Exhibit 10.1
DEFERRAL AGREEMENT
This
Deferral Agreement (this “Agreement”) is made August 11, 2008, among
Hospitality Properties Trust (the “Trust”), HPT TA Properties Trust (“HPT TA
Trust”), HPT TA Properties LLC (“HPT TA LLC”), HPT PSC Properties Trust (“HPT
PSC Trust”), HPT PSC Properties LLC (“HPT PSC LLC” and together with the Trust,
HPT TA Trust, HPT TA LLC, HPT PSC Trust, “HPT”), TravelCenters of America LLC (“TravelCenters”),
TA Leasing LLC (“TA Leasing”) and Petro Stopping Centers, L.P. (“Petro” and
together with TravelCenters and TA Leasing, “TA”).
RECITAL
The
parties are parties to a lease dated January 31, 2007, as amended, and a
lease dated May 30, 2007, as amended, and certain related and/or
incidental documents and agreements (collectively, the “Lease Documents”).
As a
result of material and unforeseen changes in the market conditions in which TA
operates since the Lease Documents were entered into, the parties wish to defer
certain rental obligations thereunder.
Now,
therefore, the parties agree:
1.
Deferral
. TA shall have the right to defer up to
$5,000,000 of Minimum Rent (this and other capitalized terms used with the
meanings ascribed to such terms in the Lease Documents) due each month under
the Lease Documents beginning with the Minimum Rent payable for July 2008
and continuing through the Minimum Rent payable for December, 2010, which is
payable January 1, 2011 (all such rent so deferred, the “Deferred Rent”). The right to defer Minimum Rent shall not be
cumulative if less than $5,000,000 is deferred in any calendar month, provided
that TA, having paid Minimum Rent for July 2008, may defer up to
$10,000,000 of Minimum Rent payable for August 2008. Any Minimum Rent deferred shall be in
multiples of $1,000,000.
2.
Interest
. No interest shall be payable on the Deferred
Rent prior to December 31, 2009.
Beginning January 1, 2010, interest shall accrue at the rate of 1%
per month on the Deferred Rent and shall be paid by TA to HPT, monthly, in
arrears, at the time and in the manner provided in the Lease Documents for the
payment of Minimum Rent, beginning with the payment of Minimum Rent due on the
first Business Day of February 2010.
3.
Payment and Prepayment
. The Deferred Rent, together with any accrued
and unpaid interest, shall be due on the first Business Day of July 2011.
The Deferred Rent may be prepaid at any time without premium or penalty, in
whole or part, provided any partial prepayment shall be made in multiples of
$1,000,000, together with accrued and unpaid interest, if any.
4.
TravelCenters Shares
. In consideration for the right to defer
Minimum Rent under the Lease Documents as provided in this Agreement,
contemporaneously with the execution of this Agreement TravelCenters will issue
1,540,000 common shares, no par value (together with any shares of
TravelCenters issued in respect of such common shares as a result of
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any stock split,
stock dividend, share exchange, merger, consolidation or similar recapitalization,
the “Common Shares”), representing common limited liability company interests
in TravelCenters subject to the restrictions set forth in this Section 4,
to HPT and will provide registration rights under the Securities Act of 1933
for the Common Shares pursuant to a Registration Rights Agreement attached as Exhibit A. On January 1, 2010, if TA has exercised
its right to defer Minimum Rent in an aggregate amount less than that permitted
pursuant to Section 1 prior to that date, a number of the Common Shares
shall thereupon be subject to repurchase by TravelCenters for consideration of
$0.01/share by notice given to HPT on or before March 1, 2010, such number
being equal to 1,540,000 multiplied by a fraction, the numerator of which is
$90,000,000 minus the aggregate Minimum Rent deferred through and including January 1,
2010, whether or not then repaid, and the denominator of which is
$90,000,000. Upon repurchase by
TravelCenters, neither HPT nor any assignee or transferee of HPT shall have any
further rights or interests in such repurchased Common Shares
5.
Redemption, Dividends and
Cooperation
. TravelCenters and its
Subsidiaries shall not offer to redeem or redeem any of TravelCenters’s common
shares prior to repayment in full of the Deferred Rent and any accrued and
unpaid interest, and thereafter, will not offer to redeem or redeem any of
TravelCenters’s common shares if such redemption would result in the Common
Shares representing more than 9.8% of the issued and outstanding shares of
TravelCenters not subject to any rights of repurchase or forfeiture; provided
that at any time TravelCenters may redeem common shares issued to officers and
employees pursuant to an equity compensation plan where redemption is for
nominal consideration, if such redemption would not result in the Common Shares
representing more than 9.8% of the issued and outstanding shares of
TravelCenters not subject to any rights of repurchase or forfeiture. TravelCenters shall not declare or make any
distributions on its common shares prior to repayment in full of the Deferred
Rent and any accrued and unpaid interest.
TA will reasonably cooperate with any HPT request involving HPT’s
compliance with Code section 856(d)(2)(B) (including the applicable
attribution rules of Code section 856(d)(5)).
6.
Termination of Deferral
. Anything in this Agreement to the contrary
notwithstanding, the right of TA to defer Minimum Rent as provided in this
Agreement shall immediately terminate upon (a) the occurrence of an Event
of Default under any of the Lease Documents, (b) the election of any
director to the Board of Directors of TA who was not nominated or appointed by
the then members of the Board of Directors of TA, (c) the adoption by the
shareholders of TA, at an annual or special meeting, of any proposal, other
than a precatory proposal, not recommended for adoption by the then members of
the Board of Directors of TA and (d) any failure to timely make payments
of interest under Section 2 above.
