)(Unaudited)
Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014Calculation of Funds from Operations (FFO) and Normalized FFOavailable for common shareholders: (8)
Net income available for common shareholders $ 77,980 $ 48,749 $ 114,395 $ 81,133 Add: Depreciation and amortization 80,582 78,763 159,551 157,050 Less: Gain on sale of real estate (7) (11,015) (130) (11,015) (130) FFO available for common shareholders 147,547 127,382 262,931 238,053 Add: (Less:) Acquisition related costs (5) 797 162 1,135 223 Estimated business management incentive fees (4) (205) 1,445 8,822 2,173 Loss on early extinguishment of debt (6) - - - 726 Deferred percentage rent (2) (1,240) 698 - 1,572 Normalized FFO available for common shareholders $ 146,899 $ 129,687 $ 272,888 $ 242,747 Weighted average common shares outstanding (basic) 150,260 149,610 150,028 149,591 Weighted average common shares outstanding (diluted) 150,292 149,789 150,594 149,740 Basic and diluted per common share amounts: FFO available for common shareholders (basic and diluted) $ 0.98 $ 0.85 $ 1.75 $ 1.59 Normalized FFO (basic) $ 0.98 $ 0.87 $ 1.82 $ 1.62 Normalized FFO (diluted) $ 0.98 $ 0.87 $ 1.81 $ 1.62 Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Calculation of EBITDA and Adjusted EBITDA: (9) Net income $ 83,146 $ 53,915 $ 124,727 $ 91,465 Add: Interest expense 35,836 34,941 71,290 69,797 Income tax expense 640 455 931 1,071 Depreciation and amortization 80,582 78,763 159,551 157,050 EBITDA 200,204 168,074 356,499 319,383 Add: (Less:) Acquisition related costs (5) 797 162 1,135 223 General and administrative expense paid in common shares (10) 1,278 1,850 3,013 3,103 Estimated business management incentive fees (4) (205) 1,445 8,822 2,173 Loss on early extinguishment of debt (6) - - - 726 Deferred percentage rent (2) (1,240) 698 - 1,572 Gain on sale of real estate (7) (11,015) (130) (11,015) (130) Adjusted EBITDA $ 189,819 $ 172,099 $ 358,454 $ 327,050(1)
At June 30, 2015, HPT owned 293 hotels; 290 of these hotels are leased by HPT to its taxable REIT subsidiaries, or TRSs, and managed by hotel operating companies and three hotels are leased to hotel operating companies. At June 30, 2015, HPT also owned 191 travel centers; all 191 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. Net operating results of HPT’s managed hotel portfolios exceeded the minimum returns due to HPT in the three months ended June 30, 2015. Certain of HPT’s managed hotels had net operating results that were, in the aggregate, $4,449 less than the minimum returns due to HPT in the three months ended June 30, 2014 and $11,443 and $25,291 less than the minimum returns due to HPT in the six months ended June 30, 2015 and 2014, 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. There was no reduction to hotel operating expenses for the three months ended June 30, 2015 and 2014 and reductions of $1,903 and $5,331 in the six months ended June 30, 2015 and 2014, respectively. 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 $4,449 in the three months ended June 30, 2014, and $9,540 and $19,960 in the six months ended June 30, 2015 and 2014, respectively, which represent the unguaranteed portions of HPT’s minimum returns from Marriott and from Sonesta. Certain of HPT’s guarantees and its security deposits may be replenished by future cash flows from the applicable hotel operations pursuant to the terms of the respective agreements. HPT had $14,976 and $8,120 of guarantee and security deposit replenishments during the three months ended June 30, 2015 and 2014, respectively. HPT had $16,189 and $2,574 of guarantee and security deposit replenishments during the six months ended June 30, 2015 and 2014, respectively.
(2)
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. In calculating net income in accordance with GAAP for the second quarter of 2015, HPT recognized $2,048 of percentage rent as a result of its lease modifications with TA. The second quarter 2015 Normalized FFO available for common shareholders and Adjusted EBITDA calculations exclude the $1,240 of deferred percentage rent included in the first quarter 2015 calculation.
