- Full-Year 2013 Hotel EBITDA Growth of 6.7% -
- Full-Year 2013 Average Daily Rate of $179.70 -
- Full-Year 2013 Occupancy of 79.7% -
- Completes the Sale of 16 Properties within Non-Core Portfolio -
- Increases Presence on West Coast and Miami Beach -
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
fourth quarter ended December 31, 2013.
Full-Year and Fourth Quarter 2013 Financial Results
Net income applicable to common shareholders was $32.8 million, or $0.16
per diluted common share, for the full-year ended December 31, 2013
compared to net income applicable to common shareholders of $8.4
million, or $0.04 per diluted common share, in 2012. The increase in net
income reported for the full-year and fourth quarter 2013 periods was
primarily related to a gain on the disposition of 12 non-core hotel
properties that closed during the fourth quarter.
Adjusted Funds from Operations (“AFFO”) in 2013 increased by $7.2
million to $86.5 million, compared to $79.3 in 2012. AFFO per diluted
common share and unit of limited partnership interest in Hersha
Hospitality Limited Partnership (“OP Unit”) was $0.41, an increase from
AFFO of $0.40 per diluted common share and OP Unit reported in 2012. The
Company’s weighted average diluted common shares and OP Units
outstanding were approximately 208.9 million as of December 31, 2013,
compared to approximately 198.1 million as of December 31, 2012.
AFFO in the fourth quarter declined by $2.0 million to $24.6 million,
compared to $26.6 million in the fourth quarter 2012. AFFO per diluted
common share and OP Unit was $0.12, a decrease from AFFO of $0.13 per
diluted common share and OP Unit reported in the same quarter in 2012.
An explanation of certain non-GAAP financial measures used in this press
release, including, among others, AFFO, 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 RevPAR
quality improved materially in 2013 given the combination of capital
recycling initiatives highlighted by our non-core portfolio sale, in
addition to acquisitions undertaken in strong RevPAR markets such as
Miami Beach and San Diego, and the opening of our Hyatt Union Square
property. For the full-year 2013 period, the Company delivered
Consolidated RevPAR of $143.30, which represented record full-year
RevPAR for the Company, driven by growing corporate and leisure
transient demand trends in U.S. gateway markets. As anticipated, the
fourth quarter of 2013 was challenging on a year-over-year basis due to
difficult comparable performance numbers from a year ago related to the
significant demand surge from Hurricane Sandy relief efforts that
significantly bolstered the portfolio results in New York and the
surrounding markets during the fourth quarter 2012 and one-time events
such as the government shutdown in October of 2013. Nevertheless, we
continued to execute our business plan on a variety of strategic
initiatives that favorably position the Company to deliver strong
operating results and cash flow in the periods ahead.”
Mr. Shah continued, “2013 was an active year from a strategic
perspective as the Company’s non-core portfolio sale, expansion on the
West Coast and in Miami, and delivery of the new tower at the Cadillac
Courtyard Miami Beach Oceanfront furthered our commitment to recycle
capital and concentrate on high RevPAR quality assets in high demand
gateway markets. We are confident that our transformative work
undertaken throughout 2013 will better reflect our inherent hotel
portfolio value.”
Full Year and Fourth Quarter 2013 Operating Results
For full-year 2013, revenue per available room (“RevPAR”) at the
Company's 43 consolidated hotels as of December 31, 2013 compared to 38
hotels as of December 31, 2012, increased 4.0% to $143.30 compared to
$137.78 in 2012. The Company’s average daily rate (“ADR”) for the hotel
portfolio increased by 2.6% to $179.70, while occupancy increased 112
basis points to 79.7%. Hotel EBITDA for the hotel portfolio increased
approximately 6.7%, or $7.8 million, to $124.5 million in 2013 compared
to 2012.
For the fourth quarter of 2013, RevPAR at the Company's consolidated
hotels as of December 31, 2013 compared to December 31, 2012, was down
1.6% to $148.60 compared to $150.97 for the fourth quarter 2012. The
Company’s fourth quarter ADR for the hotel portfolio declined by 2.0% to
$189.05, while occupancy increased 31 basis points to 78.6%. Hotel
EBITDA for the hotel portfolio declined approximately 2.5% to $34.6
million for the fourth quarter 2013 compared to the same period in 2012.
