exv99w1
Exhibit 99.1
HERSHA HOSPITALITY TRUST
510 Walnut Street | 9th Floor
Philadelphia | PA | 19106
p. 215.238.1046 | f. 215.238.0157
hersha.com
HERSHA HOSPITALITY ANNOUNCES SECOND QUARTER RESULTS
- Consolidated Hotels Exhibit Strong Growth -
- RevPAR Improved 9.4% -
- Average Daily Rate Increased 8.9% -
- Hotel EBITDA Margins Improved 140 basis points to 41.5% -
Philadelphia, PA, August 3, 2011 Hersha Hospitality Trust (NYSE: HT), owner of select
service and upscale hotels in major metropolitan markets, today announced results for the second
quarter ended June 30, 2011.
Second Quarter 2011 Financial Results
For the second quarter ended June 30, 2011, net income applicable to common shareholders improved
$3.2 million to $6.6 million, compared to net income of $3.4 million for the comparable quarter of
2010.
Adjusted Funds from Operations (AFFO) in the second quarter increased by $6.0 million to $25.1
million, compared to $19.1 million in the second quarter of 2010. AFFO per diluted common share
and unit of limited partnership interest in Hersha Hospitality Limited Partnership (OP Unit) was
$0.14 compared to $0.13 for the same quarter of 2010. AFFO per share during the second quarter of
2011 was impacted by $1.1 million ($0.01) of distributions payable on the 4.6 million Series B
preferred shares issued and sold by the Company in May 2011. The Companys weighted average diluted
common shares and OP Units outstanding was approximately 181.0 million in the second quarter of
2011, up from approximately 149.5 million in the comparable quarter of 2010.
An explanation of Funds from Operations (FFO), AFFO, Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA), Adjusted EBITDA and Hotel EBITDA, as well as
reconciliations of FFO, AFFO, EBITDA and Adjusted EBITDA to net income or loss, the most directly
comparable U.S. GAAP measures, is included at the end of this release.
Mr. Jay H. Shah, the Companys Chief Executive Officer, stated, We are pleased with our second
quarter operating results and believe that these results are indicative of the strength of our core
portfolio and the growth prospects for the remainder of the year. The portfolios occupancy levels
are approaching our historical peaks and have allowed us to strategically focus on pushing Average
Daily Rate (ADR) growth during the quarter. This ADR growth combined with the increasingly urban
concentration of our portfolio allowed us to achieve strong consolidated hotel EBITDA margins of
41.5%. The Hotel EBITDA margin performance of our consolidated portfolio is now exceeding that of
the prior peak. We believe that the strategic acquisitions completed to date combined with
potential dispositions of non-core assets and continued focus on asset management should allow us
to drive these margins higher in the future.
We continued to execute on our stated objective of expanding Hershas presence in some of the
strongest hotel markets in the country as we increased our exposure to New York City and Washington
D.C. during the quarter. We also acquired our first hotel in Los Angeles in a submarket with
multiple and highly diverse demand generators. We expect our added presence in our existing core
markets as well as our entry into these new markets to result in continued RevPAR and EBITDA
growth over time. The 20% increase in our dividend per common share declared this quarter reflects
the confidence of our Board of Trustees in our ongoing operating performance and in our current
outlook, Mr. Shah concluded.
Second Quarter 2011 Operating Results
For the quarter ended June 30, 2011, revenue per available room (RevPAR) for the Companys
consolidated hotels, 65 hotels at June 30, 2011 compared to 63 hotels as of June 30, 2010, was up
9.4% to $115.79 compared to $105.88 in the prior year period. The Companys ADR for its
consolidated hotels increased by 8.9% to $149.02, while occupancy for its consolidated hotels
increased by 32 basis points to 77.70%.
Hotel EBITDA for the Companys consolidated hotels grew approximately 24% or $7.2 million to $37.1
million for the quarter ended June 30, 2011 compared to the same period in 2010. Hotel EBITDA
margins expanded 140 basis points to 41.5% in the second quarter of 2011 compared to 40.1% in the
same quarter of 2010.
