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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 of $0.99 Per Share for Third Quarter, Up 15.1% Year Over Year
Third Quarter Adjusted EBITDA Growth of 13.0% Year Over Year
Third Quarter Comparable Hotel RevPAR Growth of 7.8% Year Over Year
Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter and nine months ended September 30, 2015, compared to the results for the prior year comparable periods:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2015 2014 2015 2014 ($ in thousands, except per share and RevPAR data) Net income available for common shareholders $ 56,019 $ 44,031 $ 170,414 $ 125,164 Net income available for common shareholders per share (basic and diluted) $ 0.37 $ 0.29 $ 1.13 $ 0.84 Adjusted EBITDA (1) $ 192,713 $ 170,505 $ 551,167 $ 497,432 Adjusted EBITDA growth 13.0 % — 10.8 % — Normalized FFO available for common shareholders (1) $ 149,692 $ 129,158 $ 422,580 $ 371,905 Normalized FFO available for common shareholders per share (diluted) (1) $ 0.99 $ 0.86 $ 2.80 $ 2.48Portfolio Performance
Comparable hotel RevPAR $ 97.59 $ 90.54 $ 93.92 $ 85.80 Comparable hotel RevPAR growth 7.8 % — 9.5 % — RevPAR (all hotels) $ 97.18 $ 90.85 $ 93.78 $ 85.97 RevPAR growth (all hotels) 7.0 % — 9.1 % — Coverage of HPT’s minimum returns and rents for hotels 1.17x 1.08x 1.13x 0.98x Coverage of HPT's minimum rents for travel centers 1.75x 1.79x 1.80x 1.70x(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 EBITDA as adjusted, or Adjusted EBITDA, for the three and nine month periods ended September 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 continued strong performance from our hotel and travel center portfolios this quarter which resulted in Normalized FFO per share growth of 15.1% and Adjusted EBITDA growth of 13.0%. Our comparable hotel RevPAR growth of 7.8% exceeded the hotel industry’s performance for the eleventh consecutive quarter. We were also active on the acquisition front this quarter, expanding both our travel center and hotel portfolios at prices we believe are attractive.”
Results for the Three and Nine Months Ended September 30, 2015 and Recent Activities:
Tenants and Managers: As of September 30, 2015, HPT had nine operating agreements with seven hotel operating companies for 302 hotels with 45,864 rooms, which represented 66% of HPT’s total annual minimum returns and rents.
Conference Call:
On Monday, November 9, 2015, at 1:00 p.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 September 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, November 16, 2015. To hear the replay, dial (412) 317-0088. The replay pass code is 10074263.
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 third quarter conference call is strictly prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s Third 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 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” 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 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 September 30,
Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: Hotel operating revenues (1) $ 437,171 $ 394,973 $ 1,243,744 $ 1,112,157 Rental income (2) (3) 73,747 63,837 207,561 190,959 FF&E reserve income (4) 968 829 3,159 2,673 Total revenues 511,886 459,639 1,454,464 1,305,789 Expenses: Hotel operating expenses (1) 308,603 279,560 870,689 780,955 Depreciation and amortization 84,261 79,649 243,812 236,699 General and administrative (5) 19,831 16,798 53,820 41,429 Acquisition related costs (6) 851 14 1,986 237 Total expenses 413,546 376,021 1,170,307 1,059,320 Operating income 98,340 83,618 284,157 246,469 Interest income 11 13 32 63 Interest expense (including amortization of deferred financing costs and debt discounts of $1,458 and $1,316, and $4,374 and $4,034, respectively) (36,628) (34,304) (107,918) (104,101) Loss on early extinguishment of debt (7) - (129) - (855) Income before income taxes, equity in earnings (losses) of an investee and gain on sale of real estate 61,723 49,198 176,271 141,576 Income tax expense (514) (39) (1,445) (1,110) Equity in earnings (losses) of an investee (24) 38 71 66 Income before gain on sale of real estate 61,185 49,197 174,897 140,532 Gain on sale of real estate (8) - - 11,015 130 Net income 61,185 49,197 185,912 140,662 Preferred distributions (5,166) (5,166) (15,498) (15,498) Net income available for common shareholders $ 56,019 $ 44,031 $ 170,414 $ 125,164 Weighted average common shares outstanding (basic) 151,359 149,665 150,476 149,616 Weighted average common shares outstanding (diluted) 151,386 150,007 150,863 149,834 Net income available for common shareholders per common share: Basic and diluted $ 0.37 $ 0.29 $ 1.13 $ 0.84
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 EndedSeptember 30,
Nine Months EndedSeptember 30,
2015 2014 2015 2014 Calculation of Funds from Operations (FFO) and Normalized FFO available for common shareholders: (9) Net income available for common shareholders $ 56,019 $ 44,031 $ 170,414 $ 125,164 Add (Less): Depreciation and amortization 84,261 79,649 243,812 236,699 Gain on sale of real estate (8) - - (11,015 ) (130 ) FFO available for common shareholders 140,280 123,680 403,211 361,733 Add (Less): Acquisition related costs (6) 851 14 1,986 237 Estimated business management incentive fees (5) 8,561 4,778 17,383 6,951 Loss on early extinguishment of debt (7) - 129 - 855 Deferred percentage rent (3) - 557 - 2,129 Normalized FFO available for common shareholders $ 149,692 $ 129,158 $ 422,580 $ 371,905 Weighted average common shares outstanding (basic) 151,359 149,665 150,476 149,616 Weighted average common shares outstanding (diluted) 151,386 150,007 150,863 149,834 Basic and diluted per common share amounts: FFO available for common shareholders (basic) $ 0.93 $ 0.83 $ 2.68 $ 2.42 FFO available for common shareholders (diluted) $ 