(3)
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 third party tenants into the escrow accounts 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.
(4)
Estimated incentive fees under HPT’s business management agreement calculated based on common share total return, as defined, are included in general and administrative expense in HPT’s condensed consolidated financial statements. In 2014, this incentive fee was payable in HPT’s common shares; beginning in 2015, any such fees will be payable in cash. 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 and Adjusted EBITDA until the fourth quarter, which is when the actual expense amount for the year is determined. During the three months ended June 30, 2015, HPT reversed $205 of incentive fees accrued in the first quarter of 2015. HPT recorded $1,445 of estimated business management incentive fees during the three months ended June 30, 2014. HPT recorded $8,822 and $2,173 of estimated business management incentive fees during the six months ended June 30, 2015 and 2014, respectively.
(5)
Represents costs associated with HPT’s acquisition activities.
(6)
HPT recorded a $726 loss on early extinguishment of debt in the first quarter of 2014 in connection with amending the terms of its unsecured revolving credit facility and unsecured term loan and the redemption of its 7.875% senior unsecured notes due 2014.
(7)
HPT recorded an $11,015 gain on sale of real estate in the second quarter of 2015 in connection with the sale of five travel centers in June 2015. HPT recorded a $130 gain on sale of real estate in the second quarter of 2014 in connection with the sale of its Sonesta ES Suites hotel in Myrtle Beach, SC in April 2014.
(8)
HPT calculates FFO per common share and Normalized FFO per common share as shown above. FFO 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 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 losses on early extinguishment of debt. HPT considers FFO 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 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 and Normalized FFO available for common shareholders may facilitate a comparison of HPT’s operating performance between periods and with other REITs. FFO 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 status as a REIT, limitations in its revolving credit facility and term loan agreement and public debt covenants, the availability of debt and equity capital to HPT, 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 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, operating income, net income available for common shareholders 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, operating income, net income available for common shareholders and cash flow from operating activities as presented in HPT’s condensed consolidated statements of income and comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate FFO 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 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, operating income, net income available for common shareholders and cash flow from operating activities as presented in HPT’s condensed consolidated statements of income and comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies 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 employees of HPT’s manager.
HOSPITALITY PROPERTIES TRUSTCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in thousands, except share data)(Unaudited)
June 30, December 31, 2015 2014 ASSETS Real estate properties, at cost: Land $ 1,505,174 $ 1,484,210 Buildings, improvements and equipment 6,504,575 6,171,983 Total real estate properties, gross 8,009,749 7,656,193 Accumulated depreciation (2,080,718) (1,982,033) Total real estate properties, net 5,929,031 5,674,160 Cash and cash equivalents 18,395 11,834 Restricted cash (FF&E reserve escrow) 39,106 33,982 Due from related persons 42,997 40,253 Other assets, net 371,619 222,333 Total assets $ 6,401,148 $ 5,982,562 LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $ 319,000 $ 18,000 Unsecured term loan 400,000 400,000 Senior unsecured notes, net of discounts 2,413,065 2,412,135 Convertible senior unsecured notes 8,478 8,478 Security deposits 42,143 33,069 Accounts payable and other liabilities 185,956 106,903 Due to related persons 17,698 8,658 Dividends payable 5,166 5,166 Total liabilities 3,391,506 2,992,409 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; 151,485,368and 149,920,449 shares issued and outstanding, respectively
1,515 1,499 Additional paid in capital 4,164,468 4,118,551 Cumulative net income 2,839,966 2,715,239 Cumulative other comprehensive income 33,412 25,804 Cumulative preferred distributions (310,981) (300,649) Cumulative common distributions (3,998,845) (3,850,398) Total shareholders’ equity 3,009,642 2,990,153 Total liabilities and shareholders’ equity $ 6,401,148 $ 5,982,562A 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/20150810005405/en/
Hospitality Properties TrustKatie Strohacker, 617-796-8232Director, Investor Relations
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