Immediately upon the termination of the right to defer Minimum Rent, all
Deferred Rent, if any, together with accrued and unpaid interest, if any, shall
be immediately due and payable. Any
default by TA under this Agreement shall constitute an Event of Default under
the Lease Documents.
7.
Representations and Warranties
of TA
. TA represents and warrants to
HPT that:
(a)
Organization
. Each entity
comprising TA is duly organized, validly
existing and in good standing under the laws of its jurisdiction or
organization and has full limited liability company or limited partnership
power and authority to conduct its
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business as it is now being
conducted and to own, operate or lease its properties and assets.
(b)
Authorization
. Each entity
comprising TA has all requisite limited
liability company or limited partnership power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement
by each entity comprising TA and the consummation by each of the transactions
contemplated hereby have been duly authorized by all necessary limited
liability company or limited partnership action by each entity comprising TA. This
Agreement has been duly and validly executed and delivered by each entity
comprising TA and, assuming due authorization, execution and delivery by each
of the other parties, constitutes the legal, valid and binding obligation of
each entity comprising TA, enforceable against each such entity in accordance
with its terms, except as such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws relating to creditors’ rights generally, (ii) general principles of
equity (whether applied in a proceeding at law or in equity) and (iii) any
implied covenant of good faith and fair dealing.
(c)
No Violation
. The execution and delivery of this Agreement by
each entity comprising TA does not, and the consummation by each such entity of
the transactions contemplated by this Agreement will not, (i) conflict
with, or result in any violation of or default under, any provision of any such
entity’s limited liability company agreement or limited partnership agreement; (ii) conflict
with or result in any violation of or default under, any law or judgment
applicable to any such entity, or to which any of their respective properties
are subject; or (iii) conflict with, or, with or without notice or the
lapse of time, result in a breach, termination (or right of termination) or
violation of or default under the terms of any agreement, contract, indenture
or other instrument to which any such entity is a party or subject, or to which
any of their respective properties are subject.
(d)
Approvals
. The execution and delivery of this Agreement by
each entity comprising TA and the consummation by it of the transactions
contemplated by this Agreement do not require the consent, approval, order, or
authorization of any person under any agreement, contract, indenture or other
instrument or Applicable Laws to which any entity comprising TA is a party or
subject or to which any of their respective properties are subject, and no
declaration, filing or registration with any governmental entity is required by
any such entity in connection with the execution and delivery of this Agreement
and the consummation by it of the transactions contemplated by this Agreement,
except for filings required under securities laws.
(e)
Common Shares
. The Common Shares, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable and not subject to any preemptive rights and
issued in compliance with all Applicable Laws.
As of the date of this Agreement, after issuance of the Common Shares,
the Common Shares represent 9.8% of the issued and outstanding shares of
TravelCenters, other than those subject to any rights of repurchase or
forfeiture (provided
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for purposes of this Section 7(e), the Common
Shares shall not be considered to be subject to any rights of repurchase or
forfeiture).
8.
Representations and Warranties
of HPT
. HPT represents and warrants
to TA that:
(a)
Organization
. Each entity
comprising HPT is duly organized, validly existing
and in good standing under the laws of its jurisdiction or organization and has
full trust or limited liability company power and authority to conduct its
business as it is now being conducted and to own, operate or lease its
properties and assets.
(b)
Authorization
. Each entity
comprising HPT has all requisite trust or
limited liability company power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement
by each entity comprising HPT and the consummation by each of the transactions
contemplated hereby have been duly authorized by all necessary trust or limited
liability company action by each entity comprising HPT. This Agreement has been duly and validly
executed and delivered by each entity comprising HPT and, assuming due
authorization, execution and delivery by each of the other parties, constitutes
the legal, valid and binding obligation of each entity comprising HPT,
enforceable against each such entity in accordance with its terms, except as
such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to creditors’ rights generally, (ii) general principles of equity (whether
applied in a proceeding at law or in equity) and (iii) any implied
covenant of good faith and fair dealing.
(c)
No Violation
. The execution and delivery of this Agreement by
each entity comprising HPT does not, and the consummation by each such entity
of the transactions contemplated by this Agreement will not, (i) conflict
with, or result in any violation of or default under, any provision of any such
entity’s declaration of trust or limited liability company agreement; (ii) conflict
with or result in any violation of or default under, any law or judgment
applicable to any such entity or to which any of their respective properties
are subject; or (iii) conflict with, or, with or without notice or the
lapse of time, result in a breach, termination (or right of termination) or
violation of or default under the terms of any agreement, contract, indenture
or other instrument to which any such entity is a party or subject or to which
any of their respective properties are subject.
(d)
Approvals
. The execution and delivery of this Agreement by
each entity comprising HPT and the consummation by it of the transactions
contemplated by this Agreement do not require the consent, approval, order, or
authorization of any person under any agreement, contract, indenture or other
instrument or Applicable Laws to which any entity comprising HPT is a party or
subject or any of their representative properties are subject, and no
declaration, filing or registration with any governmental entity is required by
any such entity in connection with the execution and delivery of this Agreement
and the consummation by it of the transactions contemplated by this Agreement,
except for filings required under securities laws.
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9.
Mergers
. Pursuant to Section 21.9 of the leases
included in the Lease Documents, the proposed merger of Petro with and into TA
Operating LLC and the subsequent merger of TA Leasing LLC with and into TA
Operating LLC are each approved by HPT and it is agreed that neither will
constitute a prohibited Change of Control under the Lease Documents.