On a same-store basis (58 hotels), RevPAR for the Companys consolidated hotels for the quarter
ended June 30, 2011 was up 6.3% to $113.28 compared to $106.62 in the prior year period. ADR for
the Companys same-store consolidated hotels increased by 6.1% to $145.28, while occupancy for its
same-store consolidated hotels increased by 14 basis points to 77.98%. Hotel EBITDA for the
Companys same-store consolidated hotels for the quarter ended June 30, 2011 increased
approximately 7.3% or $2.1 million to $31.9 million compared to the quarter ended June 30, 2010.
Hotel EBITDA margins for the Companys same-store consolidated hotels were 41.1% in the second
quarter of 2011 compared to 40.7% in the second quarter of 2010. The benefit of ADR-driven RevPAR
growth was partially offset by payroll and benefits cost increases along with rising food and
beverage expenses. Hotel EBITDA margins for the Companys same-store consolidated and total
consolidated hotel portfolios were also negatively impacted by higher repairs and maintenance
expenses as the Company has continued to significantly increase its investment in capital projects
in anticipation of an ongoing recovery.
New York City
The New York City consolidated hotel portfolio, which includes the five boroughs, consisted of 14
hotels as of June 30, 2011. For the second quarter of 2011, the Companys same-store New York City
consolidated hotel portfolio (12 hotels) recorded an 8.0% increase in RevPAR to $182.77 driven by
an 8.1% increase in ADR to $204.65 and relatively stable occupancy of 89.3%. This focus on ADR
growth resulted in Hotel EBITDA margin growth of 110 basis points to 46.5%.
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510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
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The Company believes these results reflect meaningful sequential growth from the first quarter of
2011 as demand in the northeast United States returned from the seasonally low first quarter.
Financing
On May 18, 2011, the Company issued and sold 4,600,000 8.0% Series B preferred shares in an
underwritten public offering and raised gross proceeds of approximately $111.2 million, after
underwriting discounts and commissions and offering-related expenses paid by the Company.
As of June 30, 2011, the Company has $28.0 million of borrowings on its $250.0 million secured
credit facility, $93.5 million in cash and escrows and $17.9 million of debt maturities in 2011.
Excluding borrowings under the Companys secured credit facility, approximately 95.0% of the
Companys consolidated debt is fixed rate debt or effectively fixed through interest rate swaps and
caps and has a weighted average interest rate of 5.72%. The weighted average life to maturity of
total consolidated debt is approximately 5.7 years.
Acquisitions
In April 2011, the Company closed on the previously announced acquisition of the 152-room Capitol
Hill Suites in Washington, D.C. for a total purchase price of $47.5 million, or $310,000 per key.
The Capitol Hill Suites, an all-suite boutique hotel with rooms among the largest in the city, is
centrally located on Capitol Hill and is the Companys eighth hotel in the Washington D.C. metro
region.
In May 2011, the Company closed on the previously announced acquisition of the 260-room Marriott
Courtyard Westside in Los Angeles for a total purchase price of $47.5 million, or $182,500 per key.
This is the Companys first acquisition in the Los Angeles market. The hotel was completely
renovated and reopened as the Courtyard Westside in 2008 and includes approximately 11,000 square
feet of meeting space. The Courtyard Westside is surrounded by abundant commercial and leisure
demand generators including large concentrations of Class A office space, high-end retailers,
entertainment venues and production studios. It is also proximate to the Los Angeles International
Airport, Sonys Studios, the 405/10 Interstates, and Marina Del Ray.
Hotel Properties Under Contract
On June 29, 2011, the Company announced that it had entered into a purchase and sale agreement to
acquire the 175-room Hyatt Union Square hotel in New York City for total consideration of $104.1
million, or approximately $595,000 per key. This acquisition is expected to close in 2012 shortly
after the seller completes the hotels construction. Located at the corner of 4th Avenue and 13th
Street, the hotel is well positioned with multiple demand generators. The Hyatt Union Square is
the closest major hotel to New York University and is proximate to the entertainment, fashion and
design districts of Manhattan.
