Exhibit 99.2
HOSPITALITY PROPERTIES TRUST
First Quarter 2009
Supplemental Operating and Financial Data
All amounts in this report are unaudited.
TABLE OF CONTENTS
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CORPORATE INFORMATION | |
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Company Profile | 7 |
Investor Information | 8 |
Research Coverage | 9 |
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FINANCIAL INFORMATION | |
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Key Financial Data | 11 |
Consolidated Balance Sheet | 12 |
Consolidated Statement of Income | 13 |
Notes to Consolidated Statement of Income | 14 |
Consolidated Statement of Cash Flows | 15 |
Calculation of EBITDA | 16 |
Calculation of Funds from Operations (FFO) | 17 |
Segment Information | 18 |
Debt Summary | 19 |
Debt Maturity Schedule | 20 |
Leverage Ratios, Coverage Ratios and Public Debt Covenants | 21 |
FF&E Reserve Escrows | 22 |
2009 Acquisitions and Dispositions Information | 23 |
2009 Financing Activities | 24 |
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OPERATING AGREEMENTS AND PORTFOLIO INFORMATION | |
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Summary of Operating Agreements | 26 |
Portfolio by Operating Agreement, Manager and Brand | 28 |
Operating Statistics by Hotel Operating Agreement | 29 |
Coverage by Operating Agreement | 30 |
Operating Agreement Expiration Schedule | 31 |
2
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS SUPPLEMENTAL OPERATING AND FINANCIAL DATA REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:
· OUR MANAGERS’ OR TENANTS’ ABILITY TO PAY RETURNS OR RENT TO US, INCLUDING THE ABILITY OF MARRIOTT INTERNATIONAL INC., OR MARRIOTT, AND BARCELO CRESTLINE corporation, OR CRESTLINE, TO PAY THE FULL AMOUNT OF MINIMUM RETURNS OR RENTS DUE TO US IN THE FUTURE AND OUR ABILITY TO APPLY MARRIOTT’S AND CRESTLINE’S SECURITY DEPOSITS WHICH WE HOLD TO COVER ANY SHORTFALLS;
· OUR ABILITY TO PAY DISTRIBUTIONS IN THE FUTURE, INCLUDING RESUMPTION OF DISTRIBUTIONS ON OUR COMMON SHARES LATER IN 2009 OR AT ANY FUTURE TIME, THE CONTINUATION OF PAYMENT OF DISTRIBUTIONS ON OUR PREFERRED SHARES, THE AMOUNT OF ANY SUCH DISTRIBUTIONS AND WHETHER ANY SUCH DISTRIBUTIONS WILL BE PAID IN CASH ONLY OR PARTLY IN STOCK; AND, IF PARTLY IN STOCK, THE PROPORTIONS OF CASH VERSUS STOCK COMPONENTS OF SUCH DISTRIBUTIONS;
· OUR EXPECTATION THAT WE WILL REALIZE SUBSTANTIAL INCOME FOR FINANCIAL REPORTING PURPOSES AND THAT OUR DISTRIBUTIONS TO OUR COMMON SHAREHOLDERS IN 2009 WILL BE AT LEAST EQUAL TO THE MINIMUM AMOUNTS REQUIRED IN ORDER FOR US TO REMAIN A REAL ESTATE INVESTMENT TRUST, OR REIT, FOR FEDERAL TAX PURPOSES;
· OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL;
· THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY;
· OUR ABILITY TO PAY INTEREST AND DEBT PRINCIPAL AND MAKE DISTRIBUTIONS; AND
· OUR POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS.
OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS INCLUDING;
· CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS;
· ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR MANAGING TRUSTEES, TRAVELCENTERS OF AMERICA LLC, OR TA, AND REIT MANAGEMENT & RESEARCH LLC, OR RMR, AND their affiliates;
· CHANGES IN FEDERAL, STATE AND LOCAL LEGISLATION, GOVERNMENTAL REGULATIONS, ACCOUNTING RULES, TAX LAWS AND similar matters; and
3
· ACTS OF TERRORISM, OUTBREAKS OF SO-CALLED PANDEMICS OR OTHER MAN MADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
FOR EXAMPLE:
· IF THE AVAILABILITY OF DEBT CAPITAL REMAINS RESTRICTED OR BECOMES MORE RESTRICTED, WE MAY BE UNABLE TO REFINANCE OR REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE OR ON TERMS WHICH ARE AS FAVORABLE AS WE NOW HAVE;
· OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS DEPENDS UPON A NUMBER OF FACTORS AND WE MAY BE UNABLE TO RESUME DISTRIBUTIONS ON OUR COMMON SHARES OR MAINTAIN DISTRIBUTIONS ON OUR PREFERRED SHARES. IF CAPITAL MARKET CONDITIONS BECOME WORSE OR IF OUR TENANTS AND MANAGERS DO NOT PAY AMOUNTS DUE TO US, WE MAY BECOME UNABLE OR UNWILLING TO RESUME REGULAR QUARTERLY DISTRIBUTIONS TO COMMON SHAREHOLDERS. ALSO, OUR HISTORICAL RATE OF COMMON SHARE DISTRIBUTIONS MAY NOT BE RESTORED BECAUSE OF CHANGES IN OUR EARNINGS OR OTHER CIRCUMSTANCES;
· OUR ASSUMPTIONS ABOUT CONTINUING PAYMENTS FROM OUR TENANTS AND MANAGERS MAY PROVE INACCURATE, AND OUR TENANTS AND MANAGERS MAY NOT PAY ALL OF THE AMOUNTS DUE TO US. MOREOVER, APPLICABLE TAX LAWS MAY PERMIT US TO REMAIN A REIT AND PAY DISTRIBUTIONS LESS THAN WE HAVE HISTORICALLY PAID OR EVEN LESS THAN OUR 2009 INCOME FOR FINANCIAL REPORTING PURPOSES. RECENT CHANGES IN LAWS, SUCH AS THE DEFERRAL OF CANCELLATION OF DEBT INCOME PERMITTED BY THE 2009 ECONOMIC STIMULUS LAW, AND RECENT INTERNAL REVENUE SERVICE ACTIONS, SUCH AS THE ANNOUNCEMENT WHICH PERMITS REIT QUALIFYING DIVIDENDS TO BE PAID UP TO 90% IN SHARES, MAY PERMIT REITS LIKE US TO RETAIN OUR REIT TAX STATUS WITHOUT PAYING SUBSTANTIAL CASH DISTRIBUTIONS FOR TAXABLE YEARS ENDING ON OR BEFORE DECEMBER 31, 2009. MOREOVER, THE AMOUNT OF 2009 DISTRIBUTIONS WHICH WE MAY BE REQUIRED TO PAY IN ORDER TO RETAIN OUR REIT TAX STATUS IS CONSIDERABLY LESS THAN THE TOTAL OF OUR HISTORICAL RATE OF QUARTERLY DISTRIBUTIONS FOR THE REMAINDER OF 2009 WOULD HAVE BEEN;
· HOTEL ROOM DEMAND IS USUALLY A REFLECTION OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY. IF HOTEL ROOM DEMAND BECOMES FURTHER DEPRESSED DURING THE CURRENT U.S. RECESSION, THE OPERATING RESULTS OF OUR HOTELS MAY DECLINE AND OUR OPERATORS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS;
· THE CURRENT U.S. RECESSION MAY CONTINUE FOR LONGER OR BE WORSE THAN WE NOW ANTICIPATE. SUCH CIRCUMSTANCES MAY FURTHER REDUCE THE DEMAND FOR GOODS AND SERVICES SOLD BY TA AND ADVERSELY IMPACT TA’S ABILITY TO GENERATE THE CASH FLOWS NECESSARY TO PAY OUR RENTS;
· THE RECENT OUTBREAK OF SWINE FLU IN THE UNITED STATES MAY CAUSE TRAVEL TO DECLINE AND ANY SUCH DECLINE MAY ADVERSELY IMPACT THE FINANCIAL RESULTS AT OUR HOTELS AND THE ABILITY OF OUR TENANTS AND HOTEL OPERATORS TO MAKE REQUIRED PAYMENTS TO US;
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· THE MARRIOTT AND CRESTLINE SECURITY DEPOSITS WHICH WE HOLD ARE NOT IN SEGREGATED CASH ACCOUNTS OR OTHERWISE SEPARATE FROM OUR OTHER ASSETS AND LIABiLITIES. ACCORDINGLY, ALTHOUGH WE MAY RECORD RECEIPT OF INCOME BY REDUCING OUR SECURITY DEPOSIT LIABILITY, WE WILL NOT RECEIVE ANY CASH PAYMENT. BECAUSE WE WILL NOT RECEIVE A CASH PAYMENT AND BECAUSE THE AMOUNT OF THE SECURITY DEPOSITS AVAILABLE FOR FUTURE USE IS REDUCED AS WE APPLY SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS, MARRIOTT’S OR CRESTLINE’S FAILURE TO PAY MINIMUM RETURNS OR RENTS DUE TO US MAY REDUCE OUR CASH FLOWS AND OUR ABILITY TO PAY DISTRIBUTIONS TO SHAREHOLDERS;
· THE PRICE WHICH TA MUST PAY TO PURCHASE DIESEL FUEL AND OTHER PRODUCTS WHICH IT SELLS MAY MATERIALLY INCREASE, AND THESE PRICE INCREASES MAY INCREASE TA’s WORKING CAPITAL REQUIREMENTS MORE THAN CURRENTLY EXPECTED AND REDUCE TA’s ABILITY TO PAY OUR RENTS;
· FUEL CONSERVATION EFFORTS, AN EXTENDED PERIOD OF LIMITED ACTIVITY IN THE HOUSING DEVELOPMENT INDUSTRY OR A SIGNIFICANT AND PROLONGED DECLINE IN THE IMPORT INTO THE U.S. OF CONSUMER GOODS, MAY EACH AFFECT THE DEMAND FOR TA’S GOODS AND SERVICES AND TA’S ABILITY TO PAY RENTS TO US, INCLUDING DEFERRED AMOUNTS DUE TO US; AND
· THIS SUPPLEMENTAL OPERATING AND FINANCIAL DATA REPORT STATES THAT WE HAVE REPURCHASED SOME OF OUR OUTSTANDING DEBT SECURITIES. THE IMPLICATION OF THESE STATEMENTS MAY BE THAT WE WILL CONTINUE TO REPURCHASE OUR DEBT SECURITIES. IN FACT, WE HAVE REPURCHASED OUR DEBT SECURITIES ON AN OPPORTUNISTIC BASIS, WHEN OPPORTUNITIES TO DO SO HAVE BEEN AVAILABLE TO US AT PRICES WE BELIEVE ARE ATTRACTIVE AND WHEN WE HAVE HAD AVAILABLE FINANCIAL RESOURCES. AT OUR DISCRETION, WE MAY ACCELERATE, DELAY, DISCONTINUE OR RESTART MAKING SUCH PURCHASES AT ANY TIME.
THESE RESULTS COULD OCCUR FOR MANY DIFFERENT REASONS, SOME OF WHICH, SUCH AS NATURAL DISASTERS, PANDEMICS OR CHANGES IN OUR MANAGERS OR TENANTS REVENUES OR COSTS, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY, ARE LARGELY BEYOND OUR CONTROL.
OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OUR FORWARD LOOKING STATEMENTS ARE DESCRIBED MORE FULLY UNDER “ITEM 1A. RISK FACTORS” OF OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2009 AND OF OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008, AS AMENDED.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY APPLICABLE LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
5
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
The Company: | | Strategy: |
Hospitality Properties Trust, or HPT, is a real estate investment trust, or REIT. As of March 31, 2009, we owned 289 hotels and 185 travel centers located in 44 states, Puerto Rico and Canada. At March 31, 2009, our properties were operated by companies under thirteen long term management or lease agreements. We are the only investment grade rated, publicly owned hospitality REIT in the Country and we are currently included in a number of financial indices, including the S&P 400 MidCap Index, the Russell 1000 Index, the MSCI U.S. REIT index, the FTSE EPRA/NAREIT United States index and the S&P REIT Composite index. Management: HPT is managed by Reit Management & Research LLC, or RMR. RMR was founded in 1986 to manage public investments in real estate. As of March 31, 2009, RMR managed one of the largest portfolios of publicly owned real estate in North America, including approximately 1,300 properties located in 45 states, Washington, D.C., Puerto Rico and Ontario, Canada. RMR has approximately 580 employees in its headquarters and regional offices located throughout the U.S. In addition to managing HPT, RMR manages HRPT Properties Trust, a publicly traded REIT that primarily owns office buildings and industrial properties, and Senior Housing Properties Trust, or SNH, a publicly traded REIT that primarily owns healthcare properties. RMR also provides management services to Five Star Quality Care, Inc., a healthcare services company which is a tenant of SNH, and TravelCenters of America LLC, or TA, which is our largest tenant. An affiliate of RMR, RMR Advisors, Inc., is the investment manager of several publicly traded mutual funds, the RMR Funds, which principally invest in unaffiliated real estate companies. The public companies managed by RMR and its affiliates had combined total gross assets of approximately $16 billion as of March 31, 2009. We believe that being managed by RMR is a competitive advantage for HPT because RMR provides HPT with a depth of management and experience which may be unequaled in the real estate industry. We also believe RMR is able to provide management services to us at costs that are lower than we would have to pay for similar quality services. | | Our business strategy is to maintain and grow an investment portfolio of high quality hotels and travel centers operated by qualified managers. Our properties are managed or leased under long term agreements that provide us cash flows in the form of returns and rents. We also seek to participate in operating improvements at our properties by charging rent increases based upon percentages of gross revenue increases at our leased properties and participating in hotel profits in excess of the minimum returns due to us at our managed hotels. Generally, we prefer to purchase multiple properties in one transaction because we believe a single operating agreement for multiple properties in diverse locations enhances the stability of our cash flows. When we buy individual properties we usually add those properties to a combination lease or management agreement for other properties that we own. We have a conservative capital structure and limit the amount of debt financing we use. We currently do not have any investments in off balance sheets entities. |
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| Stock Exchange Listing: | Corporate Headquarters: |
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| New York Stock Exchange | 400 Centre Street |
| | Newton, MA 02458 |
| Trading Symbol: | (t) (617) 964-8389 |
| | (f) (617) 969-5730 |
| Common Shares — HPT | |
| Preferred Shares Series B — HPT-B | |
| Preferred Shares Series C — HPT-C | |
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| Senior Unsecured Debt Ratings: | |
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| Standard & Poor’s — BBB | |
| Moody’s — Baa2 | |
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Portfolio Data by Manager (as of 3/31/09):
| | | | | | | | | | | | | | Percent | |
| | | | | | Percent of | | | | | | Annualized | | of Total | |
| | | | Number | | Number | | | | Percent of | | Minimum | | Minimum | |
| | Number of | | of Rooms/ | | of Rooms/ | | Investment | | Total | | Return / | | Return / | |
Manager | | Properties | | Suites (1) | | Suites (1) | | (000s) | | Investment | | Rent (000s) | | Rent | |
| | | | | | | | | | | | | | | |
InterContinental | | 131 | | 20,140 | | 47% | | $1,783,672 | | 28% | | $153,682 | | 26% | |
Marriott International | | 125 | | 17,920 | | 42% | | 1,587,497 | | 24% | | 161,562 | | 28% | |
Hyatt | | 22 | | 2,725 | | 6% | | 299,342 | | 5% | | 21,777 | | 4% | |
Carlson | | 11 | | 2,096 | | 5% | | 202,251 | | 3% | | 12,920 | | 2% | |
TA (2)(3) | | 185 | | N/A | | N/A | | 2,540,698 | | 40% | | 230,130 | | 40% | |
Total | | 474 | | 42,881 | | 100% | | $6,413,460 | | 100% | | $580,071 | | 100% | |
Operating Statistics by Operating Agreement (Q1 2009):
| | | | | | Annualized | | Percent | | | | | |
| | | | Number | | Minimum | | of Total | | | | RevPAR | |
| | Number of | | of Rooms/ | | Return / | | Minimum | | Coverage (4) | | Change (5) | |
Operating Agreement | | Properties | | Suites (1) | | Rent (000s) | | Return / Rent | | Q1 | | LTM | | Q1 | | LTM | |
| | | | | | | | | | | | | | | | | |
InterContinental (no. 1) | | 31 | | 3,844 | | $37,882 | | 7% | | 0.66x | | 1.03x | | -16.8% | | -4.5% | |
InterContinental (no. 2) | | 76 | | 9,220 | | 50,000 | | 9% | | 0.80x | | 1.25x | | -18.7% | | -6.0% | |
InterContinental (no. 3) | | 14 | | 4,139 | | 44,258 | | 8% | | 0.69x | | 1.08x | | -19.1% | | -7.2% | |
InterContinental (no. 4) | | 10 | | 2,937 | | 21,542 | | 3% | | 0.41x | | 0.82x | | -24.2% | | -5.3% | |
Marriott (no. 1) | | 53 | | 7,610 | | 58,878 | | 9% | | 0.85x | | 1.34x | | -21.8% | | -10.3% | |
Marriott (no. 2) | | 18 | | 2,178 | | 21,165 | | 3% | | 0.54x | | 1.05x | | -16.3% | | -6.3% | |
Marriott (no. 3) | | 34 | | 5,020 | | 44,200 | | 8% | | 0.65x | | 1.09x | | -19.5% | | -8.2% | |
Marriott (no. 4) | | 19 | | 2,756 | | 28,508 | | 5% | | 0.88x | | 1.04x | | -22.4% | | -8.9% | |
Marriott (no. 5) | | 1 | | 356 | | 8,811 | | 2% | | 0.16x | | 0.23x | | -20.0% | | -11.7% | |
Hyatt | | 22 | | 2,725 | | 21,777 | | 4% | | 0.74x | | 0.98x | | -16.2% | | 10.3% | |
Carlson | | 11 | | 2,096 | | 12,920 | | 2% | | 0.77x | | 1.20x | | -25.9% | | -10.3% | |
TA (no. 1)(2)(3) | | 145 | | N/A | | 163,953 | | 29% | | 1.12x | | 1.48x | | N/A | | N/A | |
TA (no. 2) (2) | | 40 | | N/A | | 66,177 | | 11% | | 1.19x | | 1.57x | | N/A | | N/A | |
Total / Average | | 474 | | 42,881 | | $580,071 | | 100% | | | | | | -20.0% | | -6.7% | |
(1) | 18 of our TA properties include hotels. The rooms associated with these hotels have been excluded from total number of rooms. |
(2) | Effective July 1, 2008, we entered into a rent deferral arrangement with TA which provides TA the option to defer payments of up to $5,000/month of rent under its two leases for the period July 1, 2008 until December 31, 2010. For the quarter ended March 31, 2009, TA deferred $15,000 in rents. TA rents presented in this report represent their contractual obligation and do not reflect any rent deferral. |
(3) | The amount of annual minimum rent payable to us under TA agreement no. 1 is scheduled to increase to $167,641, $172,605 and $177,672 in 2010, 2011 and 2012, respectively. These represent contractual rent amounts and do not reflect the impact of any rent deferrals (see note 2). |
(4) | We define coverage as combined total property sales minus all property level expenses which are not subordinated to minimum payments to us and the required FF&E reserve contributions, divided by the minimum return or minimum rent payments due to us. For some combinations, amounts have been calculated using data for periods prior to our ownership of certain properties and prior to commencement of our operating agreements. TA rent coverage ratios have been calculated based upon the contractual rent amounts and do not reflect the impact of any rent deferrals (see Note 2). |
(5) | We define RevPAR as hotel room revenue per day per available room. RevPar change is the RevPar percentage change in the periods ending March 31, 2009 over the comparable year earlier periods. |
7
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
Barry M. Portnoy | | Adam D. Portnoy |
Managing Trustee | | Managing Trustee |
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Bruce M. Gans, M.D. | | William A. Lamkin |
Independent Trustee | | Independent Trustee |
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John L. Harrington | | |
Independent Trustee | | |
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Senior Management |
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John G. Murray | | Mark L. Kleifges |
President and Chief Operating Officer | | Treasurer and Chief Financial Officer |
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Ethan S. Bornstein | | |
Senior Vice President | | |
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Contact Information |
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Investor Relations | | Inquiries |
Hospitality Properties Trust | | Financial inquiries should be directed to Mark L. Kleifges, |
400 Centre Street | | Treasurer and Chief Financial Officer, at (617) 964-8389 |
Newton, MA 02458 | | or mkleifges@reitmr.com. |
(t) (617) 964-8389 | | |
(f) (617) 969-5730 | | Investor and media inquiries should be directed to |
(email) info@hptreit.com | | Timothy A. Bonang, Director of Investor Relations, at |
(website) www.hptreit.com | | (617) 796-8232 or tbonang@hptreit.com, or Carlynn Finn, |
| | Manager of Investor Relations at (617) 796-8232 |
| | or cfinn@hptreit.com |
8
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
Keefe, Bruyette & Woods | | Stifel, Nicolaus |
Smedes Rose | | Rod Petrik |
(212) 887-3696 | | (410) 454-4131 |
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Morgan Keegan | | UBS |
Napoleon Overton | | William Truelove |
(901) 579-4865 | | (212) 713-8825 |
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RBC | | Wachovia Securities |
Mike Salinsky | | Jeffrey Donnelly |
(216) 378-7627 | | (617) 603-4262 |
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Debt Research Coverage |
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Credit Suisse | | UBS |
John Giordano | | Michael Dimler |
(212) 538-4935 | | (203) 719-3841 |
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Wachovia Securities | | |
Thierry Perrein | | |
(704) 715-8455 | | |
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Rating Agencies |
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Moody’s Investors Service | | Standard and Poor’s |
Maria Maslovsky | | Beth Campbell |
(212) 553-4831 | | (212) 438-2415 |
HPT is followed by the analysts and its publicly held debt is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding HPT’s performance made by these analysts or agencies do not represent opinions, forecasts or predictions of HPT or its management. HPT does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies.
