- Comparable Portfolio RevPAR Growth of 5.8% -
- Consolidated Portfolio RevPAR Growth of 7.9% -
- Hotel EBITDA Growth of 15.7% -
- Repurchases 1.5 Million Common Shares for $37.6 Million -
- Increases 2015 RevPAR and Earnings Expectations -
Company Website:
http://www.hersha.com
PHILADELPHIA -- (Business Wire)
Hersha Hospitality Trust (NYSE: HT) (“Hersha” or the “Company”), owner
of upscale hotels in urban gateway markets, today announced results for
the second quarter ended June 30, 2015.
Second Quarter 2015 Financial Results
Adjusted Funds from Operations (“AFFO”) in second quarter 2015 increased
$4.2 million to $38.8 million, compared to $34.6 million in second
quarter 2014. The Company’s weighted average diluted common shares and
units of limited partnership interest in Hersha Hospitality Limited
Partnership (“OP Units”) outstanding were approximately 50.9 million as
of June 30, 2015, compared to approximately 51.8 million as of June 30,
2014. AFFO per diluted common share and OP Unit was $0.76 in second
quarter 2015, compared to $0.67 per diluted common share and OP Unit
reported in second quarter 2014. All data presented in this press
release gives effect to the 1-for-4 reverse share split with regards to
share counts and per share data. An explanation of certain non-GAAP
financial measures used in this press release, including, among others,
AFFO and Adjusted EBITDA, as well as reconciliations of those non-GAAP
financial measures, is included at the end of this press release.
Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “Our
portfolio, concentrated in coastal gateway markets delivered 7.9% RevPAR
growth in the second quarter. Other than New York City, each of our
major markets delivered double-digit RevPAR growth, driving a 15.7%
increase in Hotel EBITDA to $54.0 million. Our portfolio in Manhattan
outperformed the market by 50 basis points, marking our sixth straight
quarter of outperforming Manhattan market trends. Operating fundamentals
in Manhattan improved sequentially, with the portfolio delivering 2.4%
RevPAR growth in June. This improvement, along with our results in July,
provides confidence for a stronger back half of 2015.”
Mr. Shah continued, “In June, we acquired the high-quality, well-located
St. Gregory Hotel in Washington, DC’s Dupont Circle for $57.0 million.
The 155-room, independent hotel is immediately accretive to our
portfolio’s RevPAR and EBITDA growth, and will benefit from our pricing
and positioning strategies. The acquisition of the St. Gregory reflects
our confidence in Washington, DC as evolving private and public sector
demand drivers provide excellent prospects for meaningful RevPAR growth.
We also continued to take advantage of the dislocation in our stock, and
repurchased $37.6 million of our shares in the second quarter. To date
in 2015, we have repurchased $50.2 million of common shares,
representing approximately 4.0% of our float. While equity prices have
rebounded from June 2015 lows, we stand ready to prudently utilize our
repurchase program moving forward, especially in times of market
volatility, or when our shares are undervalued.”
Second Quarter 2015 Operating Results
During second quarter 2015, revenue per available room (“RevPAR”) at the
Company's 47 consolidated hotels as of June 30, 2015, compared to 47
hotels as of June 30, 2014, increased 7.9% to $182.39. The Company’s
average daily rate (“ADR”) for the consolidated hotel portfolio
increased 6.5% to $207.76, while occupancy increased 116 basis points to
87.8%. Hotel EBITDA margins for the consolidated hotel portfolio
increased 70 basis points to 42.6%, with Hotel EBITDA increasing 15.7%,
or $7.3 million, to $54.0 million.
During second quarter 2015, RevPAR at the Company's 45 comparable hotels
as of June 30, 2015 increased 5.8% to $180.19. The Company’s ADR for the
comparable hotel portfolio increased 5.2% to $205.86, while occupancy
increased 48 basis points to 87.5%. Hotel EBITDA margins for the
comparable hotel portfolio increased 50 basis points to 42.3%.
The Company’s best performing market during the second quarter was the
West Coast, which reported 16.3% RevPAR growth. The Company’s
Washington, DC, Boston and South Florida portfolios reported 14.6%,
11.7% and 10.2% RevPAR growth, respectively.