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510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
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Subsequent Events
On July 1, 2011, the Company sold the 81-room Comfort Inn in West Hanover, Pennsylvania for $5.25
million, and recorded a gain of $958,000. This sale is part of the Companys strategy to dispose
of non-core assets and to recycle that capital into hotels in more attractive markets with higher
growth potential.
On July 22, 2011, the Company closed on the previously announced acquisition of the Hampton Inn
located at 32 Pearl Street, New York, NY, a redevelopment project. The property is a redevelopment
project that is being converted to an 81-room hotel and is expected to be completed in 2012.
Outlook for 2011
The Company is reiterating its operating expectations for the remainder of 2011 as the Company
continues to experience strong year over year trends. Based on managements current outlook, the
Company is reiterating the following operating expectations for 2011 as follows:
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Total consolidated portfolio RevPAR for 2011 in the range of a 6% to 8% increase versus
2010. |
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Total portfolio Hotel EBITDA margin improvement of 100 basis points to 150 basis points. |
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Same-store RevPAR for 2011 in the range of a 5% to 7% increase versus 2010. |
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Same-store Hotel EBITDA margin improvement of 75 basis points to 125 basis points. |
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An SG&A run rate of between $9.25 and $9.75 million in 2011 versus SG&A expenses of
$10.2 million in 2010. |
Dividend
For the second quarter of 2011, the Company paid dividends of $0.06 per common share and OP Unit,
an increase of $0.01, or 20%, from its prior dividend per common share and OP Unit.
For the second quarter of 2011, the Company paid dividends of $0.50 per Series A preferred share
and $0.2389 per Series B preferred share (representing a partial dividend period from May 18, 2011,
the date of issuance, through June 30, 2011).
Second Quarter 2011 Earnings Release and Conference Call
The Company will host a conference call to discuss its financial results at 9:00 AM Eastern time on
Thursday, August 4, 2011. The live conference call can be accessed by dialing (888) 452-4030 or
(719) 325-2202 for international participants. A replay of the call will be available from 12:00
noon Eastern time on August 4, 2011, through midnight Eastern time on August 18, 2011. The replay
can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international participants. The
passcode for the call and the replay is 7844283. A replay of the webcast will be available on the
Companys website for a limited time.
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510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
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About Hersha Hospitality
Hersha Hospitality Trust is a self-advised real estate investment trust, which owns interests
in 79 hotels, totaling 10,702 rooms, primarily along the Northeast Corridor from Boston, MA to
Washington D.C. Hersha also owns hotels in Los Angeles, Northern California and Scottsdale,
Arizona. Hersha focuses on upscale, mid-scale and extended stay hotels in major metropolitan
markets.
Forward Looking Statement
Certain matters within this press release are discussed using forward-looking language as specified
in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and
unknown risks, uncertainties and other factors that may cause the actual results or performance to
differ from those projected in the forward-looking statement. These forward-looking statements
include statements related to the Companys ability to outperform, the ongoing recovery of the
lodging industry and the markets in which the Companys hotel properties are located, the Companys
ability to generate internal and external growth, the completion of acquisitions under contract,
the Companys ability to identify and complete the acquisition of hotel properties in new markets,
the Companys ability to enter into contracts for and complete the disposition of non-core assets,
the Companys ability increase margins, including Hotel EBITDA margins, and the Companys operating
expectations for the full 2011 calendar year. For a description of factors that may cause the
Companys actual results or performance to differ from its forward-looking statements, please
review the information under the heading Risk Factors included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2010 and other reports filed by the Company with the
Securities and Exchange Commission.