10.
Issuance of Common Shares
. It is agreed that the issuance of the Common
Shares will not constitute a prohibited Change of Control under the Lease
Documents.
11.
TravelCenter’s Guaranty
. TravelCenters affirms that its guaranty of
the leases included in the Lease Documents remains in full force and effect and
unmodified.
12.
Miscellaneous
.
(a)
No Waiver
.
No failure by HPT or
TA, to insist upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof shall constitute a
waiver of any such breach or of any such term.
To the maximum extent permitted by law, no waiver of any breach shall
affect or alter this Agreement, which shall continue in full force and effect
with respect to any other then existing or subsequent breach.
(b)
Severability
.
Any clause,
sentence, paragraph, section or provision of this Agreement held by a court of
competent jurisdiction to be invalid, illegal or ineffective shall not impair,
invalidate or nullify the remainder of this Agreement, but rather the effect
thereof shall be confined to the clause, sentence, paragraph, section or
provision so held to be invalid, illegal or ineffective, and this Agreement
shall be construed as if such invalid, illegal or ineffective provisions had
never been contained therein.
(c)
Notices
.
(i) Any and all notices, demands,
consents, approvals, offers, elections and other communications required or
permitted under this Agreement shall be deemed adequately given if in writing
and the same shall be delivered either in hand, by telecopier with written
acknowledgment of receipt, or by mail or Federal Express or similar expedited
commercial carrier, addressed to the recipient of the notice, postpaid and
registered or certified with return receipt requested (if by mail), or with all
freight charges prepaid (if by Federal Express or similar carrier).
(ii) All notices required or permitted to
be sent hereunder shall be deemed to have been given for all purposes of this
Agreement upon the date of acknowledged receipt, in the case of a notice by
telecopier, and, in all other cases, upon the date of receipt or refusal,
except that whenever under this Agreement a notice is either received on a day
which is not a Business Day or is required to be delivered on or before a
specific day which is not a Business Day, the day of receipt or required
delivery shall automatically be extended to the next Business Day.
(iii) All such notices shall be addressed,
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if to HPT:
c/o Hospitality
Properties Trust
400 Centre Street
Newton,
Massachusetts 02458
Attn: John G. Murray, President
Facsimile: (617) 969-5730
with a copy to (which shall
not constitute notice):
Sullivan &
Worcester LLP
One Post Office Square
Boston,
Massachusetts 02109
Attn: Richard Teller
Facsimile: (617) 338-2880
if to TA:
c/o TravelCenters of
America LLC
24601 Center Ridge Road
Westlake, Ohio 44145
Attn: Thomas M. O’Brien, President
Facsimile: (440) 808-3301
with a copy to (which
shall not constitute notice):
Skadden, Arps, Slate Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attn.: Louis Goodman
Facsimile: (617) 573-4822
(iv) By notice given as herein provided,
the parties hereto and their respective successors and assigns shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses effective upon receipt by the other parties of
such notice and each shall have the right to specify as its address any other
address within the United States of America.
(d)
Construction
.
Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party to be
charged. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
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(e)
Counterparts; Headings
.
This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but which, when taken
together, shall constitute but one instrument and shall become effective as of
the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes
of reference only and shall not limit or affect the meaning of the provisions
hereof.
(f)
Applicable Law, Etc.
Except as to matters regarding the internal affairs of HPT, HPT TA Trust
and HPT PSC Trust and issues of or limitations on any personal liability of the
shareholders and trustees or directors of HPT, HPT TA Trust and HPT PSC Trust
for obligations of HPT, HPT TA Trust and HPT PSC Trust, as to which the laws of
the State of Maryland shall govern, this Agreement shall be interpreted,
construed, applied and enforced in accordance with the laws of the State of
Delaware applicable to contracts between residents of Delaware which are to be
performed entirely within Delaware, regardless of (i) where this Agreement
is executed or delivered; or (ii) where any payment or other performance
required by this Agreement is made or required to be made; or (iii) where
any breach of any provision of this Agreement occurs, or any cause of action
otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication
of any party; or (vi) whether the laws of the forum jurisdiction otherwise
would apply the laws of a jurisdiction other than Delaware; or (vii) any
combination of the foregoing.
(g)
Entire Agreement
. This Agreement (including all agreements
entered into pursuant hereto and all certificates and instruments delivered
pursuant hereto and thereto) constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties, whether oral or written
(h)
Attorneys’ Fees
. If any
lawsuit or arbitration or other legal proceeding arises in connection with the
interpretation or enforcement of this Agreement, the prevailing party therein
shall be entitled to receive from the other party the prevailing party’s costs
and expenses, including reasonable attorneys’ fees incurred in connection
therewith, in preparation therefor and on appeal therefrom, which amounts shall
be included in any judgment therein.
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(i)
Non-liability
of Trustees
.
(i) THE
AMENDED AND RESTATED DECLARATION OF TRUST OF HOSPITALITY PROPERTIES TRUST,
DATED AUGUST 21, 1995, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS AND
SUPPLEMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY
PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST AS SO
AMENDED AND SUPPLEMENTED, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF
HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES
TRUST. ALL PERSONS DEALING WITH
HOSPITALITY PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF
ANY OBLIGATION.