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Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
KEY FINANCIAL DATA |
(amounts in thousands, except per share data) |
| | As of and For the Three Months Ended (1) | |
| | 3/31/2009 | | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | | |
| | | | | | | | | | | | | | | | |
Shares Outstanding: | | | | | | | | | | | | | | | | |
Common shares outstanding (at end of period) | | 93,993 | | | 93,992 | | | 93,982 | | | 93,951 | | | 93,893 | | |
Weighted average common shares outstanding - basic and diluted (2) | | 93,992 | | | 93,984 | | | 93,954 | | | 93,942 | | | 93,893 | | |
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Common Share Data: | | | | | | | | | | | | | | | | |
Price at end of period | | $ | 12.00 | | | $ | 14.87 | | | $ | 20.52 | | | $ | 24.46 | | | $ | 34.02 | | |
High during period | | $ | 15.11 | | | $ | 19.54 | | | $ | 24.80 | | | $ | 34.03 | | | $ | 36.98 | | |
Low during period | | $ | 9.09 | | | $ | 7.20 | | | $ | 18.87 | | | $ | 24.46 | | | $ | 30.40 | | |
Annualized dividends declared per share (3) | | N/A | | | $ | 3.08 | | | $ | 3.08 | | | $ | 3.08 | | | $ | 3.08 | | |
Annualized dividend yield (at end of period) (3) | | N/A | | | 20.7% | | | 15.0% | | | 12.6% | | | 9.1% | | |
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Book Capitalization: | | | | | | | | | | | | | | | | |
Total debt | | $ | 2,675,783 | | | $ | 2,639,060 | | | $ | 2,647,758 | | | $ | 2,639,488 | | | $ | 2,632,247 | | |
Plus: total shareholders’ equity | | 2,608,921 | | | 2,628,427 | | | 2,656,247 | | | 2,697,927 | | | 2,795,283 | | |
Total book capitalization | | $ | 5,284,704 | | | $ | 5,267,487 | | | $ | 5,304,005 | | | $ | 5,337,415 | | | $ | 5,427,530 | | |
Total debt / total book capitalization | | 50.6% | | | 50.1% | | | 49.9% | | | 49.5% | | | 48.5% | | |
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Selected Balance Sheet Data: | | | | | | | | | | | | | | | | |
Total assets | | $ | 5,554,934 | | | $ | 5,572,737 | | | $ | 5,592,302 | | | $ | 5,638,988 | | | $ | 5,709,208 | | |
Total liabilities | | $ | 2,946,013 | | | $ | 2,944,310 | | | $ | 2,936,054 | | | $ | 2,941,061 | | | $ | 2,913,925 | | |
Real estate, at cost | | $ | 6,426,100 | | | $ | 6,407,884 | | | $ | 6,366,284 | | | $ | 6,351,168 | | | $ | 6,264,855 | | |
Total debt / real estate, at cost | | 41.6% | | | 41.2% | | | 41.6% | | | 41.6% | | | 42.0% | | |
| | | | | | | | | | | | | | | | |
Market Capitalization: | | | | | | | | | | | | | | | | |
Total debt (book value) | | $ | 2,675,783 | | | $ | 2,639,060 | | | $ | 2,647,758 | | | $ | 2,639,488 | | | $ | 2,632,247 | | |
Plus: market value of preferred shares (at end of period) | | 197,897 | | | 219,718 | | | 206,965 | | | 293,808 | | | 331,157 | | |
Plus: market value of common shares (at end of period) | | 1,127,916 | | | 1,397,661 | | | 1,928,511 | | | 2,298,041 | | | 3,194,240 | | |
Total market capitalization | | $ | 4,001,596 | | | $ | 4,256,439 | | | $ | 4,783,234 | | | $ | 5,231,337 | | | $ | 6,157,644 | | |
Total debt / total market capitalization | | 66.9% | | | 62.0% | | | 55.4% | | | 50.5% | | | 42.7% | | |
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Selected Income Statement Data: | | | | | | | | | | | | | | | | |
Total revenues | | $ | 254,343 | | | $ | 282,137 | | | $ | 312,583 | | | $ | 338,775 | | | $ | 319,179 | | |
EBITDA (4)(7) | | $ | 133,965 | | | $ | 132,768 | | | $ | 144,200 | | | $ | 141,963 | | | $ | 156,371 | | |
Net income available for common shareholders (5)(6)(7)(8) | | $ | 53,613 | | | $ | 44,990 | | | $ | 30,481 | | | $ | (26,944 | ) | | $ | 45,929 | | |
Funds from operations (FFO) available for common shareholders (6)(7)(9) | | $ | 89,581 | | | $ | 85,766 | | | $ | 97,324 | | | $ | 95,096 | | | $ | 108,547 | | |
Common distributions declared (3) | | N/A | | | $ | 72,374 | | | $ | 72,366 | | | $ | 72,342 | | | $ | 72,298 | | |
| | | | | | | | | | | | | | | | |
Per Share Data: | | | | | | | | | | | | | | | | |
Net income available for common shareholders (5)(6)(7)(8) | | $ | 0.57 | | | $ | 0.48 | | | $ | 0.32 | | | $ | (0.29 | ) | | $ | 0.49 | | |
FFO available for common shareholders (6)(7)(9) | | $ | 0.95 | | | $ | 0.91 | | | $ | 1.04 | | | $ | 1.01 | | | $ | 1.16 | | |
Common distributions declared (3) | | N/A | | | $ | 0.77 | | | $ | 0.77 | | | $ | 0.77 | | | $ | 0.77 | | |
FFO payout ratio | | N/A | | | 84.6% | | | 74.0% | | | 76.2% | | | 66.4% | | |
| | | | | | | | | | | | | | | | |
Coverage Ratios: | | | | | | | | | | | | | | | | |
EBITDA (4) / interest expense | | 3.7x | | | 3.4x | | | 3.7x | | | 3.6x | | | 3.9x | | |
EBITDA (4) / interest expense and preferred distributions | | 3.0x | | | 2.9x | | | 3.1x | | | 3.1x | | | 3.3x | | |
(1) | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively. The unamortized note discount was $21,396 and $29,228 at March 31, 2009 and December 31, 2008, respectively, and the equity component was $43,622 and $43,770 at March 31, 2009 and December 31, 2008, respectively. |
(2) | We had no outstanding dilutive common share equivalents during the periods presented. |
(3) | On April 8, 2009, we announced that as a result of current conditions in the capital markets, we had suspended our regular quarterly common dividend for the remainder of 2009. During the fourth quarter of 2009, we expect to re-evaluate capital market conditions and our own earnings in order to determine what amount of common share dividends will be paid in 2009. At that time we will also determine if our common dividend will be paid in cash or a combination of cash and common shares. We expect that our dividends to common shareholders in 2009 will be at least equal to the minimum amounts required in order for us to remain a real estate investment trust for federal tax purposes. |
(4) | See page 16 for our calculation of EBITDA. |
(5) | Includes for the quarter ended June 30, 2008, a $53,225, or a $0.57 per share, non-cash loss on impairment related to the writedown of certain intangible assets arising from our acquisition of TA to their estimated fair value. |
(6) | Includes for each of the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009, a $15,000, or $0.16 per share, rent deferral by TA. We have not recognized the deferred rent as revenue due to uncertainties regarding its payment by TA in the future. |
(7) | Includes for the quarter ended June 30, 2008, $19,613, or a $0.21 per share, reserve for the straight line rent receivable relating to our TA No 1. lease. |
(8) | Includes for the quarter ended March 31, 2009, $26,555, or a $0.28 per share, gain on extinguishment of debt relating to our 3.8% convertible senior notes. |
(9) | See page 17 for our calculation of FFO. |
11
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
CONSOLIDATED BALANCE SHEET |
(dollars in thousands, except share data) |
| | March 31,
2009 | | | December 31,
2008 | | |
| | | | | | | |
ASSETS | | | | | | | |
| | | | | | | |
Real estate properties, at cost: | | | | | | | |
Land | | $ | 1,392,591 | | | $ | 1,392,614 | | |
Buildings, improvements and equipment | | 5,033,509 | | | 5,015,270 | | |
| | 6,426,100 | | | 6,407,884 | | |
Accumulated depreciation | | (1,112,431 | ) | | (1,060,203 | ) | |
| | 5,313,669 | | | 5,347,681 | | |
Cash and cash equivalents | | 11,796 | | | 22,450 | | |
Restricted cash (FF&E reserve escrow) | | 25,014 | | | 32,026 | | |
Other assets, net | | 204,455 | | | 170,580 | | |
| | $ | 5,554,934 | | | $ | 5,572,737 | | |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
Revolving credit facility | | $ | 546,000 | | | $ | 396,000 | | |
Senior notes, net of discounts | | 1,693,972 | | | 1,693,730 | | |
Convertible senior notes, net of discount (1) | | 432,274 | | | 545,772 | | |
Mortgage payable | | 3,537 | | | 3,558 | | |
Security deposits | | 169,402 | | | 169,406 | | |
Accounts payable and other liabilities | | 93,149 | | | 128,078 | | |
Due to affiliates | | 2,925 | | | 3,012 | | |
Dividends payable | | 4,754 | | | 4,754 | | |
Total liabilities | | 2,946,013 | | | 2,944,310 | | |
| | | | | | | |
Commitments and contingencies | | | | | | | |
| | | | | | | |
Shareholders’ equity: | | | | | | | |
Preferred shares of beneficial interest; no par value; | | | | | | | |
100,000,000 shares authorized: | | | | | | | |
Series B preferred shares; 8 7/8% cumulative redeemable; | | | | | | | |
3,450,000 shares issued and outstanding, aggregate liquidation preference $86,250 | | 83,306 | | | 83,306 | | |
Series C preferred shares; 7% cumulative redeemable; | | | | | | | |
12,700,000 shares issued and outstanding, aggregate liquidation preference $317,500 | | 306,833 | | | 306,833 | | |
Common shares of beneficial interest, $0.01 par value; | | | | | | | |
150,000,000 shares authorized; 93,992,635 and 93,991,635 shares issued and outstanding, respectively | | 940 | | | 940 | | |
Additional paid-in capital (1) | | 3,093,691 | | | 3,093,827 | | |
Accumulated other comprehensive loss | | (1,120 | ) | | (511 | ) | |
Cumulative net income | | 1,888,904 | | | 1,827,821 | | |
Cumulative preferred distributions | | (131,111 | ) | | (123,641 | ) | |
Cumulative common distributions | | (2,632,522 | ) | | (2,560,148 | ) | |
Total shareholders’ equity | | 2,608,921 | | | 2,628,427 | | |
| | $ | 5,554,934 | | | $ | 5,572,737 | | |
(1) | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The unamortized note discount was $21,396 and $29,228 at March 31, 2009 and December 31, 2008, respectively, and the equity component was $43,622 and $43,770 at March 31, 2009 and December 31, 2008, respectively. |
12
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
CONSOLIDATED STATEMENT OF INCOME |
(in thousands, except per share data) |
| | | For the Three Months Ended | | |
| | | 3/31/2009 | | | 3/31/2008 | | |
| | | | | | | | |
Revenues: | | | | | | | | |
Hotel operating revenues (1) | | | $ | 175,701 | | | $ | 222,440 | | |
Minimum rent (1)(2) | | | 73,791 | | | 89,956 | | |
FF&E reserve income (3) | | | 4,803 | | | 6,183 | | |
Interest income | | | 48 | | | 600 | | |
Total revenues | | | 254,343 | | | 319,179 | | |
| | | | | | | | |
Expenses: | | | | | | | | |
Hotel operating expenses | | | 111,454 | | | 156,376 | | |
Interest (including amortization of deferred financing costs and debt discounts of $3,357 and $3,397, respectively) (4) | | | 36,541 | | | 39,926 | | |
Depreciation and amortization | | | 61,848 | | | 58,251 | | |
General and administrative | | | 9,599 | | | 11,444 | | |
Total expenses | | | 219,442 | | | 265,997 | | |
| | | | | | | | |
Income before gain on extinguishment of debt, gain on sale of real estate and income taxes | | | 34,901 | | | 53,182 | | |
Gain on extinguishment of debt (5) | | | 26,555 | | | - | | |
Gain on sale of real estate, net (6) | | | - | | | 645 | | |
Income before income taxes | | | 61,456 | | | 53,827 | | |
Income tax expense | | | (373 | ) | | (428 | ) | |
| | | | | | | | |
Net income | | | 61,083 | | | 53,399 | | |
| | | | | | | | |
Preferred distributions | | | (7,470 | ) | | (7,470 | ) | |
Net income available for common shareholders | | | $ | 53,613 | | | $ | 45,929 | | |
| | | | | | | | |
Weighted average common shares outstanding | | | 93,992 | | | 93,893 | | |
| | | | | | | | |
Basic and diluted net income per common share: | | | | | | | | |
Net income available for common shareholders | | | $ | 0.57 | | | $ | 0.49 | | |
See notes to consolidated statement of income on page 14.