This decline was primarily due to ADR-driven RevPAR loss, compounded by
$610,000 in cancellation fees from Hurricane Sandy disaster relief
agencies recognized by the hotels in fourth quarter 2012 for rooms that
were never utilized, ongoing renovation disruptions at the Cadillac
Courtyard Miami Beach Oceanfront and the Rittenhouse Hotel, and
increased commissions and contract labor expenses, in addition to higher
real estate taxes.
New York City and Manhattan
The New York City hotel portfolio, which includes the five boroughs,
consisted of 16 hotels as of December 31, 2013. For the fourth quarter
2013, the Company’s New York City hotel portfolio recorded a 4.4%
decrease in RevPAR to $220.87, as ADR decreased 3.5% to $240.19, while
occupancy declined 95 basis points to 92.0%.
The Manhattan hotel portfolio consisted of 13 hotels as of December 31,
2013. For the fourth quarter of 2013, the Company’s Manhattan hotel
portfolio recorded a 2.3% decrease in RevPAR to $236.80, as ADR declined
1.7% to $256.26, and occupancy declined 65 basis points to 92.4%.
Despite challenging comparisons to the prior year, the Manhattan
portfolio recorded healthy EBITDA margins of 46.4% during the fourth
quarter 2013.
Given the difficult comparisons to fourth quarter 2012 due to positive
impacts from Hurricane Sandy relief efforts, the Company believes
comparing fourth quarter 2013 operating results to fourth quarter 2011
operating results in New York City provides a more accurate picture of
the operating performance. On a two year basis, the Company’s
consolidated New York City hotels reported a 10.8% increase in RevPAR,
driven by an 8.4% increase in ADR and a 200 basis point increase in
occupancy.
Financing
As of December 31, 2013, the Company maintained significant financial
flexibility with approximately $36.2 million of cash and cash
equivalents and a fully undrawn $250 million senior unsecured revolving
line of credit. As of December 31, 2013, 100.0% of the Company’s
consolidated debt is fixed rate debt or effectively fixed through
interest rate swaps and caps. The Company’s total consolidated debt has
a weighted average interest rate of approximately 4.91% and a weighted
average life-to-maturity of approximately 3.7 years.
Acquisitions
On November 6, 2013, Hersha announced a definitive agreement to purchase
the 122-room Hotel Oceana in Santa Barbara, California for $42 million.
The purchase price reflects an 8.6% economic capitalization rate on
trailing-twelve month net operating income as of December 31, 2013.
The Hotel Oceana acquisition will be funded with cash on hand, and
includes the assumption of approximately $25.3 million in mortgage debt,
incurring interest at a fixed rate of 4.4% per year and maturing in
2023. The acquisition of the Hotel Oceana is expected to close by the
end of first quarter of 2014, and is subject to a variety of closing
conditions and the receipt of lender consent.
On December 20, 2013, the Company closed on the purchase of two
Autograph Collection hotels in Miami’s South Beach (“South Beach
Autograph Portfolio”). The purchase price for the recently renovated
South Beach Autograph Portfolio was $50.95 million and reflected a
full-year 2014 economic capitalization rate of approximately 6.8%, and
an 8.5% - 9.0% capitalization rate on stabilized earnings. The 145-room
South Beach Autograph Portfolio includes the 75-room Blue Moon Hotel and
the 70-room Winter Haven Hotel.
The acquisition of the South Beach Autograph Portfolio was funded with
cash on hand, and with a portion of net proceeds generated from the
non-core portfolio sale further described below.
Dispositions
The Company made further progress regarding efforts to recycle capital
from stabilized, select service assets in suburban markets to higher
growth urban gateway assets.
On December 18, 2013, Hersha closed on the sale of 12 of 16 hotels
included within the non-core hotel portfolio the Company previously
announced in September 2013. The sale of the 12 hotels generated net
proceeds of approximately $122.3 million.
During February 2014, the Company closed on the sale of the remaining 4
hotels within this portfolio. The sale of the 4 hotels generated net
proceeds of approximately $13.6 million.