(ii) THE DECLARATION OF TRUST OF HPT TA
PROPERTIES TRUST, DATED NOVEMBER 29, 2006, A COPY OF WHICH IS DULY FILED IN THE
OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND,
PROVIDES THAT THE NAME “HPT TA PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER
THE DECLARATION OF TRUST, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT
TA PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HPT TA PROPERTIES
TRUST. ALL PERSONS DEALING WITH HPT TA
PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF HPT TA PROPERTIES
TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
(iii) THE DECLARATION OF TRUST OF HPT PSC
PROPERTIES TRUST, DATED MAY 23, 2007, A COPY OF WHICH IS DULY FILED IN THE
OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND,
PROVIDES THAT THE NAME “HPT PSC PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER
THE DECLARATION OF TRUST, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT
PSC PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HPT PSC PROPERTIES
TRUST. ALL PERSONS DEALING WITH HPT PSC
PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE
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ASSETS OF HPT PSC PROPERTIES TRUST FOR THE PAYMENT OF
ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
Signatures appear on the next page
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Executed
under seal as of the date first above written.
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HOSPITALITY PROPERTIES TRUST
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By:
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/s/ John G. Murray
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Name: John G. Murray
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Title: President
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HPT TA PROPERTIES TRUST
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By:
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/s/ John G. Murray
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Name: John G. Murray
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Title: President
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HPT
TA PROPERTIES LLC
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By:
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/s/ John G. Murray
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Name: John G. Murray
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Title: President
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HPT
PSC PROPERTIES TRUST
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By:
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/s/ John G. Murray
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Name: John G. Murray
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Title: President
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HPT
PSC PROPERTIES LLC
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By:
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/s/ John G. Murray
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Name: John G. Murray
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Title: President
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TRAVELCENTERS OF AMERICA
LLC
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By:
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/s/ Thomas M. O’Brien
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Name: Thomas M. O’Brien
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Title: President
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TA
LEASING LLC
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By:
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/s/ Thomas M. O’Brien
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Name: Thomas M. O’Brien
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Title: President
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PETRO STOPPING CENTERS,
L.P.
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By:
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/s/ Thomas M. O’Brien
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Name: Thomas M. O’Brien
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Title: President
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement
(this “Agreement
”
) made August 11, 2008, between TravelCenters of
America LLC (the “Company”) and
Hospitality Properties Trust (the “Shareholder”).
RECITAL
Pursuant to the terms of that certain Deferral
Agreement, dated August 11, 2008 (the “Deferral Agreement”), among the
Company, the Shareholder and certain of their affiliates, the Company has
issued and the Shareholder has acquired and holds as of the date hereof
1,540,000 common shares, no par value, representing limited liability company
interests of the Company subject to the restrictions set forth in Section 4
of the Deferral Agreement (the “Shares”).
The Company has agreed to enter into this Agreement to
provide the Shareholder with certain rights relating to the registration of the
Shares.
Now, therefore, the parties agree as follows:
13. DEFINITIONS. Except as otherwise noted, for all purposes
of this Agreement, the following terms shall have the respective meanings set
forth in this Agreement, which meanings shall apply equally to the singular and
plural forms of the terms so defined and the words “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole. The following capitalized terms used herein
have the following meanings:
“
Agreement
”
means this Agreement, as amended,
restated, supplemented, or otherwise modified from time to time.
“
Business
Day
”
means any day other than a Saturday, a Sunday or a day on which banks
in the City of Boston are required, permitted or authorized, by applicable law
or executive order, to be closed for regular banking business.
“
Commission
”
means the United States Securities and Exchange
Commission, or such successor federal agency or agencies as may be established
in lieu thereof.
“
Company
”
is defined in the preamble to this
Agreement.
“
Company
Indemnified Party
”
is defined in Section 4.2.
“
Demand
Registration
”
is defined in Section 2.1.1.
“
Demand
Registration Period
”
means the period from and after (i) the date
upon which one-third (1/3) of the Shares issued to the Shareholder pursuant to
the Deferral Agreement are no longer subject to the restrictions set forth in Section 4
of the Deferral Agreement, through and including (ii) the date which is 12
calendar months following the latest of the expiration of the terms of the
leases dated January 31, 2007 and May 30, 2007 between subsidiaries
of the Company and subsidiaries of the Shareholder, as amended.
“
Exchange
Act
”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.
12
“
Maximum
Number of Shares
”
is defined in Section 2.1.3.
“
Notices
”
is defined in Section 6.2.
“
Piggy-Back
Registration
”
is defined in Section 2.2.1.
“
Prospectus
”
means a prospectus relating to a
Registration Statement, as amended or supplemented, including all materials
incorporated by reference in such Prospectus.
“
r
egister
,”
“
registered
”
and
“
registration
”
refer to a registration effected
by preparing and filing a registration statement or similar document under the
Securities Act and such registration statement becoming effective.
“
Registration
Statement
”
means any registration statement filed by the Company with the Commission in
compliance with the Securities Act for a public offering and sale of Shares
(other than a registration statement on Form S-4 or Form S-8, or
their successors, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another entity),
as amended or supplemented, including all materials incorporated by reference
in such Registration Statement.
