EX-99.1 2 a04-12623_1ex99d1.htm EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

 

Timothy A. Bonang, Mangager of

 

Investor Relations or,

 

John G. Murray, President or

 

Mark L. Kleifges, CFO

 

(617) 964-8389

 

www.hptreit.com

 

 

HPT Announces 2004 Third Quarter Operating Results

 

Newton, MA (November 3, 2004): Hospitality Properties Trust (NYSE: HPT) today announced its results of operations for the quarter ended September 30, 2004, as follows:

 

 

 

 

(amounts in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

30,707

 

$

30,897

 

$

91,235

 

$

94,081

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

28,793

 

$

27,202

 

$

80,682

 

$

82,996

 

 

 

 

 

 

 

 

 

 

 

Funds from operations (“FFO”)

 

$

59,942

 

$

56,791

 

$

176,489

 

$

171,268

 

 

 

 

 

 

 

 

 

 

 

Common distributions declared

 

$

48,386

 

$

45,063

 

$

145,137

 

$

135,179

 

 

 

 

 

 

 

 

 

 

 

Per common share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

0.43

 

$

0.43

 

$

1.22

 

$

1.33

 

 

 

 

 

 

 

 

 

 

 

Funds from operations (“FFO”)

 

$

0.89

 

$

0.91

 

$

2.66

 

$

2.74

 

 

 

 

 

 

 

 

 

 

 

Common distributions declared

 

$

0.72

 

$

0.72

 

$

2.16

 

$

2.16

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

67,191

 

62,587

 

66,268

 

62,572

 

 

Hospitality Properties Trust is a REIT headquartered in Newton, Massachusetts, which invests in hotels. HPT has investments in 285 hotels located in 38 states.

(end)

 


 

Hospitality Properties Trust

CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS

 (amounts in thousands, except per share data)

 

 

 

Quarter Ended Sept 30,

 

Nine Months Ended Sept 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Hotel operating revenues (1)

 

$

136,861

 

$

72,338

 

$

378,780

 

$

140,498

 

 

Rental income

 

30,312

 

48,163

 

95,326

 

160,251

 

 

FF&E Reserve income (2)

 

4,660

 

4,318

 

14,243

 

14,132

 

 

Interest income

 

159

 

44

 

185

 

335

 

 

Total revenues

 

171,992

 

124,863

 

488,534

 

315,216

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

Hotel operating expenses (1) (3)

 

94,896

 

51,064

 

259,216

 

97,168

 

 

Interest (including amortization of deferred financing costs of $686, $626, $2,058 and $1,853, respectively)

 

12,530

 

11,508

 

37,775

 

31,910

 

 

Depreciation and amortization

 

28,713

 

26,859

 

86,158

 

77,075

 

 

General and administrative

 

5,146

 

4,535

 

14,353

 

12,400

 

 

Loss on early extinguishment of debt (4)

 

--

 

--

 

--

 

2,582

 

 

Total expenses

 

141,285

 

93,966

 

397,502

 

221,135

 

 

 

 

 

 

 

 

 

 

 

Income before gain on sale of real estate

 

30,707

 

30,897

 

91,032

 

94,081

 

 

Gain on sale of real estate

 

--

 

--

 

203

 

--

 

 

 

 

 

 

 

 

 

 

 

Net income

 

30,707

 

30,897

 

91,235

 

94,081

 

Preferred distributions

 

(1,914

)

(3,695

)

(7,760

)

(11,085

)

Excess of liquidation preference over carrying value of preferred shares (5)

 

--

 

--

 

(2,793

)

--

 

Net income available for common shareholders

 

$

28,793

 

$

27,202

 

$

80,682

 

$

82,996

 

 

 

 

 

 

 

 

 

 

 

Calculation of FFO (6):

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

28,793

 

$

27,202

 

$

80,682

 

$

82,996

 

Add:

FF&E deposits not in net income (2)

 

453

 

2,341

 

1,346

 

7,765

 

 

Depreciation and amortization

 

28,713

 

26,859

 

86,158

 

77,075

 

 

Deferred percentage rent (7)

 

900

 

389

 

2,167

 

850

 

 

Deferred hotel operating income (8)

 

1,083

 

--

 

3,546

 

--

 

 

Excess of liquidation preference over carrying value of preferred shares (5)

 

--

 

--

 

2,793

 

--

 

 

Loss on early extinguishment of debt (4)

 

--

 

--

 

--

 

2,582

 

Less:

Gain on sale of real estate

 

--

 

--

 

(203

)

--

 

 

 

 

 

 

 

 

 

 

 

Funds from operations (“FFO”)

 

$

59,942

 

$

56,791

 

$

176,489

 

$

171,268

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

67,191

 

62,587

 

66,268

 

62,572

 

 

 

 

 

 

 

 

 

 

 

Per common share amounts:

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

0.43

 

$

0.43

 

$

1.22

 

$

1.33

 

 

FFO (6)

 

$

0.89

 

$

0.91

 

$

2.66

 

$

2.74

 

 

Common distributions declared

 

$

0.72

 

$

0.72

 

$

2.16

 

$

2.16

 

 

 

 

 

 

 

 

 

 

 

See Notes on page 3.