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510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
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HERSHA HOSPITALITY TRUST
Balance Sheet (unaudited)
(in thousands, except shares and per share data)
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June 30, 2011 |
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December 31, 2010 |
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Assets: |
|
|
|
|
|
|
|
|
Investment in Hotel Properties, net of Accumulated Depreciation |
|
$ |
1,346,914 |
|
|
$ |
1,245,851 |
|
Investment in Unconsolidated Joint Ventures |
|
|
39,171 |
|
|
|
35,561 |
|
Development Loans Receivable |
|
|
42,968 |
|
|
|
41,653 |
|
Cash and Cash Equivalents |
|
|
67,280 |
|
|
|
65,596 |
|
Escrow Deposits |
|
|
26,183 |
|
|
|
17,384 |
|
Hotel Accounts Receivable, net of allowance for doubtful
accounts of $33 and $31 |
|
|
14,361 |
|
|
|
9,611 |
|
Deferred Financing Costs, net of Accumulated Amortization of
$7,441 and $5,852 |
|
|
9,289 |
|
|
|
10,204 |
|
Due from Related Parties |
|
|
7,625 |
|
|
|
5,069 |
|
Intangible Assets, net of Accumulated Amortization of $1,210
and $1,084 |
|
|
7,940 |
|
|
|
7,934 |
|
Other Assets |
|
|
34,947 |
|
|
|
18,414 |
|
Hotel Assets Held for Sale |
|
|
2,886 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total Assets |
|
$ |
1,599,564 |
|
|
$ |
1,457,277 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity: |
|
|
|
|
|
|
|
|
Line of Credit |
|
$ |
28,000 |
|
|
$ |
46,000 |
|
Mortgages and Notes Payable, net of unamortized discount of
$879 and $983 |
|
|
719,637 |
|
|
|
648,720 |
|
Accounts Payable, Accrued Expenses and Other Liabilities |
|
|
27,458 |
|
|
|
28,601 |
|
Dividends and Distributions Payable |
|
|
12,702 |
|
|
|
9,805 |
|
Due to Related Parties |
|
|
1,260 |
|
|
|
939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
789,057 |
|
|
|
734,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests Common Units |
|
$ |
17,068 |
|
|
$ |
19,894 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Shareholders Equity: |
|
|
|
|
|
|
|
|
Preferred Shares: 8% Series A, $.01 Par Value, 29,000,000
shares authorized,
2,400,000 Shares Issued and Outstanding (Aggregate Liquidation
Preference $60,000) at June 30, 2011 and December 31, 2010 |
|
|
24 |
|
|
|
24 |
|
Preferred Shares: 8% Series B, $.01 Par Value, 4,600,000
shares authorized,
4,600,000 Shares Issued and Outstanding (Aggregate Liquidation
Preference $115,000) at June 30, 2011 and none issued and
outstanding at
December 31, 2010 |
|
|
46 |
|
|
|
|
|
Common Shares: Class A, $.01 Par Value, 300,000,000
Shares Authorized at June 30, 2011 and December 31, 2010,
169,546,878 and 169,205,638 Shares Issued and Outstanding
at June 30, 2011 and December 31, 2010, respectively |
|
|
1,699 |
|
|
|
1,692 |
|
Common Shares: Class B, $.01 Par Value, 1,000,000 Shares
Authorized,
None Issued and Outstanding |
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Loss |
|
|
(630 |
) |
|
|
(338 |
) |
Additional Paid-in Capital |
|
|
1,036,850 |
|
|
|
918,215 |
|
Distributions in Excess of Net Income |
|
|
(262,790 |
) |
|
|
(236,159 |
) |
|
|
|
|
|
|
|
Total Shareholders Equity |
|
|
775,199 |
|
|
|
683,434 |
|
|
|
|
|
|
|
|
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|
Noncontrolling Interests: |
|
|
|
|
|
|
|
|
Noncontrolling Interests Common Units |
|
|
18,018 |
|
|
|
19,410 |
|
Noncontrolling Interests Consolidated Joint Ventures |
|
|
222 |
|
|
|
474 |
|
|
|
|
|
|
|
|
Total Noncontrolling Interests |
|
|
18,240 |
|
|
|
19,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity |
|
|
793,439 |
|
|
|
703,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
1,599,564 |
|
|
$ |
1,457,277 |
|
|
|
|
|
|
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510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
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Page | 6 |
HERSHA HOSPITALITY TRUST
Summary Results (unaudited)
(in thousands, except shares and per share data)
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Three Months Ended |
|
|
Six Months Ended |
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|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Revenues |
|
$ |
89,346 |
|
|
$ |
74,453 |
|
|
$ |
146,885 |
|
|
$ |
123,550 |
|
Interest Income from Development Loans |
|
|
1,063 |
|
|
|
1,176 |
|
|
|
2,154 |
|
|
|
2,550 |
|
Other Revenue |
|
|
97 |
|
|
|
111 |
|
|
|
175 |
|
|
|
199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
|
90,506 |
|
|
|
75,740 |
|
|
|
149,214 |
|
|
|
126,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating Expenses |
|
|
46,541 |
|
|
|
39,518 |
|
|
|
84,109 |
|
|
|
71,396 |
|
Hotel Ground Rent |