New York City and Manhattan
The New York City hotel portfolio, which includes the five boroughs,
consisted of 17 hotels as of June 30, 2015. For second quarter 2015, the
Company’s comparable New York City hotel portfolio (15 hotels) recorded
a 1.4% decrease in RevPAR to $225.17, as ADR fell 60 basis points to
$239.18 and occupancy decreased 76 basis points to 94.1%.
The Manhattan hotel portfolio consisted of 14 hotels as of June 30,
2015. For second quarter 2015, the Company’s comparable Manhattan hotel
portfolio (12 hotels) achieved 94.6% occupancy, outperforming the wider
market, but down 70 basis points versus second quarter 2014. RevPAR
declined 1.7% to $240.15, while ADR decreased 1.0% to $253.85.
Overall, Manhattan trailing 12 month occupancy has exceeded 85.0% for 37
consecutive months. The city’s preeminence as a financial, cultural, and
technological hub, combined with increasing residual real estate and
land value, provides the Company confidence from a long-term operational
and investment perspective.
Financing
As of June 30, 2015, the Company maintained significant financial
flexibility with approximately $28.2 million of cash and cash
equivalents, and approximately $121.5 million of capacity from the
Company’s $250 million revolving line of credit provided under the
Company’s $500 million credit facility. As of June 30, 2015, 66.0% of
the Company’s consolidated debt was fixed rate debt or effectively fixed
through interest rate swaps and caps. The Company’s total consolidated
debt had a weighted average interest rate of approximately 4.08% and a
weighted average life-to-maturity of approximately 3.7 years assuming no
extension options are exercised.
During second quarter 2015, the Company refinanced the outstanding
mortgage debt at Hyatt Union Square within a favorable financing
environment. The new $55.8 million loan, priced at 30-day LIBOR plus 230
basis points and maturing in June 2019, will result in annual cost
savings of approximately $1.0 million.
Acquisitions
In June, the Company purchased the 155-room St. Gregory Hotel & Suites
in Washington, DC for $57.0 million. Based on the Company’s underwriting
assumptions, the purchase price reflects a forward economic
capitalization rate and EBITDA multiple of 7.0% and 12.9x, respectively.
The acquisition of the St. Gregory was funded with cash on hand and with
proceeds from the Company’s $250 million revolving line of credit under
its $500 million senior unsecured credit facility. The acquisition also
included the assumption of $25.8 million in mortgage debt that matures
in September 2021.
The St. Gregory, which joined Hersha’s growing portfolio of independent
hotels, is situated in Washington, DC’s DuPont Circle neighborhood at
21st and M Street NW, proximate to Downtown and the West End.
1-for-4 Reverse Share Split
On June 1, 2015, the Company announced a reverse share split of its
issued and outstanding common shares and common units of limited
partnership interest and LTIP units at a ratio of 1-for-4. The reverse
share split took effect after the market close on June 22, 2015.
Accordingly, every four issued and outstanding common shares were
combined into one common share. Since the reverse stock split took
effect, and as of July 27, 2015, the Company’s average daily trading
volume has increased approximately 43.0%, while price performance has
increased 1.0% compared to a 3.0% decline in the SNL US Hotel REIT Index.
Share Repurchase Activity
During the second quarter, the Company repurchased approximately 1.5
million outstanding common shares for $37.6 million at a weighted
average price of $25.60 per share. To date in 2015, the Company has
repurchased approximately 2.0 million common shares for an aggregate
repurchase price of $50.2 million, representing approximately 4.0% of
common shares outstanding. The Company will continue to consider further
repurchases during periods of share price volatility.
Dividends
Hersha paid a dividend of $0.50 per Series B Preferred Share and $0.4297
per Series C Preferred Share for the second quarter 2015. The preferred
share dividends were paid July 15, 2015 to holders of record as of July
1, 2015.
The Company’s second quarter dividend, paid on July 15, 2015 to the
holders of record of common shares on the close of business on June 30,
2015, was adjusted to $0.28 per common share (reflecting four times the
previously announced second quarter dividend of $0.07 per common share
to reflect the reverse share split).
Net Income/Loss
Net income applicable to common shareholders was $15.6 million, or $0.32
per diluted common share, in the second quarter 2015 compared to net
income applicable to common shareholders of $53.3 million, or $1.06 per
diluted common share, in second quarter 2014.