“
Restricted
Shares
”
mean all of the Shares held of record by the Shareholder or held of record by
its permitted transferees from time to time in accordance with Section 6.1
(together with any shares issued in respect thereof as a result of any stock
split, stock dividend, share exchange, merger, consolidation or similar
recapitalization), in each case that are no longer subject to the restrictions
set forth in Section 4 of the Deferral Agreement;
provided
,
that such Shares shall cease
to be Restricted Shares hereunder, as of any date, when: (a) a Registration Statement with
respect to the sale of such Restricted Shares shall have become effective under
the Securities Act (as defined below) and such Restricted Shares shall have
been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement as of such date; (b) such Restricted Shares shall
have been otherwise transferred pursuant to Rule 144 under the Securities
Act (or any similar provisions thereunder, but not Rule 144A), and new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act, in each case, as of
such date; (c) such Restricted Shares are saleable immediately in their
entirety without condition or limitation pursuant to Rule 144 under the
Securities Act; or (d) such Restricted Shares shall have ceased to be
outstanding as of such date.
“
Securities
Act
”
means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
“
Shareholder
”
is defined in the preamble to this
Agreement.
“
Shareholder
Indemnified Party
”
is defined in Section 4.1.
“
Shares
”
is defined in the recitals of this
Agreement.
“
Underwriter
”
means a securities dealer who purchases
any Restricted Shares as principal in an underwritten offering and not as part
of such dealer’s market-making activities.
14. REGISTRATION RIGHTS.
(a) Demand
Registration.
13
(i)
General Request
for Registration
. At any time during
the Demand Registration Period, the Shareholder may make a written demand for
registration under the Securities Act of all or part of the Restricted Shares
(a “Demand Registration
”
). Any such written demand for a Demand
Registration shall specify the number of Restricted Shares proposed to be sold
and the intended method(s) of distribution thereof and, unless otherwise
agreed by the Shareholder, shall be for the Shareholder’s exclusive benefit.
(ii)
Underwritten
Offering
. If the Shareholder so
elects and so advises the Company as part of its written demand for a Demand
Registration, the offering of such Restricted Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such case, the Shareholder shall enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such underwriting by the Shareholder (which
Underwriter or Underwriters shall be reasonably acceptable to the Company),
complete and execute any questionnaires, powers of attorney, indemnities,
lock-up agreements, securities escrow agreements and other documents reasonably
required or which are otherwise customary under the terms of such underwriting
agreement, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement.
(iii)
Reduction of
Offering
. If the managing
Underwriter or Underwriters for a Demand Registration that is to be an
underwritten offering advises the Company and the Shareholder that the dollar
amount or number of Restricted Shares which the Shareholder desires to sell
taken together with all other shares or other securities which the Shareholder
has agreed may be included in such offering, exceeds the maximum dollar amount
or maximum number of shares that can be sold in such offering without adversely
affecting the proposed offering price, the timing, the distribution method or
the probability of success of such offering (such maximum dollar amount or
maximum number of shares or other securities, as applicable, the “Maximum
Number of Shares
”
), then the Company shall include
in such registration: (i) first,
the Restricted Shares which the Shareholder has requested be included in the
Demand Registration; (ii) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (i), the Shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; (iii) third, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (i) and
(ii), the Shares or other securities for the account of other security holders
of the Company that can be sold without exceeding the Maximum Number of Shares.
(iv)
Withdrawal
. In the case of a Demand Registration, if the
Shareholder disapproves of the terms of any underwriting or is not entitled to
include all of its Restricted Shares in any offering, the Shareholder may elect
to withdraw such offering by giving written notice to the Company and the
Underwriter or Underwriters of its request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. In
such event, the Company need not seek effectiveness of such Registration
Statement. If the Shareholder’s
withdrawal is based on (i) a material adverse change in circumstances with
respect to the Company and not known to the Shareholder at the time the Shareholder
makes its written demand for such Demand Registration, (ii) the Company’s
failure to comply with its obligations under this Agreement or (iii) a
reduction pursuant to Section 2.1.3 of 10% or more of the number of
Restricted Shares which the Shareholder has requested be included in the Demand
Registration, the Company shall pay all
14
expenses incurred
by the Shareholder in connection with such Demand Registration as provided in Section 3.2,
and such registration shall not count as a Demand Registration for purposes of Section 3.1.1(b) or
(e).
(b) Piggy-Back
Registration.
(i)
Piggy-Back
Rights
. If, at any time on or after
the date of this Agreement, the Company proposes to file a Registration Statement
under the Securities Act with respect to an offering of common shares of the
Company, or securities or other obligations exercisable or exchangeable for, or
convertible into, common shares of the Company, by the Company for its own
account or for any other shareholder of the Company for such shareholder’s
account, other than a Registration Statement (i) filed in connection with
any employee benefit plan, (ii) for an exchange offer or offering of
securities solely to the Company’s existing shareholders, (iii) for an
offering of debt securities convertible into equity securities of the Company, (iv) for
a dividend reinvestment plan or (v) filed on Form S-4, then the
Company shall (x) give written notice of such proposed filing to the
Shareholder as soon as practicable but in no event less than ten (10) Business
Days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering and (y) offer to the Shareholder in
such notice the opportunity to register the sale of such number of Restricted
Shares as the Shareholder may request in writing within five (5) Business
Days following receipt of such notice (a “Piggy-Back Registration
”
). The Company shall
cause such Restricted Shares to be included in such registration and shall use
commercially reasonable efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Restricted
Shares requested to be included in the Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and
to permit the sale or other disposition of such Restricted Shares in accordance
with the intended method(s) of distribution thereof. If the Piggy-Back Registration involves an
Underwriter or Underwriters, the Shareholder shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such Piggy-Back Registration by the Company and complete and execute any
questionnaires, powers of attorney, indemnities, lock-up agreements, securities
escrow agreements and other documents reasonably required or which are
otherwise customary under the terms of such underwriting agreement, and furnish
to the Company such information as the Company may reasonably request in
writing for inclusion in the Registration Statement or such information that is
otherwise customary.
