- Q1 2017 Net Income of $18.7 Million, or $0.44
per Share -
- Q1 2017 Comparable Portfolio RevPAR Growth of
3.1% -
- Completes Sale of Two Suburban Washington, DC
Hotels -
- Enters Dynamic Seattle Market -
- Exits Mystic Partners Joint-Venture -
Hersha Hospitality Trust (NYSE: HT) (“Hersha” or the “Company”),
owner of upscale hotels in urban gateway markets, today announced
results for the first quarter ended March 31, 2017.
First Quarter 2017 Financial Results
Net income applicable to common shareholders was $18.7 million,
or $0.44 per diluted common share, in first quarter 2017, compared
to a net loss applicable to common shareholders of $11.3 million,
or $0.26 per diluted common share, in first quarter 2016. The
increase in first quarter 2017 net income and net income per
diluted common share was primarily due to an increase in operating
income, as well as gains related to the disposition of hotel
properties and joint ventures undertaken during the period.
Adjusted Funds from Operations (“AFFO”) in the first quarter
2017 was $13.5 million. AFFO per diluted common share and OP Unit
in the first quarter 2017 was $0.30, a 7.1% increase from AFFO per
diluted common share and OP Unit of $0.28 in the same quarter in
2016 due to an improvement in operating fundamentals, and a reduced
share count. The Company’s weighted average diluted common shares
and OP Units outstanding were approximately 44.7 million for the
three months ended March 31, 2017, compared to approximately 46.9
million for the three months ended March 31, 2016. 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, to GAAP net income, is included at the
end of this press release.
Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated,
“During the first quarter, Hersha remained very active with its
capital recycling strategy, continuing to improve the Company’s
high-quality, transient-focused portfolio and positioning it for
strong growth. In early January, we closed on the sale of two
suburban Washington, DC properties for $62.0 million, and agreed to
a 6-month extension to close on the sale of three suburban West
Coast hotels for $130.5 million, a $7.5 million increase from the
original purchase price. We also entered the dynamic Seattle market
through the purchase of the Forbes Four Star, AAA Four-Diamond Pan
Pacific Hotel, and capitalized on market dislocation in Miami by
acquiring The Ritz-Carlton, Coconut Grove at a very attractive
basis. Finally, we liquidated our Mystic joint-venture, adding the
high-quality Mystic Marriott Hotel & Spa to our consolidated
hotel portfolio and further simplifying our balance sheet.
Successfully recycling capital and upgrading our portfolio quality
and growth profile across the last two years positions us well for
continued growth and outperformance. Looking ahead, we will focus
our portfolio strategy on hotels that generate consistent cash
flows and provide attractive asset value growth in the country’s
highest demand urban gateway and destination markets.”
Mr. Shah continued, “Excluding the Company’s South Florida
portfolio, which continues to be affected by headwinds, our
comparable portfolio delivered an impressive 6.4% RevPAR growth.
Rate‐based gains, and robust performance in our Washington, DC
cluster from January’s inauguration drove a Hotel EBITDA increase
of 3.5% to $32.5 million. We are constructive on the cycle’s
duration based on an improving macroeconomic environment and
healthy employment, coupled with positive demand trends and solid
convention calendars across the majority of our markets. As we move
through 2017, close alignment with our operators and hands-on asset
and revenue management strategies will drive profitability. We are
confident that our best-in-class capital allocation and scaled
operational capabilities across our unique portfolio of
well-located, transient-oriented hotels creates significant
value.”
First Quarter 2017 Operating Results
The best performing market during the first quarter was the
Company’s Washington, DC Urban portfolio, which reported 15.4%
revenue per available room (“RevPAR”) growth. The Company’s
Washington, DC Metro, Philadelphia and Boston portfolios reported
11.9%, 11.1% and 8.2% RevPAR growth, respectively, in first quarter
2017.
The Company’s consolidated EBITDA contribution in the first
quarter 2017 continued to shift given the re-positioning of the
portfolio. The West Coast (33%), South Florida (25%) and
Washington, DC (18%) portfolios contributed approximately 76% of
total consolidated EBITDA in the first quarter 2017 compared to
approximately 70% in the first quarter 2016. New York City
contributed 13%, Boston contributed 5%, while Philadelphia
contributed 3% of consolidated EBITDA in the first quarter
2017.