2015 Outlook
The Company is updating operating and financial expectations for 2015
for the Company’s consolidated and comparable portfolios. These
expectations build in the Company’s year to date performance,
acquisitions and capital markets activity, and assume operating and
economic fundamentals remain unchanged. The updated expectations also
assume no additional acquisitions, dispositions or capital market
activities. Based on management’s current outlook and assumptions, the
Company’s 2015 operating expectations are as follows:
|
| |
| |
| | Previous 2015 Outlook | | Updated 2015 Outlook |
($’s in millions except per share amounts(1)) | | Low |
| High | | Low |
| High |
Net Income
| |
$27.0
| |
$31.0
| |
$27.0
| |
$31.0
|
Net Income per diluted share
| |
$0.52
| |
$0.60
| |
$0.55
| |
$0.63
|
| | | | | | | |
|
Consolidated RevPAR Growth
| |
6.0%
| |
8.0%
| |
6.5%
| |
8.5%
|
Consolidated EBITDA Margin Growth
| |
75 bps
| |
125 bps
| |
75 bps
| |
125 bps
|
| | | | | | | |
|
Comparable Property RevPAR Growth
| |
5.0%
| |
6.0%
| |
5.5%
| |
6.5%
|
Comparable Property EBITDA Margin Growth
| |
50 bps
| |
100 bps
| |
50 bps
| |
100 bps
|
| | | | | | | |
|
Adjusted EBITDA
| |
$176.0
| |
$180.0
| |
$178.0
| |
$182.0
|
| | | | | | | |
|
Adjusted FFO
| |
$116.0
| |
$120.0
| |
$116.0
| |
$120.0
|
Adjusted FFO per diluted share and unit
| |
$2.24
| |
$2.32
| |
$2.28
| |
$2.36
|
(1) Per share data reflects 1-for-4 Reverse
Share Split Effective June 22, 2015 |
|
Second Quarter 2015 Conference Call
The Company will host a conference call to discuss these results at 9:00
a.m. Eastern Time on Wednesday, July 29, 2015. A live webcast of the
conference call will be available on the Company’s website at www.hersha.com.
The conference call can be accessed by dialing 1-888-401-4669 or
1-719-325-2463 for international participants. A replay of the call will
be available from 12:00 p.m. Eastern Time on Wednesday, July 29, 2015,
through midnight Eastern Time on Wednesday, August 12, 2015. The replay
can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for
international participants. The passcode for the call and the replay is
1237399. A replay of the webcast will be available on the Company’s
website for a limited time.
About Hersha Hospitality Trust
Hersha Hospitality Trust (HT) is a self-advised real estate investment
trust in the hospitality sector, which owns and operates high quality
upscale hotels in urban gateway markets. The Company's 52 hotels
totaling 8,414 rooms are located in New York, Boston, Philadelphia,
Washington, DC, Miami and select markets on the West Coast. The
Company's shares are traded on The New York Stock Exchange under the
ticker “HT”.
Non-GAAP Financial Measures
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.
Cautionary Statements Regarding Forward Looking Statements
Certain matters within this press release are discussed using
“forward-looking statements” within the meaning of the safe harbor
provisions of 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 statements. These forward-looking
statements may include statements related to, among other things: the
Company’s 2015 outlook for net income attributable to common
shareholders, net income per weighted average common share and OP Units
outstanding, Adjusted EBITDA, Adjusted FFO, Adjusted FFO per weighted
average common share and OP Unit outstanding, consolidated and
comparable RevPAR growth and consolidated and comparable EBITDA margin
growth, economic and other assumptions underlying the Company’s 2015
outlook regarding economic growth, labor markets, real estate values and
the economic vibrancy of our target markets, the Company’s ability to
grow operating cash flow, leverage rate-driven revenue growth, return
capital to its shareholders, whether in the form of increased dividends
or otherwise, and to outperform, the ability of the Company’s hotels to
achieve stabilized or projected revenue, the stability of the lodging
industry and the markets in which the Company’s hotel properties are
located, the Company’s ability to generate internal and external growth,
the Company’s ability to increase margins, including hotel EBITDA
margins, the expected increase in the net asset value of the hotels in
the Company’s portfolio as a result of capital being invested by foreign
or domestic investors or for any other reason, and the Company’s ability
to achieve its forecasted stabilization rates. Forward-looking
statements are neither historical facts nor assurances of future
performance. Instead, they are based only on the Company’s current
beliefs, expectations and assumptions regarding the future of its
business, future plans and strategies, projections, anticipated events
and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject to
inherent uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of the Company’s
control. The Company’s actual results and financial condition may differ
materially from those indicated in the forward-looking statements
contained in this press release. Therefore, you should not rely on any
of these forward-looking statements. For a description of factors that
may cause the Company’s actual results or performance to differ from its
forward-looking statements, please review the information under the
heading “Risk Factors” included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2014 filed by the Company with the
Securities and Exchange Commission (“SEC”) and other documents filed by
the Company with the SEC from time to time. All information provided in
this press release, unless otherwise stated, is as of July 28, 2015, and
the Company undertakes no duty to update this information unless
required by law.
