EXHIBIT 99.1
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400 Centre
Street, Newton, MA 02458-2076
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tel: (617)
964-8389 fax: (617) 969-5730
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FOR IMMEDIATE RELEASE
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Contact:
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Timothy A. Bonang,
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Manager of Investor Relations
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(617) 796-8149
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www.hptreit.com
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Hospitality Properties Trust
Announces 2005 Third Quarter Results
Newton, MA (November 7,
2005): Hospitality Properties Trust
(NYSE: HPT) today announced its results of operations for the quarter and nine
months ended September 30, 2005.
Results for the quarter ended September 30,
2005:
Net income was $30.6 million for the quarter
ended September 30, 2005, compared to $30.7 million for the same quarter
last year. Net income available for
common shareholders was $28.7 million, or $0.40 per share, for the quarter
ended September 30, 2005, compared to $28.8 million, or $0.43 per share,
for the same quarter last year.
Funds from operations (FFO) for the quarter
ended September 30, 2005 were $69.7 million, or $0.97 per share. This compares to FFO for the quarter ended September 30,
2004 of $59.9 million, or $0.89 per share.
The weighted average number of common shares
outstanding totaled 71.9 million and 67.2 million for the quarters ended September 30,
2005 and 2004, respectively.
Results for the nine months ended September 30,
2005:
Net income was $81.7 million for the nine
months ended September 30, 2005, compared to $91.2 million for the same
period last year. Net income available
for common shareholders was $76.0 million, or $1.10 per share, for the nine
months ended September 30, 2005, compared to $80.7 million, or $1.22 per
share, for the same period last year.
Funds from operations (FFO) for the nine months
ended September 30, 2005 were $197.8 million, or $2.86 per share. This compares to FFO for the nine months
ended September 30, 2004 of $176.5 million, or $2.66 per share.
The weighted average number of common shares
outstanding totaled 69.2 million and 66.3 million for the nine months ended September 30,
2005 and 2004, respectively.
A Maryland Real Estate
Trust with transferable shares of beneficial interest listed on the New York
Stock Exchange.
No shareholder, Trustee or
officer is personally liable for any act or obligation of the Trust.
Financing Activities:
On October 6,
2005, HPT raised its regular quarterly common share dividend by $0.01 to $0.73
per common share ($2.92 per share per year).
This regular quarterly dividend will be paid to common shareholders of
record as of the close of business on October 21, 2005, and distributed on
or about November 17, 2005.
In October 2005,
the credit ratings of HPT’s senior unsecured debt obligations were raised to “BBB”
and “Baa2” from “BBB-” and “Baa3” by Standard & Poor’s Rating Services
and Moody’s Investors Service, respectively. The interest rate on drawings under HPT’s revolving
credit facility was reduced from LIBOR plus 80 basis points to LIBOR plus 65
basis points as a result of these ratings increases.
Investing Activities:
On September 30,
2005, HPT sold its Prime HotelSM located in Atlanta, Georgia for $3.2
million. This hotel was included in a
combination management agreement with Carlson Hotels Worldwide, or Carlson,
with 11 other former Prime HotelsSM.
On November 1, 2005, HPT acquired a Country Inn & Suites
by CarlsonSM hotel located in Brooklyn Center, Minnesota with 84
guestrooms from Carlson for $4.1 million as a replacement hotel. The remaining 11 Prime HotelsSM were
rebranded as Carlson owned brands during the second quarter of 2005 and are
currently undergoing renovations.
Conference Call:
On Monday, November 7,
2005, at 1:00 p.m. Eastern Time, John Murray, president and chief
operating officer, and Mark Kleifges, chief financial officer, will host a
conference call to discuss the results for the quarter ended September 30,
2005.
The conference
call telephone number is (877) 502-9276.
Participants calling from outside the United States and Canada should
dial (913) 981-5591. No pass code is
necessary to access the call from either number. Participants should dial in about 15 minutes
prior to the scheduled start of the call.
A replay of the conference call will be available through Friday, November 11,
2005. To hear the replay, dial (719) 457-0820.
The replay pass code is 6192841.
A live audio
webcast of the conference call will also be available in a listen only mode on the
company’s web site, which is located at www.hptreit.com. Participants wanting to access the webcast
should visit the company’s web site about five minutes before the call. The archived webcast will be available for replay
on HPT’s web site for about one week after the call.
Supplemental Data:
A copy of HPT’s
Third Quarter 2005 Supplemental Operating and Financial Data is available for
download at HPT’s web site.
Hospitality Properties Trust is a real estate
investment trust, or REIT, which owns 298 hotels located in 38 states, Puerto
Rico and Canada as of November 1, 2005. HPT is headquartered in Newton,
Massachusetts.