|
|
364 |
|
|
|
354 |
|
|
|
728 |
|
|
|
646 |
|
Real Estate and Personal Property
Taxes and Property Insurance |
|
|
5,425 |
|
|
|
4,685 |
|
|
|
10,540 |
|
|
|
8,761 |
|
General and Administrative |
|
|
2,179 |
|
|
|
1,918 |
|
|
|
4,140 |
|
|
|
4,753 |
|
Stock Based Compensation |
|
|
1,785 |
|
|
|
1,499 |
|
|
|
3,270 |
|
|
|
2,156 |
|
Acquisition and Terminated Transaction
Costs |
|
|
1,276 |
|
|
|
221 |
|
|
|
2,091 |
|
|
|
3,557 |
|
Loss on Impairment of Assets |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
30 |
|
Depreciation and Amortization |
|
|
14,400 |
|
|
|
12,681 |
|
|
|
28,374 |
|
|
|
24,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
|
71,970 |
|
|
|
60,893 |
|
|
|
133,252 |
|
|
|
115,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
18,536 |
|
|
|
14,847 |
|
|
|
15,962 |
|
|
|
10,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
|
117 |
|
|
|
16 |
|
|
|
219 |
|
|
|
57 |
|
Interest Expense |
|
|
11,588 |
|
|
|
11,341 |
|
|
|
22,211 |
|
|
|
23,034 |
|
Other Expense |
|
|
283 |
|
|
|
86 |
|
|
|
567 |
|
|
|
178 |
|
Loss on Debt Extinguishment |
|
|
34 |
|
|
|
1 |
|
|
|
34 |
|
|
|
732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Income (Loss) from
Unconsolidated Joint Venture Investments
and Discontinued Operations |
|
|
6,748 |
|
|
|
3,435 |
|
|
|
(6,631 |
) |
|
|
(13,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated Joint Ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Unconsolidated Joint Venture
Investments |
|
|
(198 |
) |
|
|
(131 |
) |
|
|
(1,179 |
) |
|
|
(1,171 |
) |
Gain from Remeasurement of
Investment in Unconsolidated Joint Ventures |
|
|
2,757 |
|
|
|
2,190 |
|
|
|
2,757 |
|
|
|
4,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Unconsolidated
Joint Venture Investments |
|
|
2,559 |
|
|
|
2,059 |
|
|
|
1,578 |
|
|
|
2,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations |
|
|
9,307 |
|
|
|
5,494 |
|
|
|
(5,053 |
) |
|
|
(10,693 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operations
Income (Loss) from Discontinued Operations |
|
|
41 |
|
|
|
213 |
|
|
|
(17 |
) |
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
|
9,348 |
|
|
|
5,707 |
|
|
|
(5,070 |
) |
|
|
(10,630 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Income) Loss Allocated to Noncontrolling
Interests |
|
|
(459 |
) |
|
|
(1,151 |
) |
|
|
618 |
|
|
|
564 |
|
Preferred Distributions |
|
|
(2,299 |
) |
|
|
(1,200 |
) |
|
|
(3,499 |
) |
|
|
(2,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Applicable to Common
Shareholders |
|
$ |
6,590 |
|
|
$ |
3,356 |
|
|
$ |
(7,951 |
) |
|
$ |
(12,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
Applicable to Common Shareholders |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
Income (Loss) from Discontinued Operations |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.00 |
) |
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Applicable to Common
Shareholders |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Continuing Operations
Applicable to Common Shareholders |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
Income (Loss) from Discontinued Operations |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.00 |
) |
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Applicable to Common
Shareholders |
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
168,672,936 |
|
|
|
137,200,796 |
|
|
|
168,504,893 |
|
|
|
118,360,826 |
|
Diluted |
|
|
173,687,233 |
|
|
|
140,284,117 |
|
|
|
168,504,893 |
|
|
|
118,360,826 |
|
|
|
|
|
510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
|
|
Page | 7 |
Non-GAAP Measures
FFO and AFFO
The National Association of Real Estate Investment Trusts (NAREIT) developed Funds from
Operations (FFO) as a non-GAAP financial measure of performance of an equity REIT in order to
recognize that income-producing real estate historically has not depreciated on the basis
determined under GAAP. We calculate FFO applicable to common shares and Partnership units in
accordance with the April 2002 National Policy Bulletin of NAREIT, which we refer to as the White
Paper. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP)
excluding extraordinary items as defined under GAAP and gains or losses from sales of previously
depreciated assets, plus certain non-cash items, such as depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Our interpretation of the NAREIT
definition is that noncontrolling interest in net income (loss) should be added back to (deducted
from) net income (loss) as part of reconciling net income (loss) to FFO. Our FFO computation may
not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the
NAREIT definition, or that interpret the NAREIT definition differently than we do.