 


 

Hospitality Properties Trust

NOTES TO CONSOLIDATED STATEMENT OF INCOME AND FUNDS FROM OPERATIONS

 (amounts in thousands, except per share data)

 

(1)        As of September 30, 2004, each of our 285 hotels was included in one of eight combinations of hotels which are either leased to one of our taxable REIT subsidiaries and managed by an independent hotel operating company or leased to a third party. At September 30, 2004, we had 177 managed hotels and 108 leased hotels. Our consolidated statement of income includes hotel operating revenues and expenses of managed hotels, and only rental income from our leased hotels. The pro forma operating results for all 177 of our managed hotels assuming acquisition of the hotels and commencement of the management agreements as of January 1, 2003, are as follows (includes amounts for periods prior to our ownership of some of these hotels and for periods when some of these hotels were leased from us by third parties):

 

 

 

Quarter Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

Hotel operating revenues

 

$

136,861

 

$

133,986

 

$

390,781

 

$

387,436

 

Hotel operating expenses

 

92,985

 

92,694

 

264,320

 

263,377

 

 

 

(2)                Various percentages of total sales at most of our hotels are escrowed as reserves for future renovations or refurbishment, or FF&E Reserve escrows. We own the FF&E Reserve escrows for all the hotels leased to our taxable REIT subsidiary and for most of the hotels leased to third parties. We have a security and remainder interest in the FF&E Reserve escrows for the remaining hotels leased to third parties. When we own the FF&E Reserve escrows at hotels leased to third parties, generally accepted accounting principles, or GAAP, require that payments into the escrow are reported as additional rent. When we have a security and remainder interest in the FF&E Reserve escrows, deposits are not included in revenue but are included in FFO. The amounts which are escrowed as FF&E reserves for our managed hotels are not reported as FF&E reserve income in our consolidated statement of income.

 

(3)                Certain of our managed hotels had net operating results that were less than the minimum returns due to us by $1,762 in the 2003 third quarter and $4,070 and $5,645 in the first nine months of 2004 and 2003, respectively. There were no fundings of minimum returns by our managers in the 2004 third quarter. These amounts have been reflected in our consolidated statement of income as a net reduction to hotel operating expenses in each period because the minimum returns were funded by our managers.

 

(4)                Represents the write off of unamortized deferred financing costs related to early extinguishment of debt.

 

(5)                On April 12, 2004, we redeemed all of our outstanding 9 ½% Series A Preferred Shares at their liquidation preference of $25 per share, plus accumulated and unpaid dividends. Pursuant to the Securities and Exchange Commission’s clarification on Emerging Issues Task Force Topic D-42, The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock, the $2,793 excess of the liquidation preference of the redeemed shares over their carrying amount was deducted from net income to determine net income available to common shareholders in the calculation of earnings per share.

 

(6)                We compute FFO as shown in the calculation above. Our calculation of FFO differs from the NAREIT definition because we include FF&E deposits not included in net income (see note 2), deferred percentage rent (see note 7) and deferred hotel operating income (see note 8) and exclude the excess of liquidation preference over carrying value of redeemed preferred shares (see note 5) and loss on early extinguishment of debt not settled in cash (see note 4). We consider FFO to be an appropriate measure of performance for a REIT, along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical costs, such as depreciation expense and losses on early extinguishment of debt, it may facilitate comparison of current operating performance among REITs. FFO does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO is among the important factors considered by our board of trustees when determining the amount of distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving bank credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance.

 

(7)                We recognize percentage rental income received for the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred for purposes of calculating net income, the calculation of FFO includes this amount.

 

(8)                Our rights to share in the operating results of our managed hotels in excess of minimum returns are generally determined based upon annual calculations. Our managed hotels generated net operating results that were $1,083 in the 2004 third quarter and $3,546 in the first nine months of 2004, more than the minimum returns due to us. We recognize income in excess of our minimum returns in the fourth quarter when all contingencies are met and the income is earned. Although recognition of this income is deferred for purposes of calculating net income, the calculation of FFO includes this amount.

