Exhibit 99.1
Unaudited Pro Forma Consolidated Financial Information
HERSHA HOSPITALITY TRUST
Pro Forma Consolidated Balance Sheet
As of September 30, 2013
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2013 for the Company presents the disposition of a portfolio sale of 16 non-core hotel properties as if the disposition occurred on September 30, 2013. On December 18, 2013, the Company closed on the sale of 12 hotel properties included in the 16 non-core hotel properties. The Company expects the closing of the remaining four non-core hotel properties to occur prior to the end of the first quarter of 2014, which is subject to receipt of third party consents.
This unaudited pro forma consolidated balance sheet should be read in conjunction with (i) the Company’s unaudited financial statements as of and for the nine months ended September 30, 2013 included in our Quarterly Report on Form 10-Q, filed with the SEC on November 7, 2013, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 20, 2013, related to this disposition, and (iii) the notes to the pro forma consolidated balance sheet included in this Form 8-K. In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.
The following unaudited pro forma consolidated balance sheet is not necessarily indicative of the financial condition of the Company assuming such disposition had been completed as of September 30, 2013, nor is it indicative of the future financial condition of the Company.
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| | As of September 30, 2013 |
| | | (A) | | | (B) | | | (C) | | | |
| | Historical | | Portfolio Sale Part I | | Portfolio Sale Part II | | Pro Forma |
Assets: | | | | | | | | | | | | |
Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets | | $ | 1,487,605 | | $ | - | | $ | - | | $ | 1,487,605 |
Investment in Unconsolidated Joint Ventures | | | 14,251 | | | - | | | - | | | 14,251 |
Development Loans Receivable | | | - | | | - | | | - | | | - |
Cash and Cash Equivalents | | | 46,588 | | | 122,300 | | | 11,000 | | | 179,888 |
Escrow Deposits | | | 30,175 | | | - | | | - | | | 30,175 |
Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts | | | 11,344 | | | - | | | - | | | 11,344 |
Deferred Financing Costs, Net of Accumulated Amortization | | | 8,344 | | | - | | | - | | | 8,344 |
Due from Related Parties | | | 6,318 | | | - | | | - | | | 6,318 |
Intangible Assets, Net of Accumulated Amortization | | | 8,023 | | | - | | | - | | | 8,023 |
Deposits on Hotel Acquisitions | | | 15,486 | | | - | | | - | | | 15,486 |
Other Assets | | | 24,927 | | | - | | | - | | | 24,927 |
Hotel Assets Held for Sale | | | 178,695 | | | (122,210) | | | (56,485) | | | - |
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Total Assets | | $ | 1,831,756 | | $ | 90 | | $ | (45,485) | | $ | 1,786,361 |
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Liabilities and Equity: | | | | | | | | | | | | |
Line of Credit | | $ | 79,700 | | $ | - | | $ | - | | $ | 79,700 |
Unsecured Term Loan | | | 150,000 | | | - | | | - | | | 150,000 |
Unsecured Notes Payable | | | 51,548 | | | - | | | - | | | 51,548 |
Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt | | | 568,496 | | | - | | | - | | | 568,496 |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 34,465 | | | - | | | - | | | 34,465 |
Dividends and Distributions Payable | | | 15,950 | | | - | | | - | | | 15,950 |
Due to Related Parties | | | 7,224 | | | - | | | - | | | 7,224 |
Liabilities Related to Hotel Assets Held for Sale | | | 79,291 | | | (33,262) | | | (46,029) | | | - |
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Total Liabilities | | | 986,674 | | | (33,262) | | | (46,029) | | | 907,383 |
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Redeemable Noncontrolling Interests - Common Units | | $ | - | | $ | - | | $ | - | | $ | - |
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Equity: | | | | | | | | | | | | |
Shareholders' Equity: | | | | | | | | | | | | |
Preferred Shares | | | 76 | | | - | | | - | | | 76 |
Common Shares: Class A | | | 2,027 | | | - | | | - | | | 2,027 |
Common Shares: Class B | | | - | | | - | | | - | | | - |
Accumulated Other Comprehensive Loss | | | (422) | | | - | | | - | | | (422) |
Additional Paid-in Capital | | | 1,198,760 | | | - | | | - | | | 1,198,760 |
Distributions in Excess of Net Income | | | (383,991) | | | 33,352 | | | 544 | | | (350,095) |
Total Shareholders' Equity | | | 816,450 | | | 33,352 | | | 544 | | | 850,346 |
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Noncontrolling Interests: | | | | | | | | | | | | |
Noncontrolling Interests - Common Units | | | 28,786 | | | - | | | - | | | 28,786 |
Noncontrolling Interests - Consolidated Variable Interest Entity | | | (154) | | | - | | | - | | | (154) |
Total Noncontrolling Interests | | | 28,632 | | | - | | | - | | | 28,632 |
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Total Equity | | | 845,082 | | | 33,352 | | | 544 | | | 878,978 |
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Total Liabilities and Equity | | $ | 1,831,756 | | $ | 90 | | $ | (45,485) | | $ | 1,786,361 |
HERSHA HOSPITALITY TRUST
Notes and Management’s Assumptions to the
Pro Forma Consolidated Balance Sheet
As of September 30, 2013
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
| (A) | | Represents the Company’s unaudited consolidated balance sheet as of September 30, 2013 as filed in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. |
| (B) | | Represents the adjustment to reflect the portfolio sale of 12 non-core hotel properties, which includes the sale of assets with a net book value of approximately $122.2 million, the repayment of consolidated mortgage debt with an aggregate principal balance of $33.2 million, and net proceeds of approximately $122.3 million after the repayment of debt. |
| (C) | | Represents the adjustment to reflect the probable sale of the remaining four non-core hotel properties, which are under contract to be sold and such sale is expected to occur during the first quarter of 2014. This closing is estimated to generate net proceeds of $11.0 million, the sale of assets with a net book value of approximately $56.4 million, and the assumption by BRE NE of mortgage debt with an aggregate principal balance of $46.0 million as of September 30, 2013. The Company estimated the net proceeds for this disposition based on the closing costs incurred for the sale of the 12 non-core properties noted above. |
HERSHA HOSPITALITY TRUST
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2012
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2012 for the Company presents the disposition of a portfolio sale of 16 non-core hotel properties as if the disposition occurred on January 1, 2012. On December 18, 2013, the Company closed on the sale of 12 hotel properties included in the 16 non-core hotel properties. The Company expects the closing of the remaining four non-core hotel properties to occur prior to the end of the first quarter of 2014, which is subject to receipt of third party consents.
