First Quarter Net Income of $1.37 Per Common
Share
First Quarter Normalized FFO of $0.88 Per
Common Share
Hospitality Properties Trust (Nasdaq: HPT) today announced its
financial results for the quarter ended March 31, 2019:
Three Months Ended March 31, 2019 2018
($ in thousands, except per share and RevPAR data) Net
income $ 225,787 $ 80,206 Net income per common share $ 1.37 $ 0.49
Adjusted EBITDAre (1) $ 195,901 $ 202,956 Normalized FFO (1) $
144,640 $ 154,868 Normalized FFO per common share (1) $ 0.88 $ 0.94
Portfolio
Performance
Comparable hotel RevPAR $ 87.02 $ 89.91 Change in comparable hotel
RevPAR (3.2 %) — RevPAR (all hotels) $ 87.77 $ 90.62 Change in
RevPAR (all hotels) (3.1 %) — Coverage of HPT’s minimum returns and
rents for hotels
0.71
x
0.82x Coverage of HPT's minimum rents for travel centers
1.71
x
1.74x
(1) Additional information and reconciliations of net income
determined in accordance with U.S. generally accepted accounting
principles, or GAAP, to certain non-GAAP measures including EBITDA,
EBITDAre, Adjusted EBITDAre, FFO and Normalized FFO, for the
quarters ended March 31, 2019 and 2018 appear later in this
press release.
John Murray, President and Chief Executive Officer of HPT, made
the following statement:
"HPT's first quarter 2019 comparable hotel RevPAR declined 3.2%
compared to the prior year period due to occupancy decreases from
twenty-eight hotels under renovation, non-recurring business
related to significant weather events, the first quarter 2019 U.S.
government shutdown and competition from new hotels. For hotels not
impacted by these events, comparable RevPAR increased 1.6%.
HPT's 179 TA properties performed well during the three months
ended March 31, 2019. Total fuel volumes were up 2.2% versus
the same period last year, and non-fuel gross margins increased
2.9% with increases in the store, quick service restaurants and
truck services businesses.
In April 2019, HPT announced a dividend increase to $0.54 per
common share ($2.16 per share per year) which marks the eighth year
in a row it has raised its common share dividend.”
Results for the Quarter Ended March 31, 2019 and Recent
Activities:
- Net Income: Net income for the
quarter ended March 31, 2019 was $225.8 million, or $1.37 per
diluted common share, compared to net income of $80.2 million, or
$0.49 per diluted common share, for the quarter ended
March 31, 2018. Net income for the quarter ended
March 31, 2019 includes a $159.5 million, or $0.97 per diluted
common share, gain on sale of real estate and $21.0 million, or
$0.13 per diluted common share, of unrealized gains on equity
securities. Net income for the quarter ended March 31, 2018
includes $25.0 million, or $0.15 per diluted common share, of net
unrealized gains and losses on equity securities. The weighted
average number of diluted common shares outstanding was 164.3
million and 164.2 million for the quarters ended March 31,
2019 and 2018, respectively.
- Adjusted EBITDAre: Adjusted
EBITDAre for the quarter ended March 31, 2019 compared to the
same period in 2018 decreased 3.5% to $195.9 million.
- Normalized FFO: Normalized FFO
for the quarter ended March 31, 2019 were $144.6 million, or
$0.88 per diluted common share, compared to Normalized FFO of
$154.9 million, or $0.94 per diluted common share, for the quarter
ended March 31, 2018.
- Hotel RevPAR (comparable
hotels): For the quarter ended March 31, 2019 compared to
the same period in 2018 for HPT’s 323 hotels that were owned
continuously since January 1, 2018: average daily rate, or
ADR, increased 1.0% to $129.11; occupancy decreased 2.9 percentage
points to 67.4%; and revenue per available room, or RevPAR,
decreased 3.2% to $87.02.
- Hotel RevPAR (all hotels): For
the quarter ended March 31, 2019 compared to the same period
in 2018 for HPT’s 327 hotels that were owned as of March 31,
2019: ADR increased 0.9% to $130.03; occupancy decreased 2.8
percentage points to 67.5%; and RevPAR decreased 3.1% to
$87.77.