 

 


 

Key Balance Sheet Data

(in thousands)

 

 

 

September 30, 2004

 

December 31, 2003

 

 

 

 

 

 

 

Cash

 

$

3,491

 

$

6,428

 

 

 

 

 

 

 

Restricted cash (FF&E Reserve escrow)

 

$

45,532

 

$

55,755

 

 

 

 

 

 

 

Real Estate, at cost

 

$

3,193,505

 

$

3,179,507

 

 

 

 

 

 

 

Debt, net of discounts

 

 

 

 

 

Floating rate — Credit Facility, due 2005

 

$

80,000

 

$

201,000

 

Fixed rate — 7.00% Senior Notes, due 2008

 

149,908

 

149,888

 

Fixed rate — 9.125% Senior Notes, due 2010

 

49,964

 

49,960

 

Fixed rate — 8.3% Mortgage payable, due 2011

 

3,840

 

3,881

 

Fixed rate — 6.85% Senior Notes, due 2012

 

124,307

 

124,240

 

Fixed rate — 6.75% Senior Notes, due 2013

 

297,391

 

297,157

 

 

 

 

 

 

 

Total Debt

 

$

705,410

 

$

826,126

 

 

 

 

 

 

 

Book Equity

 

 

 

 

 

 

 

 

 

 

 

9.5% Series A Preferred (none and 3,000,000 shares outstanding)

 

$

—-

 

$

72,207

 

8.875% Series B Preferred (3,450,000 shares outstanding)

 

83,306

 

83,306

 

Common (67,203,229 and 62,587,079 shares outstanding)

 

1,667,311

 

1,490,015

 

 

 

 

 

 

 

Total Equity

 

$

1,750,617

 

$

1,645,528

 

 

 

 

 

 

 

Additional Data

(in thousands except percentages)

 

 

 

 

 

 

 

 

September 30, 2004

 

December 31, 2003

 

Leverage Ratios

 

 

 

 

 

Total Debt / Total Assets

 

26.1

%

 

29.9

%

 

Total Debt / Real Estate, at cost

 

22.1

%

 

26.0

%

 

Total Debt / Total Book Capitalization

 

28.7

%

 

33.4

%

 

Variable Rate Debt / Total Book Capitalization

 

3.3

%

 

8.1

%

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30, 2004

 

Nine Months Ended
September 30, 2003

 

Cash Flow Data

 

 

 

 

 

 

 

 

 

 

 

Cash flow provided by (used in):

 

 

 

 

 

Operating activities

 

$

151,571

 

$

158,224

 

Investing activities

 

$

(1,617

)

$

(264,238

)

Financing activities

 

$

(152,891

)

$

103,095

 

 

 

 

 

 

 

 


 

Hotel Revenue Data

 

The following tables summarize the hotel operating statistics reported to us by our third party tenants and managers for our 285 hotels.

 

Lease/

 

No. of

 

No. of Rooms/

 

Quarter Ended September 30,

 

Nine Months Ended September 30,

 

Management Agreement

 

Hotels

 

Suites

 

2004(1)

 

2003(1)

 

Change

 

2004(1)

 

2003(1)

 

Change

 

ADR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Host (no. 1)

 

53

 

7,610

 

$

100

.08

 

$

94

.70

 

5.7

%

 

$

100

.02

 

$

95

.84

 

4.4

%

 

Host (no. 2)

 

18

 

2,178

 

93

.97

 

92

.37

 

1.7

%

 

94

.11

 

93

.46

 

0.7

%

 

Marriott

 

35

 

5,382

 

93

.74

 

92

.45

 

1.4

%

 

94

.33

 

92

.24

 

2.3

%

 

Barcelo Crestline

 

19

 

2,756

 

86

.85

 

82

.85

 

4.8

%

 

91

.17

 

88

.87

 

2.6

%

 

InterContinental (no. 1) (2)(3)

 

30

 

3,694

 

91

.10

 

91

.74

 

-0.7

%

 

89

.93

 

90

.64

 

-0.8

%

 

InterContinental (no. 2) (2)(3)

 

76

 

9,220

 

54

.88

 

54

.12

 

1.4

%

 

56

.04

 

55

.08

 

1.7

%

 

Prime (3)

 

36

 

5,250

 

73

.09

 

69

.80

 

4.7

%

 

74

.31

 

70

.06

 

6.1

%

 

Homestead

 

18

 

2,399

 

51

.04

 

46

.25

 

10.4

%

 

49.