The GAAP measure that we believe to be most directly comparable to FFO, net income (loss)
applicable to common shares, includes depreciation and amortization expenses, gains or losses on
property sales and noncontrolling interest. In computing FFO, we eliminate these items because, in
our view, they are not indicative of the results from our property operations.
Hersha also presents Adjusted Funds from Operations (AFFO), which reflects FFO in accordance with
the NAREIT definition further adjusted by:
|
|
|
adding back write-offs of deferred financing costs on debt extinguishment, both for
consolidated and unconsolidated properties; |
|
|
|
|
adding back amortization of deferred financing costs; |
|
|
|
|
making adjustments for the amortization of original issue discount/premium; |
|
|
|
|
adding back non-cash stock expense; |
|
|
|
|
adding back non-cash impairment expenses; |
|
|
|
|
adding back acquisition and terminated transaction expenses; |
|
|
|
|
adding back FFO attributed to our partners in consolidated joint ventures; and |
|
|
|
|
making adjustments to ground lease payments, which are required by GAAP to be
amortized on a straight-line basis over the term of the lease, to reflect the actual
lease payment. |
FFO and AFFO do not represent cash flows from operating activities in accordance with GAAP and
should not be considered an alternative to net income as an indication of the Companys performance
or to cash flow as a measure of liquidity or ability to make distributions. We consider FFO and
AFFO to be meaningful, additional measures of our operating performance because they exclude the
effects of the assumption that the value of real estate assets diminishes predictably over time,
and because they are widely used by industry analysts as performance measures. We show both FFO
from consolidated hotel operations and FFO from unconsolidated joint ventures because we believe it
is meaningful for the investor to understand the relative contributions from our consolidated and
unconsolidated hotels. The display of both FFO from consolidated hotels and FFO from unconsolidated
joint ventures allows for a detailed analysis of the operating performance of our hotel portfolio by management and
|
|
|
|
510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
|
|
Page | 8 |
investors. We present FFO and AFFO applicable to common shares and Partnership units because
our Partnership units are redeemable for common shares. We believe it is meaningful for the
investor to understand FFO and AFFO applicable to all common shares and Partnership units.
