-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hl+keeIHbXB1X8l28GE7GOVHTQ6j5z9BZrQetJ+usxWE9SKMj8RHOw1lcNGfADIC T+arjLvjPr2xiLvJb6rUVQ== 0001029869-98-001355.txt : 19981208 0001029869-98-001355.hdr.sgml : 19981208 ACCESSION NUMBER: 0001029869-98-001355 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981204 ITEM INFORMATION: FILED AS OF DATE: 19981207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOSPITALITY PROPERTIES TRUST CENTRAL INDEX KEY: 0000945394 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 043262075 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11527 FILM NUMBER: 98764655 BUSINESS ADDRESS: STREET 1: 400 CENTRE ST CITY: NEWTON STATE: MA ZIP: 02158 BUSINESS PHONE: 6179648389 MAIL ADDRESS: STREET 1: 400 CENTRE STREET CITY: NEWTON STATE: MA ZIP: 02158 8-K 1 HOSPITALITY PROPERTIES TRUST FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 4, 1998 HOSPITALITY PROPERTIES TRUST (Exact name of registrant as specified in charter) Maryland 1-11527 04-3262075 (State or other (Commission file (IRS employer jurisdiction of number) identification no.) incorporation) 400 Centre Street, Newton, Massachusetts 02458 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 617-964-8389 CERTAIN IMPORTANT FACTORS This Current Report contains statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Current Report and include statements regarding the intent, belief or expectations of Hospitality Properties Trust (the "Company"), its Trustees or its officers with respect to the declaration or payment of dividends, the consummation of additional acquisitions, policies and plans of the Company regarding investments, dispositions, financings, conflicts of interest or other matters, the Company's qualification and continued qualification as a real estate investment trust or trends affecting the Company's or any hotel's financial condition or results of operations. Readers are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contained in the forward looking statements as a result of various factors. Such factors include, without limitation, changes in financing terms, the Company's ability or inability to complete acquisitions and financing transactions, results of operations of the Company's hotels and general changes in economic conditions not presently contemplated. The information contained in the Company's Form 8-K dated February 11, 1998, including the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations", and in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1997, including under the captions "Items 1. and 2. Business and Properties", identifies other important factors that could cause such differences. THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, DATED AUGUST 21, 1995 A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE TRUST. ALL PERSONS DEALING WITH THE TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (b) Pro Forma Financial Information. Index to Unaudited Consolidated Pro Forma Financial Statements and Other Data (see index on page F-1). (c) Exhibits. 12 Computation of Pro Forma Ratio of Earnings to Fixed Charges 23 Consent of Arthur Andersen LLP. -2- HOSPITALITY PROPERTIES TRUST Index to Unaudited Pro Forma Consolidated Financial Statements and Other Data 1. Introduction to Unaudited Pro Forma Consolidated Financial Statements and Other Data............................................F-2 2. Unaudited Pro Forma Consolidated Balance Sheet and Other Data as of September 30, 1998 ............................................F-3 3. Unaudited Pro Forma Consolidated Statement of Income and Other Data for the Nine Months Ended September 30, 1998.........................F-4 4. Unaudited Pro Forma Consolidated Statement of Income and Other Data for the Year Ended December 31, 1997.................................F-5 5. Notes to Unaudited Pro Forma Consolidated Financial Statements and Other Data.......................................................F-6
