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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 |
Third Quarter Net Income of $0.30 per share
Normalized FFO of $1.03 per share for the Third Quarter
Comparable Hotel RevPAR for the Third Quarter Grows 3.8% Year Over Year
Hospitality Properties Trust (Nasdaq: HPT) today announced its financial results for the quarter and nine months ended September 30, 2016.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015($ in thousands, except per share and RevPAR data)
Net income available for common shareholders $ 46,646 $ 56,019 $ 144,426 $ 170,414 Net income available for common shareholders per share $ 0.30 $ 0.37 $ 0.94 $ 1.13Adjusted EBITDA (1)
$ 210,514 $ 192,713 $ 613,825 $ 551,167 Normalized FFO available for common shareholders (1) $ 162,135 $ 149,692 $ 468,003 $ 422,580Normalized FFO available for common shareholders per share (1)
$ 1.03 $ 0.99 $ 3.05 $ 2.80Portfolio Performance
Comparable hotel RevPAR $ 101.77 $ 98.02 $ 98.37 $ 94.15 Comparable hotel RevPAR growth 3.8% — 4.5% — RevPAR (all hotels) $ 101.35 $ 97.95 $ 97.35 $ 94.33 RevPAR growth (all hotels) 3.5% — 3.2% — Coverage of HPT’s minimum returns and rents for hotels 1.25x 1.18x 1.18x 1.13x Coverage of HPT's minimum rents for travel centers 1.78x 1.74x 1.59x 1.79x(1) Reconciliations of net income 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 available for common shareholders determined in accordance with GAAP to funds from operations, or FFO available for common shareholders, and Normalized FFO available for common shareholders, for the quarters and nine months ended September 30, 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 properties this quarter. HPT’s comparable hotel RevPAR growth of 3.8% exceeded the industry for the 15th consecutive quarter and aggregate coverage of our minimum returns and rents improved compared to the same quarter last year. During the quarter, we also raised $372 million of net proceeds from a common equity offering and principally used the net proceeds to repay debt.”
Results for the Three and Nine Months Ended September 30, 2016 and Recent Activities:
Financing Activities:
In August 2016, HPT issued 12,650,000 common shares in a public offering at a price of $30.75 per share. The net proceeds from this offering of approximately $372.0 million after payment of the underwriters' discount and other offering expenses were used to repay amounts outstanding under HPT's revolving credit facility and for general business purposes.
In September 2016, HPT redeemed at par plus accrued interest all $300.0 million of its 5.625% senior notes due 2017 using cash on hand and borrowings under its revolving credit facility.
Tenants and Managers: As of September 30, 2016, HPT had nine operating agreements with seven hotel operating companies for 305 hotels with 46,347 rooms, which represented 65% of HPT’s total annual minimum returns and rents, and five lease agreements with one travel center operating company for 198 travel centers, which represented 35% of HPT’s total annual minimum returns and rents.
Conference Call:
On Wednesday, November 9, 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 September 30, 2016. The conference call telephone number is (877) 329-4297. Participants calling from outside the United States and Canada should dial (412) 317-5435. 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 Wednesday, November 16, 2016. To hear the replay, dial (412) 317-0088. The replay pass code is 10092992.