This sale completes Hersha’s portfolio transformation into a pure play
urban transient-focused collection of hotels with exposure to some of
the highest demand gateway markets in the United States.
Subsequent Events
The Company entered into a definitive agreement to sell the Hotel 373
located in midtown Manhattan. The 70 room hotel is being sold to an
offshore investment group for $37.0 million, or approximately $529,000
per key.
The Company values the anticipated sale of Hotel 373 at an economic
capitalization rate of 5.2% based on trailing 2013 net operating income
and a trailing 2013 hotel EBITDA multiple of 17.3x. The proposed
transaction is expected to close in the second quarter of 2014, and is
subject to a variety of closing conditions. As a result, there can be no
assurance that the Company will be able to consummate the disposition on
the schedule or on the terms described.
New Credit Facility
The company has received a commitment from its existing bank group and
is in the process of amending its current $400 million senior unsecured
credit facility (the “Facility”) which would allow the Company to
increase the size of the facility, while simultaneously extending the
tenor and reducing the pricing. The revised credit facility is expected
to close by the end of the first quarter of 2014.
2014 Outlook
The Company is introducing operating expectations for 2014 for the
Company’s consolidated portfolio. Based on management’s current outlook,
the Company’s 2014 operating expectations are as follows:
|
|
|
| |
Metric | | | | 2014 Expectation |
| | | |
|
Total consolidated RevPAR growth: | | | |
5.0% - 7.0%
|
Total consolidated Hotel EBITDA margin growth: | | | |
25 bps – 75 bps
|
| | | |
|
Dividend
Hersha paid a dividend of $0.50 per Series B Preferred Share and $0.4297
per Series C Preferred Share for the fourth quarter ended December 31,
2013 on January 15, 2014 to holders of record as of January 1, 2014.
The Company also paid a dividend of $0.06 per Common Share and per OP
Unit for the fourth quarter ended December 31, 2013 on January 16, 2014
to holders of record as of January 2, 2014.
Fourth Quarter 2013 Conference Call
Hersha will host a conference call to discuss the Company’s financial
results at 9:00 AM Eastern time on Wednesday, February 26, 2014. A live
webcast of the conference call will be available online on the Company’s
website at www.hersha.com.
The conference call can be accessed by dialing 1-888-417-8533 or
1-719-325-2429 for international participants. A replay of the call will
be available from 12:00 p.m. Eastern Time on Wednesday, February 26,
2014, through midnight Eastern Time on March 12, 2014. 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 9906295. A
replay of the webcast will be available on the Company’s website for a
limited time.
About Hersha Hospitality
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 50 hotels
totaling 7,998 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.
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 may include
statements related to the Company’s ability to outperform, the ongoing
recovery 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 completion of acquisitions under contract, the