F-1 HOSPITALITY PROPERTIES TRUST Introduction to Unaudited Pro Forma Consolidated Financial Statements and Other Data The following unaudited pro forma consolidated balance sheet at September 30, 1998 is intended to present the consolidated financial position of the Company as if the transactions described in the notes hereto (the "Transactions") were consummated at September 30, 1998. The following unaudited pro forma consolidated statements of income are intended to present the consolidated results of operations of the Company as if the Transactions were consummated as of the beginning of the fiscal year presented. These unaudited pro forma consolidated financial statements should be read in conjunction with, and are qualified in their entirety by reference to, the separate consolidated financial statements of the Company for the year ended December 31, 1997 and of certain hotel properties the Company has acquired for the year ended January 2, 1998, incorporated herein by reference to the Company's Current Reports on Form 8-K dated February 11, 1998 and April 15, 1998 and to the Company's Annual Report on Form 10-K for its year ended December 31, 1997; and the Company's unaudited consolidated financial statements for the quarter ended September 30, 1998, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. These unaudited adjusted pro forma consolidated financial statements are not necessarily indicative of what the actual consolidated financial position or results of operations of the Company would have been as of the date or for the period indicated, nor do they purport to represent the expected consolidated financial position or results of operations of the Company for any future period. Differences may result from, among other considerations, future changes in the Company's portfolio of investments, changes in interest rates, changes in the capital structure of the Company, delays in the acquisition of certain properties or any determination not to complete the acquisition of any hotel properties and changes in operating expenses. The following unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of income were prepared pursuant to the Securities and Exchange Commission's rules for the presentation of pro forma data. The pro forma and adjusted pro forma other data give effect to the consummation by the Company of the Transactions. Certain properties expected to be acquired by the Company are currently under construction or development by the sellers. Other properties were under construction during the periods presented when they were owned or under development by the sellers. The accompanying pro forma information does not give further effect to the completion of construction or the related lease commencement for any period prior thereto. Construction projects not completed by September 30, 1998 are likewise not reflected in the pro forma balance sheet. Rather, the effect of completion of construction of these properties is presented separately from the pro forma information as described in the accompanying notes. The Company believes that a display of such adjusted pro forma data is meaningful and relevant to the understanding of the Transactions and, accordingly has presented such data in the final two columns, labeled "Other Data," on the accompanying pages. F-2 HOSPITALITY PROPERTIES TRUST Unaudited Pro Forma Consolidated Balance Sheet and Other Data As of September 30, 1998 (amounts in thousands)
Pro Forma Other Data --------------------------- --------------------------- Pro Forma Other Adjusted Pro Historical (A) Adjustments Pro Forma Adjustments Forma ------------ ----------- ---------- ----------- ----------- Assets Real estate properties $1,744,675 $ 8,543 (B) $1,753,218 $ 63,198(I) $1,816,416 Accumulated depreciation (97,784) -- (97,784) -- (97,784) ---------- -------- ---------- -------- ---------- 1,646,891 8,543 1,655,434 63,198 1,718,632 Cash and cash equivalents 1,421 39,807 (C) 41,228 (40,910)(J) 318 Restricted cash (FF&E Reserve) 16,588 -- 16,588 -- 16,588 Other assets, net 8,029 4,823 (D) 12,852 -- 12,852 ---------- -------- ---------- -------- ---------- $1,672,929 $ 53,173 $1,726,102 $ 22,288 $1,748,390 ========== ======== ========== ======== ========== Liabilities and Shareholders' Equity Senior notes due 2005 and 2008, net of discount $ 149,746 $115,000 (E) $ 264,746 $ -- $ 264,746 __% Monthly income senior notes due 2009 - 50,000 (F) 50,000 -- 50,000 