(ii)
Reduction of
Offering
. If the managing
Underwriter or Underwriters for a Piggy-Back Registration that is to be an
underwritten offering advises the Company and the holders of Restricted Shares
that the dollar amount or number of Shares or other securities which the
Company desire to sell, taken together with Shares or other securities, if any,
as to which registration has been demanded pursuant to written contractual
arrangements with persons other than the Shareholder, the Restricted Shares as
to which registration has been requested under this Section 2.2, and the
Shares or other securities, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other
shareholders of the Company, exceeds the Maximum Number of Shares, then the
Company shall include in any such registration:
15
(a) If the registration
is undertaken for the Company’s account: (i) first, the shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; (ii) second, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (i), the
shares or other securities, if any, including the Restricted Shares, as to
which registration has been requested pursuant to written contractual
piggy-back registration rights of security holders (
pro rata
in accordance with the number of Shares or other
securities which each such person has actually requested to be included in such
registration, regardless of the number of shares or other securities with
respect to which such persons have the right to request such inclusion) that
can be sold without exceeding the Maximum Number of Shares; and
(b) If the registration
is a “demand” registration undertaken at the demand of persons, other than the
Shareholder, pursuant to written contractual arrangements with such persons, (i) first,
the Shares or other securities for the account of the demanding persons that
can be sold without exceeding the Maximum Number of Shares; (ii) second,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the Shares or other securities that the Company desires
to sell that can be sold without exceeding the Maximum Number of Shares; and (iii) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the shares or other securities, if any,
including the Restricted Shares, as to which registration has been requested
pursuant to written contractual piggy-back registration rights which other
security holders desire to sell (
pro rata
in accordance with the number of Shares or other securities which each such
person has actually requested to be included in such registration, regardless
of the number of shares or other securities with respect to which such persons
have the right to request such inclusion) that can be sold without exceeding
the Maximum Number of Shares.
(iii)
Withdrawal
. The Shareholder may elect to withdraw its
request for inclusion of Restricted Shares in any Piggy-Back Registration by
giving written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement.
The Company may also elect to withdraw a registration at any time prior
to the effectiveness of the Registration Statement. If the Shareholder’s withdrawal is based on (i) a
material adverse change in circumstances with respect to the Company and not
known to the Shareholder at the time the Shareholder elects to participate in
such Piggy-Back Registration, (ii) the Company’s failure to comply with
its obligations under this Agreement or (iii) a reduction pursuant to Section 2.2.2
of 10% or more of the number of Restricted Shares which the Shareholder has
requested be included in the Piggy-Back Registration, the Company shall pay all
expenses incurred by the Shareholder in connection with such Piggy-Back
Registration as provided in Section 3.2.
15. REGISTRATION PROCEDURES.
(a)
Filings;
Information
. Whenever the Company is
required to effect the registration of any Restricted Shares pursuant to Section 2,
the Company shall use commercially reasonable efforts to effect the
registration and sale of such Restricted Shares in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in
connection with any such request.
16
(i)
Filing
Registration Statement
. The Company
shall, as expeditiously as possible and in any event within thirty (30) days
after receipt of a request for a Demand Registration pursuant to Section 2.1,
prepare and file with the Commission a Registration Statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of all Restricted
Shares to be registered thereunder in accordance with Section 2.1.2 and
the intended method(s) of distribution thereof, and shall use commercially
reasonable efforts to cause such Registration Statement to become and remain
effective for the period required by Section 3.1.3;
provided
,
however
,
that:
(a) the Company shall
have the right to defer any Demand Registration for periods of up to thirty
(30) days, and any Piggy-Back Registration for such period(s) as may be
applicable to deferment of any demand registration to which such Peggy-Back
Registration relates, in each case if the Company shall furnish to the holders
a certificate signed by the Chief Executive Officer of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be materially detrimental to the Company and its Shareholder for such
Registration Statement to be effected at such time (including without
limitation because the Company is then engaged in a material transaction or has
an undisclosed material corporate development, in either case, which would be
required to be disclosed in the Registration Statement);
provided
,
further
,
however
,
that the Company shall not
have the right to exercise the right set forth in this clause (a) for more
than one hundred and twenty (120) days in any 365-day period in respect of a
Demand Registration (including in such 120 days, any deferral under subsection (d) of
this Section 3.1.1 if the Registration Statement was not timely filed
thereunder);
(b) the Company shall
not be obligated to effect any registration of Restricted Shares upon receipt
of a written demand for a Demand Registration if the Company has already
completed three (3) Demand Registrations;
(c) the
Company shall not be obligated to effect any registration of Restricted Shares
upon receipt of a written demand for a Demand Registration in the event that
the number of Restricted Shares proposed to be included in the Demand
Registration represents less than one-third (1/3) of the Shares issued to the
Shareholder pursuant to the Deferral Agreement or if less, all the Shares then
held by the Shareholder;
(d) the
Company shall not then be obligated to effect any registration of Restricted
Shares upon receipt of a written demand for a Demand Registration if the
Company shall furnish to the Shareholder a certificate signed by the Chief
Executive Officer of the Company stating that within ninety (90) days of
receipt of the written demand for a Demand Registration, the Company shall file
a Registration Statement and offer to the Shareholder the opportunity to
register Restricted Shares thereunder in accordance with Section 2.2; and
17
(e) the
Company shall not be obligated to effect any registration of Restricted Shares
upon receipt of a written demand for a Demand Registration if the Company has,
within the six (6) month period preceding the date of the written demand
for a Demand Registration already effected one Demand Registration for the
Shareholder pursuant to Section 2.1.