The following table reconciles FFO and AFFO for the periods presented to the most directly
comparable GAAP measure, net income (loss) applicable to common shares, for the same periods:
HERSHA HOSPITALITY TRUST
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
(in thousands, except shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
Net income (loss) applicable to common shares |
|
$ |
6,590 |
|
|
$ |
3,356 |
|
|
$ |
(7,951 |
) |
|
$ |
(12,466 |
) |
Income (loss) allocated to noncontrolling interest |
|
|
459 |
|
|
|
1,151 |
|
|
|
(618 |
) |
|
|
(564 |
) |
(Income) from unconsolidated joint ventures |
|
|
(2,559 |
) |
|
|
(2,059 |
) |
|
|
(1,578 |
) |
|
|
(2,837 |
) |
Depreciation and amortization |
|
|
14,400 |
|
|
|
12,681 |
|
|
|
28,374 |
|
|
|
24,643 |
|
Depreciation and amortization from discontinued operations |
|
|
42 |
|
|
|
89 |
|
|
|
84 |
|
|
|
182 |
|
FFO allocated to noncontrolling interests in consolidated joint ventures |
|
|
(101 |
) |
|
|
(124 |
) |
|
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from consolidated hotel operations
applicable to common shares and Partnership units |
|
|
18,831 |
|
|
|
15,094 |
|
|
|
18,550 |
|
|
|
8,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated joint venture investments |
|
|
2,559 |
|
|
|
2,059 |
|
|
|
1,578 |
|
|
|
2,837 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from remeasurement of investment in unconsolidated joint
ventures |
|
|
(2,757 |
) |
|
|
(2,190 |
) |
|
|
(2,757 |
) |
|
|
(4,008 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of purchase price
in excess of historical cost |
|
|
567 |
|
|
|
509 |
|
|
|
1,092 |
|
|
|
1,017 |
|
Interest in depreciation and amortization
of unconsolidated joint ventures |
|
|
1,785 |
|
|
|
1,153 |
|
|
|
1,987 |
|
|
|
1,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from unconsolidated joint venture operations
applicable to common shares and Partnership units |
|
|
2,154 |
|
|
|
1,531 |
|
|
|
1,900 |
|
|
|
1,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations
applicable to common shares and Partnership units |
|
|
20,985 |
|
|
|
16,625 |
|
|
|
20,450 |
|
|
|
10,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO allocated to noncontrolling interests in consolidated joint ventures |
|
|
101 |
|
|
|
124 |
|
|
|
(239 |
) |
|
|
|
|
Loss from impairment of assets |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
30 |
|
Acquisition and terminated transaction costs |
|
|
1,276 |
|
|
|
221 |
|
|
|
2,091 |
|
|
|
3,557 |
|
Amortization of deferred financing costs |
|
|
853 |
|
|
|
537 |
|
|
|
1,630 |
|
|
|
1,076 |
|
Deferred financing costs written off in debt extinguishment |
|
|
34 |
|
|
|
1 |
|
|
|
34 |
|
|
|
732 |
|
Amortization of discounts and premiums |
|
|
53 |
|
|
|
55 |
|
|
|
104 |
|
|
|
108 |
|
Non-cash stock compensation expense |
|
|
1,785 |
|
|
|
1,499 |
|
|
|
3,270 |
|
|
|
2,156 |
|
Straight-line amortization of ground lease expense |
|
|
62 |
|
|
|
66 |
|
|
|
124 |
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds from Operations |
|
$ |
25,149 |
|
|
$ |
19,145 |
|
|
$ |
27,464 |
|
|
$ |
17,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFO per Diluted Weighted Average Common Shares
and Units Outstanding |
|
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.15 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Common Shares and Units Outstanding |
|
|
180,982,024 |
|
|
|
149,523,252 |
|
|
|
180,961,276 |
|
|
|
129,979,680 |
|
|
|
|
|
510 Walnut Street . 9th Floor | Philadelphia. PA. 19106 | p. 215.238.1046 | f. 215.238.0157
|
|
Page | 9 |
Adjusted EBITDA
Adjusted Earnings Before Interest, Taxes, and Depreciation and Amortization (EBITDA) is a
non-GAAP financial measure within the meaning of the Securities and Exchange Commission rules. Our
interpretation of Adjusted EBITDA is that EBITDA derived from our investment in unconsolidated
joint ventures should be added back to net income (loss) as part of reconciling net income (loss)
to Adjusted EBITDA. Our Adjusted EBITDA computation may not be comparable to EBITDA or Adjusted
EBITDA reported by other companies that interpret the definition of EBITDA differently than we do.
Management believes Adjusted EBITDA to be a meaningful measure of a REITs performance because it
is widely followed by industry analysts, lenders and investors and that it should be considered
along with, but not as an alternative to, net income, cash flow, FFO and AFFO, as a measure of the
companys operating performance.