0.93 $ 0.82 $ 2.67 $ 2.41 Normalized FFO available for common shareholders (basic) $ 0.99 $ 0.86 $ 2.81 $ 2.49 Normalized FFO available for common shareholders (diluted) $ 0.99 $ 0.86 $ 2.80 $ 2.48Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2015 2014 2015 2014 Calculation of EBITDA and Adjusted EBITDA: (10) Net income $ 61,185 $ 49,197 $ 185,912 $ 140,662 Add: Interest expense 36,628 34,304 107,918 104,101 Income tax expense 514 39 1,445 1,110 Depreciation and amortization 84,261 79,649 243,812 236,699 EBITDA 182,588 163,189 539,087 482,572 Add (Less): Acquisition related costs (6) 851 14 1,986 237 General and administrative expense paid in common shares (11) 713 1,838 3,726 4,818 Estimated business management incentive fees (5) 8,561 4,778 17,383 6,951 Loss on early extinguishment of debt (7) - 129 - 855 Deferred percentage rent (3) - 557 - 2,129 Gain on sale of real estate (8) - - (11,015 ) (130 ) Adjusted EBITDA $ 192,713 $ 170,505 $ 551,167 $ 497,432
(1) At September 30, 2015, HPT owned 302 hotels; 299 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 September 30, 2015, HPT also owned 193 travel centers; all 193 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, $6,560 and $8,782 less than the minimum returns due to HPT in the three months ended September 30, 2015 and 2014, respectively, and $17,395 and $30,963 less than the minimum returns due to HPT in the nine months ended September 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 in the three months ended September 30, 2015. Hotel operating expenses were reduced by $42 in the three months ended September 30, 2014 and by $1,295 and $5,052 in the nine months ended September 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 $6,560 and $8,740 in the three months ended September 30, 2015 and 2014, respectively, and $16,100 and $25,911 in the nine months ended September 30, 2015 and 2014, respectively, which represent the unguaranteed portions of HPT’s minimum returns 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 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 financial statements as an increase to hotel operating expenses. HPT had $11,970 and $4,150 of guarantee and security deposit replenishments in the three months ended September 30, 2015 and 2014, respectively, and $27,551 and $6,447 of guarantee and security deposit replenishments in the nine months ended September 30, 2015 and 2014, respectively.
(2) Rental income includes $3,752 and $553 in the three months ended September 30, 2015 and 2014, respectively, and $5,807 and $1,659 in the nine months ended September 30, 2015 and 2014, 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. 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 the modification of its travel center leases.
(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 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.
(5) 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 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. Incentive fees for 2015, if any, will be payable in cash in January 2016.
(6) Represents costs associated with HPT’s acquisition activities.
(7) 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 certain senior unsecured notes. HPT recorded a $129 loss on early extinguishment of debt in the third quarter of 2014 in connection with the redemption of certain senior unsecured notes.
(8) 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. HPT recorded a $130 gain on sale of real estate in the second quarter of 2014 in connection with the sale of one hotel.
(9) 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 estimated 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 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 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 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, 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 available for common shareholders and Normalized FFO available for common shareholders differently than HPT does.
(10) 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.
(11) 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)
September 30, December 31, 2015 2014 ASSETS Real estate properties, at cost: Land $ 1,527,504 $ 1,484,210 Buildings, improvements and equipment 6,671,318 6,171,983 Total real estate properties, gross 8,198,822 7,656,193 Accumulated depreciation (2,153,666) (1,982,033) Total real estate properties, net 6,045,156 5,674,160 Cash and cash equivalents 7,375 11,834 Restricted cash (FF&E reserve escrow) 44,296 33,982 Due from related persons 46,862 40,253 Other assets, net 350,861 222,333 Total assets $ 6,494,550 $ 5,982,562 LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $ 454,000 $ 18,000 Unsecured term loan 400,000 400,000 Senior unsecured notes, net of discounts 2,413,530 2,412,135 Convertible senior unsecured notes 8,478 8,478 Security deposits 53,175 33,069 Accounts payable and other liabilities 160,063 106,903 Due to related persons 24,306 8,658 Dividends payable 5,166 5,166 Total liabilities 3,518,718 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 and outstanding, aggregate liquidation preference of $290,000 280,107 280,107 Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 151,547,288 and 149,920,449 shares issued and outstanding, respectively 1,515 1,499 Additional paid in capital 4,165,912 4,118,551 Cumulative net income 2,901,151 2,715,239 Cumulative other comprehensive income 17,881 25,804 Cumulative preferred distributions (316,146) (300,649) Cumulative common distributions (4,074,588) (3,850,398) Total shareholders’ equity 2,975,832 2,990,153 Total liabilities and shareholders’ equity $ 6,494,550 $ 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/20151109005374/en/
Hospitality Properties TrustKatie Strohacker, 617-796-8232Director, Investor Relations
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