(ii)
Copies
. If the Shareholder has included Restricted
Shares in a registration, the Company shall, prior to filing a Registration
Statement or Prospectus, or any amendment or supplement thereto, furnish
without charge to the Shareholder and its counsel, copies of such Registration
Statement as proposed to be filed, each amendment and supplement to such
Registration Statement (in each case including all exhibits thereto and
documents incorporated by reference therein), the Prospectus included in such
Registration Statement (including each preliminary Prospectus), and such other
documents as the Shareholder or counsel for any the Shareholder may reasonably
request in order to facilitate the disposition of the Restricted Shares
included in such registration.
(iii)
Amendments and
Supplements
. The Company shall
prepare and file with the Commission such amendments, including post-effective
amendments, and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and in compliance with the provisions of the Securities Act
until all Restricted Shares, and all other securities covered by such
Registration Statement, have been disposed of in accordance with the intended
method(s) of distribution set forth in such Registration Statement (which
period shall not exceed the sum of one hundred eighty (180) days, plus any
period during which any such disposition is interfered with by any stop order
or injunction of the Commission or any governmental agency or court ) or such
securities have been withdrawn.
(iv)
Notification
. If the Shareholder has included Restricted
Shares in a registration, after the filing of the Registration Statement, the
Company shall promptly, and in no event more than two (2) Business Days
after such filing, notify the Shareholder of such filing, and shall further
notify the Shareholder promptly and confirm such notification in writing in all
events within two (2) Business Days of the occurrence of any of the
following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective
amendment to such Registration Statement becomes effective; (iii) the
issuance or threatened issuance by the Commission of any stop order (and the
Company shall use reasonable best efforts to prevent the entry of such stop
order or to remove it if entered); and (iv) any request by the Commission
for any amendment or supplement to such Registration Statement or any
Prospectus relating thereto or for additional information or of the occurrence
of an event requiring the preparation of a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of the securities
covered by such Registration Statement, such Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and promptly make available to the Shareholder any such supplement
or amendment; except that before filing with the Commission a Registration
Statement or Prospectus or any amendment or supplement thereto, including
documents incorporated by reference, the Company shall furnish to the
Shareholder and to its counsel, copies of all such documents proposed to be
filed sufficiently in advance of filing to provide the Shareholder and its
counsel with a reasonable opportunity to review such documents
18
and comment
thereon, and the Company shall not file any Registration Statement or
Prospectus or amendment or supplement thereto, including documents incorporated
by reference, to which the Shareholder or its counsel shall reasonably object.
(v)
State Securities
Laws Compliance
. If the Shareholder
has included Restricted Shares in a registration the Company shall use
commercially reasonable efforts to (i) register or qualify the Restricted
Shares covered by the Registration Statement under such securities or “blue sky”
laws of such jurisdictions in the United States as the Shareholder (in light of
the intended plan of distribution) may request and (ii) take such action
necessary to cause such Restricted Shares covered by the Registration Statement
to be registered with or approved by such other federal or state authorities as
may be necessary by virtue of the business and operations of the Company and do
any and all other acts and things that may be necessary or advisable to enable
the Shareholder to consummate the disposition of such Restricted Shares in such
jurisdictions;
provided
,
however
,
that the Company shall not be
required to qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3.1.5 or subject
itself to taxation in any such jurisdiction.
(vi)
Agreements for
Disposition
. The Company shall enter
into customary agreements (including, if applicable, an underwriting agreement
in customary form) and use commercially reasonable efforts to take such other
actions as are required in order to expedite or facilitate the disposition of
Restricted Shares. The representations,
warranties and covenants of the Company in any underwriting agreement which are
made to or for the benefit of any Underwriters, to the extent applicable, shall
also be made to and for the benefit of the Shareholder. For the avoidance of doubt, the Shareholder
may not require the Company to accept terms, conditions or provisions in any
such agreement which the Company determines are not reasonably acceptable to
the Company, notwithstanding any agreement to the contrary herein. The Shareholder shall not be required to make
any representations or warranties in the underwriting agreement except as
reasonably requested by the Company and, if applicable, with respect to the
Shareholder’s organization, good standing, authority, title to Restricted
Shares, lack of conflict of such sale with such holder’s material agreements
and organizational documents, and with respect to written information relating
to the Shareholder that the Shareholder has furnished in writing expressly for
inclusion in such Registration Statement.
The Shareholder, however, shall agree to such covenants and
indemnification and contribution obligations for selling stockholders as are
reasonable and customarily contained in agreements of that type.
(vii)
Cooperation
. The Company and all officers and members of
the management of the Company, shall reasonably cooperate in any offering of
Restricted Shares under this Agreement, which cooperation shall include,
without limitation, the preparation of the Registration Statement with respect
to such offering and all other offering materials and related documents, and
participation in meetings with Underwriters, attorneys, accountants and
potential investors. The Shareholder
shall reasonably cooperate in the preparation of the registration statement and
other documents relating to any offering in which it includes securities
pursuant to this Section 3. The
Shareholder shall also furnish to the Company such information regarding
itself, the Restricted Shares held by it, and the intended method(s) of
disposition of such securities as shall be reasonably required to effect the
registration of the Restricted Shares.
