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HPT releases Q4 earnings
February 29 2012

Hospitality Properties Trust notes Q4 increases in occupancy, RevPAR and ADR.

NEWTON, Massachusetts--Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter and year ended December 31, 2011.

View the full results including tables.

Results for the Quarter Ended December 31, 2011:

Normalized funds from operations, or Normalized FFO, for the quarter ended December 31, 2011 were $96.8 million, or $0.78 per share, compared to Normalized FFO for the quarter ended December 31, 2010 of $104.5 million, or $0.85 per share.

Net income available for common shareholders was $30.7 million, or $0.25 per share, for the quarter ended December 31, 2011, compared to a net loss available for common shareholders of $100.4 million, or $0.81 per share, for the same quarter last year. Net income (loss) available for common shareholders for the quarters ended December 31, 2011 and 2010, include a $9.1 million, or $0.07 per share, and a $147.3 million, or $1.19 per share, loss on asset impairment, respectively.

The weighted average number of common shares outstanding was 123.5 million and 123.4 million for the quarters ended December 31, 2011 and 2010, respectively.

A reconciliation of net income available for common shareholders determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended December 31, 2011 and 2010 appears later in this press release.

Results for the Year Ended December 31, 2011:

Normalized FFO for the year ended December 31, 2011 were $407.5 million, or $3.30 per share, compared to Normalized FFO for the year ended December 31, 2010 of $400.0 million, or $3.24 per share.

Net income available for common shareholders was $160.6 million, or $1.30 per share, for the year ended December 31, 2011, compared to a net loss available for common shareholders of $8.5 million, or $0.07 per share, for the year ended December 31, 2010. Net income available for common shareholders for the year ended December 31, 2011 includes a $16.4 million, or $0.13 per share, loss on asset impairment. Net loss available for common shareholders for the year ended December 31, 2010 includes a $6.7 million, or $0.05 per share, loss on extinguishment of debt and a $163.7 million, or $1.33 per share, loss on asset impairment.

The weighted average number of common shares outstanding was 123.5 million and 123.4 million for the years ended December 31, 2011 and 2010, respectively.

A reconciliation of net income available for common shareholders determined according to GAAP to FFO and Normalized FFO for the years ended December 31, 2011 and 2010 appears later in this press release.

Hotel Portfolio Performance:

For the quarter ended December 31, 2011 compared to the same period in 2010: average daily rate, or ADR, increased 4.9% to $94.63; occupancy increased 1.2 percentage points to 67.2%; and, as a result, revenue per available room, or RevPAR, increased by 6.9% to $63.59.

For the year ended December 31, 2011 compared to the year ended December 31, 2010: ADR increased 3.7% to $93.84; occupancy increased 2.6 percentage points to 71.9%; and, as a result, RevPAR increased by 7.6% to $67.47.

Tenants and Managers:

Marriott No. 234. During the three months ended December 31, 2011, the payments HPT received under its management contract with Marriott International, Inc. (NYSE: MAR), or Marriott, covering 71 hotels and requiring minimum returns to HPT of $98.9 million/year (referred to as the Marriott No. 234 agreement) were $11.6 million less than the minimum amounts contractually required. During the three months ended December 31, 2011, HPT applied the remaining $0.2 million of available security deposit to partially cover these shortfalls and Marriott provided $9.1 million of guaranty payments to HPT. At December 31, 2011, there was $30.9 million remaining under Marriott's guaranty to cover future payment shortfalls up to 90% of the minimum returns due to HPT.

InterContinental. During the three months ended December 31, 2011, the payments HPT received under its management contract with InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental, covering 130 hotels and requiring minimum returns to HPT of $156.2 million/year (referred to as the InterContinental agreement) were $8.4 million less than the minimum amounts contractually required. HPT applied the available security deposit to cover these shortfalls. At December 31, 2011, the available security deposit which HPT held to cover future payment shortfalls was $55.8 million.

Both the Marriott and InterContinental security deposits may be replenished from certain percentages of future cash flows which exceed HPT's minimum returns, if any.

As of December 31, 2011, all other payments due to HPT from its managers and tenants under its operating agreements were current.