Company’s ability to identify and complete the acquisition of hotel
properties in new markets, the Company’s ability to enter into contracts
for and complete the disposition of non-core assets, the Company’s
ability to complete the hotel redevelopment projects, the Company’s
ability to increase margins, including Hotel EBITDA margins, the timing
of the refinancing of the Company’s credit facility, and the Company’s
operating expectations for the full 2014 calendar year. 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,
2012 filed by the Company with the Securities and Exchange Commission
(“SEC”), and the Company’s Quarterly Report on Form 10-Q for the three
months ended September 30, 2013, the Company’s Annual Report on Form
10-K for the year ended December 31, 2013 to be filed by the Company
with the SEC on or about February 26, 2014, 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 February 25, 2014,
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) | | | | | | |
| | | | | |
|
| | December 31, 2013 | | December 31, 2012 |
Assets: | | | | | | |
Investment in Hotel Properties, Net of Accumulated Depreciation,
Including Consolidation of Variable Interest Entity Assets of
$85,759 and $86,657
| |
$
|
1,535,835
| | |
$
|
1,466,713
| |
Investment in Unconsolidated Joint Ventures
| | |
12,044
| | | |
16,007
| |
Development Loans Receivable
| | |
-
| | | |
28,425
| |
Cash and Cash Equivalents
| | |
36,213
| | | |
69,059
| |
Escrow Deposits
| | |
25,938
| | | |
26,792
| |
Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of
$43 and $365
| | |
9,141
| | | |
11,538
| |
Deferred Financing Costs, Net of Accumulated Amortization of $7,070
and $4,841
| | |
7,570
| | | |
8,695
| |
Due from Related Parties
| | |
11,124
| | | |
8,488
| |
Intangible Assets, Net of Accumulated Amortization of $3,227 and
$2,413
| | |
7,603
| | | |
8,698
| |
Deposits on Hotel Acquisitions
| | |
18,586
| | | |
37,750
| |
Other Assets
| | |
27,460
| | | |
25,514
| |
Hotel Assets Held for Sale
| | |
56,583
| | | |
-
| |
| |
|
| |
|
|
Total Assets | |
$
|
1,748,097
|
| |
$
|
1,707,679
|
|
| | | | | |
|
Liabilities and Equity: | | | | | | |
Line of Credit
| |
$
|
-
| | |
$
|
-
| |
Unsecured Term Loan
| | |
150,000
| | | |
100,000
| |
Unsecured Notes Payable
| | |
51,548
| | | |
51,548
| |
Mortgages Payable, including Net Unamortized Premium and
Consolidation of Variable Interest Entity Debt of $55,714 and
$57,256
| | |
571,953
| | | |
641,160
| |
Accounts Payable, Accrued Expenses and Other Liabilities
| | |
40,852
| | | |
33,838
| |
Dividends and Distributions Payable
| | |
15,955
| | | |
15,621
| |
Due to Related Parties
| | |
4,815
| | | |
4,403
| |
Liabilities Related to Hotel Assets Held for Sale
| | |
45,835
| | | |
-
| |
| |
|
| |
|
|
Total Liabilities | |
|
880,958
|
| |
|
846,570
|
|
| | | | | |
|
Redeemable Noncontrolling Interests - Common Units | |
$
|
-
| | |
$
|
15,321
| |
| | | | | |
|
Equity: | | | | | | |
Shareholders' Equity:
| | | | | | |
Preferred Shares: $.01 Par Value, 29,000,000 shares Authorized,
7,600,000 Series B and C Shares Issued and Outstanding at December
31, 2013 and 7,000,000 Series A and B Preferred Shares Issued and
Outstanding at December 31, 2012, with Liquidation Preferences of
$25 Per Share
| | |
76
| | | |
70
| |