RevPAR at the Company's 44 comparable hotels increased 3.1% to
$156.43 in first quarter 2017. The Company’s average daily rate
(“ADR”) for the comparable hotel portfolio increased 1.0% to
$200.48, while occupancy increased 157 basis points to 78.0%. Hotel
EBITDA margins for the comparable hotel portfolio decreased 30 bps
to 29.4%. Excluding Hyatt Union Square and The Sanctuary Beach
Resort, which reported disproportionate margin deterioration due to
renovations in connection with the re-concepting of the restaurant
and bar at both hotels, the Company’s comparable Hotel EBITDA
margins increased 50 basis points.
New York City and Manhattan
The New York City hotel portfolio, which includes the five
boroughs, consisted of 10 hotels as of March 31, 2017. In first
quarter 2017, the Company’s comparable New York City hotel
portfolio reported occupancy of 85.5%. RevPAR increased 1.3% to
$151.66, driven by a 1.1% ADR increase to $177.35.
The Manhattan hotel portfolio consisted of 7 hotels as of March
31, 2017. The Company’s comparable Manhattan hotel portfolio
reported 87.7% occupancy. RevPAR rose 1.0% to $164.88 as a result
of 1.5% ADR growth to $188.04. In the first quarter, the Company
outperformed greater Manhattan RevPAR by 330 basis points, and has
outperformed the Manhattan market in 11 of the previous 13 quarters
as a result of a young, well-located, and purpose-built hotel
cluster in-tune with travelers’ tastes and preferences. Excluding
the Hyatt Union Square, where the Company is re-concepting the
restaurant and bar, comparable Manhattan portfolio RevPAR increased
2.2%. The Company’s Manhattan portfolio reported Gross Operating
Profitability (“GOP”) and Hotel EBITDA margins of 39.1% and 20.8%,
respectively, in the first quarter 2017. Hotel EBITDA margins
excluding the Hyatt Union Square increased 150 bps to 22.8% as a
result of strong flow-through of 195.2%.
Financing
As of March 31, 2017, the Company maintained significant
financial flexibility with approximately $47.6 million of cash and
cash equivalents and full capacity on the Company’s senior
unsecured credit facility. As of March 31, 2017, 41.0% of the
Company’s consolidated debt was fixed rate debt or hedged through
interest rate swaps and caps. The Company’s total consolidated debt
had a weighted average interest rate of approximately 3.43% and a
weighted average life-to-maturity of approximately 4.1 years.
Acquisitions
On February 1, 2017, the Company acquired the 115-room
Ritz-Carlton in Coconut Grove, Miami, FL for $36.0 million. The
Company funded the acquisition with proceeds from the sale of the
Residence Inn Greenbelt, MD as part of a tax-deferred like-kind
exchange. The AAA Four-Diamond Ritz-Carlton is prominently situated
on 3.4 acres, across the street from the Company’s 140-room
Residence Inn, and one-half block from the waterfront in Coconut
Grove. The hotel is part of a two tower, 22-story residential-hotel
condominium complex that opened in 2002. In addition to the hotel’s
115 rooms, the Ritz-Carlton features 14,000 sq. ft. of meeting
space, a restaurant, bar, a destination spa, fitness center, retail
space, center and approximately 8,000 sq. ft. of leasable office
space.
On February 21, 2017, the Company acquired the 153-room Pan
Pacific Hotel in Seattle, WA for $79.0 million. The Pan Pacific
Hotel is exceptionally located in the vibrant South Lake Union
submarket of Seattle’s CBD, the epicenter of the city’s growth over
the past several years. The luxury lifestyle Forbes Four Star, AAA
Four-Diamond Pan Pacific Hotel opened in 2006 as part of 2200
Westlake, a mixed-use development with 260 luxury condominiums
anchored by a Whole Foods urban prototype and food hall. The
hotel’s 153 rooms, of which 20% are premium suites, feature four
fixture baths including separate glass showers and oversized
bathtubs. The hotel’s amenities also include a 3-meal restaurant
and bar, 9,100 square feet of meeting space, an outdoor veranda, a
fitness center with a feature whirlpool spa, locker rooms and sauna
and 60 designated parking spaces.
Dispositions
In January 2017, Hersha closed on the sale of the 203-room
Courtyard by Marriott in Alexandria, VA, and the 120-room Residence
Inn in Greenbelt, MD for $62.0 million. In addition, the Company
agreed to a 6-month extension to close on the sale of three
suburban West Coast hotels for $130.5 million, a $7.5 million
increase from the original purchase price, valuing the entire
757-room, 5-hotel suburban portfolio at $192.5 million, or $254,000
per key. In addition to the price increase, the Company has secured
a $10.0 million non-refundable deposit from the purchaser. The
suburban West Coast portfolio sale is anticipated to close in July
2017.