Revolving debt 182,000 (182,000)(G) -- 16,000(K) 16,000 Security and other deposits 191,250 850 (B) 192,100 6,288(L) 198,388 Other liabilities 10,183 -- 10,183 -- 10,183 Shareholder's equity: Common shares of beneficial interest 428 28 (H) 456 -- 456 Additional paid-in capital 1,161,567 69,295 (H) 1,230,862 -- 1,230,862 Cumulative net income 179,883 -- 179,883 -- 179,883 Dividends (202,128) -- (202,128) -- (202,128) ---------- -------- ---------- -------- ---------- Total shareholders' equity 1,139,750 69,323 1,209,073 -- 1,209,073 ---------- -------- ---------- -------- ---------- $1,672,929 $ 53,173 $1,726,102 $ 22,288 $1,748,390 ========== ======== ========== ======== ==========
See accompanying notes to unaudited pro forma consolidated financial statements and other data. F-3 HOSPITALITY PROPERTIES TRUST Unaudited Pro Forma Consolidated Statement of Income and Other Data For the Nine Months Ended September 30, 1998 (amounts in thousands, except per share and ratio amounts)
Pro Forma Other Data --------------------------- --------------------------- Pro Forma Other Adjusted Pro Historical (M) Adjustments Pro Forma Adjustments Forma ------------ ----------- ---------- ----------- ----------- Revenues: Rental income $113,702 $8,589(N) $122,291 $9,647(S) $131,938 FF&E reserve income 11,683 -- 11,683 -- 11,683 Interest income 1,354 -- 1,354 -- 1,354 ------- ------ ------- ------ ------- Total revenues 126,739 8,589 135,328 9,647 144,975 ------- ------ ------- ------ ------- Expenses: Depreciation and amortization of real estate assets 39,617 2,787(O) 42,404 3,329(T) 45,733 Interest 15,178 3,591(P) 18,769 1,519(U) 20,288 General and administrative 7,608 422(Q) 8,030 504(V) 8,534 ------- ------ ------- ------ ------- Total expenses 62,403 6,800 69,203 5,352 74,555 ------- ------ ------- ------ ------- Income before extraordinary item $64,336 $1,789 $66,125 $4,295 $70,420 ======= ====== ======= ====== ======= Weighted average shares outstanding 41,685 3,911(R) 45,596 -- 45,596 ======= ====== ======= ====== ======= Income before extraordinary item per Share $ 1.54 $ 1.45 $ 1.54 ======= ======= ======= Earnings to Fixed Charges 5.2x 4.5x 4.5x ======= ======= =======
See accompanying notes to unaudited pro forma consolidated financial statements and other data. F-4 HOSPITALITY PROPERTIES TRUST Unaudited Pro Forma Consolidated Statement of Income and Other Data For the Year Ended December 31, 1997 (amounts in thousands, except per share and ratio amounts)
Pro Forma Other Data (unaudited) (unaudited) --------------------------- --------------------------- Historical(M) Pro Forma Other Adjusted Pro (audited) Adjustments Pro Forma Adjustments Forma ------------ ----------- ---------- ----------- ----------- Revenues: Rental income $ 98,561 $40,460(N) $139,021 $36,712(S) $175,733 FF&E reserve income 14,643 -- 14,643 -- 14,643 Interest income 928 -- 928 -- 928 -------- ------- -------- ------- -------- Total revenues 114,132 40,460 154,592 36,712 191,304 -------- ------- -------- ------- -------- Expenses: Depreciation and amortization of real estate assets 31,949 13,541(O) 45,490 12,558(T) 58,048 Interest 15,534 9,492(P) 25,026 2,038(U) 27,064 Terminated acquisition cost 713 -- 713 -- 713 General and administrative 6,783 2,049(Q) 8,832 1,901(V) 10,733 -------- ------- -------- ------- -------- Total expenses 54,979 25,082 80,061 16,497 96,558 -------- ------- -------- ------- -------- Net income $59,153 $15,378 $ 74,531 $20,215 $94,746 ======== ======= ======== ======= ======== Weighted average shares outstanding 27,530 18,066(R) 45,596 -- 45,596 ======== ======= ======== ======= ======== Net income per Share $ 2.15 $ 1.63 $ 2.08 ======== ======== ======== Earnings to Fixed Charges 4.8x 4.0x 4.5x ======== ======== ========