- Coverage of Minimum Returns and
Rents: For the quarter ended March 31, 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 0.71x from 0.82x for the quarter ended
March 31, 2018.For the quarter ended March 31, 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 decreased to 1.71x from 1.74x for the quarter ended
March 31, 2018.As of March 31, 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.
- Recent Property Acquisition
Activities: As previously announced, in February 2019, HPT
acquired the 335 room Hotel Palomar located in Washington, D.C. for
a purchase price of $141.5 million, excluding acquisition related
costs. HPT added this Kimpton® branded hotel to its management
agreement with InterContinental Hotels Group, plc (LON: IHG; NYSE:
IHG (ADRs)), or IHG.In May 2019, HPT acquired the 198 room Crowne
Plaza® hotel located in Milwaukee, WI for a purchase price of $30.0
million, excluding acquisition related costs. HPT added this hotel
to its management agreement with IHG.
- Transaction with TravelCenters of
America LLC: As previously announced, in January 2019, HPT sold
20 travel centers in 15 states to TravelCenters of America LLC
(Nasdaq: TA), or TA, that HPT owned and leased to TA for $308.2
million. HPT realized a gain of $159.5 million from these sales
during the quarter ended March 31, 2019. HPT used the proceeds
from these sales to repay borrowings under its revolving credit
facility and for general business purposes, including hotel
acquisitions. HPT and TA also amended and extended the terms of
their leases. On April 1, 2019, HPT received the first of 16
quarterly installments of $4.4 million of previously deferred rents
under the terms of the amended leases.
Tenants and Managers: As of March 31, 2019, HPT had
eight operating agreements with six hotel operating companies for
327 hotels with 50,882 rooms, which represented 71% of HPT’s total
annual minimum returns and rents, and five lease agreements with TA
for 179 travel centers, which represented 29% of HPT’s total annual
minimum returns and rents.
- Marriott Agreements: As of
March 31, 2019, 122 of HPT’s hotels were operated by
subsidiaries of Marriott International, Inc. (Nasdaq: MAR), or
Marriott, under three agreements. HPT’s Marriott No. 1 agreement
includes 53 hotels, and provides for annual minimum return payments
to HPT of $71.5 million as of March 31, 2019 (approximately
$17.9 million per quarter). During the three months ended
March 31, 2019, HPT realized returns under its Marriott No. 1
agreement of $15.7 million. Because there is no guarantee or
security deposit for this agreement, the minimum returns HPT
receives under this agreement are limited to available hotel cash
flows after payment of hotel operating expenses and funding of a
FF&E reserve. HPT’s Marriott No. 234 agreement includes 68
hotels and requires annual minimum returns to HPT of $108.2 million
as of March 31, 2019 (approximately $27.0 million per
quarter). During the three months ended March 31, 2019, HPT
realized returns under its Marriott No. 234 agreement of $26.9
million. HPT’s Marriott No. 234 agreement is partially secured by a
security deposit and a limited guaranty from Marriott; during the
three months ended March 31, 2019, HPT reduced the available
security deposit by $2.1 million to cover shortfalls in hotel cash
flows available to pay the minimum returns due to HPT during the
period. As of March 31, 2019, the available security deposit
from Marriott for the Marriott No. 234 agreement was $30.6 million
and there was $30.7 million available under Marriott’s guaranty for
up to 90% of the minimum returns due to HPT to cover future payment
shortfalls if and after the available security deposit is depleted.
HPT's Marriott No. 5 agreement includes one resort hotel in Kauai,
HI which is leased to Marriott on a full recourse basis. The
contractual rent due to HPT for this hotel for the three months
ended March 31, 2019 of $2.6 million was paid to HPT.
- IHG Agreement: As of
March 31, 2019, 101 of HPT’s hotels were operated by
subsidiaries of IHG under one agreement requiring annual minimum
returns and rents to HPT of $205.0 million as of March 31,
2019 (approximately $51.3 million per quarter). During the three
months ended March 31, 2019, HPT realized returns and rents
under its IHG agreement of $49.6 million. HPT's IHG agreement is
partially secured by a security deposit. During the three months
ended March 31, 2019, HPT reduced the available security
deposit by $14.3 million to cover shortfalls in hotel cash flows
available to pay the minimum returns and rents due to HPT during
the period. As of March 31, 2019, the available IHG security
deposit which HPT held to pay future payment shortfalls was $85.7
million. In connection with the February acquisition of the Hotel
Palomar described above, IHG agreed to provide HPT $5.0 million to
supplement the existing security deposit.