|
| | |
| | |
HERSHA HOSPITALITY TRUST | | | | | | |
Balance Sheet (unaudited) | | | | | | |
(in thousands, except shares and per share data) | | | | | | |
| | | | | |
|
| | June 30, 2015 | | December 31, 2014 |
Assets: | | | | | | |
Investment in Hotel Properties, Net of Accumulated Depreciation,
Including Consolidation of Variable Interest Entity Assets of
$83,521 and $84,247
| |
$
|
1,781,415
| | |
$
|
1,745,483
| |
Investment in Unconsolidated Joint Ventures
| | |
10,327
| | | |
11,150
| |
Cash and Cash Equivalents
| | |
28,161
| | | |
21,675
| |
Escrow Deposits
| | |
16,903
| | | |
16,941
| |
Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of
$40 and $39
| | |
10,714
| | | |
9,363
| |
Deferred Financing Costs, Net of Accumulated Amortization of $7,822
and $6,938
| | |
8,597
| | | |
8,605
| |
Due from Related Parties
| | |
6,347
| | | |
6,580
| |
Intangible Assets, Net of Accumulated Amortization of $3,730 and
$3,514
| | |
7,150
| | | |
7,316
| |
Other Assets
| |
|
34,452
|
| |
|
28,426
|
|
Total Assets | |
$
|
1,904,066
|
| |
$
|
1,855,539
|
|
| | | | | |
|
Liabilities and Equity: | | | | | | |
Line of Credit
| |
$
|
128,500
| | |
$
|
-
| |
Unsecured Term Loan
| | |
250,000
| | | |
250,000
| |
Unsecured Notes Payable
| | |
51,548
| | | |
51,548
| |
Mortgages Payable, including Net Unamortized Premium and
Consolidation of Variable Interest Entity Debt of $53,325 and
$54,132
| | |
605,480
| | | |
617,375
| |
Accounts Payable, Accrued Expenses and Other Liabilities
| | |
54,418
| | | |
54,116
| |
Dividends and Distributions Payable
| | |
17,402
| | | |
17,909
| |
Due to Related Parties
| |
|
6,558
|
| |
|
7,203
|
|
Total Liabilities | |
$
|
1,113,906
|
| |
$
|
998,151
|
|
| | | | | |
|
Equity: | | | | | | |
Shareholders' Equity:
| | | | | | |
Preferred Shares: $0.01 Par Value, 29,000,000 Shares Authorized,
4,600,000 Series B and 3,000,000 Series C Shares Issued and
Outstanding at June 30, 2015 and December 31, 2014, with
Liquidation Preferences of $25 Per Share
| |
$
|
76
| | |
$
|
76
| |
Common Shares: Class A, $0.01 Par Value, 300,000,000 Shares
Authorized, 47,769,899 and 49,708,771 Shares Issued and
Outstanding at June 30, 2015 and December 31, 2014, respectively
| | |
477
| | | |
497
| |
Common Shares: Class B, $0.01 Par Value, 1,000,000 Shares
Authorized, None Issued and Outstanding at June 30, 2015 and
December 31, 2014
| | |
-
| | | |
-
| |
Accumulated Other Comprehensive Loss
| | |
(979
|
)
| | |
(358
|
)
|
Additional Paid-in Capital
| | |
1,154,842
| | | |
1,194,547
| |
Distributions in Excess of Net Income
| |
|
(393,943
|
)
| |
|
(365,381
|
)
|
Total Shareholders' Equity
| | |
760,473
| | | |
829,381
| |
| | | | | |
|
Noncontrolling Interests:
| | | | | | |
Noncontrolling Interests - Common Units and LTIP Units
| | |
31,105
| | | |
29,082
| |
Noncontrolling Interests - Consolidated Variable Interest Entity
| |
|
(1,418
|
)
| |
|
(1,075
|
)
|
Total Noncontrolling Interests
| | |
29,687
| | | |
28,007
| |
| |
|
| |
|
|
Total Equity
| | |
790,160
| | | |
857,388
| |
| |
|
| |
|
|
Total Liabilities and Equity | |
$
|
1,904,066
|
| |
$
|
1,855,539
|
|
|
| | |
| | |
| | |
| | |