In January 2017, Hersha redeemed its interest in its Mystic
Partners joint-venture. The Company transferred to its former
joint-venture partner all of its partnership interests in the
Hartford Marriott and the Hartford Hilton for $11.5 million, which
represented a 100% recovery of the Company’s equity investment in
these assets and net cash at the Mystic Marriott. The Company
simultaneously assumed full ownership of the Mystic Marriott Hotel
& Spa without any additional cash payment to the joint-venture
partner, and extinguished the property’s mortgage debt. The Company
recognized a gain on the disposition of the Mystic Partners
joint-venture of $16.2 million during the first quarter 2017.
Dividends
Hersha paid a cash dividend of $0.4297 per Series C Preferred
Share, $0.40625 per Series D Preferred Share, and $0.40625 per
Series E Preferred Share for the first quarter ending March 31,
2017. The preferred share dividends were paid April 17, 2017 to
holders of record as of April 1, 2017.
The Board of Trustees also declared cash dividends totaling
$0.28 per common share and per limited partnership unit for the
first quarter ending March 31, 2017. These common share dividends
and limited partnership unit distributions were paid April 17, 2017
to holders of record as of March 31, 2017.
2017 Outlook
The Company is updating its range for Net Income to account for
first quarter transactions, while maintaining its operating and
financial expectations for full-year 2017. The Company’s
expectations, which are based on the Company’s current view of
operating and economic fundamentals, include the Company’s
liquidation of The Mystic JV, the suburban Washington, DC hotel
dispositions, ownership of the 3 suburban West Coast hotels through
June 30, 2017, the acquisition of The Ritz-Carlton, Coconut Grove,
and the Company’s acquisition of The Pan Pacific Hotel in Seattle,
WA, and does not build in any additional acquisitions, dispositions
or capital market activities for 2017. Based on management’s
current outlook and assumptions, the Company’s 2017 operating
expectations are as follows:
2017 Outlook ($’s in millions except per share
amounts) Low High Net income $79.0 $89.0
Net income per share $1.86 $2.10 Comparable Property RevPAR
Growth 0.0% 2.0% Comparable Property EBITDA Margins -1.0% 0.0%
Adjusted EBITDA $162.0 $172.0 Adjusted FFO $94.0
$104.0 Adjusted FFO per share $2.08 $2.31
First Quarter 2017 Conference Call
The Company will host a conference call to discuss these results
at 9:00 a.m. Eastern Time on April 26, 2017. Hosting the call will
be Mr. Jay H. Shah, Chief Executive Officer, Mr. Neil H. Shah,
President and Chief Operating Officer, and Mr. Ashish Parikh, Chief
Financial Officer.
A live audio 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 1-888-364-3104 or 1-719-325-2449 for
international participants. A replay of the call will be available
from 12:00 p.m. Eastern Time on Wednesday, April 26, 2017, through
11:59 pm Eastern Time on Wednesday, May 10, 2017. The replay can be
accessed by dialing 1-844-512-2921 or 1-412-317-6671 for
international participants. The passcode for the call and the
replay is 4711551. 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
53 hotels totaling 7,944 rooms are located in New York, Washington,
DC, Boston, Philadelphia, Miami and select markets on the West
Coast. The Company's common 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 2017 outlook for net income
attributable to common shareholders, net income per weighted
average common share and OP Units outstanding, Adjusted EBITDA,
AFFO, AFFO per weighted average common share and OP Unit
outstanding, consolidated and comparable RevPAR growth and
consolidated and comparable Hotel EBITDA margin growth, economic
and other assumptions underlying the Company’s 2017 outlook and
assumptions 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, the Company’s ability to
match or outperform its competitors’ performance, the ability of
the Company’s hotels to achieve stabilized or projected revenue
consistent with our expectations, 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 Company’s ability to close on
pending transactions on the terms it expects, if at all.