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 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”, "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 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, 2016 2015 2016 2015 Revenues: Hotel operating revenues (1) $ 464,173 $ 437,171 $ 1,332,586 $ 1,243,744 Rental income (2) 78,278 73,747 231,830 207,561 FF&E reserve income (3) 1,065 968 3,517 3,159 Total revenues 543,516 511,886 1,567,933 1,454,464 Expenses: Hotel operating expenses (1) 322,012 308,603 923,239 870,689 Depreciation and amortization 90,139 84,261 266,192 243,812 General and administrative (4) 37,739 19,831 91,127 53,820 Acquisition related costs (5) 156 851 885 1,986 Total expenses 450,046 413,546 1,281,443 1,170,307 Operating income 93,470 98,340 286,490 284,157 Dividend income 626 — 1,375 — Interest income 89 11 227 32
Interest expense (including amortization of debt issuance costsand debt discounts of $2,122, $1,458, $6,114 and $4,374, respectively)
(41,280 ) (36,628 ) (124,564 ) (107,918 ) Loss on early extinguishment of debt (6) (158 ) — (228 ) —Income before income taxes, equity in earnings (losses) of aninvestee and gain on sale of real estate
52,747 61,723 163,300 176,271 Income tax expense (948 ) (514 ) (3,483 ) (1,445 ) Equity in earnings (losses) of an investee 13 (24 ) 107 71 Income before gain on sale of real estate 51,812 61,185 159,924 174,897 Gain on sale of real estate (7) — — — 11,015 Net income 51,812 61,185 159,924 185,912 Preferred distributions (5,166 ) (5,166 ) (15,498 ) (15,498 ) Net income available for common shareholders $ 46,646 $ 56,019 $ 144,426 $ 170,414 Weighted average common shares outstanding (basic) 157,217 151,359 153,357 150,476 Weighted average common shares outstanding (diluted) 157,263 151,386 153,390 150,863 Net income available for common shareholders per common share: Basic and diluted $ 0.30 $ 0.37 $ 0.94 $ 1.13HOSPITALITY 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
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015Calculation of Funds from Operations (FFO) and Normalized FFO availablefor common shareholders: (8)
Net income available for common shareholders $ 46,646 $ 56,019 $ 144,426 $ 170,414Add (Less):
Depreciation and amortization
90,139 84,261 266,192 243,812 Gain on sale of real estate (7) — — — (11,015 ) FFO available for common shareholders 136,785 140,280 410,618 403,211Add:
Acquisition related costs (5)
156 851 885 1,986 Estimated business management incentive fees (4) 25,036 8,561 56,272 17,383 Loss on early extinguishment of debt (6) 158 — 228 — Normalized FFO available for common shareholders $ 162,135 $ 149,692 $ 468,003 $ 422,580 Weighted average common shares outstanding (basic) 157,217 151,359 153,357 150,476 Weighted average common shares outstanding (diluted) 157,263 151,386 153,390 150,863 Basic and diluted per common share amounts: FFO available for common shareholders (basic) $ 0.87 $ 0.93 $ 2.68 $ 2.68 FFO available for common shareholders (diluted) $ 0.87 $ 0.93 $ 2.68 $ 2.67 Normalized FFO available for common shareholders (basic) $ 1.03 $ 0.99 $ 3.05 $ 2.81 Normalized FFO available for common shareholders (diluted) $ 1.03 $ 0.99 $ 3.05 $ 2.80Three Months Ended
Nine Months Ended
September 30,
September 30,
2016 2015 2016 2015 Calculation of EBITDA and Adjusted EBITDA: (9) Net income $ 51,812 $ 61,185 $ 159,924 $ 185,912Add:
Interest expense
41,280 36,628 124,564 107,918 Income tax expense 948 514 3,483 1,445 Depreciation and amortization 90,139 84,261 266,192 243,812 EBITDA 184,179 182,588 554,163 539,087Add (less):
Acquisition related costs (5)
156 851 885 1,986 General and administrative expense paid in common shares (10) 985 713 2,277 3,726 Estimated business management incentive fees (4) 25,036 8,561 56,272 17,383 Loss on early extinguishment of debt (6) 158 — 228 — Gain on sale of real estate (7) — — — (11,015 ) Adjusted EBITDA $ 210,514 $ 192,713 $ 613,825 $ 551,167(1) At September 30, 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 September 30, 2016, HPT also owned 198 travel centers; all 198 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, $2,248 and $6,560 less than the minimum returns due to HPT in the three months ended September 30, 2016 and 2015, respectively, and $12,618 and $17,395 less than the minimum returns due to HPT in the nine months ended September 30, 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. There was no reduction to hotel operating expenses in the three months ended September 30, 2016 or 2015 and reductions of $592 and $1,295 in the nine months ended September 30, 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 $2,248 and $6,560 in the three months ended September 30, 2016 and 2015, respectively, and $12,026 and $16,100 in the nine months ended September 30, 2016 and 2015, respectively, which represent the unguaranteed portions of HPT's minimum returns from Sonesta. Certain of HPT’s managed hotel portfolios had net operating results that were, in the aggregate, $35,123 and $28,969 more than the minimum returns due to HPT in the three months ended September 30, 2016 and 2015, respectively, and $80,867 and $65,973 more than the minimum returns due to HPT in the nine months ended September 30, 2016 and 2015, respectively. Certain of HPT’s guarantees and its security deposits may be replenished by a share of these excess 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 were increased by $15,103 and $11,970 in the three months ended September 30, 2016 and 2015, respectively, and $33,897 and $27,551 in the nine months ended September 30, 2016 and 2015, respectively, as a result of such replenishments.