See accompanying notes to unaudited pro forma consolidated financial statements and other data. F-5 HOSPITALITY PROPERTIES TRUST Notes to Unaudited Pro Forma Consolidated Financial Statements and Other Data (dollars in thousands) Pro Forma Consolidated Balance Sheet Adjustments A. Represents the historical unaudited consolidated balance sheet of the Company at September 30, 1998. B. Represents the purchase of one Candlewood(R) hotel in November 1998 open but not acquired as of September 30, 1998 for a cash price of $7,693 (including closing costs), net of purchase price withheld for security deposit of $850. C. Represents the net effect of the pro forma adjustments on cash. D. Represents the recording of the deferred finance costs in connection with the issuance of $115 million of senior notes due 2005 and the issuance of $50 million of __% Monthly Income Senior Notes due 2009 (the "Proposed Offering"). E. Represents issuance of senior notes due 2005 in November 1998. F. Represents issuance of the Proposed Offering. G. Represents repayment of amounts borrowed under the credit facility after completion of the Proposed Offering, the transaction described in Note E above, the issuance of 2.75 million common shares of beneficial interest in November 1998 and the purchase of one Candlewood(R) hotel acquired in November 1998. H. Represents issuance of 2.75 million common shares of beneficial interest in November 1998. Other Data Consolidated Balance Sheet Adjustments I. Represents the purchase of 7 hotels acquired or to be acquired, but not open as of September 30, 1998: Cash purchase prices: One Courtyard by Marriott(R) hotel $ 8,806 Six Candlewood(R) hotels 47,790 Purchase price withheld as security deposits 6,288 Closing costs 314 --------- Total $ 63,198 =========
Included in the above are certain hotel properties the Company has purchased or expects to purchase from sellers upon completion of construction, of which four have been purchased by the Company in November 1998 and December 1998 for an aggregate purchase price of $34,084. J. Represents the net effect of the other adjustments on cash. K. Represents other net borrowings by the Company under its credit facility to complete the planned acquisition of hotels still under development as of September 30, 1998. L. Represents security deposits held by the Company as a result of purchasing and leasing the following hotels: One Courtyard by Marriott(R) hotel $ 978 Six Candlewood(R) hotels 5,310 ------- Total $ 6,288 =======
Pro Forma Consolidated Income Statement Adjustments M. Represents the historical income statement of the Company for the periods presented. F-6 HOSPITALITY PROPERTIES TRUST Notes to Unaudited Pro Forma Consolidated Financial Statements and Other Data - continued (dollars in thousands) Pro Forma Consolidated Income Statement Adjustments - continued N. Represents the pro forma effect of leases entered and to be entered for hotels open during the periods presented. This pro forma effect is derived as follows:
Nine Months Year Ended Ended September 30, December 31, 1998 1997 ------------------- ------------ Pro forma Minimum Rent $120,310 $136,493 Pro forma Percentage Rent 1,981 2,528 Amounts included in historical Minimum Rent (111,721) (96,033) Amounts included in historical Percentage Rent (1,981) (2,528) -------- -------- $ 8,589 $ 40,460 ======== ========
Certain of the hotels owned by the Company as of September 30, 1998 were under development and others are currently under development by the sellers of these properties. The Company is not contractually obligated to acquire these hotels until they are substantially completed. The foregoing pro forma income statement assumes the hotels, which were completed prior to September 30, 1998 were acquired as of their completion date. O. Represents the impact of the pro forma transactions on depreciation expense for the entire periods presented. P. Represents the following adjustments to interest expense: o Elimination of interest on the $125 million CMBS Notes repaid upon the issuance of the 7% Senior Notes in February 1998 including amortization of deferred financing costs. o Elimination of interest on $182 million of the Company's $300 million credit facility repaid with the net proceeds of the senior notes due 2005 and of the __% Monthly Income Senior Notes due 2009 and proceeds from HPT's November 1998 equity offering. o Record interest, including amortization of deferred financing costs, on the senior notes due 2005. o Record interest, including amortization of deferred financing costs, of $3.3 million and $4.4 million, respectively, for the nine months ended