Acquisitions and Dispositions:

On January 31, 2012, HPT completed its previously announced acquisition of the entities which own the Royal Sonesta Hotel in Cambridge, MA (400 rooms) and lease the Royal Sonesta Hotel in New Orleans, LA (483 rooms) for $150.5 million, excluding acquisition costs. HPT funded these purchases with existing cash balances, including proceeds from the offering of its Series D Preferred Shares described below, and borrowings under its revolving credit facility. Simultaneous with this acquisition, HPT entered into management agreements for these hotels with Sonesta International Hotels Corporation, or Sonesta, an affiliate of Reit Management & Research LLC, the manager of HPT.

HPT previously announced plans and began the process to sell 21 Marriott hotels included in its Marriott No. 234 agreement. The 21 hotels had a net book value, after impairment writedowns, of approximately $123.0 million at December 31, 2011. In February 2012, HPT entered an agreement to sell one of these 21 hotels, a full service Marriott hotel in St. Louis, MO, for $35.0 million, excluding closing costs. HPT expects to complete this sale in the second quarter of 2012. This pending sale is subject to customary closing conditions; accordingly, HPT cannot provide any assurance that it will sell this hotel. Subsequent to December 31, 2011, HPT entered discussions with Marriott about retaining certain of the remaining 20 hotels in the Marriott No. 234 agreement. If certain of these hotels are sold, HPT will retain the net sales proceeds from the sales and the amount of minimum returns due from Marriott under the agreement will be reduced by 9% per annum of the net sales proceeds; and if HPT determines to retain certain of these hotels in the agreement, HPT will invest previously agreed amounts to improve these hotels and the amount of minimum returns due from Marriott under the agreement will be increased by 9% per annum of the amounts funded. However, because discussions with Marriott are ongoing and because HPT has not yet contracted for any sales, HPT cannot provide any assurance that it will sell or retain any of these 20 hotels.

HPT previously announced its plans to sell or rebrand up to 42 hotels included in its InterContinental agreement. HPT continues to evaluate plans to either sell or rebrand these hotels, including the conversion of certain hotels to the Sonesta brand and management. As of December 31, 2011, the net book value, after impairment writedowns, for these 42 hotels was approximately $363.5 million. If these hotels are sold, HPT will retain the net sales proceeds and reduce the amount of minimum returns due from InterContinental by 8% per annum; if these hotels are rebranded, the amount of the minimum returns due from InterContinental will be reduced by agreed amounts per hotel; and, if HPT determines to retain these hotels under InterContinental management, HPT will invest certain previously agreed amounts to improve these hotels and the amount of minimum returns due from InterContinental under the agreement will be increased by 8% per annum of the amounts funded. HPT is in discussions about selling or rebranding certain of these hotels; however, HPT cannot provide any assurance that it will sell or rebrand any of these 42 hotels.

Recent Financing Activities:

In January 2012, HPT sold 11.6 million shares of its 7.125% Series D Cumulative Redeemable Preferred Shares at a price of $25.00 per share in a public offering. Net proceeds from this offering ($280.4 million after underwriting and other offering expenses) were used to repay amounts outstanding under its revolving credit facility and for the acquisition described above.

On February 13, 2012, HPT redeemed all of its 3.5 million outstanding shares of 8.875% Series B Cumulative Redeemable Preferred Shares for $25.00 per share plus accrued and unpaid distributions. HPT funded this redemption with cash on hand and borrowings under its revolving credit facility.

Conference Call:

On Wednesday, February 29, 2012, at 1:00 p.m. Eastern Standard Time, John Murray, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the financial results for the quarter and year ended December 31, 2011. The conference call telephone number is (877) 531-2986. Participants calling from outside the United States and Canada should dial (612) 332-0630. No passcode 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 beginning on Wednesday, February 29, 2012 and will run through Wednesday, March 7, 2012. To hear the replay, dial (320) 365-3844. The replay passcode is 227521.

A live audio webcast of the conference call will also be available in a listen only mode on our website, which is located at www.hptreit.com. Participants wanting to access the webcast should visit our website about five minutes before the call. The archived webcast will be available for replay on HPT's website for about one week after the call. The recording and retransmission in any way of HPT's fourth quarter conference call is strictly prohibited without the prior written consent of HPT.

Supplemental Data:

A copy of HPT's Fourth Quarter 2011 Supplemental Operating and Financial Data is available for download at HPT's website, www.hptreit.com. HPT's website is not incorporated as part of this press release.

Hospitality Properties Trust is a real estate investment trust, or REIT, which as of December 31, 2011, owned 288 hotels and 185 travel centers located in 44 states, Puerto Rico and Canada. HPT is headquartered in Newton, MA

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