13
Hospitality Properties Trust Supplemental Operating and Financial Data March 31, 2009 NOTES TO CONSOLIDATED STATEMENT OF INCOME | |
(in thousands, except per share data) |
(1) | | At March 31, 2009, each of our our 289 hotels are included in one of eleven operating agreements of hotels of which 197 are leased to one of our taxable REIT subsidiaries and managed by independent hotel operating companies and 92 are leased to third parties. Our 185 travel centers are leased under two agreements. Our consolidated statement of income includes hotel operating revenues and expenses of managed hotels and rental income from our leased hotels and travel centers. |
| | |
(2) | | During the three months ended March 31, 2009, TA elected to defer $15,000, or $0.16 per share, of rents under the previously announced rent deferral agreement. We have not recognized the deferred rent as revenue due to uncertainties regarding its payment by TA. |
| | |
(3) | | 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 all the FF&E escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. |
| | |
(4) | | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively. |
| | |
(5) | | During the first quarter of 2009, we recorded a $26,555, or $0.28 per share, gain on the extinguishment of debt relating to the repurchase of our 3.8% convertible senior notes, net of unamortized discounts and issuance costs. |
| | |
(6) | | During the first quarter of 2008, we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and recognized a gain on sale of $645. |
14
Hospitality Properties Trust |
Supplemental Operating and Financial Data |
March 31, 2009 |
|
CONSOLIDATED STATEMENT OF CASH FLOWS (1) |
(in thousands) |
| | For the Three Months Ended | |
| | 3/31/2009 | | | 3/31/2008 | |
| | | | | | |
Cash flows from operating activities: | | | | | | |
Net income | | $ | 61,083 | | | $ | 53,399 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | | | | |
Depreciation and amortization | | 61,848 | | | 58,251 | |
Amortization of deferred financing costs and debt discounts as interest | | 3,367 | | | 3,397 | |
Straight line rental income | | - | | | (3,794 | ) |
Other non-cash (income) expense, net | | (729 | ) | | (781 | ) |
FF&E reserve income and deposits | | (12,379 | ) | | (16,230 | ) |
Gain on extinguishment of debt | | (26,555 | ) | | - | |
Gain on sale of real estate, net | | - | | | (645 | ) |
Change in assets and liabilities: | | | | | | |
Increase in other assets | | (1,172 | ) | | (2,998 | ) |
Decrease in accounts payable and other | | (29,732 | ) | | (35,867 | ) |
(Decrease) increase in due to affiliate | | (87 | ) | | 1,616 | |
Cash provided by operating activities | | 55,644 | | | 56,348 | |
| | | | | | |
Cash flows from investing activities: | | | | | | |
Real estate acquisitions | | (3,016 | ) | | (45,877 | ) |
FF&E reserve fundings | | (45,921 | ) | | (20,235 | ) |
Net proceeds from sale of real estate | | - | | | 7,644 | |
Cash used in investing activities | | (48,937 | ) | | (58,468 | ) |
| | | | | | |
Cash flows from financing activities: | | | | | | |
Repurchase of convertible senior notes | | (87,517 | ) | | - | |
Repayment of senior notes | | - | | | (150,000 | ) |
Draws on revolving credit facility | | 185,000 | | | 303,000 | |
Repayments of revolving credit facility | | (35,000 | ) | | (65,000 | ) |
Deferred financing costs incurred | | - | | | (27 | ) |
Distributions to preferred shareholders | | (7,470 | ) | | (7,470 | ) |
Distributions to common shareholders | | (72,374 | ) | | (72,297 | ) |
Cash (used in) provided by financing activities | | (17,361 | ) | | 8,206 | |
| | | | | | |
(Decrease) increase in cash and cash equivalents | | (10,654 | ) | | 6,086 | |
Cash and cash equivalents at beginning of period | | 22,450 | | | 23,401 | |
Cash and cash equivalents at end of period | | $ | 11,796 | | | $ | 29,487 | |
| | | | | | |
Supplemental cash flow information: | | | | | | |
Cash paid for interest | | $ | 56,388 | | | $ | 58,696 | |
Cash paid for income taxes | | | 130 | | | | 170 | |
| | | | | | |
Non cash investing activities: | | | | | | |
Property managers’ deposits in FF&E reserve | | $ | 11,675 | | | $ | 19,496 | |
Property managers’ purchases with FF&E reserve | | (28,555 | ) | | (22,396 | ) |
(1) | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively. |
15
Hospitality Properties Trust |
Supplemental Operating and Financial Data |
March 31, 2009 |
|
CALCULATION OF EBITDA |
(in thousands) |
| | For the Three Months Ended |
| | 3/31/2009 | | 3/31/2008 |
| | | | | | |
Net income (1)(2) | | $ | 61,083 | | | $ | 53,399 | |
Plus: | Interest expense | | 36,541 | | | 39,926 | |
| Depreciation and amortization | | 61,848 | | | 58,251 | |
| Deferred percentage rent (3) | | 675 | | | 1,552 | |
| Deferred additional returns (4) | | - | | | 3,460 | |
| Income taxes | | 373 | | | 428 | |
Less: | Gain on sale of real estate (5) | | - | | | (645 | ) |
| Gain on extinguishment of debt (6) | | (26,555 | ) | | - | |
EBITDA | | $ | 133,965 | | | $ | 156,371 | |
(1) | | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively. |
(2) | | Net income for the three months ended March 31, 2009 is reduced by a $15,000 rent deferral by TA. We have not recognized the deferred rent as revenue due to uncertainties regarding its payment by TA in the future. |
(3) | | 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 these amounts in the calculation of EBITDA for each quarter of the year. The fourth quarter EBITDA calculation excludes the amounts recognized during the first three quarters. |
(4) | | Our share of the operating results of our managed hotels in excess of the minimum returns due to us, or additional returns, is generally determined based upon annual calculations. We recognize additional returns in the fourth quarter, which is when all contingencies are met and the income is earned. Although we defer recognition of this income until the fourth quarter for purposes of calculating net income, we include these amounts in the calculation of EBITDA for each quarter of the year. The fourth quarter EBITDA calculation excludes the amounts recognized during the first three quarters. |
(5) | | During the first quarter of 2008, we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and recognized a gain on sale of $645. |
(6) | | During the first quarter of 2009, we recorded a $26,555, or $0.28 per share, gain on the extinguishment of debt relating to the repurchase of our 3.8% convertible senior notes. |
We compute EBITDA, or earnings before interest, taxes, depreciation and amortization, as net income plus interest expense, depreciation and amortization expense, income tax expense, deferred percentage rent, deferred additional returns less gain on extinguishment of debt and gain on sale of real estate. Other companies may calculate EBITDA differently than we do. We consider EBITDA to be an appropriate measure of our performance, along with net income and cash flow from operating, investing and financing activities. We believe EBITDA provides useful information to investors because by excluding the effects of certain historical costs, such as interest and depreciation and amortization expense, EBITDA can facilitate a comparison of our current operating performance with our past operating performances and of operating performances among REITs. EBITDA does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or 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.
16
Hospitality Properties Trust |
Supplemental Operating and Financial Data |
March 31, 2009 |
|
CALCULATION OF FUNDS FROM OPERATIONS (FFO) |
(in thousands, except per share data) |
| | For the Three Months Ended |
| | 3/31/2009 | | 3/31/2008 |
| | | | | | |
Net income available for common shareholders (1)(2) | | $ | 53,613 | | | $ | 45,929 | |
Plus: | Depreciation and amortization | | 61,848 | | | 58,251 | |
| Deferred percentage rent (3) | | 675 | | | 1,552 | |
| Deferred additional returns (4) | | - | | | 3,460 | |
Less: | Gain on extinguishment of debt (5) | | (26,555 | ) | | - | |
| Gain on sale of real estate (6) | | - | | | (645 | ) |
FFO available for common shareholders | | $ | 89,581 | | | $ | 108,547 | |
| | | | | | |
Weighted average shares outstanding | | 93,992 | | | 93,893 | |
| | | | | | |
Net income available for common shareholders per share | | $ | 0.57 | | | $ | 0.49 | |
FFO available for common shareholders per share | | $ | 0.95 | | | $ | 1.16 | |
(1) | | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively. |
(2) | | Net income for the three months ended March 31, 2009 is reduced by a $15,000, rent deferral by TA. We have not recognized the deferred rent as revenue due to uncertainties regarding its payment by TA in the future. |
(3) | | 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 these estimated amounts 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) | | Our share of the operating results of our managed hotels in excess of the minimum returns due to us, or additional returns, is generally determined based upon annual calculations. We recognize additional returns in the fourth quarter, which is when all contingencies are met and the income is earned. Although we defer recognition of this income until the fourth quarter for purposes of calculating net income, we include these estimated amounts 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. |
(5) | | During the first quarter of 2009, we recorded a $26,555, or $0.28 per share, gain on the extinguishment of debt relating to the repurchase of our 3.8% convertible senior notes. |
(6) | | During the first quarter of 2008, we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and recognized a gain on sale of $645. |
We compute FFO as shown in the calculation above. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include acquisition costs, if any, deferred percentage rent (see Note 3) and deferred additional returns (see Note 4) and exclude gain on extinguishment of debt (see Note 5). We consider FFO to be an appropriate measure of performance for a real estate investment trust, or 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, FFO can facilitate a 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 one important factor considered by our board of trustees in 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 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.