- Sonesta Agreement: As of
March 31, 2019, 51 of HPT’s hotels were operated under a
management agreement with Sonesta International Hotels Corporation,
or Sonesta, requiring annual minimum returns of $127.6 million as
of March 31, 2019 (approximately $31.9 million per quarter).
During the three months ended March 31, 2019, HPT realized
returns under its Sonesta agreement of $14.2 million. Because there
is no guarantee or security deposit for this agreement, the minimum
returns HPT receives under this agreement are limited to available
hotel cash flows after payment of hotel operating expenses
including management and related fees.
- Wyndham Agreement: As of
March 31, 2019, 22 of HPT’s hotels were operated under a
management agreement with subsidiaries of Wyndham Hotels &
Resorts, Inc. (NYSE: WH), or Wyndham, requiring annual minimum
returns of $27.9 million as of March 31, 2019 (approximately
$7.0 million per quarter). The guaranty provided by Wyndham with
respect to the management agreement was limited to $35.7 million
and has been depleted since 2017. HPT's agreement with the Wyndham
subsidiary provides that if the hotels' cash flows available after
payment of hotel operating expenses are less than the minimum
returns due to HPT and if the guaranty is depleted, to avoid
default Wyndham is required to pay HPT the greater of the available
hotel cash flows after payment of hotel operating expenses and 85%
of the contractual minimum amount due. During the three months
ended March 31, 2019, HPT realized returns under its Wyndham
agreement of $5.9 million, which represents 85% of the minimum
returns due for the period. HPT also 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
March 31, 2019 was paid to HPT.
- Hyatt Agreement: As of
March 31, 2019, 22 of HPT’s hotels were operated under a
management agreement with a subsidiary of Hyatt Hotels Corporation
(NYSE: H), or Hyatt, requiring annual minimum returns of $22.0
million as of March 31, 2019 (approximately $5.5 million per
quarter). During the three months ended March 31, 2019, HPT
realized returns under its Hyatt agreement of $5.5 million. HPT’s
Hyatt agreement is partially secured by a limited guaranty from
Hyatt. During the three months ended March 31, 2019, the
hotels under this agreement generated cash flows that were less
than the minimum returns due to HPT, and Hyatt made $0.4 million of
guaranty payments to cover the shortfall. As of March 31,
2019, there was $21.5 million available under Hyatt's
guaranty.
- Radisson Agreement: As of
March 31, 2019, nine of HPT’s hotels were operated under a
management agreement with a subsidiary of Radisson Hospitality,
Inc., or Radisson, requiring annual minimum returns of $19.8
million as of March 31, 2019 (approximately $4.9 million per
quarter). During the three months ended March 31, 2019, HPT
realized returns under its Radisson agreement of $4.8 million.
HPT’s Radisson agreement is partially secured by a limited guaranty
from Radisson. During the three months ended March 31, 2019,
the hotels under this agreement generated cash flows that were less
than the minimum returns due to HPT, and Radisson made $2.6 million
of guaranty payments to cover the shortfall. As of March 31,
2019, there was $39.9 million available under Radisson's
guaranty.
- Travel Center Agreements: As of
March 31, 2019, HPT’s 179 travel centers located along the
U.S. Interstate Highway system were leased to TA under five lease
agreements, which require aggregate annual minimum rents of $246.1
million (approximately $61.5 million per quarter). As of
March 31, 2019, all payments due to HPT from TA under these
leases were current. See above regarding transactions we completed
with TA in January 2019.
Conference Call:
At 10:00 a.m. Eastern Time this morning, President and Chief
Executive Officer, John Murray, and Chief Financial Officer and
Treasurer, Brian Donley, will host a conference call to discuss
HPT's first 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, May 17, 2019. To access the replay,
dial (412) 317-0088. The replay pass code is 10130293.
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 first quarter conference call is strictly
prohibited without the prior written consent of HPT.