(2) Rental income includes $2,932 and $3,752 in the three months ended September 30, 2016 and 2015, respectively, and $10,377 and $5,807 in the nine months ended September 30, 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. 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. Rental income for the nine months ended September 30, 2015 includes $2,048 of percentage rent recorded because the amount was no longer contingent as a result of HPT’s lease modifications with TA.
(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 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.
(4) 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, if any, is determined. HPT recorded estimated business management incentive fees of $25,036 and $8,561 during the three months ended September 30, 2016 and 2015, respectively, and $56,272 and $17,383 during the nine months ended September 30, 2016 and 2015, respectively.
(5) Represents costs associated with HPT’s acquisition activities.
(6) HPT recorded losses of $158 and $228 on early extinguishment of debt during the three and nine months ended September 30, 2016, respectively, in connection with the redemption of certain senior unsecured notes.
(7) HPT recorded an $11,015 gain on sale of real estate during the nine months ended September 30, 2015 in connection with the sale of five travel centers.
(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 business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of HPT’s core operating performance and the uncertainty as to whether any such business management incentive fees will ultimately be payable when all contingencies for determining any such fees are determined at the end of the calendar year 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 supplemental measures of operating performance for a REIT, along with net income, net income available for common shareholders and operating income. 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 credit 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 or operating income as an indicator of HPT’s operating performance or as a measure of HPT’s liquidity. These measures should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in HPT’s condensed consolidated statements of income. 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 supplemental measures of its operating performance, along with net income, net income available for common shareholders and operating income. 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. In calculating Adjusted EBITDA, HPT includes business management incentive fees only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of HPT’s core operating performance and the uncertainty as to whether any such business management incentive fees will ultimately be payable when all contingencies for determining any such fees are determined at the end of the calendar year. 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 or operating income as an indicator of operating performance or as a measure of HPT’s liquidity. These measures should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in HPT’s condensed consolidated statements of income. 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)
September 30, December 31, 2016 2015 ASSETS Real estate properties: Land $ 1,550,174 $ 1,529,004 Buildings, improvements and equipment 7,047,370 6,732,768 Total real estate properties, gross 8,597,544 8,261,772 Accumulated depreciation (2,436,327 ) (2,217,135 ) Total real estate properties, net 6,161,217 6,044,637 Cash and cash equivalents 9,534 13,682 Restricted cash (FF&E reserve escrow) 60,606 51,211 Due from related persons 62,949 50,987 Other assets, net 291,826 234,280 Total assets $ 6,586,132 $ 6,394,797 LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $ 150,000 $ 465,000 Unsecured term loan, net 398,254 397,756 Senior unsecured notes, net 2,564,476 2,403,439 Convertible senior unsecured notes 8,478 8,478 Security deposits 88,524 53,579 Accounts payable and other liabilities 155,433 179,783 Due to related persons 64,303 69,514 Dividends payable 5,166 5,166 Total liabilities 3,434,634 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 sharesissued and outstanding, aggregate liquidation preference of $290,000
280,107 280,107Common shares of beneficial interest, $.01 par value; 200,000,000 sharesauthorized; 164,269,211 and 151,547,288 shares issued and outstanding,respectively
1,643 1,515 Additional paid in capital 4,539,704 4,165,911 Cumulative net income 3,041,581 2,881,657 Cumulative other comprehensive income (loss) 35,904 (15,523 ) Cumulative preferred distributions (336,811 ) (321,313 ) Cumulative common distributions (4,410,630 ) (4,180,272 ) Total shareholders’ equity 3,151,498 2,812,082 Total liabilities and shareholders’ equity $ 6,586,132 $ 6,394,797A 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: http://www.businesswire.com/news/home/20161109005458/en/
Hospitality Properties TrustKatie Strohacker, 617-796-8232Senior Director, Investor Relations
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