Common Shares: Class A, $.01 Par Value, 300,000,000 Shares
Authorized at December 31, 2013 and December 31, 2012, 202,759,419
and 198,672,356 Shares Issued and Outstanding at December 31, 2013
and December 31, 2012, respectively
| | |
2,028
| | | |
1,986
| |
Common Shares: Class B, $.01 Par Value, 1,000,000 Shares
Authorized, None Issued and Outstanding
| | |
-
| | | |
-
| |
Accumulated Other Comprehensive Loss
| | |
(376
|
)
| | |
(1,786
|
)
|
Additional Paid-in Capital
| | |
1,200,798
| | | |
1,178,292
| |
Distributions in Excess of Net Income
| |
|
(364,568
|
)
| |
|
(348,734
|
)
|
Total Shareholders' Equity
| | |
837,958
| | | |
829,828
| |
| | | | | |
|
Noncontrolling Interests:
| | | | | | |
Noncontrolling Interests - Common Units
| | |
29,523
| | | |
15,484
| |
Noncontrolling Interests - Consolidated Variable Interest Entity
| |
|
(342
|
)
| |
|
476
|
|
Total Noncontrolling Interests
| | |
29,181
| | | |
15,960
| |
| |
|
| |
|
|
Total Equity
| | |
867,139
| | | |
845,788
| |
| |
|
| |
|
|
Total Liabilities and Equity | |
$
|
1,748,097
|
| |
$
|
1,707,679
|
|
|
| | |
| | |
| | |
| | |
HERSHA HOSPITALITY TRUST | | | | | | | | | | | | |
Summary Results (unaudited) | | | | | | | | | | | | |
(in thousands, except shares and per share data) | | | | | | | | | | | | |
| |
| Three Months Ended | |
| Year Ended |
| |
| December 31, 2013 | |
| December 31, 2012 | |
| December 31, 2013 | |
| December 31, 2012 |
Revenues: | | | | | | | | | | | | |
Hotel Operating Revenues
| |
$
|
92,045
| | |
$
|
81,845
| | |
$
|
338,064
| | |
$
|
299,005
| |
Interest Income from Development Loans
| | |
-
| | | |
396
| | | |
158
| | | |
1,998
| |
Other Revenue
| |
|
56
|
| |
|
48
|
| |
|
191
|
| |
|
212
|
|
Total Revenues | |
|
92,101
|
| |
|
82,289
|
| |
|
338,413
|
| |
|
301,215
|
|
| | | | | | | | | | | |
|
Operating Expenses: | | | | | | | | | | | | |
Hotel Operating Expenses
| | |
50,881
| | | |
41,313
| | | |
188,431
| | | |
161,982
| |
Gain on Insurance Settlements
| | |
-
| | | |
-
| | | |
(403
|
)
| | |
-
| |
Hotel Ground Rent
| | |
246
| | | |
213
| | | |
985
| | | |
835
| |
Real Estate and Personal Property Taxes and Property Insurance
| | |
6,329
| | | |
5,458
| | | |
24,083
| | | |
19,341
| |
General and Administrative
| | |
5,168
| | | |
4,853
| | | |
14,279
| | | |
13,777
| |
Stock Based Compensation
| | |
2,927
| | | |
3,356
| | | |
9,746
| | | |
9,678
| |
Acquisition and Terminated Transaction Costs
| | |
171
| | | |
20
| | | |
974
| | | |
1,179
| |
Depreciation and Amortization
| | |
14,628
| | | |
12,260
| | | |
55,784
| | | |
48,243
| |
Gain on Hotel Acquisitions
| |
|
-
|
| |
|
-
|
| |
|
(12,096
|
)
| |
|
-
|
|
Total Operating Expenses | |
|
80,350
|
| |
|
67,473
|
| |
|
281,783
|
| |
|
255,035
|
|
| | | | | | | | | | | |
|
Operating Income | | |
11,751
| | | |
14,816
| | | |
56,630
| | | |
46,180
| |
| | | | | | | | | | | |
|
Interest Income
| | |
409
| | | |
452
| | | |
1,784
| | | |
1,311
| |
Interest Expense
| | |
10,411
| | | |
9,432
| | | |
39,984
| | | |
37,295
| |
Other Expense
| | |
60
| | | |
214
| | | |
897
| | | |
740
| |
Loss on Debt Extinguishment
| |
|
-
|
| |
|
2,940
|
| |
|
545
|
| |
|
3,189
|
|
| | | | | | | | | | | | | | | |
|
Income before Loss from Unconsolidated Joint Ventures