September 30, 1998 and the year ended December 31, 1997, on the proposed $50 million offering of __% Monthly Income Senior Notes due 2009 at an assumed interest rate of 8.5%. o Record interest, including amortization of deferred financing costs, on borrowings under the Company's $300 million credit facility to complete the Transactions. Q. Represents the estimated impact of the pro forma transactions on general and administrative expenses of the Company for the periods presented. R. Represents the impact of additional common shares of beneficial interest issued in the periods presented including the 2.75 million shares issued in November 1998. Other Data Consolidated Income Statement Adjustments S. Represents the effect of leases entered and to be entered for the transactions described in Note I above, since the beginning of the periods presented. The effect of these leases is derived as follows:
Nine Months Year Ended Ended September 30, December 31, 1998 1997 ------------------ -------------- Adjusted Pro forma Minimum Rent $129,957 $ 173,205 Adjusted Pro forma Percentage Rent 1,981 2,528 Amounts included in pro forma Minimum Rent (120,310) (136,493) Amounts included in pro forma Percentage Rent (1,981) (2,528) -------- --------- $ 9,647 $ 36,712 ======== =========
T. Represents the impact of the transactions described in Note I above, on depreciation expense for the entire periods presented. F-7 HOSPITALITY PROPERTIES TRUST Notes to Unaudited Pro Forma Consolidated Financial Statements and Other Data - continued (dollars in thousands) Other Data Consolidated Income Statement Adjustments - continued U. Represents interest on the credit line borrowings to be made in connection with the transactions described in Note I above, at LIBOR plus contractual spreads for the entire periods presented. The average applicable LIBOR rate was 5.7% for the year ended December 31, 1997 and 5.6% for the nine months ended September 30, 1998. V. Represents the estimated impact of the transactions described in Note I above, on general and administrative expenses of the Company. F-8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HOSPITALITY PROPERTIES TRUST By: /s/ Thomas M. O'Brien ----------------------------- Thomas M. O'Brien, Treasurer and Chief Financial Officer Date: December 4, 1998 EX-12 2 COMPUTATION OF PRO FORMA RATIO OF EARNINGS Hospitality Properties Trust Computation of Pro Forma Ratio of Earnings to Fixed Charges (amounts in thousands, except ratio amounts)
For the Nine Months Ended September 30, 1998 For the Year Ended December 31, 1997 ----------------------------------------------- --------------------------------------- Adjusted Adjusted Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma ---------- --------- --------- --------- --------- --------- Income before extraordinary item $64,336 $66,125 $70,420 $59,153 $74,531 $ 94,746 Fixed charges 15,178 18,769 20,288 15,534 25,026 27,064 ------- ------- ------- ------- ------- -------- Adjusted earnings $79,514 $84,894 $90,708 $74,687 $99,557 $121,810 ======= ======= ======= ======= ======= ======== Fixed charges: Interest on indebtedness and amortization of deferred finance costs $15,178 $18,769 $20,288 $15,534 $25,026 $ 27,064 ------- ------- ------- ------- ------- -------- Total fixed charges $15,178 $18,769 $20,288 $15,534 $25,026 $ 27,064 ======= ======= ======= ======= ======= ======== Ratio of earnings to fixed charges 5.2x 4.5x 4.5x 4.8x 4.0x 4.5x ======= ======= ======= ======= ======= ========
EX-23 3 CONSENTS OF EXPERTS AND COUNSEL Exhibit 23 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the use of our report dated January 16, 1998 included in this registration statement (File No. 333-43573) and prospectus supplement and to the incorporation by reference in this registration statement and prospectus supplement of our reports dated January 16, 1998 included in Hospitality Properties Trust's Form 8-K dated February 11, 1998 and our report dated February 27, 1998 included in Hospitality Property Trust's Form 10-K for the year ended December 31, 1997, and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Washington, D.C. December 4, 1998 -----END PRIVACY-ENHANCED MESSAGE-----