17
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
SEGMENT INFORMATION (1)
(in thousands)
| | For the Three Months Ended March 31, 2009 | | |
| | Hotels | | | Travel Centers | | | Corporate | | | Consolidated | | |
| | | | | | | | | | | | | |
Hotel operating revenues | | $ | 175,701 | | | $ | - | | | $ | - | | | $ | 175,701 | | |
Minimum rent | | 31,593 | | | 42,198 | | | - | | | 73,791 | | |
FF&E reserve income | | 4,803 | | | - | | | - | | | 4,803 | | |
Interest income | | - | | | - | | | 48 | | | 48 | | |
Total revenues | | 212,097 | | | 42,198 | | | 48 | | | 254,343 | | |
Hotel operating expenses | | (111,454 | ) | | - | | | - | | | (111,454 | ) | |
Operating income | | 100,643 | | | 42,198 | | | 48 | | | 142,889 | | |
| | | | | | | | | | | | | |
Interest expense | | - | | | - | | | 36,541 | | | 36,541 | | |
Depreciation and amortization expense | | 40,409 | | | 21,439 | | | - | | | 61,848 | | |
General and administrative expense | | - | | | - | | | 9,599 | | | 9,599 | | |
Total expenses | | 40,409 | | | 21,439 | | | 46,140 | | | 107,988 | | |
| | | | | | | | | | | | | |
Income (loss) before gain on extinguishment of debt and income taxes | | 60,234 | | | 20,759 | | | (46,092 | ) | | 34,901 | | |
Gain on extinguishment of debt | | - | | | - | | | 26,555 | | | 26,555 | | |
Income (loss) before income taxes | | 60,234 | | | 20,759 | | | (19,537 | ) | | 61,456 | | |
Income tax expense | | - | | | - | | | (373 | ) | | (373 | ) | |
| | | | | | | | | | | | | |
Net income (loss) | | $ | 60,234 | | | $ | 20,759 | | | $ | (19,910 | ) | | $ | 61,083 | | |
| | | | | | | | | | | | | |
Total assets | | $ | 3,195,529 | | | $ | 2,331,011 | | | $ | 28,394 | | | $ | 5,554,934 | | |
| | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2008 | | |
| | Hotels | | | Travel Centers | | | Corporate | | | Consolidated | | |
| | | | | | | | | | | | | |
Hotel operating revenues | | $ | 222,440 | | | $ | - | | | $ | - | | | $ | 222,440 | | |
Minimum rent | | 30,890 | | | 59,066 | | | - | | | 89,956 | | |
FF&E reserve income | | 6,183 | | | - | | | - | | | 6,183 | | |
Interest income | | - | | | - | | | 600 | | | 600 | | |
Total revenues | | 259,513 | | | 59,066 | | | 600 | | | 319,179 | | |
Hotel operating expenses | | (156,376 | ) | | - | | | - | | | (156,376 | ) | |
Operating income | | 103,137 | | | 59,066 | | | 600 | | | 162,803 | | |
| | | | | | | | | | | | | |
Interest expense | | - | | | - | | | 39,926 | | | 39,926 | | |
Depreciation and amortization expense | | 38,428 | | | 19,823 | | | - | | | 58,251 | | |
General and administrative expense | | - | | | - | | | 11,444 | | | 11,444 | | |
Total expenses | | 38,428 | | | 19,823 | | | 51,370 | | | 109,621 | | |
| | | | | | | | | | | | | |
Income (loss) before gain on sale of real estate and income taxes | | 64,709 | | | 39,243 | | | (50,770 | ) | | 53,182 | | |
Gain on sale of real estate | | 645 | | | - | | | - | | | 645 | | |
Income (loss) before income taxes | | 65,354 | | | 39,243 | | | (50,770 | ) | | 53,827 | | |
Income tax expense | | - | | | - | | | (428 | ) | | (428 | ) | |
| | | | | | | | | | | | | |
Net income (loss) | | $ | 65,354 | | | $ | 39,243 | | | $ | (51,198 | ) | | $ | 53,399 | | |
| | | | | | | | | | | | | |
Total assets | | $ | 3,246,441 | | | $ | 2,408,652 | | | $ | 54,115 | | | $ | 5,709,208 | | |
(1) All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. The implementation of FSP 14-1 resulted in non-cash interest expense for the three months ended March 31, 2009 and 2008 of $2,438, or $.02 per share, and $2,357, or $0.03 per share, respectively.
18
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
(dollars in thousands)
| | Interest | | | Principal | | | Maturity | | | Years to | | |
| | Rate | | | Balance | | | Date | | | Maturity | | |
| | | | | | | | | | | | | |
Secured Fixed Rate Debt: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Mortgage - secured by one hotel in Overland Park, KS | | 8.300 | % | | $ | 3,537 | | | 07/01/11 | | | 2.3 | | |
| | | | | | | | | | | | | |
Unsecured Debt: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Unsecured Floating Rate Debt: | | | | | | | | | | | | | |
Revolving credit facility (LIBOR + 55 bps) (1) | | 1.080 | % | | $ | 546,000 | | | 10/24/10 | | | 1.6 | | |
| | | | | | | | | | | | | |
Unsecured Fixed Rate Debt: | | | | | | | | | | | | | |
Senior notes due 2010 | | 9.125 | % | | $ | 50,000 | | | 07/15/10 | | | 1.3 | | |
Senior notes due 2012 | | 6.850 | % | | 125,000 | | (2) | 07/15/12 | | | 3.3 | | |
Senior notes due 2013 | | 6.750 | % | | 300,000 | | (3) | 02/15/13 | | | 3.9 | | |
Senior notes due 2015 | | 5.125 | % | | 300,000 | | (4) | 02/15/15 | | | 5.9 | | |
Senior notes due 2016 | | 6.300 | % | | 275,000 | | | 06/15/16 | | | 7.2 | | |
Senior notes due 2017 | | 5.625 | % | | 300,000 | | | 03/15/17 | | | 8.0 | | |
Senior notes due 2018 | | 6.700 | % | | 350,000 | | | 01/15/18 | | | 8.8 | | |
Convertible senior notes due 2027 | | 3.800 | % | | 453,670 | | (5) | 03/15/27 | | (6) | 18.0 | | |
Total / weighted average unsecured fixed rate debt | | 5.741 | % | | $ | 2,153,670 | | | | | | 8.8 | | |
| | | | | | | | | | | | | |
Weighted average secured fixed rate debt / total | | 8.300 | % | | $ | 3,537 | | | | | | 2.3 | | |
Weighted average unsecured floating rate debt / total | | 1.080 | % | | 546,000 | | | | | | 1.6 | | |
Weighted average unsecured fixed rate debt / total | | 5.741 | % | | 2,153,670 | | | | | | 8.8 | | |
Weighted average debt / total | | 4.803 | % | | $ | 2,703,207 | | | | | | 7.4 | | |
(1) | Represents amounts outstanding on our $750 million revolving credit facility at March 31, 2009. Subject to certain conditions, at our option, this facility’s maturity date can be extended to October 24, 2011 upon our payment of a fee. Interest rate is as of March 31, 2009. |
| |
(2) | In April and May of 2009, we repurchased $24.2 million of our 6.85% senior notes at a total cost of $20.6 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(3) | In April 2009, we repurchased $13.0 million of our 6.75% senior notes at a total cost of $10.4 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(4) | In April 2009, we repurchased $20.0 million of our 5.125% senior notes at a total cost of $14.2 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(5) | During the first quarter of 2009, we repurchased $121.3 million of our convertible senior notes at a total cost of $87.5 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(6) | The convertible senior notes are convertible if certain conditions are met (including certain changes in control) into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the initial exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 20, 2012, March 15, 2017, and March 15, 2022, or upon the occurrence of certain change in control events prior to March 20, 2012. |
19
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
(dollars in thousands)
| | Scheduled Principal Payments During Period | |
| | | | | | | | | | | | | |
| | Secured | | | Unsecured | | | Unsecured | | | | | |
| | Fixed Rate | | | Floating | | | Fixed | | | | | |
Year | | Debt | | | Rate Debt | | | Rate Debt | | | Total | | |
2009 | | $ | 63 | | | $ | - | | | $ | - | | | $ | 63 | | |
2010 | | 91 | | | 546,000 | | (1) | 50,000 | | | 596,091 | | |
2011 | | 3,383 | | | - | | | - | | | 3,383 | | |
2012 | | - | | | - | | | 125,000 | | (2) | 125,000 | | |
2013 | | - | | | - | | | 300,000 | | (3) | 300,000 | | |
2014 | | - | | | - | | | - | | | - | | |
2015 | | - | | | - | | | 300,000 | | (4) | 300,000 | | |
2016 | | - | | | - | | | 275,000 | | �� | 275,000 | | |
2017 | | - | | | - | | | 300,000 | | | 300,000 | | |
2018 | | - | | | - | | | 350,000 | | | 350,000 | | |
2027 | | - | | | - | | | 453,670 | | (5)(6) | 453,670 | | |
| | $ | 3,537 | | | $ | 546,000 | | | $ | 2,153,670 | | | $ | 2,703,207 | | |
(1) | Represents amounts outstanding on our $750 million revolving credit facility at March 31, 2009. Subject to certain conditions, at our option, this facility’s maturity date can be extended to October 24, 2011 upon our payment of a fee. |
| |
(2) | In April and May of 2009, we repurchased $24.2 million of our 6.85% senior notes at a total cost of $20.6 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(3) | In April 2009, we repurchased $13.0 million of our 6.75% senior notes at a total cost of $10.4 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(4) | In April 2009, we repurchased $20.0 million of our 5.125% senior notes at a total cost of $14.2 million, excluding accrued interest, using borrowings under our revolving credit facility. |
| |
(5) | The convertible senior notes are convertible if certain conditions are met (including certain changes in control) into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the initial exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 20, 2012, March 15, 2017, and March 15, 2022, or upon the occurrence of certain change in control events prior to March 20, 2012. |
| |
(6) | During the first quarter of 2009, we repurchased $121.3 million of our convertible senior notes at a total cost of $87.5 million, excluding accrued interest, using borrowings under our revolving credit facility. |
20
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
| | As of and For the Three Months Ended |
| | 3/31/2009 | | | 12/31/2008 | | | 9/30/2008 | | | 6/30/2008 | | | 3/31/2008 | |
Leverage Ratios: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total debt / total assets | | 48.2% | | | 47.4% | | | 47.3% | | | 46.8% | | | 46.1% | |
Total debt / real estate assets, at cost | | 41.6% | | | 41.2% | | | 41.6% | | | 41.6% | | | 42.0% | |
Total debt / total book capitalization | | 50.6% | | | 50.1% | | | 49.9% | | | 49.5% | | | 48.5% | |
Total debt / total market capitalization | | 66.9% | | | 62.0% | | | 55.4% | | | 50.5% | | | 42.7% | |
Secured debt / total assets | | 0.1% | | | 0.1% | | | 0.1% | | | 0.1% | | | 0.1% | |
Variable rate debt / total debt | | 20.4% | | | 15.0% | | | 15.4% | | | 15.2% | | | 15.0% | |
| | | | | | | | | | | | | | | |
Coverage Ratios: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
EBITDA (1) / interest expense (2) | | 3.7x | | | 3.4x | | | 3.7x | | | 3.6x | | | 3.9x | |