HERSHA HOSPITALITY TRUST | | | | | | | | | | | | |
Summary Results (unaudited) | | | | | | | | | | | | |
(in thousands, except shares and per share data) | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2015 | | June 30, 2014 | | June 30, 2015 | | June 30, 2014 |
Revenues: | | | | | | | | | | | | |
Hotel Operating Revenues
| |
$
|
127,000
| | |
$
|
111,487
| | |
$
|
222,688
| | |
$
|
191,404
| |
Other Revenue
| |
|
30
|
| |
|
66
|
| |
|
54
|
| |
|
99
|
|
Total Revenues | |
|
127,030
|
| |
|
111,553
|
| |
|
222,742
|
| |
|
191,503
|
|
| | | | | | | | | | | |
|
Operating Expenses: | | | | | | | | | | | | |
Hotel Operating Expenses
| | |
64,134
| | | |
56,948
| | | |
121,489
| | | |
105,724
| |
Insurance Recoveries
| | |
-
| | | |
(2,557
|
)
| | |
-
| | | |
(4,602
|
)
|
Hotel Ground Rent
| | |
727
| | | |
595
| | | |
1,455
| | | |
1,005
| |
Real Estate and Personal Property Taxes and Property Insurance
| | |
8,222
| | | |
7,180
| | | |
16,492
| | | |
13,986
| |
General and Administrative
| | |
3,768
| | | |
3,289
| | | |
6,576
| | | |
6,079
| |
Share Based Compensation
| | |
1,655
| | | |
1,449
| | | |
3,194
| | | |
2,561
| |
Acquisition and Terminated Transaction Costs
| | |
190
| | | |
1,672
| | | |
308
| | | |
1,806
| |
Depreciation and Amortization
| |
|
18,328
|
| |
|
17,457
|
| |
|
36,581
|
| |
|
33,800
|
|
Total Operating Expenses | |
|
97,024
|
| |
|
86,033
|
| |
|
186,095
|
| |
|
160,359
|
|
| | | | | | | | | | | |
|
Operating Income | | |
30,006
| | | |
25,520
| | | |
36,647
| | | |
31,144
| |
| | | | | | | | | | | |
|
Interest Income
| | |
51
| | | |
277
| | | |
99
| | | |
675
| |
Interest Expense
| | |
(10,688
|
)
| | |
(10,745
|
)
| | |
(21,323
|
)
| | |
(20,793
|
)
|
Other Expense
| | |
(156
|
)
| | |
(214
|
)
| | |
(325
|
)
| | |
(330
|
)
|
Gain on Disposition of Hotel Properties
| | |
-
| | | |
7,227
| | | |
-
| | | |
7,227
| |
Gain on Hotel Acquisitions, Net
| | |
-
| | | |
13,609
| | | |
-
| | | |
13,609
| |
Development Loan Recovery
| | |
-
| | | |
22,494
| | | |
-
| | | |
22,494
| |
Loss on Debt Extinguishment
| |
|
(222
|
)
| |
|
-
|
| |
|
(222
|
)
| |
|
(644
|
)
|
Income before Income (Loss) from Unconsolidated Joint Venture
Investments, Income Taxes and Discontinued Operations | | |
18,991
| | | |
58,168
| | | |
14,876
| | | |
53,382
| |
| | | | | | | | | | | |
|
Income (Loss) from Unconsolidated Joint Venture Investments | |
|
526
|
| |
|
419
|
| |
|
252
|
| |
|
(1
|
)
|
| | | | | | | | | | | |
|
Loss before Income Taxes | | |
19,517
| | | |
58,587
| | | |
15,128
| | | |
53,381
| |
| | | | | | | | | | | |
|
Income Tax Benefit (Expense) | | |
109
| | | |
(1
|
)
| | |
109
| | | |
107
| |
| |
|
| |
|
| |
|
| |
|
|
Income from Continuing Operations | | |
19,626
| | | |
58,586
| | | |
15,237
| | | |
53,488
| |
| | | | | | | | | | | |
|
Discontinued Operations | | | | | | | | | | | | |
Gain on Disposition of Discontinued Assets
| | |
-
| | | |
-
| | | |
-
| | | |
81
| |
Impairment of Discontinued Assets
| | |
-
| | | |
-
| | | |
-
| | | |
(1,800
|
)
|
Income from Discontinued Operations, Net of Income Taxes
| |
|
-
|
| |
|
-
|
| |
|
-
|
| |
|
304
|
|
Loss from Discontinued Operations | | |
-