Investments, Income Taxes and Discontinued Operations | | |
1,689
| | | |
2,682
| | | |
16,988
| | | |
6,267
| |
| | | | | | | | | | | |
|
Unconsolidated Joint Ventures | | | | | | | | | | | | |
Loss from Unconsolidated Joint Ventures
| | |
(1
|
)
| | |
(153
|
)
| | |
(22
|
)
| | |
(232
|
)
|
Impairment of Investment in Unconsolidated Joint Venture
| | |
(1,813
|
)
| | |
-
| | | |
(1,813
|
)
| | |
-
| |
Loss from Remeasurement of Investment in Unconsolidated Joint
Ventures
| |
|
-
|
| |
|
-
|
| |
|
-
|
| |
|
(1,892
|
)
|
Loss from Unconsolidated Joint Venture Investments | |
|
(1,814
|
)
| |
|
(153
|
)
| |
|
(1,835
|
)
| |
|
(2,124
|
)
|
| | | | | | | | | | | |
|
Income before Income Taxes | | |
(125
|
)
| | |
2,529
| | | |
15,153
| | | |
4,143
| |
| | | | | | | | | | | |
|
Income Tax Benefit
| |
|
3,318
|
| |
|
3,355
|
| |
|
5,600
|
| |
|
3,355
|
|
Income from Continuing Operations | | |
3,193
| | | |
5,884
| | | |
20,753
| | | |
7,498
| |
| | | | | | | | | | | |
|
Discontinued Operations | | | | | | | | | | | | |
Gain (Loss) on Disposition of Hotel Properties
| | |
31,089
| | | |
(38
|
)
| | |
32,121
| | | |
11,231
| |
Impairment of Asset Held for Sale
| | |
-
| | | |
-
| | | |
(10,314
|
)
| | |
-
| |
Income from Discontinued Operations
| |
|
2,957
|
| |
|
1,003
|
| |
|
7,388
|
| |
|
3,489
|
|
Income from Discontinued Operations | | |
34,046
| | | |
965
| | | |
29,195
| | | |
14,720
| |
| |
|
| |
|
| |
|
| |
|
|
Net Income | | |
37,239
| | | |
6,849
| | | |
49,948
| | | |
22,218
| |
| | | | | | | | | | | |
|
(Income) Loss Allocated to Noncontrolling Interests
| | |
(963
|
)
| | |
(65
|
)
| | |
(335
|
)
| | |
158
| |
Preferred Distributions
| | |
(3,589
|
)
| | |
(3,500
|
)
| | |
(14,611
|
)
| | |
(14,000
|
)
|
Extinguishment of Issuance Costs Upon Redemption of Series A
Preferred Stock
| |
|
-
|
| |
|
-
|
| |
|
(2,250
|
)
| |
|
-
|
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
32,687
|
| |
$
|
3,284
|
| |
$
|
32,752
|
| |
$
|
8,376
|
|
| | | | | | | | | | | |
|
Earnings per Share: | | | | | | | | | | | | |
BASIC | | | | | | | | | | | | |
(Loss) Income from Continuing Operations Applicable to Common
Shareholders
| |
$
|
0.00
| | |
$
|
0.01
| | |
$
|
0.02
| | |
$
|
(0.03
|
)
|
Income from Discontinued Operations
| |
|
0.16
|
| |
|
0.01
|
| |
|
0.14
|
| |
|
0.07
|
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
0.16
|
| |
$
|
0.02
|
| |
$
|
0.16
|
| |
$
|
0.04
|
|
| | | | | | | | | | | |
|
DILUTED | | | | | | | | | | | | |
(Loss) Income from Continuing Operations Applicable to Common
Shareholders
| |
$
|
0.00
| | |
$
|
0.01
| | |
$
|
0.02
| | |
$
|
(0.03
|
)
|
Income from Discontinued Operations
| |
|
0.16
|
| |
|
0.01
|
| |
|
0.14
|
| |
|
0.07
|
|
| | | | | | | | | | | |
|
Net Income Applicable to Common Shareholders | |
$
|
0.16
|
| |
$
|
0.02
|
| |
$
|
0.16
|
| |
$
|
0.04
|
|
| | | | | | | | | | | |
|
Weighted Average Common Shares
Outstanding: | | | | | | | | | | | | |
Basic
| | |
198,994,277
| | | |
196,411,729
| | | |
198,390,450
| | | |
187,415,270
| |
Diluted
| | |
198,994,277
| | | |
199,593,648
| | | |
201,918,177
| | | |
187,415,270
| |
| | | | | | | | | | | | | | | |
|
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 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.
