EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm
Exhibit 99.1
 
HERSHA HOSPITALITY TRUST
 
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
 
The accompanying unaudited Pro Forma Consolidated Statement of Operations for Hersha for the year ended December 31, 2012 is presented as if the acquisition of our interest in the Holiday Inn Express 29th Street had been consummated as of January 1, 2012.

This pro forma consolidated statement should be read in conjunction with (i) the Hersha audited financial statements for the year ended December 31, 2012 included in our Annual Report on Form 10-K, (ii) the Metro 29th Street Associates, LLC historical financial statements and notes thereto included elsewhere in Hersha’s Current Report on Form 8-K/A filed August 30, 2012, and (iii) the notes to the Pro Forma Consolidated Statement of Operations included  in this Form 8-K/A. In management’s opinion, adjustments necessary to reflect the effects of the acquisitions have been made based on management’s best estimate.
 
 
The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what actual results of Hersha would have been assuming such acquisition had been completed as of January 1, 2012, nor is it indicative of the results of operations for future periods.

   
For the Year Ended December 31, 2012
  
   
(A)
    
(B)
                      
   
Historical
    
Holiday Inn Express
29th Street
    
Combined
    
Adjustments
      
Pro Forma
  
Revenue:
                                
Hotel Operating Revenues
   $ 356,005     $ 6,478     $ 362,483     $ -       $ 362,483  
Interest Income From Development Loans
     1,998       -       1,998       -         1,998  
Other Revenues
     212       -       212       -         212  
Total Revenue
     358,215       6,478       364,693       -         364,693  
Operating Expenses:
                                          
Hotel Operating Expenses
     196,119       3,056       199,175       -         199,175  
Hotel Ground Rent
     835       -       835       -         835  
Real Estate and Personal Property Taxes and Property Insurance
     22,527       535       23,062       -         23,062  
General and Administrative
     23,427       -       23,427       -         23,427  
Acquisition and Terminated Transaction Costs
     1,187       -       1,187       -         1,187  
Depreciation and Amortization
     57,364       832       58,196       145  
(C)
     58,341  
Total Operating Expenses
     301,459       4,423       305,882       145         306,027  
                                           
Operating Income (Loss)
     56,756       2,055       58,811       (145 )       58,666  
                                           
Interest Income
     1,311       -       1,311       -         1,311  
Interest Expense
     (43,967 )     (2,404 )     (46,371 )     402  
(D)
     (45,969 )
Other Expense
     (788 )     (39 )     (827 )     -         (827 )
Loss on Debt Extinguishment
     (3,324 )     -       (3,324 )     -         (3,324 )
                                           
Income Before (Loss) Income from Unconsolidated Joint Venture Investments, Income Taxes and Discontinued Operations
     9,988       (388 )     9,600       257         9,857  
                                           
(Loss) Income from Unconsolidated Joint Venture Investments
     (2,124 )     -       (2,124 )     114  
(E)
     (2,010 )
                                           
Income (Loss) before Income Taxes
     7,864       (388 )     7,476       371         7,847  
                                           
Income Tax Benefit
     3,355       -       3,355       -         3,355  
Income (Loss) from Continuing Operations
     11,219       (388 )     10,831       371         11,202  
                                           
Discontinued Operations
                                          
Gain on Disposition of Hotel Properties
     11,231       -       11,231       -         11,231  
Loss from Discontinued Operations
     (232 )     -       (232 )     -         (232 )
Income from Discontinued Operations
     10,999       -     $ 10,999     $ -       $ 10,999  
                                           
Net Income (Loss)
     22,218       (388 )     21,830       371         22,201  
                                           
Loss Allocated to Noncontrolling Interests
     158       448       606       16  
(F)
     622  
Preferred Distributions
     (14,000 )     -       (14,000 )     -         (14,000 )
                                           
Net (Loss) Income applicable to Common Shareholders
   $ 8,376     $ 60     $ 8,436     $ 386       $ 8,822  
                                           
Earnings Per Share from Continuing Operations applicable to Common Shareholders
                                          
Basic
   $ (0.01 )                             $ (0.01 )
Diluted
   $ (0.01 )                             $ (0.01 )
                                           
Weighted Average Common Shares Outstanding
                                          
Basic
     187,415,270                                 187,415,270  
Diluted
     187,415,270                                 187,415,270  
 
 
 
 

HERSHA HOSPITALITY TRUST
 
Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(Unaudited, Dollar Amounts in Thousands Except per Share Data)

(A)
Represents Hersha’s Consolidated Statement of Operations for the year ended December 31, 2012 as filed in our Annual Report on Form 10-K.

(B)
Represents the historical statement of operations for the Holiday Inn Express 29th Street for the period from January 1, 2012 through June 18, 2012, the date of the acquisition of our interest in the Holiday Inn Express 29th Street.

(C)
Represents the adjustment to reflect the estimated depreciation on property of the Holiday Inn Express 29th Street after the allocation of purchase price, net of the amounts recorded for depreciation in the historical statement of operations.  Depreciation and amortization are computed using the straight-line method and are based upon the estimated useful life of the asset.

The purchase price amounts used in these pro forma statements are subject to change, and allocation adjustments made to the fixed asset captions could result in a change in depreciation expense made in future financial statement filings.

We acquired the remaining 50% interest in the Holiday Inn Express 29th Street from our partner in the venture.  The purchase price allocated to the property of the Holiday Inn Express 29th Street represents the fair value of the property on the date of acquisition.  The pro forma adjustment reflects the depreciation expense incurred on the fair value of the property in excess of the depreciation included in the historical statement of operations for the Holiday Inn Express and is as follows:

Assets Acquired
  
Fair Value
    
Life
    
Depreciation Expense
  
Land
   $ 30,329       N/A     $ -  
Building and Improvements
     57,016       40       665  
FF&E
     2,856       5       267  
Intangible
     98       1       46  
Total
                     977  
Less: Holiday Inn Express 29th Street historical depreciation
                     (832 )
Pro Forma Adjustment
                   $ 145  
 
(D)
Adjustment represents amortization of $402 for the premium recorded on debt with an above market rate of interest assumed in the acquisition of the remaining 50% interest in the Holiday Inn Express 29th Street.  The stated rate of interest on the debt is 6.50%.  Including amortization of the discount, the effective rate of interest is 4.94%.  A discount of $3,436 was recorded and is being amortized over the life of the debt which matures in November 2016.

(E)
Represents adjustment to remove $114 of loss from investment in unconsolidated joint ventures for the Holiday Inn Express 29th Street which was included in our historical statement of operations.
 
 
 
 
 
(F)
Represents noncontrolling interest allocable to holders of units of limited partnership interest in our operating partnership, HHLP.  The cumulative noncontrolling interest effect of the acquisition of our interest in the Holiday Inn Express 29th Street  is calculated by using the weighted average minority interest percentage of 3.70% for year ended December 31, 2012, as follows:
 
Increase in historical Hersha income
     60        
Noncontrolling interest percentage
     3.70 %      
Pro forma adjustment
           $ 2  
                 
Noncontrolling interest in pro forma adjustments
                
Depreciation pro forma adjustment
     (145 )        
Interest expense pro forma adjustment
     402          
Historical loss from investment in Holiday Inn Express 29th Street
     114          
Total pro forma adjustments
     371          
Noncontrolling interest percentage
     3.70 %        
Pro forma adjustment
             14  
                 
Total pro forma adjustments for noncontrolling interest due to HHLP unit holders
           $ 16