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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 |
Second Quarter Net Income of $0.05 Per Common Share
Second Quarter Normalized FFO of $1.03 Per Common Share
Announced Agreement to Acquire a Net Lease Portfolio of Service-Oriented Retail Properties for $2.4 Billion
Hospitality Properties Trust (Nasdaq: HPT) today announced its financial results for the quarter and six months ended June 30, 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
($ in thousands, except per share and RevPAR data)
Net income
$
8,782
$
97,289
$
234,569
$
177,495
Net income per common share
$
0.05
$
0.59
$
1.43
$
1.08
Adjusted EBITDAre (1)
$
218,972
$
226,898
$
414,873
$
429,854
Normalized FFO (1)
$
168,766
$
176,193
$
313,406
$
331,061
Normalized FFO per common share (1)
$
1.03
$
1.07
$
1.91
$
2.02
Portfolio Performance
Comparable hotel RevPAR
$
100.78
$
102.91
$
93.45
$
95.84
Change in comparable hotel RevPAR
(2.1
%)
—
(2.5
%)
—
RevPAR (all hotels)
$
101.86
$
104.40
$
94.73
$
97.50
Change in RevPAR (all hotels)
(2.4
%)
—
(2.8
%)
—
Coverage of HPT’s minimum returns and rents for hotels
1.10x
1.23x
0.91x
1.03x
Coverage of HPT's minimum rents for travel centers
1.91x
1.90x
1.81x
1.82x
John Murray, President and Chief Executive Officer of HPT, made the following statement:
“In the second quarter, comparable RevPAR declined 2.1% compared to the prior year period due in part to occupancy decreases from fourteen hotels under renovation, nine of which were relatively higher contributing full service hotels that impacted our IHG, Sonesta and Radisson Hotel Group portfolios. For hotels not impacted by renovations, comparable RevPAR declined by 0.3%. HPT's 179 TA properties performed well during the three months ended June 30, 2019. Total fuel volumes increased 2.6% and total rent coverage remained strong at 1.91x.
In addition, as previously announced, HPT entered into a definitive agreement to acquire a high-quality net lease portfolio of 770 service-oriented retail properties for $2.4 billion in cash, subject to adjustments and other payments, that will provide HPT with increased scale, a more secure financial profile and greater diversity in tenant base, property type and geography. In July 2019, HPT raised $93.9 million, after underwriting fees and before other offering expenses, by selling its shares of The RMR Group Inc. and has commenced marketing certain assets as part of its planned dispositions in connection with this acquisition."
Results for the Three and Six Months Ended June 30, 2019 and Recent Activities:
Net income for the six months ended June 30, 2019 was $234.6 million, or $1.43 per diluted common share, compared to net income of $177.5 million, or $1.08 per diluted common share, for the six months ended June 30, 2018. Net income for the six months ended June 30, 2019 includes a $159.5 million, or $0.97 per diluted common share, gain on sale of real estate and $39.8 million, or $0.24 per diluted common share, of net unrealized losses on equity securities. Net income for the six months ended June 30, 2018 includes $45.9 million, or $0.28 per diluted common share, of net unrealized gains on equity securities. The weighted average number of diluted common shares outstanding was 164.3 million and 164.2 million for the six months ended June 30, 2019 and 2018, respectively.
Adjusted EBITDAre: Adjusted EBITDAre for the quarter ended June 30, 2019 compared to the same period in 2018 decreased 3.5% to $219.0 million.
Adjusted EBITDAre for the six months ended June 30, 2019 compared to the same period in 2018 decreased 3.5% to $414.9 million.
Normalized FFO: Normalized FFO for the quarter ended June 30, 2019 were $168.8 million, or $1.03 per diluted common share, compared to Normalized FFO of $176.2 million, or $1.07 per diluted common share, for the quarter ended June 30, 2018.
Normalized FFO for the six months ended June 30, 2019 were $313.4 million, or $1.91 per diluted common share, compared to Normalized FFO of $331.1 million, or $2.02 per diluted common share, for the six months ended June 30, 2018.