Supplemental Data:
A copy of HPT’s First 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 The RMR Group 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.
HOSPITALITY PROPERTIES TRUST CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share
data)
(Unaudited)
Three Months Ended March 31, 2019 2018
Revenues: Hotel operating revenues (1) $ 455,385 $ 445,276 Rental
income (2) 68,151 81,993 FF&E reserve income (3) 1,372
1,364 Total revenues 524,908 528,633
Expenses: Hotel operating expenses (1) 319,125 314,982 Depreciation
and amortization 99,365 99,617 General and administrative (4)
12,235 11,734 Total expenses 430,725 426,333
Gain on sale of real estate (5) 159,535 — Dividend income 876 626
Unrealized gains and losses on equity securities, net (6) 20,977
24,955 Interest income 637 292 Interest expense (including
amortization of debt issuance costs and debt discounts and premiums
of $2,570 and $2,478, respectively) (49,766 ) (47,540 ) Income
before income taxes and equity in earnings of an investee 226,442
80,633 Income tax expense (1,059 ) (471 ) Equity in earnings of an
investee 404 44 Net income $ 225,787 $ 80,206
Weighted average common shares outstanding (basic)
164,278 164,199 Weighted average common shares
outstanding (diluted) 164,322 164,219 Net
income per common share (basic and diluted) $ 1.37 $ 0.49
See Notes on page 8
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 March 31, 2019 2018 Calculation of
FFO and Normalized FFO: (7) Net income $ 225,787 $ 80,206 Add
(Less): Depreciation and amortization 99,365 99,617 Gain on sale of
real estate (5) (159,535 ) — Unrealized gains and losses on equity
securities, net (6) (20,977 ) (24,955 ) FFO and Normalized FFO $
144,640 $ 154,868 Weighted average common
shares outstanding (basic) 164,278 164,199 Weighted
average common shares outstanding (diluted) 164,322 164,219
Basic and diluted per common share amounts: FFO and
Normalized FFO $ 0.88 $ 0.94 Distributions declared per share $
0.53 $ 0.52 Three
Months Ended March 31, 2019 2018 Calculation of EBITDA, EBITDAre
and Adjusted EBITDAre: (8) Net income $ 225,787 $ 80,206
Add:
Interest expense
49,766 47,540 Income tax expense 1,059 471 Depreciation and
amortization 99,365 99,617 EBITDA 375,977 227,834
Less:
Gain on sale of real estate (5)
(159,535 ) — EBITDAre 216,442 227,834
Add (Less):
General and administrative expense paid in
common shares (9)
436 77 Unrealized gains and losses on equity securities, net (6)
(20,977 ) (24,955 ) Adjusted EBITDAre $ 195,901 $ 202,956
See Notes on page 8
(1) As of March 31, 2019, HPT owned 327 hotels; 325 of
these hotels were managed by hotel operating companies and two
hotels were leased to hotel operating companies. As of
March 31, 2019, HPT also owned 179 travel centers; all 179 of
these travel centers were leased to TA 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,
$42,839 and $27,586 less than the minimum returns due to HPT for
the three months ended March 31, 2019 and 2018, respectively.
When managers of these hotels are required to fund the shortfalls
under the terms of HPT’s management 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. The reduction to hotel
operating expenses was $22,465 and $10,851 for the three months
ended March 31, 2019 and 2018, respectively. When HPT reduces
the amounts of the security deposit it holds for any of its
operating agreements for payment deficiencies, it does not result
in additional cash flows to HPT of the deficiency amounts, but
reduces the refunds due to the respective tenants or managers who
have provided HPT with these deposits upon expiration of the
respective operating agreement. The security deposits are
non-interest bearing and are not held in escrow. HPT had shortfalls
at certain of its managed hotel portfolios not funded by the
managers of these hotels under the terms of its management
agreements of $20,676 and $17,769 for the three months ended
March 31, 2019 and 2018, respectively, which represent the
unguaranteed portions of HPT's minimum returns from its Marriott,
Sonesta and Wyndham agreements. Certain of HPT’s managed hotel
portfolios had net operating results that were, in the aggregate,
$1,275 more than the minimum returns due to HPT for the three
months ended March 31, 2018. The net operating results of
HPT's managed hotel portfolios did not exceed the minimum returns
due to HPT for the three months ended March 31, 2019. Certain
of HPT's guarantees and its security deposits may be replenished by
a share of future cash flows from the applicable hotel operations
in excess of the minimum returns due to HPT pursuant to the terms
of the respective agreements. When HPT's guarantees and 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.