2
Hospitality
Properties Trust
CONSOLIDATED
STATEMENT OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except
per share data)
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Quarter Ended September 30,
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Nine Months Ended September 30,
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2005
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2004
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2005
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2004
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Revenues:
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Hotel
operating revenues (1)
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$
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184,379
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$
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136,861
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$
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510,485
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$
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378,780
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Rental
income
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31,919
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30,312
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94,874
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95,326
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FF&E
reserve income (2)
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4,963
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4,660
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14,200
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14,000
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Interest
income
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426
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159
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956
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428
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Total
revenues
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221,687
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171,992
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620,515
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488,534
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Expenses:
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Hotel
operating expenses (1)
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134,888
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94,896
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367,657
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259,216
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Interest
(including amortization of deferred financing costs of $606, 686, 2,285 and
$2,058, respectively)
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16,056
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12,530
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49,076
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37,775
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Depreciation
and amortization
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34,462
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28,713
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96,924
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86,158
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General and
administrative
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5,696
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5,146
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17,856
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14,353
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Loss on
asset impairment (3)
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—
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—
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7,300
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—
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Total
expenses
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191,102
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141,285
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538,813
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397,502
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Income
before gain on sale of real estate
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30,585
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30,707
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81,702
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91,032
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Gain on sale
of real estate
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—
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—
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—
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203
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Net income
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30,585
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30,707
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81,702
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91,235
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Preferred
distributions
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(1,914
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(1,914
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(5,742
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(7,760
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Excess of
liquidation preference over carrying value of preferred shares (4)
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—
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—
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—
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(2,793
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Net income
available for common shareholders
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$
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28,671
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$
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28,793
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$
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75,960
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$
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80,682
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Calculation
of FFO (5):
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Net income
available for common shareholders
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$
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28,671
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$
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28,793
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$
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75,960
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$
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80,682
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Add:
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FF&E
deposits not in net income (2)
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490
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453
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1,487
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1,346
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Depreciation and amortization
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34,462
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28,713
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96,924
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86,158
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Deferred
percentage rent (6)
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1,121
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900
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3,008
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2,167
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Deferred
hotel operating income (7)
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4,928
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1,083
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13,079
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3,546
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Loss on
asset impairment (3)
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—
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—
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7,300
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—
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Excess of
liquidation preference over carrying value of preferred shares (4)
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—
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—
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—
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2,793
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Less:
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Gain on sale
of real estate
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—
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—
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—
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(203
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Funds from
operations (“FFO”)
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$
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69,672
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$
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59,942
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$
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197,758
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$
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176,489
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Weighted
average common shares outstanding
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71,908
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67,191
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69,173
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66,268
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Per common
share amounts:
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Net income
available for common shareholders
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$
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0.40
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$
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0.43
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$
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1.10
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$
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1.22
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FFO (5)
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$
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0.97
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$
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0.89
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$
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2.86
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$
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2.66
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Common
distributions declared
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$
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0.73
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$
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0.72
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$
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2.17
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$
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2.16
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See Notes on page 4.
3
Hospitality Properties Trust
NOTES TO CONSOLIDATED STATEMENT
OF INCOME AND FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(1) At September 30, 2005, each of our 297
hotels are included in one of ten combinations of hotels of which 188 are
leased to one of our taxable REIT subsidiaries and managed by independent hotel
operating companies and 109 are leased to third parties. Our consolidated
statement of income includes hotel operating revenues and expenses of managed hotels
and rental income from our leased hotels. Certain of our managed hotels had net
operating results that were less than the minimum returns due to us by $730 in
the third quarter of 2005, and $730 and $4,070 in the first nine months of 2005
and 2004, respectively. These amounts are included in our consolidated
statement of income as a net reduction to hotel operating expenses in each
period because the minimum returns were funded by our managers. In the third
quarter of 2004, all our managed hotel combinations had net operating results
that were more than the minimum returns due to us.
(2) Various
percentages of total sales at most of our hotels are escrowed as reserves for
future renovations or refurbishment, or FF&E Reserve escrows. We own the FF&E Reserve escrows for all
the hotels leased to our taxable REIT subsidiaries and for most of the hotels
leased to third parties. We have a
security and remainder interest in the FF&E Reserve escrows for the remaining
hotels leased to third parties. When we
own the FF&E Reserve escrows at hotels leased to third parties we report
payments into the escrow as additional rent.
When we have a security and remainder interest in the FF&E Reserve
escrows, deposits are not included in revenue but are included in FFO. We do
not report the amounts which are escrowed as FF&E reserves for our managed
hotels as FF&E reserve income in our consolidated statement of income.
(3) In
June 2005, we authorized Carlson Hotels Worldwide, or Carlson, to pursue
the sale of our Prime HotelSM in Atlanta, GA. In connection with
this decision, we recorded a $7,300 loss on asset impairment in the second
quarter of 2005 to reduce the carrying value of the hotel to its estimated net
realizable value less the cost to sell. We sold the hotel on September 30,
2005, for $3,227.