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, 2016 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 April 25, 2017, 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)
March 31, 2017 December 31,
2016 Assets: Investment in Hotel Properties, Net of
Accumulated Depreciation $ 1,924,050 $ 1,767,570 Investment in
Unconsolidated Joint Ventures 2,856 11,441 Cash and Cash
Equivalents 47,633 185,644 Escrow Deposits 7,206 8,993 Hotel
Accounts Receivable, Net of Allowance for Doubtful Accounts of $0
and $91 11,024 8,769 Due from Related Parties 18,311 18,332
Intangible Assets, Net of Accumulated Amortization of $5,023 and
$4,532 17,562 16,944 Other Assets 37,940 39,370 Hotel Assets Held
for Sale 57,454 98,473
Total
Assets $ 2,124,036 $ 2,155,536
Liabilities and Equity: Line of Credit $ - $ - Unsecured
Term Loan, Net of Unamortized Deferred Financing Costs 707,505
663,500 Unsecured Notes Payable, Net of Unamortized Deferred
Financing Costs 50,591 50,578
Mortgages Payable, Net of Unamortized
Premium and Unamortized Deferred Financing Costs
312,237 337,821 Accounts Payable, Accrued Expenses and Other
Liabilities 65,325 65,106 Dividends and Distributions Payable
17,584 26,050 Liabilities Related to Hotel Assets Held for Sale -
51,428 Deferred Gain on Disposition of Hotel Assets 81,268
81,314
Total Liabilities $ 1,234,510
$ 1,275,797
Equity: Shareholders'
Equity:
Preferred Shares: $.01 Par Value,
29,000,000 Shares Authorized, 3,000,000 Series C, 7,700,000 Series
D and 4,000,000 Series E Shares Issued and Outstanding at March 31,
2017 and December 31, 2016, with Liquidation Preferences of $25 Per
Share
$ 147 $ 147
Common Shares: Class A, $0.01 Par Value,
90,000,000 Shares Authorized at March 31, 2017 and December 31,
2016; 41,794,680 and 41,770,514 Shares Issued and Outstanding at
March 31, 2017 and December 31, 2016, respectively
418 418
Common Shares: Class B, $0.01 Par Value,
1,000,000 Shares Authorized, None Issued and Outstanding at March
31, 2017 and December 31, 2016
- - Accumulated Other Comprehensive Income 1,443 1,373 Additional
Paid-in Capital 1,197,828 1,198,311 Distributions in Excess of Net
Income (357,800 ) (364,831 ) Total Shareholders'
Equity 842,036 835,418 Noncontrolling Interests - Common
Units and LTIP Units 47,490 44,321
Total Equity 889,526 879,739
Total Liabilities and Equity $ 2,124,036 $
2,155,536
HERSHA
HOSPITALITY TRUST Summary Results (unaudited) (in
thousands, except shares and per share data)
Three
Months Ended March 31, 2017 March 31, 2016
Revenues: Hotel Operating Revenues: Room $ 90,769 $ 94,479
Food & Beverage 10,736 7,210 Other Operating Revenues
6,447 5,158 Total Hotel Operating Revenues
107,952 106,847 Other Revenue 46 23
Total Revenues 107,998 106,870
Operating Expenses: Hotel Operating Expenses: Room
21,304 22,751 Food & Beverage 9,557 6,302 Other Operating
Revenues 36,406 36,665 Total Hotel
Operating Expenses 67,267 65,718 Hotel Ground Rent 807 893 Real
Estate and Personal Property Taxes and Property Insurance 7,626
9,156 General and Administrative 3,196 2,994 Share Based
Compensation 1,429 2,406 Acquisition and Terminated Transaction
Costs 700 1,508 Depreciation and Amortization 19,462
20,060
Total Operating Expenses 100,487
102,735
Operating Income 7,511
4,135 Interest Income 125 46 Interest Expense (9,849 )
(12,221 ) Other Expense (399 ) (123 ) Gain on Disposition of Hotel
Properties 18,731 - Loss on Debt Extinguishment (274 )
(42 )
Income (Loss) before Results from
Unconsolidated Joint Venture Investments and Income Taxes
15,845 (8,205 )
Unconsolidated Joint Ventures Loss
from Unconsolidated Joint Ventures (3,886 ) (214 )
Gain from Remeasurement of Investment in
Unconsolidated Joint Venture
16,239 -
Income (Loss) from Unconsolidated Joint
Venture Investments
12,353 (214 )
Income (Loss) before
Income Taxes 28,198 (8,419 )
Income Tax Expense
(2,243 ) -
Net Income
(Loss) 25,955 (8,419 ) (Income) Loss Allocated to
Noncontrolling Interests (1,181 ) 687 Preferred Distributions
(6,042 ) (3,589 )
Net Income (Loss)
Applicable to Common Shareholders $ 18,732 $ (11,321 )
Earnings per
Share:
BASIC Net Income (Loss) Applicable to Common
Shareholders $ 0.45 $ (0.26 )
DILUTED
Net Income (Loss) Applicable to Common Shareholders $ 0.44
$ (0.26 )
Weighted Average
Common Shares Outstanding:
Basic 41,716,958 44,379,327 Diluted 42,110,911 44,379,327
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 non-cash share based
compensation expense;
- adding back acquisition and terminated
transaction expenses;
- adding back contingent
considerations;
- adding back amortization of deferred
financing costs;
- adding back adjustments for the
amortization of discounts and premiums;
- adding back write-offs of deferred
financing costs on debt extinguishment, both for consolidated and
unconsolidated properties;
- adding back straight-line amortization
of ground lease expense and prior period tax assessment expenses;
and
- adding back unconsolidated joint
venture management company transaction costs and state and local
tax expense related to prior period assessment.