|
|
| | |
| | |
| | |
| | |
HERSHA HOSPITALITY TRUST | | | | | | | | | | | | | |
Funds from Operations (FFO) and Adjusted Funds from Operations
(AFFO) | | | | | | | | | | | | |
(in thousands, except shares and per share data) | | | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | |
| Three Months Ended | |
| Year Ended |
| | |
| December 31, 2013 | |
| December 31, 2012 | |
| December 31, 2013 | |
| December 31, 2012 |
| | | | | | | | | | | | |
|
Net income applicable to common shares
| | |
$
|
32,687
| | |
$
|
3,284
| | |
$
|
32,752
| | |
$
|
8,376
| |
Income (loss) allocated to noncontrolling interest
| | | |
963
| | | |
65
| | | |
335
| | | |
(158
|
)
|
Loss from unconsolidated joint ventures
| | | |
1,814
| | | |
153
| | | |
1,835
| | | |
2,124
| |
Gain on hotel acquisition
| | | |
-
| | | |
-
| | | |
(12,096
|
)
| | |
-
| |
(Gain) loss on disposition of hotel properties
| | | |
(31,089
|
)
| | |
38
| | | |
(32,121
|
)
| | |
(11,231
|
)
|
Loss from impairment of depreciable assets
| | | |
-
| | | |
-
| | | |
10,314
| | | |
-
| |
Depreciation and amortization
| | | |
14,628
| | | |
12,260
| | | |
55,784
| | | |
48,243
| |
Depreciation and amortization from discontinued operations
| | |
|
13
|
| |
|
2,801
|
| |
|
7,050
|
| |
|
9,148
|
|
Funds from consolidated hotel operations applicable to common
shares and Partnership units | | | |
19,016
| | | |
18,601
| | | |
63,853
| | | |
56,502
| |
| | | | | | | | | | | | |
|
Loss from unconsolidated joint venture investments
| | | |
(1,814
|
)
| | |
(153
|
)
| | |
(1,835
|
)
| | |
(2,124
|
)
|
Loss from remeasurement of investment in unconsolidated joint
ventures
| | | |
-
| | | |
-
| | | |
-
| | | |
1,892
| |
Impairment of investment in unconsolidated joint ventures
| | | |
1,813
| | | |
-
| | | |
1,813
| | | |
-
| |
Depreciation and amortization of purchase price in excess of
historical cost
| | | |
147
| | | |
164
| | | |
596
| | | |
902
| |
Interest in depreciation and amortization of unconsolidated joint
ventures
| | |
|
1,774
|
| |
|
1,230
|
| |
|
6,068
|
| |
|
5,441
|
|
Funds from unconsolidated joint venture operations applicable
to common shares and Partnership units | | | |
1,920
| | | |
1,241
| | | |
6,642
| | | |
6,111
| |
| | |
|
| |
|
| |
|
| |
|
|
Funds from Operations applicable to common shares and Partnership
units | | | |
20,936
| | | |
19,842
| | | |
70,495
| | | |
62,613
| |
| | | | | | | | | | | | |
|
Add:
| | | | | | | | | | | | | |
Non-cash extinguishment of issuance costs upon redemption of series
A preferred stock
| | | |
-
| | | |
-
| | | |
2,250
| | | |
-
| |
Non-cash stock compensation expense
| | | |
2,927
| | | |
3,356
| | | |
9,746
| | | |
9,678
| |
Acquisition and terminated transaction costs
| | | |
171
| | | |
20
| | | |
974
| | | |
1,179
| |
Amortization of deferred financing costs
| | | |
753
| | | |
666
| | | |
2,886
| | | |
2,991
| |
Amortization of discounts and premiums
| | | |
(213
|
)
| | |
(214
|
)
| | |
(845
|
)
| | |
(432
|
)
|
Deferred financing costs written off in debt extinguishment
| | | |
-
| | | |
2,940
| | | |
545
| | | |
3,189
| |
Straight-line amortization of ground lease expense
| | | |
-
| | | |
1
| | | |
2
| | | |
40
| |
Real estate taxes expense related to reassessment of prior period
assessment
| | |
|
-
|
| |
|
-
|
| |
|
434
|
| |
|
-
|
|
| | | | | | | | | | | | |
|
Adjusted Funds from Operations | | |
$
|
24,574
|
| |
$
|
26,611
|
| |
$
|
86,487
|
| |
$
|
79,258
|
|
| | | | | | | | | | | | |
|
AFFO per Diluted Weighted Average Common Shares and Units
Outstanding
| | |
$
|
0.12
|
| |
$
|
0.13
|
| |
$
|
0.41
|
| |
$
|
0.40
|
|
| | | | | | | | | | | | |
|