| | | |
-
| | | |
-
| | | |
(1,415
|
)
|
| |
|
| |
|
| |
|
| |
|
|
Net Income | | |
19,626
| | | |
58,586
| | | |
15,237
| | | |
52,073
| |
| | | | | | | | | | | |
|
(Income) Loss Allocated to Noncontrolling Interests
| | |
(405
|
)
| | |
(1,655
|
)
| | |
38
| | | |
(1,148
|
)
|
Preferred Distributions
| |
|
(3,589
|
)
| |
|
(3,589
|
)
| |
|
(7,178
|
)
| |
|
(7,178
|
)
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
15,632
|
| |
$
|
53,342
|
| |
$
|
8,097
|
| |
$
|
43,747
|
|
| | | | | | | | | | | |
|
Earnings per Share: | | | | | | | | | | | | |
BASIC | | | | | | | | | | | | |
Income from Continuing Operations Applicable to Common Shareholders
| |
$
|
0.32
| | |
$
|
1.07
| | |
$
|
0.16
| | |
$
|
0.90
| |
Loss from Discontinued Operations
| |
|
0.00
|
| |
|
0.00
|
| |
|
0.00
|
| |
|
(0.03
|
)
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
0.32
|
| |
$
|
1.07
|
| |
$
|
0.16
|
| |
$
|
0.87
|
|
| | | | | | | | | | | |
|
DILUTED | | | | | | | | | | | | |
Income from Continuing Operations Applicable to Common Shareholders
| |
$
|
0.32
| | |
$
|
1.06
| | |
$
|
0.16
| | |
$
|
0.89
| |
Loss from Discontinued Operations
| |
|
0.00
|
| |
|
0.00
|
| |
|
0.00
|
| |
|
(0.03
|
)
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
0.32
|
| |
$
|
1.06
|
| |
$
|
0.16
|
| |
$
|
0.86
|
|
| | | | | | | | | | | |
|
Weighted Average Common Shares
Outstanding: | | | | | | | | | | | |
Basic
| | |
48,530,716
| | | |
49,623,618
| | | |
49,053,846
| | | |
49,903,225
| |
Diluted
| | |
49,072,364
| | | |
50,053,389
| | | |
49,577,031
| | | |
50,303,394
| |
| | | | | | | | | | | | | | | |
|
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 Common 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 loss from impairment of assets and depreciation
and amortization, and after adjustments for unconsolidated partnerships
and joint ventures. Our interpretation of the NAREIT definition is that
non-controlling 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 shareholders, includes loss from
the impairment of certain depreciable assets, our investment in
unconsolidated joint ventures and land, depreciation and amortization
expenses, gains or losses on property sales, non-controlling interest
and preferred dividends. In computing FFO, we eliminate these items
because, in our view, they are not indicative of the results from our
property operations. We determined that the loss from the impairment of
certain depreciable assets, including investments in unconsolidated
joint ventures and land, was driven by a measurable decrease in the fair
value of certain hotel properties and other assets as determined by our
analysis of those assets in accordance with applicable GAAP. As such,
these impairments have been eliminated from net income (loss) to
determine FFO.
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 acquisition and terminated transaction expenses;
-
adding back preferred share extinguishment costs
-
adding back prior period tax assessment 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 Company’s 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 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.