Hotel RevPAR (comparable hotels): For the quarter ended June 30, 2019 compared to the same period in 2018 for HPT’s 322 comparable hotels: average daily rate, or ADR, decreased 1.2% to $130.37; occupancy decreased 0.7 percentage points to 77.3%; and revenue per available room, or RevPAR, decreased 2.1% to $100.78.
For the six months ended June 30, 2019 compared to the same period in 2018 for HPT’s 322 comparable hotels: ADR decreased 0.1% to $129.26; occupancy decreased 1.8 percentage points to 72.3%; and RevPAR decreased 2.5% to $93.45.
Hotel RevPAR (all hotels): For the quarter ended June 30, 2019 compared to the same period in 2018 for HPT’s 328 hotels that were owned as of June 30, 2019: ADR decreased 1.3% to $131.94; occupancy decreased 0.9 percentage points to 77.2%; and RevPAR decreased 2.4% to $101.86.
For the six months ended June 30, 2019 compared to the same period in 2018 for HPT’s 328 hotels that were owned as of June 30, 2019: ADR decreased 0.3% to $131.03; occupancy decreased 1.9 percentage points to 72.3%; and RevPAR decreased 2.8% to $94.73.
Coverage of Minimum Returns and Rents: For the quarter ended June 30, 2019, the aggregate coverage ratio of (x) total hotel revenues minus all hotel expenses and FF&E reserve escrows which are not subordinated to minimum returns or rents due to HPT to (y) HPT’s minimum returns or rents due from hotels decreased to 1.10x from 1.23x for the quarter ended June 30, 2018.
For the six months ended June 30, 2019, the aggregate coverage ratio of (x) total hotel revenues minus all hotel expenses and FF&E reserve escrows which are not subordinated to minimum returns or rents due to HPT to (y) HPT’s minimum returns or rents due from hotels decreased to 0.91x from 1.03x for the six months ended June 30, 2018.
For the quarter ended June 30, 2019, the aggregate coverage ratio of (x) total travel center revenues less travel center expenses to (y) HPT’s minimum rent due from leased travel centers, excluding payments of previously deferred rent, increased to 1.91x from 1.90x for the quarter ended June 30, 2018.
For the six months ended June 30, 2019, the aggregate coverage ratio of (x) total travel center revenues less travel center expenses to (y) HPT’s minimum rent due from leased travel centers, excluding payments of previously deferred rent, decreased to 1.81x from 1.82x for the six months ended June 30, 2018.
As of June 30, 2019, approximately 73% of HPT’s aggregate annual minimum returns and rents were secured by guarantees or security deposits from HPT’s managers and tenants pursuant to the terms of HPT’s operating agreements.
As previously announced, in June 2019, HPT entered into an agreement to acquire a net lease portfolio from Spirit MTA REIT (NYSE: SMTA) for $2.4 billion in cash, excluding transaction costs and subject to customary adjustments or prorations, or the SMTA Transaction. In addition to the $2.4 billion purchase price, HPT has agreed to pay the prepayment penalties to extinguish the existing mortgage debt on the portfolio, which penalties are estimated to be approximately $78.0 million. The portfolio consists of 770 service-oriented retail properties net leased to tenants in 22 different industries. To finance the transaction, HPT has secured commitments from lenders for an up to $2.0 billion unsecured term loan facility. HPT may use the proceeds from this term loan facility, borrowings under its existing revolving credit facility, proceeds from the sale of certain assets, proceeds from the issuance of new unsecured senior notes or other sources to finance this transaction. This transaction is subject to the approval by SMTA's shareholders and other customary conditions and is expected to close in the third quarter of 2019. HPT has commenced marketing certain assets as part of its previously announced plan to sell approximately $500.0 million of the assets it will acquire in the SMTA Transaction and approximately $300.0 million of other assets to reduce leverage following the SMTA Transaction.
As previously announced, in July 2019, HPT sold all 2,503,777 of its class A common shares of The RMR Group Inc., or RMR Inc., in an underwritten public offering at a price to the public of $40.00 per common share. HPT received $93.9 million in net proceeds after underwriting fees and before other offering expenses that it used to repay debt.