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
evaluate our performance by reviewing AFFO, in addition to FFO,
because we believe that adjusting FFO to exclude certain recurring
and non-recurring items as described above provides useful
supplemental information regarding the our ongoing operating
performance and that the presentation of AFFO, when combined with
the primary GAAP presentation of net income (loss), more completely
describes our operating performance. 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 OP Units because our OP 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 OP 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 March 31, 2017 March 31,
2016 Net income (loss) applicable to common shares $
18,732 $ (11,321 ) Income (loss) allocated to noncontrolling
interest 1,181 (687 ) (Income) loss from unconsolidated joint
ventures (12,353 ) 214 Gain on disposition of hotel properties
(18,731 ) - Depreciation and amortization 19,462
20,060
Funds from consolidated hotel
operations applicable to common shares and Partnership
units
8,291 8,266 Income (loss) from
unconsolidated joint venture investments 12,353 (214 ) Income from
remeasurement of investment in unconsolidated joint ventures
(16,239 ) -
Depreciation and amortization of
difference between purchase price and historical cost
(302 ) 120
Interest in depreciation and amortization
of unconsolidated joint ventures
4,134 606
Funds from unconsolidated joint venture
operations applicable to common shares and Partnership
units
(54 ) 512
Funds from
Operations applicable to common shares and Partnership units
8,237 8,778 Add: Non-cash share based compensation expense
1,429 2,406 Acquisition and terminated transaction costs 700 1,508
Tax expense related to gain from
remeasurement of investment in unconsolidated joint venture
1,853 - Amortization of deferred financing costs 648 660 Interest
in amortization of deferred financing costs of unconsolidated joint
venture 367 - Amortization of discounts and premiums (174 ) (386 )
Deferred financing costs and debt premium written off in debt
extinguishment 274 42 Straight-line amortization of ground lease
expense 159 162
Adjusted
Funds from Operations $ 13,493 $ 13,170
AFFO per Diluted Weighted Average Common
Shares and Partnership Units Outstanding
$ 0.30 $ 0.28 Diluted Weighted Average Common
Shares and Partnership Units Outstanding 44,741,968 46,895,449
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, GAAP net income (loss) as
a measure of the Company's operating performance.
HERSHA HOSPITALITY TRUST
Adjusted EBITDA (in thousands)
Three Months
Ended March 31, 2017 March 31, 2016 Net
income (loss) applicable to common shareholders $ 18,732 $ (11,321
) Income (loss) allocated to noncontrolling interest 1,181 (687 )
(Income) loss from unconsolidated joint ventures (12,353 ) 214 Gain
on disposition of hotel properties (18,731 ) - Non-operating
interest income (125 ) (46 ) Distributions to Preferred
Shareholders 6,042 3,589 Interest expense 9,849 12,221 Income tax
expense 2,243 - Deferred financing costs and debt premium written
off in debt extinguishment 274 42 Depreciation and amortization
19,462 20,060 Acquisition and terminated transaction costs 700
1,508 Non-cash share based compensation expense 1,429 2,406
Straight-line amortization of ground lease expense 159
162
Adjusted EBITDA from
consolidated hotel operations 28,862
28,148 Income (loss) from unconsolidated joint
venture investments 12,353 (214 ) Gain on remeasurement of
investment in unconsolidated joint venture (16,239 ) - Depreciation
and amortization of difference between purchase price and
historical cost (302 ) 120
Adjustment for interest in interest
expense, depreciation and amortization of unconsolidated joint
ventures
5,647 1,725
Adjusted EBITDA
from unconsolidated joint venture operations 1,459
1,631
Adjusted EBITDA $ 30,321
$ 29,779
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/20170425006909/en/
Hersha Hospitality TrustAshish Parikh, Chief Financial
OfficerPeter Majeski, Manager of Investor Relations &
Finance215-238-1046
Hersha Hospitality (NYSE:HT)
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