Certain amounts related to depreciation and amortization and
depreciation and amortization from discontinued operations in the prior
year FFO reconciliation have been recast to conform to the current year
presentation. In addition, based on guidance provided by NAREIT, we have
eliminated loss from the impairment of certain depreciable assets,
including investments in unconsolidated joint ventures and land, from
net (income) loss to arrive at FFO in each year presented. 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, 2015 | | June 30, 2014 | | June 30, 2015 | | June 30, 2014 |
| | | | | | | | | | | |
|
Net income applicable to common shares
| |
$
|
15,632
| | |
$
|
53,342
| | |
$
|
8,097
| | |
$
|
43,747
| |
Income (loss) allocated to noncontrolling interest
| | |
405
| | | |
1,655
| | | |
(38
|
)
| | |
1,148
| |
(Income) loss from unconsolidated joint ventures
| | |
(526
|
)
| | |
(419
|
)
| | |
(252
|
)
| | |
1
| |
Gain on hotel acquisition
| | |
-
| | | |
(13,609
|
)
| | |
-
| | | |
(13,609
|
)
|
Development loan recovery
| | |
-
| | | |
(22,494
|
)
| | |
-
| | | |
(22,494
|
)
|
Gain on disposition of hotel properties
| | |
-
| | | |
(7,227
|
)
| | |
-
| | | |
(7,308
|
)
|
Loss from impairment of depreciable assets
| | |
-
| | | |
-
| | | |
-
| | | |
1,800
| |
Depreciation and amortization
| |
|
18,328
|
| |
|
17,457
|
| |
|
36,581
|
| |
|
33,800
|
|
Funds from consolidated hotel operations applicable to common
shares and Partnership units | |
|
33,839
|
| |
|
28,705
|
| |
|
44,388
|
| |
|
37,085
|
|
| | | | | | | | | | | |
|
Income (loss) from unconsolidated joint venture investments
| | |
526
| | | |
419
| | | |
252
| | | |
(1
|
)
|
Depreciation and amortization of purchase price in excess of
historical cost
| | |
121
| | | |
152
| | | |
241
| | | |
295
| |
Interest in depreciation and amortization of unconsolidated joint
ventures
| |
|
1,680
|
| |
|
1,636
|
| |
|
2,773
|
| |
|
2,507
|
|
Funds from unconsolidated joint venture operations applicable
to common shares and Partnership units | | |
2,327
| | | |
2,207
| | | |
3,266
| | | |
2,801
| |
| |
|
| |
|
| |
|
| |
|
|
Funds from Operations applicable to common shares and Partnership
units | | |
36,166
| | | |
30,912
| | | |
47,654
| | | |
39,886
| |
| | | | | | | | | | | |
|
Add:
| | | | | | | | | | | | |
Non-cash share based compensation expense
| | |
1,655
| | | |
1,449
| | | |
3,194
| | | |
2,561
| |
Acquisition and terminated transaction costs
| | |
190
| | | |
1,672
| | | |
308
| | | |
1,806
| |
Amortization of deferred financing costs
| | |
657
| | | |
655
| | | |
1,377
| | | |
1,354
| |
Amortization of discounts and premiums
| | |
(256
|
)
| | |
(220
|
)
| | |
(509
|
)
| | |
(439
|
)
|
Deferred financing costs written off in debt extinguishment
| | |
222
| | | |
-
| | | |
222
| | | |
644
| |
Straight-line amortization of ground lease expense
| | |
122
| | | |
122
| | | |
245
| | | |
163
| |
State and local tax expense related to reassessment of prior period
assessment
| |
|
-
|
| |
|
-
|
| |
|
-
|
| |
|
217
|
|
| | | | | | | | | | | |
|
Adjusted Funds from Operations | |
$
|
38,756
|
| |
$
|
34,590
|
| |
$
|
52,491
|
| |
$
|
46,192
|
|
| | | | | | | | | | | |
|
AFFO per Diluted Weighted Average Common Shares and Partnership
Units Outstanding
| |
$
|
0.76
|
| |
$
|
0.67
|
| |
$
|
1.02
|
| |
$
|
0.89
|
|
| | | | | | | | | | | |
|
Diluted Weighted Average Common Shares and Partnership Units
Outstanding
| | |
50,940,422
| | | |
51,782,068
| | | |
51,429,430
| | | |
52,032,073
| |
| | | | | | | | | | | | | | | |
|
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 REIT's 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 Company's operating performance.