Tenants and Managers: As of June 30, 2019, HPT had eight operating agreements with six hotel operating companies for 328 hotels with 51,080 rooms, which represented 71% of HPT’s total annual minimum returns and rents, and five leases with TravelCenters of America Inc., or TA, for 179 travel centers, which represented 29% of HPT’s total annual minimum returns and rents.
HPT currently expects to exit its relationship with Wyndham and to rebrand or sell its 22 hotels currently managed by Wyndham.
HPT leases 48 vacation units in one of the hotels to a subsidiary of Wyndham Destinations, Inc. (NYSE: WYND), or Destinations, which requires annual minimum rent of $1.5 million (approximately $0.4 million per quarter). The guaranty provided by Destinations with respect to the lease is unlimited. The contractual rent due to HPT under the lease for Destinations' 48 vacation units during the three months ended June 30, 2019 was paid to HPT.
Conference Call:
At 10:00 a.m. Eastern Time this morning, President and Chief Executive Officer, John Murray, Chief Financial Officer and Treasurer, Brian Donley, and Vice President, Todd Hargreaves, will host a conference call to discuss HPT's second quarter 2019 financial results. 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 Friday, August 16, 2019. To access the replay, dial (412) 317-0088. The replay pass code is 10132777.
A live audio webcast of the conference call will also be available in a listen-only mode on HPT’s website, 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 2019 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, the District of Columbia, Puerto Rico and Canada. HPT’s properties are operated under long term management or lease agreements. HPT is managed by the operating subsidiary of RMR Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.
Non-GAAP Financial Measures:
HPT presents certain “non-GAAP financial measures” within the meaning of applicable Securities and Exchange Commission, or SEC, rules, including EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income as indicators of HPT’s operating performance or as measures of HPT’s liquidity. These measures should be considered in conjunction with net income as presented in HPT’s condensed consolidated statements of income. HPT considers these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income. HPT believes these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of HPT’s operating performance between periods and with other REITs.
Please see the pages attached hereto for a more detailed statement of HPT’s operating results and financial condition and for an explanation of HPT’s calculation of FFO and Normalized FFO, EBITDA, EBITDAre and Adjusted EBITDAre and a reconciliation of those amounts to amounts determined in accordance with GAAP.
Comparable Hotels Data:
HPT presents RevPAR, ADR and occupancy for the periods presented on a comparable basis to facilitate comparisons between periods. HPT generally defines comparable hotels as those that were owned by it and were open and operating for the entire periods being compared. For each of the three and six months ended June 30, 2019 and 2018, HPT excluded six hotels from its comparable results. Five of these hotels were not owned for the entire periods and one was closed for a major renovation during part of the periods presented.
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Revenues:
Hotel operating revenues (1)
$
541,668
$
529,599
$
997,053
$
974,875
Rental income (2)
67,764
81,018
135,915
163,011
FF&E reserve income (3)
1,130
1,334
2,502
2,698
Total revenues
610,562
611,951
1,135,470
1,140,584
Expenses:
Hotel operating expenses (1)
381,703
374,081
700,828
689,063
Depreciation and amortization
99,196
99,684
198,561
199,301
General and administrative (4)
12,207
13,121
24,442
24,855
Total expenses
493,106
486,886
923,831
913,219
Gain on sale of real estate (5)
—
—
159,535
—
Dividend income
876
626
1,752
1,252
Unrealized gains and (losses) on equity securities, net (6)
(60,788
)
20,940
(39,811
)
45,895
Interest income
449
323
1,086
615
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $2,570, $2,559, $5,140 and $5,037, respectively)
(49,601
)
(48,741
)
(99,367
)