EBITDA (1) / interest expense and preferred distributions (2) | | 3.0x | | | 2.9x | | | 3.1x | | | 3.1x | | | 3.3x | |
| | | | | | | | | | | | | | | |
Public Debt Covenants: (3) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total debt / adjusted total assets - allowable maximum 60.0% | | 41.4% | | | 41.2% | | | 41.7% | | | 41.7% | | | 41.9% | |
Secured debt / adjusted total assets - allowable maximum 40.0% | | 0.1% | | | 0.1% | | | 0.1% | | | 0.1% | | | 0.1% | |
Consolidated income available for debt service / debt service - required minimum 1.50x | | 3.63x | | | 3.93x | | | 3.41x | | | 3.23x | | | 3.69x | |
Total unencumbered assets to unsecured debt - required minimum 150% / 200% | | 241.4% | | | 242.8% | | | 240.2% | | | 240.2% | | | 238.6% | |
(1) | See page 16 for our calculation of EBITDA. |
| |
(2) | All periods presented reflect the retroactive application of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”, or FSP 14-1. Interest expense includes additional non-cash interest of $2,348, $2,473, $2,434, $2,396 and $2,357 for the three months ending March 31, 2009, December 31, September 30, June 30 and March 31 2008, respectively, resulting from the adoption of FSP 14-1. |
| |
(3) | Adjusted total assets and unencumbered assets include original cost of real estate assets and acquisition costs less impairment write downs and exclude depreciation and amortization, accounts receivable and intangible assets. Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, loss on asset impairment, gains and losses on sales of property and amortization of deferred charges. Debt service excludes non-cash interest expense reulsting from the adoption of FSP 14-1. |
21
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
(dollars in thousands)
| | As of and For the Three Months Ended | |
HPT Owned: | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | |
| | | | | | | | | | | |
FF&E reserves (beginning of period) | | $ 32,026 | | $ 37,485 | | $ 37,003 | | $ 45,469 | | $ 28,134 | |
Manager deposits | | 11,675 | | 17,286 | | 18,732 | | 16,246 | | 19,496 | |
HPT fundings (2): | | | | | | | | | | | |
Carlson | | - | | - | | - | | 125 | | 172 | |
Marriott | | 5,022 | | 4,881 | | 829 | | 5,431 | | 9,772 | |
Hyatt | | - | | - | | 1,000 | | 1,500 | | 600 | |
InterContinental | | 4,846 | | - | | - | | - | | 9,691 | |
Hotel improvements | | (28,555) | | (27,626) | | (20,079) | | (31,768) | | (22,396) | |
FF&E reserves (end of period) | | $ 25,014 | | $ 32,026 | | $ 37,485 | | $ 37,003 | | $ 45,469 | |
(1) | | Generally, each of our hotel operating agreements require the deposit of a percentage of gross hotel revenues into escrows to fund periodic hotel renovations, or FF&E reserves. For recently built or renovated hotels, this requirement may be deferred for a period. We own all the FF&E reserve escrows for our hotels. |
| | |
(2) | | Represents FF&E reserve deposits not funded by hotel operations, but separately funded by us. The operating agreements for our hotels generally provide that, if necessary, we will provide FF&E funding in excess of escrowed reserves. To the extent we make such fundings, our annual minimum returns or rent generally increases by a percentage of the amounts we fund. |
22
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
2009 ACQUISITIONS AND DISPOSITIONS INFORMATION
(dollars in thousands)
2009 ACQUISITIONS (through 3/31/2009):
| | | | | | | | Number | | | | | | Purchase | |
Date | | | | | | | | of Rooms | | Operating | | Purchase | | Price per | |
Acquired | | Properties | | Brand | | Location | | / Suites | | Agreement | | Price | | Room / Suite | |
| | | | | | | | | | | | | | | |
There were no acquisitions during the three months ended March 31, 2009. |
2009 DISPOSITIONS (through 3/31/09):
| | | | | | | | Number | | | | | | Sales | |
Date | | | | | | | | of Rooms | | Operating | | Sales | | Price per | |
Disposed | | Properties | | Brand | | Location | | / Suites | | Agreement | | Price | | Room / Suite | |
| | | | | | | | | | | | | | | |
There were no dispositions during the three months ended March 31, 2009. |
23
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
2009 FINANCING ACTIVITIES
(share amounts and dollars in thousands)
| | For the Three Months
Ended | |
| | 3/31/2009 | |
| | | |
Debt Transactions: (1) | | | |
New debt raised | | $ | - | |
Total new debt | | - | |
| | | |
Debt repurchased and retired (2) | | (121,330) | |
Net debt | | $ | (121,330) | |
| | | |
Equity Transactions: | | | |
New common shares issued | | - | |
New common equity raised, net | | $ | - | |
| | | |
New preferred shares issued | | - | |
New preferred equity raised, net | | $ | - | |
Total new equity | | $ | - | |
(1) Excludes drawings and repayments under our revolving credit facility.
(2) During the first quarter of 2009, we repurchased $121.3 million face amount of our convertible senior notes at a total cost of $87.5 million, excluding accrued interest, using borrowings under our revolving credit facility. For financial reporting purposes, the carrying value of the notes repurchased were net of unamortized issuance costs of $1,553 and unamortized discounts of $5,853 resulting from the adoption of FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”.
24
OPERATING AGREEMENTS
AND PORTFOLIO INFORMATION
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
SUMMARY OF OPERATING AGREEMENTS
(dollars in thousands)
Operating Agreement | | Marriott (no. 1) | | Marriott (no. 2) | | Marriott (no. 3) | | Marriott (no. 4) | | Marriott (no. 5) | | InterContinental (no. 1) | | InterContinental (no. 2) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Number of Properties | | 53 | | 18 | | 34 | | 19 | | 1 | | 31 | | 76 | |
| | | | | | | | | | | | | | | |
Number of Rooms / Suites | | 7,610 | | 2,178 | | 5,020 | | 2,756 | | 356 | | 3,844 | | 9,220 | |
| | | | | | | | | | | | | | | |
Property Brands | | Courtyard by Marriott® | | Residence Inn by Marriott® | | Marriott® / Residence Inn by Marriott® / Courtyard by Marriott® / TownePlace Suites by Marriott® / SpringHill Suites by Marriott® | | Residence Inn by Marriott® / Courtyard by Marriott® / TownePlace Suites by Marriott® / SpringHill Suites by Marriott® | | Marriott® | | Staybridge Suites® | | Candlewood Suites® | |
| | | | | | | | | | | | | | | |
Number of States | | 24 | | 14 | | 14 | | 14 | | 1 | | 16 | | 29 | |
| | | | | | | | | | | | | | | |
Manager | | Subsidiary of Marriott International | | Subsidiary of Marriott International | | Subsidiaries of Marriott International | | Subsidiaries of Marriott International | | Subsidiary of Marriott International | | Subsidiary of InterContinental | | Subsidiary of InterContinental | |
| | | | | | | | | | | | | | | |
Tenant | | Subsidiary of Host Hotels & Resorts Subleased to Subsidiary of Barcelo Crestline | | Subsidiary of Host Hotels & Resorts Subleased to Subsidiary of Barcelo Crestline | | Our TRS | | Subsidiary of Barcelo Crestline | | Subsidiary of Marriott International | | Our TRS | | Our TRS | |
| | | | | | | | | | | | | | | |
Investment at March 31, 2009 (1) | | $590,160 | | $211,836 | | $427,544 | | $274,222 | | $83,735 | | $436,708 | | $589,405 | |
| | | | | | | | | | | | | | | |
End of Current Term | | 2012 | | 2010 | | 2019 | | 2015 | | 2019 | | 2031 | | 2028 | |
| | | | | | | | | | | | | | | |
Renewal Options (2) | | 3 for 12 years each | | (3) | | 2 for 15 years each | | 2 for 10 years each | | 4 for 15 years each | | 2 for 12.5 years each | | 2 for 15 years each | |
| | | | | | | | | | | | | | | |
Annual Minimum Return / Minimum Rent | | $58,878 | | $21,165 | | $44,200 | | $28,508 | | $8,811 | | $37,882 | | $50,000 | |
| | | | | | | | | | | | | | | |
Additional Return (4) | | -- | | -- | | $711 | | -- | | -- | | -- | | $10,000 | |
| | | | | | | | | | | | | | | |
Percentage Return / Rent (5) | | 5% of revenues above 1994/95 revenues | | 7.5% of revenues above 1996 revenues | | 7% of revenues above 2000/01 revenues | | 7% of revenues above 1999/2000 revenues | | CPI based calculation | | 7.5 %of revenues above 2004/06/08 revenues | | 7.5% of revenues above 2006/07 revenues | |
| | | | | | | | | | | | | | | |
Security Deposit | | $50,540 | | $17,220 | | $36,204 (6) | | 28,508 (7) | | -- | | $36,872 (8) | | -- | |
| | | | | | | | | | | | | | | |
Other Security Features | | HPT controlled lockbox with minimum balance maintenance requirement; subtenant and subtenant parent minimum net worth requirement | | HPT controlled lockbox with minimum balance maintenance requirement; subtenant and subtenant parent minimum net worth requirement | | | | Tenant minimum net worth requirement | | Marriott guarantee; parent minimum net worth requirement | | Limited guarantee provided by InterContinental; parent minimum net worth requirement | | Limited guarantee provided by InterContinental; parent minimum net worth requirement | |
(1) | Excludes expenditures made from FF&E reserves funded from hotel operations, but includes amounts funded by us separately. |
(2) | Renewal options may be exercised by the manager or tenant for all, but not less than all, of the properties within each combination. |
(3) | On November 13, 2008, we were notified by the tenant that it will not exercise its renewal option at the end of the current lease term. Upon expiration of the agreement, we expect to lease these hotels one of our these to TRSs and the hotel brands and management agreement with Marriott are currently not expected to change. |
(4) | These management agreements provide for annual additional return payments in the amount listed, to the extent of available cash flow after payment of operating costs, funding of the FF&E reserve, payment of our minimum return and payment of certain management fees. These amounts are generally not guaranteed or secured by deposits. |
(5) | Each management contract or lease provides for payment to us of a percentage of increases in total property sales over a base year level as additional return or rent. |
(6) | Marriott’s payment due on March 27, 2009, for this agreement was deficient in the amount of $838. On April 9, 2009, we applied $838 of this deposit to cover the minimum return deficiency. On April 24, 2009, we did not receive the $3,409 payment due from Marriott under this agreement. On May 7, 2009, we applied $3,409 of this deposit to cover the minimum return deficiency. As of May 7, 2009 the balance of this security deposit is $31,957. |