.81

 

47

.93

 

3.9

%

 

Total/Average

 

285

 

38,489

 

$

79

.05

 

$

76

.11

 

3.9

%

 

$

79

.81

 

$

77

.03

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OCCUPANCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Host (no. 1)

 

53

 

7,610

 

75

.7%

 

68

.1%

 

7.6 pt

 

72

.6%

 

64

.3%

 

8.3 pt

 

Host (no. 2)

 

18

 

2,178

 

83

.9%

 

81

.1%

 

2.8 pt

 

80

.0%

 

77

.7%

 

2.3 pt

 

Marriott

 

35

 

5,382

 

85

.1%

 

80

.0%

 

5.1 pt

 

78

.7%

 

75

.3%

 

3.4 pt

 

Barcelo Crestline

 

19

 

2,756

 

75

.9%

 

70

.4%

 

5.5 pt

 

75

.7%

 

69

.2%

 

6.5 pt

 

InterContinental (no. 1) (2)(3)

 

30

 

3,694

 

80

.9%

 

78

.5%

 

2.4 pt

 

77

.2%

 

76

.7%

 

0.5 pt

 

InterContinental (no. 2) (2)(3)

 

76

 

9,220

 

78

.3%

 

76

.8%

 

1.5 pt

 

71

.3%

 

73

.1%

 

-1.8 pt

 

Prime (3)

 

36

 

5,250

 

62

.6%

 

69

.7%

 

-7.1 pt

 

63

.9%

 

70

.3%

 

-6.4 pt

 

Homestead

 

18

 

2,399

 

78

.7%

 

80

.1%

 

-1.4 pt

 

80

.5%

 

76

.7%

 

3.8 pt

 

Total/Average

 

285

 

38,489

 

76

.9%

 

74

.8%

 

2.1 pt

 

73

.4%

 

71

.9%

 

1.5 pt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RevPAR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Host (no. 1)

 

53

 

7,610

 

$

75

.76

 

$

64

.49

 

17.5

%

 

$

72

.61

 

$

61

.63

 

17.8

%

 

Host (no. 2)

 

18

 

2,178

 

78

.84

 

74

.91

 

5.2

%

 

75

.29

 

72

.62

 

3.7

%

 

Marriott

 

35

 

5,382

 

79

.77

 

73

.96

 

7.9

%

 

74

.24

 

69

.46

 

6.9

%

 

Barcelo Crestline

 

19

 

2,756

 

65

.92

 

58

.33

 

13.0

%

 

69

.02

 

61

.50

 

12.2

%

 

InterContinental (no. 1) (2)(3)

 

30

 

3,694

 

73

.70

 

72

.02

 

2.3

%

 

69

.43

 

69

.52

 

-0.1

%

 

InterContinental (no. 2) (2)(3)

 

76

 

9,220

 

42

.97

 

41

.56

 

3.4

%

 

39

.96

 

40

.26

 

-0.8

%

 

Prime (3)

 

36

 

5,250

 

45

.75

 

48

.65

 

-6.0

%

 

47

.48

 

49

.25

 

-3.6

%

 

Homestead

 

18

 

2,399

 

40

.17

 

37

.05

 

8.4

%

 

40

.10

 

36

.76

 

9.1

%

 

Total/Average

 

285

 

38,489

 

$

60

.79

 

$

56

.93

 

6.8

%

 

$

58

.58

 

$

55

.38

 

5.8

%

 

(1)          Includes data for the calendar periods indicated, except for our Courtyard by Marriott®, Residence Inn by Marriott®, Marriott Hotels Resorts and Suites®, TownePlace Suites by Marriott®, and SpringHill Suites by Marriott® branded hotels, which include data for comparable fiscal periods.

(2)          2003 includes data for periods prior to our ownership of some hotels.

(3)          2003 includes data for periods some hotels were not operated by the current manager.

 

Rent/Return Coverage Data(1)

 

Lease/Management Agreement

 

Quarter ended 9/30/04

 

Year ended 9/30/04

 

Year ended 12/31/03

 

 

 

 

 

 

 

 

 

Host (no. 1)

 

1.4x

 

1.2x

 

1.0x

 

Host (no. 2)

 

1.1x

 

1.0x

 

1.0x

 

Marriott

 

1.1x

 

0.9x

 

0.8x

 

Barcelo Crestline

 

0.7x

 

0.8x

 

0.7x

 

InterContinental (no. 1)

 

0.9x

 

0.7x

 

0.7x

 

InterContinental (no. 2)

 

0.9x

 

0.8x

 

0.8x

 

Prime

 

1.0x

 

1.1x

 

1.0x

 

Homestead

 

1.2x

 

1.2x

 

1.1x

 

Range (all agreements)

 

0.7x-1.4x

 

0.7x-1.2x

 

0.7x-1.1x

 

(1)          We define coverage as combined total hotel sales minus all expenses which are not subordinated to minimum payments to us and the required FF&E Reserve contributions (which data is provided to us by our tenants or operators), divided by the minimum rent or return payments due to us. For some combinations, amounts have been calculated using data for periods prior to our ownership of some hotels and prior to commencement of operating agreements.