(4) On
April 12, 2004, we redeemed all of our outstanding 9 ½% Series A
Preferred Shares at their liquidation preference of $25 per share, plus
accumulated and unpaid dividends. We deducted the $2,793 excess of the liquidation
preference of the redeemed shares over their carrying amount from net income in
determining net income available to common shareholders in the calculation of
earnings per share in the 2004 first quarter, which was when the redemption was
approved by our board of trustees.
(5) We
compute FFO as shown. Our calculation of FFO differs from the NAREIT definition
because we include FF&E deposits not included in net income (see note 2),
deferred percentage rent (see note 6) and deferred hotel operating income (see
note 7) and exclude loss on asset impairment (see note 3) and the excess of
liquidation preference over carrying value of redeemed preferred shares (see
note 4). We consider FFO to be an appropriate measure of performance for a
REIT, along with net income and cash flow from operating, investing and
financing activities. We believe that FFO provides useful information to
investors because by excluding the effects of certain historical costs, such as
depreciation expense, impairment charges and losses on early extinguishment of
debt, it may facilitate comparison of current operating performance among
REITs. FFO does not represent cash generated by operating activities in
accordance with GAAP and should not be considered an alternative to net income or
cash flow from operating activities as a measure of financial performance or
liquidity. FFO is among the important factors considered by our board of
trustees when determining the amount of distributions to shareholders. Other
important factors include, but are not limited to, requirements to maintain our
status as a REIT, limitations in our revolving bank credit facility and public
debt covenants, the availability of debt and equity capital to us and our
expectation of our future capital needs and operating performance.
(6) In
calculating net income we recognize percentage rental income received for the
first, second and third quarters in the fourth quarter, which is when all
contingencies are met and the income is earned. Although we defer recognition
of this revenue until the fourth quarter for purposes of calculating net
income, we include the amount in the calculation of FFO for each quarter of the
year. The fourth quarter FFO calculation excludes the amounts recognized during
the first three quarters.
(7) Our rights to share in the operating results of our managed hotels in
excess of the minimum returns due to us are generally determined based upon
annual calculations. Our managed hotels generated net operating results that
were $4,928 and $1,083, in the third quarter of 2005 and 2004, respectively,
and $13,079 and $3,546, in the first nine months of 2005 and 2004,
respectively, more than the minimum returns due to us. Typically the net
operating results of our hotels are strongest during the second and third
quarters of the year, which are the most active periods for business and
leisure travel. We recognize income in excess of our minimum returns in the
fourth quarter, which is when all contingencies are met and the income is
earned. Although we defer recognition of this revenue until the fourth
quarter for purposes of calculating net income, we include the amount in the
calculation of FFO for each quarter of the year. The fourth quarter FFO calculation excludes the amounts recognized
during the first three quarters.
4
Hospitality
Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except
share data)
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September 30,
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December 31,
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2005
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2004
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(Unaudited)
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ASSETS
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Real estate properties, at cost:
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Land
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$
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536,589
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$
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460,748
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Buildings,
improvements and equipment
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3,067,592
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2,720,242
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3,604,181
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3,180,990
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Accumulated depreciation
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(596,726
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(556,517
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3,007,455
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2,624,473
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Cash and cash equivalents
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19,164
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15,894
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Restricted cash (FF&E reserve escrow)
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32,369
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38,511
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Other assets, net
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21,434
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10,547
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$
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3,080,422
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$
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2,689,425
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Revolving credit facility
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$
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8,000
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$
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72,000
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Senior notes, net of discounts
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921,484
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621,679
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Mortgage payable
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3,781
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3,826
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Security deposits
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185,304
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175,304
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Accounts payable and other liabilities
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90,738
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77,782
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Due to affiliate
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7,531
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2,661
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Dividends payable
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1,914
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50,300
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Total
liabilities
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1,218,752
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1,003,552
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Commitments and contingencies
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Shareholders’ equity:
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Preferred
shares of beneficial interest, no par value, 100,000,000 shares authorized:
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Series B
preferred shares; 8 7/8% cumulative redeemable; 3,450,000 shares issued and
outstanding, aggregate liquidation preference $86,250
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83,306
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83,306
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Common
shares of beneficial interest; $0.01 par value; 100,000,000 shares
authorized, 71,920,578 and 67,203,228 issued and outstanding, respectively
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719
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672
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Additional
paid-in capital
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2,059,883
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1,859,936
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Cumulative
net income
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1,162,871
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1,081,169
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Cumulative
preferred distributions
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(57,422
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)
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(51,680
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Cumulative
common distributions
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(1,387,687
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(1,287,530
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Total
shareholders’ equity
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1,861,670
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1,685,873
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$
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3,080,422
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$
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2,689,425
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(end)
5