(7) | On April 24, 2009, we did not receive the $2,193 payment due from Crestline under this agreement. On May 7, 2009, we applied $2,193 of this deposit to cover the minimum return deficiency. As of May 7, 2009 the balance of this security deposit is $26,315. |
(8) | A single $36,872 deposit secures InterContinental’s obligations under the InterContinental No. 1, No. 3 and No. 4 portfolios. |
26
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
SUMMARY OF OPERATING AGREEMENTS
(dollars in thousands)
Operating Agreement | | InterContinental (no. 3) | | InterContinental (no. 4) | | Hyatt | | Carlson | | TA (no. 1) | | TA (no. 2) | | Total / Range / Average
(all investments) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Number of Properties | | 14 | | 10 | | 22 | | 11 | | 145 | | 40 | | 474 | |
| | | | | | | | | | | | | | | |
Number of Rooms / Suites | | 4,139 | | 2,937 | | 2,725 | | 2,096 | | (1) | | -- | | 42,881 (1) | |
| | | | | | | | | | | | | | | |
Property Brands | | InterContinental® / Crowne Plaza® / Holiday Inn® / Staybridge Suites® | | Crowne Plaza® / Staybridge Suites® | | AmeriSuites® / Hyatt PlaceTM | | Radisson Hotels & Resorts® / Park Plaza® Hotels & Resorts / Country Inn & Suites by CarlsonSM | | TravelCenters of America® | | Petro Stopping Centers® | | 17 Brands | |
| | | | | | | | | | | | | | | |
Number of States | | 7 plus Ontario and Puerto Rico | | 5 | | 14 | | 7 | | 39 | | 25 | | 44 plus Ontario and Puerto Rico | |
| | | | | | | | | | | | | | | |
Manager | | Subsidiaries of InterContinental | | Subsidiaries of InterContinental | | Subsidiary of Hyatt | | Subsidiary of Carlson | | TA | | TA | | 5 Managers | |
| | | | | | | | | | | | | | | |
Tenant | | Our TRS and a subsidiary of InterContinental | | Our TRS | | Our TRS | | Our TRS | | Subsidiary of TA | | Subsidiary of TA | | 5 Tenants | |
| | | | | | | | | | | | | | | |
Investment at March 31, 2009 (2) | | $512,373 | | $245,186 | | $299,342 | | $202,251 | | $1,835,192 | | $705,506 | | 6,413,460 | |
| | | | | | | | | | | | | | | |
End of Current Term | | 2029 | | 2030 | | 2030 | | 2030 | | 2022 | | 2024 | | 2010-2031 | |
| | | | | | | | | | | | | | | |
Renewal Options (3) | | 2 for 15 years each | | 2 for 15 years each | | 2 for 15 years each | | 2 for 15 years each | | N/A | | 2 for 15 years each | | | |
| | | | | | | | | | | | | | | |
Annual Minimum Return / Minimum Rent | | $44,258 | | $21,542 | | $21,777 | | $12,920 | | $163,953 (4)(5) | | $66,177 (4) | | $580,071 | |
| | | | | | | | | | | | | | | |
Additional Return (6) | | $3,458 | | $1,750 | | 50% of cash flow in excess of minimum return (7) | | 50% of cash flow in excess of minimum return (7) | | -- | | -- | | $15,919 | |
| | | | | | | | | | | | | | | |
Percentage Return / Rent (8) | | 7.5% of revenues above 2006/07 revenues | | 7.5% of revenues above 2007 revenues | | -- | | -- | | 3% of non-fuel revenues and 0.3% of fuel revenues above 2011 revenues | | 3% of non-fuel revenues and 0.3% of fuel revenues above 2012 revenues | | | |
| | | | | | | | | | | | | | | |
Security Deposit | | $36,872 (9) | | $36,872 (9) | | -- | | -- | | -- | | -- | | $169,344 | |
| | | | | | | | | | | | | | | |
Other Security Features | | Limited guarantee provided by InterContinental; parent minimum net worth requirement | | Limited guarantee provided by InterContinental; parent minimum net worth requirement | | Limited guarantee provided by Hyatt; parent minimum net worth requirement | | Limited guarantee provided by Carlson; parent minimum net worth requirement | | TA guarantee | | TA guarantee | | | |
(1) | 18 of our TA properties include hotels. The rooms associated with these hotels have been excluded from total hotel rooms. |
(2) | Excludes expenditures made from FF&E reserves funded from hotel operations, but includes amounts funded by us separately. |
(3) | Renewal options may be exercised by the manager or tenant for all, but not less than all, of the properties within each combination. |
(4) | Effective July 1, 2008, we entered a rent deferral arrangement with TA which provides TA the option to defer payments of up to $5 million per month of rent under the two leases for the period July 1, 2008 until December 31, 2010. For the three months ended March, 31, 2009, TA deferred $15 million in rents. TA rents presented in this report represent their contractual obligation and do not reflect any rent deferral. |
(5) | The amount of minimum rent payable to us by TA is scheduled to increase to $167,641, $172,605 and $177,672 in 2010, 2011 and 2012, respectively. |
(6) | These management agreements provide for annual additional return payments in the amount listed, to the extent of available cash flow after payment of operating costs, funding of the FF&E reserve, payment of our minimum return and payment of certain management fees. These amounts are not guaranteed or secured by deposits. |
(7) | These management agreements provide for payment to us of 50% of available cash flow after payment of operating costs, funding the FF&E reserve, payment of our minimum return and reimbursement to the managers of working capital and guaranty advances, if any. |
(8) | Each management contract or lease provides for payment to us of a percentage of increases in total property sales over a base year level as additional return or rent. |
(9) | A single $36,872 deposit secures InterContinental’s obligations under the InterContinental No. 1, No. 3 and No. 4 portfolios. |
27
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
PORTFOLIO BY OPERATING AGREEMENT, MANAGER AND BRAND
(dollars in thousands)
| | | | Percent of | | | | Percent of | | | | | | | | Annual | | Percent of | |
| | Number of | | Number of | | Number of | | Number of | | | | Percent of | | Investment per | | Minimum | | Minimum | |
| | Properties | | Properties | | Rooms / Suites (1) | | Rooms / Suites (1) | | Investment (2) | | Investment | | Room / Suite | | Return / Rent | | Return / Rent | |
By Operating Agreement: | | | | | | | | | | | | | | | | | | | |
InterContinental (no. 1) | | 31 | | 7% | | 3,844 | | 9% | | $ | 436,708 | | 7% | | $ | 114 | | $ | 37,882 | | 7% | |
InterContinental (no. 2) | | 76 | | 16% | | 9,220 | | 21% | | 589,405 | | 9% | | 64 | | 50,000 | | 9% | |
InterContinental (no. 3) | | 14 | | 3% | | 4,139 | | 10% | | 512,373 | | 8% | | 124 | | 44,258 | | 8% | |
InterContinental (no. 4) | | 10 | | 2% | | 2,937 | | 7% | | 245,186 | | 4% | | 83 | | 21,542 | | 3% | |
Marriott (no. 1) | | 53 | | 11% | | 7,610 | | 18% | | 590,160 | | 9% | | 78 | | 58,878 | | 9% | |
Marriott (no. 2) | | 18 | | 4% | | 2,178 | | 5% | | 211,836 | | 3% | | 97 | | 21,165 | | 3% | |
Marriott (no. 3) | | 34 | | 7% | | 5,020 | | 12% | | 427,544 | | 7% | | 85 | | 44,200 | | 8% | |
Marriott (no. 4) | | 19 | | 4% | | 2,756 | | 6% | | 274,222 | | 4% | | 100 | | 28,508 | | 5% | |
Marriott (no. 5) | | 1 | | - | | 356 | | 1% | | 83,735 | | 1% | | 235 | | 8,811 | | 2% | |
Hyatt | | 22 | | 5% | | 2,725 | | 6% | | 299,342 | | 5% | | 110 | | 21,777 | | 4% | |
Carlson | | 11 | | 2% | | 2,096 | | 5% | | 202,251 | | 3% | | 96 | | 12,920 | | 2% | |
TA (no. 1) (3)(4) | | 145 | | 31% | | N/A | | N/A | | 1,835,192 | | 29% | | N/A | | 163,953 | | 29% | |
TA (no. 2) (3) | | 40 | | 8% | | N/A | | N/A | | 705,506 | | 11% | | N/A | | 66,177 | | 11% | |
Total | | 474 | | 100% | | 42,881 | | 100% | | $ | 6,413,460 | | 100% | | $ | 90 | | $ | 580,071 | | 100% | |
| | | | | | | | | | | | | | | | | | | |
By Manager: | | | | | | | | | | | | | | | | | | | |
InterContinental | | 131 | | 28% | | 20,140 | | 47% | | $ | 1,783,672 | | 28% | | $ | 89 | | $ | 153,682 | | 26% | |
Marriott International | | 125 | | 27% | | 17,920 | | 42% | | 1,587,497 | | 24% | | 89 | | 161,562 | | 28% | |
Hyatt | | 22 | | 5% | | 2,725 | | 6% | | 299,342 | | 5% | | 110 | | 21,777 | | 4% | |
Carlson | | 11 | | 2% | | 2,096 | | 5% | | 202,251 | | 3% | | 96 | | 12,920 | | 2% | |
TA (3)(4) | | 185 | | 38% | | N/A | | N/A | | 2,540,698 | | 40% | | N/A | | 230,130 | | 40% | |
Total | | 474 | | 100% | | 42,881 | | 100% | | $ | 6,413,460 | | 100% | | $ | 90 | | $ | 580,071 | | 100% | |
By Brand: | | | | | | | | | | | | | | | | | | | |
AmeriSuites® / Hyatt PlaceTM | | 22 | | 5% | | 2,725 | | 6% | | $ | 299,342 | | 5% | | $ | 110 | | | | | |
Candlewood Suites® | | 76 | | 16% | | 9,220 | | 22% | | 589,387 | | 9% | | 64 | | | | | |
Country Inn & Suites by CarlsonSM | | 5 | | 1% | | 753 | | 2% | | 74,827 | | 1% | | 99 | | | | | |
Courtyard by Marriott® | | 71 | | 15% | | 10,281 | | 24% | | 850,617 | | 13% | | 83 | | | | | |
Crowne Plaza® | | 12 | | 3% | | 4,406 | | 10% | | 371,431 | | 6% | | 84 | | | | | |
Holiday Inn® | | 3 | | 1% | | 697 | | 2% | | 36,010 | | 1% | | 52 | | | | | |
InterContinental® | | 5 | | 1% | | 1,479 | | 3% | | 309,949 | | 5% | | 210 | | | | | |
Marriott Hotels® | | 3 | | 1% | | 1,349 | | 3% | | 154,316 | | 2% | | 114 | | | | | |
Park Plaza® Hotels & Resorts | | 1 | | 0% | | 209 | | 0% | | 11,533 | | 0% | | 55 | | | | | |
Radisson Hotels & Resorts® | | 5 | | 1% | | 1,134 | | 3% | | 115,890 | | 2% | | 102 | | | | | |
Residence Inn by Marriott® | | 37 | | 8% | | 4,695 | | 11% | | 457,552 | | 7% | | 97 | | | | | |
SpringHill Suites by Marriott® | | 2 | | 0% | | 264 | | 1% | | 20,880 | | 0% | | 79 | | | | | |
Staybridge Suites® | | 35 | | 7% | | 4,338 | | 10% | | 476,895 | | 7% | | 110 | | | | | |
TownePlace Suites by Marriott® | | 12 | | 3% | | 1,331 | | 3% | | 104,133 | | 2% | | 78 | | | | | |
TravelCenters of America® | | 145 | | 30% | | N/A | | N/A | | 1,835,192 | | 29% | | N/A | | | | | |
Petro Stopping Centers® | | 40 | | 8% | | N/A | | N/A | | 705,506 | | 11% | | N/A | | | | | |
Total | | 474 | | 100% | | 42,881 | | 100% | | $ | 6,413,460 | | 100% | | $ | 90 | | | | | |
(1) 18 of our TA properties include a hotel. The rooms associated with these hotels have been excluded from total hotel rooms.
(2) Includes intangibles acquired by us at the time of the our investments in the TA lease no. 1 of 145 TravelCenters of America properties. Excludes expenditures made from FF&E reserves funded from hotel operations, but includes amounts separately funded by us.