HPT had $1,275 of guaranty and security deposit replenishments for
the three months ended March 31, 2018. There were no
replenishments for the three months ended March 31, 2019.
(2) Rental income includes decreases of $1,132 and increases of
$3,079 for the three months ended March 31, 2019 and 2018,
respectively, of adjustments necessary to record scheduled rent
changes 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) 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 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
with The RMR Group LLC 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, in the first,
second and third quarters. Although HPT recognizes this expense, if
any, in the first, second and third quarters for purposes of
calculating net income, HPT does not include these amounts in the
calculation of Normalized FFO or Adjusted EBITDAre until the fourth
quarter, which is when the business management incentive fee
expense amount for the year, if any, is determined. No estimated
business management incentive fee expense was recorded for the
three months ended March 31, 2019 or 2018.
(5) HPT recorded a $159,535 gain on sale of real estate during
the three months ended March 31, 2019 in connection with the
sales of 20 travel centers.
(6) Unrealized gains and losses on equity securities, net
represent the adjustment required to adjust the carrying value of
HPT's investments in The RMR Group Inc. and TA common shares to
their fair value as of March 31, 2019 and 2018.
(7) HPT calculates funds from operations, or FFO, and Normalized
FFO 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, calculated in accordance with GAAP, excluding
any gain or loss on sale of properties and loss on impairment of
real estate assets, if any, plus real estate depreciation and
amortization, less any unrealized gains and losses on equity
securities, as well as certain other adjustments currently not
applicable to HPT. In calculating Normalized FFO, HPT includes
business management incentive fees, if any, only in the fourth
quarter versus the quarter when they are recognized as an 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 be payable when all contingencies for
determining such fees are known at the end of the calendar year.
FFO and Normalized FFO are among the factors considered by HPT’s
Board of Trustees when determining the amount of distributions to
its 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. Other real estate companies and REITs may
calculate FFO and Normalized FFO differently than HPT does.
(8) HPT calculates earnings before interest, taxes, depreciation
and amortization, or EBITDA, EBITDA for real estate, or EBITDAre,
and Adjusted EBITDAre as shown above. EBITDAre is calculated on the
basis defined by Nareit which is EBITDA, excluding gains and losses
on the sale of real estate, loss on impairment of real estate
assets, if any, as well as certain other adjustments currently not
applicable to HPT. In calculating Adjusted EBITDAre, HPT adjusts
for the items shown above and includes business management
incentive fees only in the fourth quarter versus the quarter when
they are recognized as an 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 be payable when
all contingencies for determining such fees are known at the end of
the calendar year. Other real estate companies and REITs may
calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than
HPT does.
(9) Amounts represent the equity compensation for HPT’s
trustees, its officers and certain other employees of HPT’s
manager.