This unaudited pro forma consolidated statement of operations should be read in conjunction with (i) the Company’s audited financial statements for the year ended December 31, 2012 included in our Annual Report on Form 10-K, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 20, 2013, related to this disposition, and (iii) the notes to the unaudited pro forma consolidated statement of operations included in this Form 8-K. In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.
The following unaudited pro forma consolidated statement of operations is not necessarily indicative of what actual results of the Company would have been assuming such acquisition had been completed as of January 1, 2012, nor is it indicative of the results of operations for future periods.
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| | For the Year Ended December 31, 2012 |
| | | (A) | | | (B) | | | (C) | | | |
| | Historical | | Portfolio Sale I | | Portfolio Sale II | | Pro Forma |
Revenue: | | | | | | | | | | | | |
Hotel Operating Revenues | | $ | 356,005 | | $ | (37,907) | | $ | (14,928) | | $ | 303,170 |
Interest Income from Development Loans | | | 1,998 | | | - | | | - | | | 1,998 |
Other Revenues | | | 212 | | | - | | | - | | | 212 |
Total Revenues | | | 358,215 | | | (37,907) | | | (14,928) | | | 305,380 |
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Operating Expenses: | | | | | | | | | | | | |
Hotel Operating Expenses | | | 196,119 | | | (21,955) | | | (9,157) | | | 165,007 |
Hotel Ground Rent | | | 835 | | | - | | | - | | | 835 |
Real Estate and Personal Property Taxes and Property Insurance | | | 22,527 | | | (2,108) | | | (852) | | | 19,567 |
General and Administrative (including Share Based Payments) | | | 23,427 | | | (8) | | | (2) | | | 23,417 |
Acquisition and Terminated Transaction Costs | | | 1,187 | | | - | | | - | | | 1,187 |
Depreciation and Amortization | | | 57,364 | | | (5,589) | | | (2,659) | | | 49,116 |
Total Operating Expenses | | | 301,459 | | | (29,660) | | | (12,670) | | | 259,129 |
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Operating Income | | | 56,756 | | | (8,247) | | | (2,258) | | | 46,251 |
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Interest Income | | | 1,311 | | | - | | | - | | | 1,311 |
Interest Expense | | | 43,967 | | | (3,795) | | | (2,876) | | | 37,296 |
Other Expense | | | 788 | | | (2) | | | (6) | | | 780 |
Loss on Debt Extinguishment | | | 3,324 | | | (135) | | | - | | | 3,189 |
Income Before Loss from Unconsolidated Joint Venture
Investments, Income Taxes and Discontinued Operations | | | 9,988 | | | (4,315) | | | 624 | | | 6,297 |
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Loss from Unconsolidated Joint Ventures | | | (232) | | | - | | | - | | | (232) |
Loss from Remeasurement of Investment in Unconsolidated Joint Venture | | | (1,892) | | | - | | | - | | | (1,892) |
Loss from Unconsolidated Joint Venture Investments | | | (2,124) | | | - | | | - | | | (2,124) |
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Income Before Income Taxes | | | 7,864 | | | (4,315) | | | 624 | | | 4,173 |
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Income Tax Benefit | | | 3,355 | | | - | | | - | | | 3,355 |
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Income from Continuing Operations | | $ | 11,219 | | $ | (4,315) | | $ | 624 | | $ | 7,528 |
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Earnings Per Share: | | | | | | | | | | | | |
Basic | | $ | 0.06 | | | | | | | | $ | 0.04 |
Diluted | | $ | 0.06 | | | | | | | | $ | 0.04 |
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Weighted Average Common Shares Outstanding: | | | | | | | | | | | | |
Basic | | | 187,415,270 | | | | | | | | | 187,415,270 |
Diluted | | | 187,415,270 | | | | | | | | | 187,415,270 |
HERSHA HOSPITALITY TRUST
Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
| (A) | | Represents the Company’s Consolidated Statement of Operations for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K, excluding discontinued operations. |
| (B) | | Represents the reclassification from continuing operations of the operating results related to the portfolio sale of 12 non-core hotel properties. The reclassification of these hotel properties resulted in a reduction of approximately $4.3 million of income from continuing operations. |
| (C) | | Represents the reclassification from continuing operations of the operating results related to the remaining four non-core hotel properties, which are under contract to be sold and such sale is expected to occur during the first quarter of 2014. The reclassification of these hotel properties resulted in an increase of approximately $0.6 million of income from continuing operations. |