Diluted Weighted Average Common Shares and Units Outstanding
| | | |
209,016,369
| | | |
206,733,328
| | | |
208,886,212
| | | |
198,110,615
| |
| | | | | | | | | | | | | | | | |
|
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:
Adjusted EBITDA
HERSHA HOSPITALITY TRUST |
| | |
| | |
| | |
| | |
Adjusted EBITDA | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | |
| |
| Three Months Ended | |
| Year Ended |
| | December 31, 2013 | | December 31, 2012 | | December 31, 2013 | | December 31, 2012 |
| | | | | | | | | | | |
|
Net income applicable to common shareholders
| |
$
|
32,687
| |
$
|
3,284
| |
$
|
32,752
| |
$
|
8,376
|
Loss from unconsolidated joint ventures
| | |
1,814
| | |
153
| | |
1,835
| | |
2,124
|
Gain on hotel acquisition
| | |
-
| | |
-
| | |
(12,096)
| | |
-
|
Gain on disposition of hotel properties
| | |
(31,089)
| | |
38
| | |
(32,121)
| | |
(11,231)
|
Loss from impairment of assets
| | |
-
| | |
-
| | |
10,314
| | |
-
|
Loss (income) allocated to noncontrolling interest
| | |
963
| | |
65
| | |
335
| | |
(158)
|
Non-operating interest income
| | |
(13)
| | |
(28)
| | |
(70)
| | |
(84)
|
Distributions to Preferred Shareholders
| | |
3,589
| | |
3,500
| | |
14,611
| | |
14,000
|
Interest expense from continuing operations
| | |
10,411
| | |
9,432
| | |
39,984
| | |
37,295
|
Interest expense from discontinued operations
| | |
1,084
| | |
1,461
| | |
4,863
| | |
7,872
|
Extinguishment of issuance costs upon redemption of series A
preferred stock
| | |
-
| | |
-
| | |
2,250
| | |
-
|
Income tax benefit
| | |
(3,318)
| | |
(3,355)
| | |
(5,600)
| | |
(3,355)
|
Deferred financing costs written off in debt extinguishment
| | |
-
| | |
2,940
| | |
545
| | |
3,189
|
Depreciation and amortization from continuing operations
| | |
14,628
| | |
12,260
| | |
55,784
| | |
48,243
|
Depreciation and amortization from discontinued operations
| | |
13
| | |
2,801
| | |
7,050
| | |
9,148
|
Acquisition and terminated transaction costs
| | |
171
| | |
20
| | |
974
| | |
1,179
|
Non-cash stock compensation expense
| | |
2,927
| | |
3,356
| | |
9,746
| | |
9,678
|
Straight-line amortization of ground lease expense
| | |
-
| | |
1
| | |
2
| | |
40
|
Real estate taxes expense related to reassessment of prior period
assessment
| |
|
-
| |
|
-
| |
|
434
| |
|
-
|
| | | | | | | | | | | |
|
Adjusted EBITDA from consolidated hotel operations | |
|
33,867
| |
|
35,928
| |
|
131,592
| |
|
126,316
|
| | | | | | | | | | | |
|
Loss from unconsolidated joint venture investments
| | |
(1,814)
| | |
(153)
| | |
(1,835)
| | |
(2,124)
|
Loss on remeasurement of investment in unconsolidated joint ventures
| | |
-
| | |
-
| | |
-
| | |
1,892
|
Impairment of investment in unconsolidated joint ventures
| | |
1,813
| | |
-
| | |
1,813
| | |
-
|
Depreciation and amortization of purchase price in excess of
historical cost
| | |
147
| | |
164
| | |
596
| | |
902
|
Adjustment for interest in interest expense, depreciation and
amortization of unconsolidated joint ventures
| |
|
3,527
| |
|
3,035
| |
|
12,898
| |
|
16,162
|
| | | | | | | | | | | |
|
Adjusted EBITDA from unconsolidated joint venture operations | |
|
3,673
| |
|
3,046
| |
|
13,472
| |
|
16,832
|
| | | | | | | | | | | |
|
Adjusted EBITDA | |
$
|
37,540
| |
$
|
38,974
| |
$
|
145,064
| |
$
|
143,148
|
| | | | | | | | | | | |
|
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.
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 web site, www.hersha.com.
Contacts:
Hersha Hospitality Trust
Ashish Parikh, Chief Financial Officer
215-238-1046
Source: Hersha Hospitality Trust
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