Hospitality Properties Trust's Q1 earnings widen to US$45.6M from US$33.4M in year-ago quarter, FIFO increases to US$102.4M from $94.3M; occupancy rose 3.4 points to 67.6%, RevPAR grew 7.5%
May 9, 2011
– Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter ended March 31, 2011.
Results for the Quarter Ended March 31, 2011:
Funds from operations, or FFO, for the quarter ended March 31, 2011 were $102.4 million, or $0.83 per share, compared to FFO for the quarter ended March 31, 2010 of $94.3 million, or $0.76 per share.
Net income available for common shareholders was $45.6 million, or $0.37 per share, for the quarter ended March 31, 2011, compared to $33.4 million, or $0.27 per share, for the same quarter last year.
The weighted average number of common shares outstanding was 123.4 million for the quarters ended March 31, 2011 and 2010.
A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to FFO for the quarters ended March 31, 2011 and 2010 appears later in this press release.
Hotel Portfolio Performance:
For the quarter ended March 31, 2011 compared to the same period in 2010: average daily rate, or ADR, increased 2.1% to $93.55; occupancy increased 3.4 percentage points to 67.6%; and, as a result, revenue per available room, or RevPAR, increased by 7.5% to $63.24.
Hotel Tenants and Managers:
During the three months ended March 31, 2011, all payments due to HPT under its hotel leases and management contracts were paid when due except for certain payments from Marriott International, Inc., or Marriott, Barceló Crestline Corporation, or Crestline, and InterContinental Hotels Group PLC, or InterContinental.
During the three months ended March 31, 2011, the payments HPT received under its management contract with Marriott (Marriott No. 3 contract) covering 34 hotels and requiring minimum returns to HPT of $44.2 million per year, and under its lease with Crestline (Marriott No. 4 contract) covering 19 hotels managed by Marriott and requiring minimum rent to HPT of $28.5 million per year, were $5.0 million and $2.5 million, respectively, less than the minimum amounts contractually required. HPT applied available security deposits to cover these shortfalls. Also, during the period between March 31, 2011 and May 8, 2011, HPT did not receive payments to cure shortfalls for the minimum returns due under the Marriott No. 3 contract and the minimum rent due under the Marriott No. 4 contract of $1.6 million and $0.9 million, respectively, and HPT applied the security deposits it holds to cover these amounts. At May 8, 2011, the remaining balances of the security deposits for the Marriott Nos. 3 and 4 contracts held by HPT were $3.5 million and $4.8 million, respectively. At this time, HPT expects that Marriott will continue to pay HPT the net cash flows from operations of the hotels covered by the defaulted contracts. In the absence of agreements modifying the contract terms between HPT and Marriott or Crestline, HPT currently expects the security deposits it holds from Marriott and Crestline may be fully utilized to cover cash shortfalls in payments HPT expects to receive under these contracts during 2011. As previously disclosed, HPT has entered into negotiations with Marriott to modify the agreements covering these hotels and the management agreement covering its 18 Residence Inn hotels (Marriott No. 2 contract). Although HPT continues to pursue these ongoing negotiations, there can be no assurance that any agreement will be reached.
In January 2011, the remaining $6.7 million available under the $125.0 million guarantee securing the obligations of InterContinental under its four operating agreements with HPT was exhausted and InterContinental has subsequently limited its payments to HPT to the net cash flows from operations of the hotels covered by the four operating agreements. During the three months ended March 31, 2011, the payments HPT received under its four operating agreements with InterContinental, which require minimum returns/rents of $153.7 million per year, were $9.2 million less than the minimum amounts contractually required. HPT applied the available security deposit to cover these shortfalls. During the period between March 31, 2011 and May 8, 2011, HPT received payments of the net cash flows from the operations of the hotels which approximated the minimum returns/rents due under the four InterContinental operating agreements. As of May 8, 2011, the remaining balance of the security deposit for these InterContinental agreements held by HPT was $27.7 million. At this time, HPT expects that InterContinental will continue to pay HPT the net cash flows from operations of the hotels included in the defaulted contracts. HPT currently expects the security deposit it holds from InterContinental may be sufficient to cover shortfalls in minimum payments due to HPT under these contracts in 2011. As previously disclosed, HPT has also entered into negotiations with InterContinental to modify its four operating agreements covering 131 hotels. Although HPT continues to pursue these ongoing negotiations with InterContinental, there can be no assurance that any agreement will be reached.
As of May 8, 2011, all other payments due to HPT from its managers and tenants under its operating agreements are current.
Travel Center Leases:
As previously announced, on January 31, 2011, HPT entered into an amendment agreement with TravelCenters of America LLC, or TA, which modified the terms of its two leases with TA. As of May 8, 2011, all TA obligations to HPT under these modified leases are current.
On Monday, May 9, 2011, at 1:00 p.m. Eastern Time, John Murray, President, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the results for the quarter ended March 31, 2011. The conference call telephone number is (800) 230-1074. Participants calling from outside the United States and Canada should dial (612) 234-9960. 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 Monday, May 16, 2011. To hear the replay, dial (800) 475-6701. The replay pass code is 179302.
A live audio webcast of the conference call will also be available in a listen only mode on the company's website, which is located at www.hptreit.com. Participants wanting to access the webcast should visit the company's 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 first quarter conference call is strictly prohibited without the prior written consent of HPT.
A copy of HPT's First 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 owns 289 hotels and 185 travel centers located in 44 states, Puerto Rico and Canada. HPT is headquartered in Newton, MA.
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