(3) Effective July 1, 2008, we entered a rent deferral arrangement with TA which provides TA the option to defer payments of up to $5 million per month of rent under the two leases for the period July 1, 2008 until December 31, 2010. As of March 31, 2009, TA deferred $45 million in rents. TA rents presented in this report represent their contractural obligation and do not reflect any rent deferral.
(4) The amount of annual minimum rent payable to us by TA is scheduled to increase to $167,641, $172,605 and $177,672 in 2010, 2011 and 2012, respectively.
28
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
| OPERATING STATISTICS BY HOTEL OPERATING AGREEMENT | |
| | No. of | | No. of
Rooms / | | First Quarter (1) | |
| | Hotels | | Suites | | 2009 | | 2008 | | Change | |
ADR | | | | | | | | | | | |
InterContinental (no. 1) | | 31 | | 3,844 | | $ | 108.18 | | $ | 115.06 | | -6.0% | |
InterContinental (no. 2) | | 76 | | 9,220 | | 67.53 | | 72.18 | | -6.4% | |
InterContinental (no. 3) | | 14 | | 4,139 | | 130.49 | | 147.76 | | -11.7% | |
InterContinental (no. 4) | | 10 | | 2,937 | | 100.62 | | 115.16 | | -12.6% | |
Marriott (no. 1) | | 53 | | 7,610 | | 117.52 | | 128.78 | | -8.7% | |
Marriott (no. 2) | | 18 | | 2,178 | | 108.66 | | 121.96 | | -10.9% | |
Marriott (no. 3) | | 34 | | 5,020 | | 104.24 | | 110.80 | | -5.9% | |
Marriott (no. 4) | | 19 | | 2,756 | | 115.96 | | 128.59 | | -9.8% | |
Marriott (no. 5) | | 1 | | 356 | | 213.97 | | 235.91 | | -9.3% | |
Hyatt | | 22 | | 2,725 | | 98.01 | | 108.07 | | -9.3% | |
Carlson | | 11 | | 2,096 | | 95.77 | | 110.90 | | -13.6% | |
Total | | 289 | | 42,881 | | $ | 102.42 | | $ | 112.34 | | -8.8% | |
| | | | | | | | | | | |
OCCUPANCY | | | | | | | | | | | |
InterContinental (no. 1) | | 31 | | 3,844 | | 63.6% | | 71.9% | | -8.3 pt | |
InterContinental (no. 2) | | 76 | | 9,220 | | 60.5% | | 69.6% | | -9.1 pt | |
InterContinental (no. 3) | | 14 | | 4,139 | | 67.3% | | 73.5% | | -6.2 pt | |
InterContinental (no. 4) | | 10 | | 2,937 | | 59.6% | | 68.7% | | -9.1 pt | |
Marriott (no. 1) | | 53 | | 7,610 | | 53.8% | | 62.8% | | -9.0 pt | |
Marriott (no. 2) | | 18 | | 2,178 | | 62.2% | | 66.2% | | -4.0 pt | |
Marriott (no. 3) | | 34 | | 5,020 | | 57.5% | | 67.2% | | -9.7 pt | |
Marriott (no. 4) | | 19 | | 2,756 | | 61.0% | | 70.9% | | -9.9 pt | |
Marriott (no. 5) | | 1 | | 356 | | 73.3% | | 83.1% | | -9.8 pt | |
Hyatt | | 22 | | 2,725 | | 60.7% | | 65.7% | | -5.0 pt | |
Carlson | | 11 | | 2,096 | | 56.3% | | 65.6% | | -9.3 pt | |
Total | | 289 | | 42,881 | | 59.9% | | 68.3% | | -8.4 pt | |
| | | | | | | | | | | |
RevPAR | | | | | | | | | | | |
InterContinental (no. 1) | | 31 | | 3,844 | | $ | 68.80 | | $ | 82.73 | | -16.8% | |
InterContinental (no. 2) | | 76 | | 9,220 | | 40.86 | | 50.24 | | -18.7% | |
InterContinental (no. 3) | | 14 | | 4,139 | | 87.82 | | 108.60 | | -19.1% | |
InterContinental (no. 4) | | 10 | | 2,937 | | 59.97 | | 79.11 | | -24.2% | |
Marriott (no. 1) | | 53 | | 7,610 | | 63.23 | | 80.87 | | -21.8% | |
Marriott (no. 2) | | 18 | | 2,178 | | 67.59 | | 80.74 | | -16.3% | |
Marriott (no. 3) | | 34 | | 5,020 | | 59.94 | | 74.46 | | -19.5% | |
Marriott (no. 4) | | 19 | | 2,756 | | 70.74 | | 91.17 | | -22.4% | |
Marriott (no. 5) | | 1 | | 356 | | 156.84 | | 196.04 | | -20.0% | |
Hyatt | | 22 | | 2,725 | | 59.49 | | 71.00 | | -16.2% | |
Carlson | | 11 | | 2,096 | | 53.92 | | 72.75 | | -25.9% | |
Total | | 289 | | 42,881 | | $ | 61.35 | | $ | 76.73 | | -20.0% | |
(1) Includes data for the calendar periods indicated, except for our Marriott® branded hotels, which include data for comparable fiscal periods.
“ADR” is average daily rate; “RevPAR” is revenue per available room. All operating data presented are based upon the operating results provided by our managers and tenants for the indicated periods. We have not independently verified our managers’ and tenants’ operating data.
29
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
COVERAGE BY OPERATING AGREEMENT (1)
| | For the Twelve Months Ended (2) | |
Operating Agreement | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | |
InterContinental (no. 1) | | 1.03x | | 1.13x | | 1.15x | | 1.14x | | 1.12x | |
InterContinental (no. 2) | | 1.25x | | 1.38x | | 1.42x | | 1.42x | | 1.42x | |
InterContinental (no. 3) | | 1.08x | | 1.23x | | 1.32x | | 1.36x | | 1.37x | |
InterContinental (no. 4) | | 0.82x | | 1.02x | | 1.15x | | 1.18x | | 1.30x | |
Marriott (no. 1) | | 1.34x | | 1.47x | | 1.56x | | 1.60x | | 1.62x | |
Marriott (no. 2) | | 1.05x | | 1.13x | | 1.21x | | 1.20x | | 1.25x | |
Marriott (no. 3) | | 1.09x | | 1.17x | | 1.24x | | 1.26x | | 1.26x | |
Marriott (no. 4) | | 1.04x | | 1.15x | | 1.21x | | 1.22x | | 1.23x | |
Marriott (no. 5) | | 0.23x | | 0.37x | | 0.48x | | 0.61x | | 0.76x | |
Hyatt | | 0.98x | | 1.07x | | 1.00x | | 0.86x | | 0.70x | |
Carlson | | 1.20x | | 1.42x | | 1.51x | | 1.61x | | 1.66x | |
TA (no. 1) (3)(4) | | 1.48x | | 1.43 | | 1.24x | | 1.18x | | 1.20x | |
TA (no. 2) (3)(4) | | 1.57x | | 1.51 | | 1.32x | | 1.16x | | 1.09x | |
| | | | | | | | | | | |
| | For the Three Months Ended (2) | |
Operating Agreement | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | |
InterContinental (no. 1) | | 0.66x | | 0.87x | | 1.28x | | 1.29x | | 1.09x | |
InterContinental (no. 2) | | 0.80x | | 1.08x | | 1.56x | | 1.55x | | 1.32x | |
InterContinental (no. 3) | | 0.69x | | 0.86x | | 1.18x | | 1.59x | | 1.29x | |
InterContinental (no. 4) | | 0.41x | | 0.74x | | 0.95x | | 1.18x | | 1.22x | |
Marriott (no. 1) | | 0.85x | | 1.23x | | 1.58x | | 1.74x | | 1.40x | |
Marriott (no. 2) | | 0.54x | | 1.06x | | 1.36x | | 1.25x | | 0.87x | |
Marriott (no. 3) | | 0.65x | | 0.96x | | 1.30x | | 1.47x | | 1.01x | |
Marriott (no. 4) | | 0.88x | | 1.03x | | 0.95x | | 1.29x | | 1.37x | |
Marriott (no. 5) | | 0.16x | | -0.01x | | 0.45x | | 0.36x | | 0.68x | |
Hyatt | | 0.74x | | 0.87x | | 1.13x | | 1.21x | | 1.09x | |
Carlson | | 0.77x | | 1.11x | | 1.40x | | 1.51x | | 1.66x | |
TA (no. 1) (3)(4) | | 1.12x | | 1.59x | | 1.80x | | 1.43x | | 0.88x | |
TA (no. 2) (3)(4) | | 1.19x | | 1.69x | | 1.91x | | 1.49x | | 0.93x | |
(1) We define coverage as combined total property sales minus all property level expenses which are not subordinated to minimum payments to us and the required FF&E reserve contributions (which data is provided to us by our managers or tenants), divided by the minimum return or minimum rent payments due to us. For some combinations, amounts have been calculated using data for periods prior to our ownership of certain properties and prior to commencement of our operating agreements.
(2) Includes data for the calendar periods indicated, except for our Marriott® branded hotels, which include data for comparable fiscal periods.
(3) Includes data for periods prior to our ownership of some properties.
(4) Effective July 1, 2008, we entered a rent deferral arrangement with TA which provides TA the option to defer payments of up to $5 million per month of rent under the two leases for the period July 1, 2008 until December 31, 2010. For each of the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009, TA deferred $15 million in rents. TA rent coverage ratios have been calculated based upon the contractual rent amounts and do not reflect the impact of any rent deferral.
All operating data presented are based upon the operating results provided by our managers and tenants for the indicated periods. We have not independently verified our managers’ or tenants’ operating data.
30
Hospitality Properties Trust
Supplemental Operating and Financial Data
March 31, 2009
OPERATING AGREEMENT EXPIRATION SCHEDULE
(dollars in thousands)
| | Annualized Minimum
Return / Rent | | % of Annualized
Minimum Return /
Rent | | Cumulative % of
Annualized Minimum
Return / Rent | |
2008 | | $ | - | | - | | - | |
2009 | | - | | - | | - | |
2010 | | 21,165 | (1) | 3.6% | | 3.6% | |
2011 | | - | | - | | - | |
2012 | | 58,878 | | 10.2% | | 13.8% | |
2013 | | - | | - | | 13.8% | |
2014 | | - | | - | | 13.8% | |
2015 | | 28,508 | (2) | 4.9% | | 18.7% | |
2016 | | - | | - | | 18.7% | |
2017 | | - | | - | | 18.7% | |
2018 and thereafter | | 471,520 | (2) | 81.3% | | 100.0% | |
Total | | $ | 580,071 | | 100.0% | | | |
| | | | | | | |
Weighted average remaining term | | 14.2 years | | | | | |
(1) On November 13, 2008, we were notified that the tenant will not exercise its renewal option at the end of the current lease term. Upon expiration of the agreement, we expect to lease the hotels to one of our taxable REIT subsidiaries; the hotel brand and management agreement with Marriott are not expected to change.
(2) Crestline did not pay the minimum rent due in April for the lease which expires in 2015 ($28.5 million/year) and Marriott did not pay the minimum returns due in March and April to us for our management agreement which expires in 2019 ($44,200/year). We have sent notices to Crestline and Marriott concerning these defaults and we are having discussions with Marriott about these defaults. We have not yet determined whether we will accelerate the terminations of these contracts if these defaults are not cured.
31