HERSHA HOSPITALITY TRUST
Adjusted EBITDA
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
|
June 30, 2011 |
|
|
June 30, 2010 |
|
Net income (loss) applicable to common shares |
|
$ |
6,590 |
|
|
$ |
3,356 |
|
|
$ |
(7,951 |
) |
|
$ |
(12,466 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated joint ventures |
|
|
(2,559 |
) |
|
|
(2,059 |
) |
|
|
(1,578 |
) |
|
|
(2,837 |
) |
Interest income |
|
|
(117 |
) |
|
|
(16 |
) |
|
|
(219 |
) |
|
|
(57 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) allocated to noncontrolling interest |
|
|
459 |
|
|
|
1,151 |
|
|
|
(618 |
) |
|
|
(564 |
) |
Loss from impairment of assets |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
30 |
|
Distributions to Series A Preferred Shareholders |
|
|
2,299 |
|
|
|
1,200 |
|
|
|
3,499 |
|
|
|
2,400 |
|
Interest expense from continuing operations |
|
|
11,588 |
|
|
|
11,341 |
|
|
|
22,211 |
|
|
|
23,034 |
|
Interest expense from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48 |
|
Deferred financing costs written off in debt extinguishment |
|
|
34 |
|
|
|
1 |
|
|
|
34 |
|
|
|
732 |
|
Depreciation and amortization from continuing operations |
|
|
14,400 |
|
|
|
12,681 |
|
|
|
28,374 |
|
|
|
24,643 |
|
Depreciation and amortization from discontinued operations |
|
|
42 |
|
|
|
89 |
|
|
|
84 |
|
|
|
182 |
|
Acquisition and terminated transaction costs |
|
|
1,276 |
|
|
|
221 |
|
|
|
2,091 |
|
|
|
3,557 |
|
Non-cash stock compensation expense |
|
|
1,785 |
|
|
|
1,499 |
|
|
|
3,270 |
|
|
|
2,156 |
|
Straight-line amortization of ground lease expense |
|
|
62 |
|
|
|
66 |
|
|
|
124 |
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from consolidated hotel operations |
|
|
35,859 |
|
|
|
29,547 |
|
|
|
49,321 |
|
|
|
40,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated joint venture investments |
|
|
2,559 |
|
|
|
2,059 |
|
|
|
1,578 |
|
|
|
2,837 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on remeasurement of investment in unconsolidated joint
ventures |
|
|
(2,757 |
) |
|
|
(2,190 |
) |
|
|
(2,757 |
) |
|
|
(4,008 |
) |
Depreciation and amortization
of purchase price in excess of historical cost |
|
|
567 |
|
|
|
509 |
|
|
|
1,092 |
|
|
|
1,017 |
|
Adjustment for interest in interest expense, depreciation and
amortization of unconsolidated joint ventures |
|
|
4,968 |
|
|
|
4,356 |
|
|
|
7,651 |
|
|
|
6,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from unconsolidated joint venture operations |
|
|
5,337 |
|
|
|
4,734 |
|
|
|
7,564 |
|
|
|
6,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
41,196 |
|
|
$ |
34,281 |
|
|
$ |
56,885 |
|
|
$ |
47,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Hotel EBITDA
Hotel EBITDA is a commonly used measure of performance in the hotel industry for a specific
hotel or group of hotels. We believe Hotel EBITDA provides a more complete understanding of the
operating results of the individual hotel or group of hotels. We calculate Hotel EBITDA by
utilizing the total revenues generated from hotel operations less all operating expenses, property
taxes, insurance and management fees, which calculation excludes Company expenses not specific to a
hotel, such as corporate overhead. Because Hotel EBITDA is specific to individual hotels or groups
of hotels and not to the Company as a whole, it is not directly comparable to any GAAP measure and
should not be relied on as a measure of performance for our portfolio of hotels taken as a whole.
Supplemental Schedules
The Company has published supplemental earnings schedules in order to provide additional
disclosure and financial information for the benefit of the Companys stakeholders. These can be
found in the Investor Relations section and the SEC Filings and Presentations page of the
Companys web site, www.hersha.com.
Contact:
Ashish Parikh, CFO
Ph: (215) 238-1046
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