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share
data)
(Unaudited)
March 31, December 31, 2019 2018 ASSETS Real estate properties:
Land $ 1,671,210 $ 1,626,239 Buildings, improvements and equipment
7,962,010 7,896,734 Total real estate properties,
gross 9,633,220 9,522,973 Accumulated depreciation (2,979,795 )
(2,973,384 ) Total real estate properties, net 6,653,425 6,549,589
Cash and cash equivalents 23,675 25,966 Restricted cash 75,129
50,037 Due from related persons 79,710 91,212 Other assets, net
423,865 460,275 Total assets $ 7,255,804 $
7,177,079 LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility $ 141,000 $ 177,000 Unsecured
term loan, net 397,442 397,292 Senior unsecured notes, net
3,600,314 3,598,295 Security deposits 116,448 132,816 Accounts
payable and other liabilities 250,925 211,332 Due to related
persons 13,109 62,913 Total liabilities 4,519,238
4,579,648 Commitments and contingencies
Shareholders’ equity: Common shares of beneficial interest, $.01
par value; 200,000,000 shares authorized; 164,441,709 shares issued
and outstanding 1,644 1,644 Additional paid in capital 4,545,917
4,545,481 Cumulative other comprehensive loss (200 ) (266 )
Cumulative net income available for common shareholders 3,457,682
3,231,895 Cumulative common distributions (5,268,477 ) (5,181,323 )
Total shareholders’ equity 2,736,566 2,597,431 Total
liabilities and shareholders’ equity $ 7,255,804 $ 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:
- Mr. Murray states in this press release
that comparable hotel RevPAR increased for hotels not impacted by
renovations, non-recurring business related to significant weather
events, the U.S. government shutdown during the first quarter of
2019 and competition from new hotels compared with the prior year
period. Mr. Murray also states in this press release that total
fuel volumes and non-fuel gross margins at its TA properties
improved during the first quarter of 2019 compared with the prior
year period. These statements may imply that HPT's comparable
hotels that were impacted by renovation activities, non-recurring
business related to significant weather events, the U.S. government
shutdown and competition from new hotels will experience similar
RevPAR improvements once those hotels are no longer impacted by
those matters. In addition, these statements may imply that TA
properties' total fuel volumes and non-fuel gross margins will
continue to improve. In fact, those comparable hotels may not
realize increased RevPAR, even when the matters that negatively
impacted them in the 2019 first quarter no longer impact them, or
otherwise. Further, TA's fuel volumes and non-fuel gross margins at
HPT's TA properties may not continue to improve and they could
decline, which may reduce coverage of HPT's minimum rents from its
TA properties and negatively impact TA's ability to pay HPT
rent.
- As of March 31, 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. This may imply that these minimum returns and
rents will be paid. In fact, certain of these guarantees and
security deposits are limited in amount and duration and all the
guarantees are subject to the guarantors' abilities and willingness
to pay. HPT cannot be sure of the future financial performance of
HPT's properties and whether such performance will cover HPT's
minimum returns and rents, whether the guarantees or security
deposits will be adequate to cover future shortfalls in the minimum
returns or rents due to HPT which they guarantee or secure, or
regarding HPT's managers', tenants' or guarantors' future actions
if and when the guarantees and security deposits expire or are
depleted or their abilities or willingness to pay minimum returns
and rents owed to HPT. Moreover, the security deposits HPT holds
are not segregated from HPT's other assets and the application of
security deposits to cover payments shortfalls will result in HPT
recording income, but will not result in HPT receiving additional
cash. The balance of HPT's annual minimum returns and rents as of
March 31, 2019 was not secured by guarantees or security
deposits.
- HPT has no guarantees or security
deposits for the minimum returns due to HPT from HPT's Marriott No.
1 or Sonesta agreements and the guaranty from Wyndham has been
depleted. Accordingly, HPT may receive amounts that are less than
the contractual minimum returns stated in these agreements. HPT can
provide no assurance as to whether Wyndham will continue to pay at
least the greater of available hotel cash flows after payment of
hotel operating expenses and 85% of the minimum returns due to HPT
or if Wyndham will default on its payments.
- Mr. Murray states in this press release
that HPT increased its dividend to $0.54 per common share ($2.16
per share per year). A possible implication of this statement is
that HPT will continuously pay quarterly dividends of $0.54/share
per quarter or $2.16/share per year in the future. Mr. Murray also
states in this press release that HPT has increased its dividend
annually for eight consecutive years. A possible implication of
this statement is that HPT will continue to increase its annual
dividend in the future. HPT’s dividend rates are set from time to
time by HPT’s Board of Trustees. HPT's Board of Trustees considers
many factors when setting dividend rates, including HPT’s
historical and projected income, Normalized FFO, cash available for
distribution, the then current and expected needs and availability
of cash to pay HPT’s obligations and fund HPT’s investments,
distributions which may be required to be paid to maintain HPT’s
qualification for taxation as a REIT and other factors deemed
relevant by HPT’s Board of Trustees in its discretion. Accordingly,
future dividend rates may be increased or decreased and there is no
assurance as to the rate at which future dividends will be
paid.
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/20190510005055/en/
Katie Strohacker, Senior Director, Investor Relations(617)
796-8232
Hospitality Properties (NASDAQ:HPT)
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