|
| | |
| | |
| | |
| | |
HERSHA HOSPITALITY TRUST | | | | | | | | | | | | |
Adjusted EBITDA | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2015 | | June 30, 2014 | | June 30, 2015 | | June 30, 2014 |
| | | | | | | | | | | |
|
Net income applicable to common shareholders
| |
$
|
15,632
| | |
$
|
53,342
| | |
$
|
8,097
| | |
$
|
43,747
| |
Income (loss) allocated to noncontrolling interest
| | |
405
| | | |
1,655
| | | |
(38
|
)
| | |
1,148
| |
(Income) loss from unconsolidated joint ventures
| | |
(526
|
)
| | |
(419
|
)
| | |
(252
|
)
| | |
1
| |
Gain on hotel acquisition
| | |
-
| | | |
(13,609
|
)
| | |
-
| | | |
(13,609
|
)
|
Development loan recovery
| | |
-
| | | |
(22,494
|
)
| | |
-
| | | |
(22,494
|
)
|
Gain on disposition of hotel properties
| | |
-
| | | |
(7,227
|
)
| | |
-
| | | |
(7,308
|
)
|
Loss from impairment of assets
| | |
-
| | | |
-
| | | |
-
| | | |
1,800
| |
Non-operating interest income
| | |
(44
|
)
| | |
(8
|
)
| | |
(86
|
)
| | |
(16
|
)
|
Distributions to Preferred Shareholders
| | |
3,589
| | | |
3,589
| | | |
7,178
| | | |
7,178
| |
Interest expense from continuing operations
| | |
10,688
| | | |
10,745
| | | |
21,323
| | | |
20,793
| |
Interest expense from discontinued operations
| | |
-
| | | |
-
| | | |
-
| | | |
354
| |
Income tax (benefit) expense
| | |
(109
|
)
| | |
1
| | | |
(109
|
)
| | |
(107
|
)
|
Deferred financing costs written off in debt extinguishment
| | |
222
| | | |
-
| | | |
222
| | | |
644
| |
Depreciation and amortization from continuing operations
| | |
18,328
| | | |
17,457
| | | |
36,581
| | | |
33,800
| |
Acquisition and terminated transaction costs
| | |
190
| | | |
1,672
| | | |
308
| | | |
1,806
| |
Non-cash share based compensation expense
| | |
1,655
| | | |
1,449
| | | |
3,194
| | | |
2,561
| |
Straight-line amortization of ground lease expense
| | |
122
| | | |
122
| | | |
245
| | | |
163
| |
State and Local tax expense related to reassessment of prior period
assessment
| |
|
-
|
| |
|
-
|
| |
|
-
|
| |
|
217
|
|
| | | | | | | | | | | |
|
Adjusted EBITDA from consolidated hotel operations | |
|
50,152
|
| |
|
46,275
|
| |
|
76,663
|
| |
|
70,678
|
|
| | | | | | | | | | | |
|
Income (loss) from unconsolidated joint venture investments
| | |
526
| | | |
419
| | | |
252
| | | |
(1
|
)
|
Add:
| | | | | | | | | | | | |
Depreciation and amortization of purchase price in excess of
historical cost
| | |
121
| | | |
152
| | | |
241
| | | |
295
| |
Adjustment for interest in interest expense, depreciation and
amortization of unconsolidated joint ventures
| |
|
3,671
|
| |
|
3,633
|
| |
|
5,684
|
| |
|
5,687
|
|
| | | | | | | | | | | |
|
Adjusted EBITDA from unconsolidated joint venture operations | |
|
4,318
|
| |
|
4,204
|
| |
|
6,177
|
| |
|
5,981
|
|
| | | | | | | | | | | |
|
Adjusted EBITDA | |
$
|
54,470
|
| |
$
|
50,479
|
| |
$
|
82,840
|
| |
$
|
76,659
|
|
| | | | | | | | | | | | | | | |
|
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 Company’s stakeholders. These can be found in the Investor
Relations section and the “SEC Filings and Presentations” page of the
Company’s website, www.hersha.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150728006863/en/
Contacts:
Hersha Hospitality Trust
Ashish Parikh, Chief Financial Officer
215-238-1046
Source: Hersha Hospitality Trust
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