(96,281
)
Loss on early extinguishment of debt (7)
—
(160
)
—
(160
)
Income before income taxes and equity in earnings of an investee
8,392
98,053
234,834
178,686
Income tax benefit (expense)
260
(771
)
(799
)
(1,242
)
Equity in earnings of an investee
130
7
534
51
Net income
$
8,782
$
97,289
$
234,569
$
177,495
Weighted average common shares outstanding (basic)
164,284
164,205
164,281
164,202
Weighted average common shares outstanding (diluted)
164,326
164,243
164,324
164,226
Net income per common share (basic and diluted)
$
0.05
$
0.59
$
1.43
$
1.08
See Notes on pages 9 and 10
HOSPITALITY PROPERTIES TRUST
RECONCILIATIONS OF FUNDS FROM OPERATIONS,
NORMALIZED FUNDS FROM OPERATIONS, EBITDA, EBITDAre AND ADJUSTED EBITDAre
(amounts in thousands, except share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Calculation of FFO and Normalized FFO: (8)
Net income
$
8,782
$
97,289
$
234,569
$
177,495
Add (Less): Depreciation and amortization
99,196
99,684
198,561
199,301
Gain on sale of real estate (5)
—
—
(159,535
)
—
Unrealized (gains) and losses on equity securities, net (6)
60,788
(20,940
)
39,811
(45,895
)
FFO
168,766
176,033
313,406
330,901
Add: Loss on early extinguishment of debt (7)
—
160
—
160
Normalized FFO
$
168,766
$
176,193
$
313,406
$
331,061
Weighted average common shares outstanding (basic)
164,284
164,205
164,281
164,202
Weighted average common shares outstanding (diluted)
164,326
164,243
164,324
164,226
Basic and diluted per common share amounts:
FFO and Normalized FFO
$
1.03
$
1.07
$
1.91
$
2.02
Distributions declared per share
$
0.54
$
0.53
$
1.07
$
1.05
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Calculation of EBITDA, EBITDAre and Adjusted EBITDAre: (9)
Net income
$
8,782
$
97,289
$
234,569
$
177,495
Add (Less): Interest expense
49,601
48,741
99,367
96,281
Income tax benefit (expense)
(260
)
771
799
1,242
Depreciation and amortization
99,196
99,684
198,561
199,301
EBITDA
157,319
246,485
533,296
474,319
Less: Gain on sale of real estate (5)
—
—
(159,535
)
—
EBITDAre
157,319
246,485
373,761
474,319
Add (Less): General and administrative expense paid in common shares (10)
865
1,193
1,301
1,270
Loss on early extinguishment of debt (7)
—
160
—
160
Unrealized (gains) and losses on equity securities, net (6)
60,788
(20,940
)
39,811
(45,895
)
Adjusted EBITDAre
$
218,972
$
226,898
$
414,873
$
429,854
See Notes on pages 9 and 10
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(Unaudited)
June 30,
December 31,
2019
2018
ASSETS
Real estate properties:
Land
$
1,674,653
$
1,626,239
Buildings, improvements and equipment
8,002,833
7,896,734
Total real estate properties, gross
9,677,486
9,522,973
Accumulated depreciation
(3,026,473
)
(2,973,384
)
Total real estate properties, net
6,651,013
6,549,589
Cash and cash equivalents
15,688
25,966
Restricted cash
37,792
50,037
Due from related persons
75,939
91,212
Other assets, net
397,314
460,275
Total assets
$
7,177,746
$
7,177,079
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility
$
90,000
$
177,000
Unsecured term loan, net
397,591
397,292
Senior unsecured notes, net
3,602,333
3,598,295
Security deposits
123,637
132,816
Accounts payable and other liabilities
298,625
211,332
Due to related persons
8,118
62,913
Total liabilities
4,520,304
4,579,648
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,454,537 and 164,441,709 shares issued and outstanding, respectively
1,645
1,644
Additional paid in capital
4,546,737
4,545,481
Cumulative other comprehensive loss
(129
)
(266
)
Cumulative net income available for common shareholders
3,466,464
3,231,895
Cumulative common distributions
(5,357,275
)
(5,181,323
)
Total shareholders’ equity
2,657,442
2,597,431
Total liabilities and shareholders’ equity
$
7,177,746
$
7,177,079
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", "will", "may" and negatives or derivatives of these 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. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond HPT's control. 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.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190809005055/en/
Katie Strohacker, Senior Director, Investor Relations (617) 796-8232
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