19
(viii)
Records
. Upon reasonable notice and during normal
business hours, subject to the Company receiving any customary confidentiality
undertakings or agreements, the Company shall make available for inspection by
the Shareholder, any Underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other professional
retained by the Shareholder or any Underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company as
shall be necessary to enable them to exercise their due diligence
responsibility, and shall cause the Company’s officers, directors and employees
to supply all information reasonably requested by the Shareholder in connection
with such Registration Statement.
(ix)
Opinions and
Comfort Letters
. The Company shall
use commercially reasonable efforts to furnish to the Shareholder signed
counterparts, addressed to the Shareholder, of (i) any opinion of counsel
to the Company delivered to any Underwriter and (ii) any comfort letter
from the Company’ independent public accountants delivered to any Underwriter;
provided
,
however
,
that counsel to the Underwriter shall have exclusive authority to negotiate the
terms thereof. In the event no legal
opinion is delivered to any Underwriter, the Company shall furnish to the
Shareholder, at any time that the Shareholder elects to use a Prospectus, an
opinion of counsel to the Company to the effect that the Registration Statement
containing such Prospectus has been declared effective, that no stop order is
in effect, and such other matters as the Shareholder may reasonably request as
would customarily have been addressed in an opinion of counsel to the Company
delivered to an Underwriter.
(x)
Earnings
Statement
. The Company shall comply
with all applicable rules and regulations of the Commission and the Securities
Act, and make generally available to its shareholders, as soon as practicable,
an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act, provided that the Company will be deemed to have complied
with this Section 3.1.10 if the earnings statement satisfies the
provisions of Rule 158 under the Securities Act.
(xi)
Listing
. The Company shall use commercially reasonable
efforts to cause all Restricted Shares included in any registration to be
listed on such exchanges or otherwise designated for trading in the same manner
as similar shares of the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory to
the Shareholder.
(b)
Registration
Expenses
. The Company shall bear all
customary costs and expenses incurred in connection with any Demand
Registration effected pursuant to Section 2.1, and any Piggy-Back
Registration effected pursuant to Section 2.2, and all reasonable expenses
incurred in performing or complying with its other obligations under this
Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or “blue sky” laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Restricted Shares, subject to the limit set forth in paragraph (ix) below);
(iii) printing expenses; (iv) the Company’s internal expenses
(including, without limitation, all fees, salaries and expenses of its
officers, employees and management); (v) the fees and expenses incurred in
connection with the listing of the Restricted Shares, as required by Section 3.1.11;
(vi) fees imposed by the Financial Industry Regulatory Authority, Inc.;
(vii) fees and disbursements of
20
counsel for the Company and fees and expenses for independent certified
public accountants retained by the Company (including the expenses or costs
associated with the delivery of any opinions or comfort letters requested
pursuant to Section 3.1.9); (viii) the fees and expenses of any
special experts retained by the Company in connection with such registration;
and (ix) the fees and expenses of one counsel selected by the Shareholder
in a Demand Registration or if it participates in a Piggy-Back
Registration. The Company shall have no
obligation to pay any underwriting discounts or selling commissions
attributable to the Restricted Shares being sold by the Shareholder, which
underwriting discounts or selling commissions shall be borne solely by the
Shareholder. Additionally, in an
underwritten offering, the Shareholder and the Company shall bear the expenses
of the Underwriter or Underwriters
pro rata
in
proportion to the respective amount of shares each is selling in such offering.
(c)
Information
. The Shareholder shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Restricted Shares under the Securities Act pursuant to Section 2
and in connection with the Company’s obligation to comply with federal and
applicable state securities laws.
(d)
Shareholder
Obligations
. The Shareholder may not
participate in any underwritten offering pursuant to Section 2 unless such
holder (i) agrees to only sell Restricted Shares on the basis reasonably
provided in any underwriting agreement, and (ii) completes, executes and
delivers any and all questionnaires, lock-up agreements, powers of attorney,
custody agreements, indemnities, underwriting agreements and other documents
reasonably or customarily required by or under the terms of any underwriting
agreement or as reasonably requested by the Company.
16. INDEMNIFICATION AND CONTRIBUTION.
(a)
Indemnification
by the Company
. The Company agrees
to indemnify and hold harmless the Shareholder and its officers, employees,
affiliates, directors, partners, members, attorneys and agents, and each
person, if any, who controls the Shareholder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) (each, a “Shareholder
Indemnified Party”) from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of Restricted
Shares was registered under the Securities Act, any preliminary Prospectus,
final Prospectus or summary Prospectus contained in such Registration
Statement, or arising out of or based upon any omission (or alleged omission)
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expense, loss,
judgment, claim, damage or liability arises out of or is based upon (a) any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary Prospectus, final Prospectus
or summary Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by the Shareholder expressly for use
therein, or (b) the use of any Registration Statement, any preliminary
Prospectus, final Prospectus or summary Prospectus during a period when the
Shareholder has been notified that a stop order has been issued in respect
thereof or
21
any proceeding for that purpose has been initiated, or the use of any
Registration Statement, any preliminary Prospectus, final Prospectus or summary
Prospectus has been suspended by the Company pursuant to the terms of this
Agreement. The foregoing indemnity shall
not inure to the benefit of any Shareholder Indemnified Party from whom the
person asserting losses, claims, damages or liabilities purchased Restricted
Shares, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Shareholder Indemnified Party to such
person, if required by law so to have been delivered at or prior to the written
confirmation of the sale of Restricted Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 3.1.3.
(b)
Indemnification
by the Shareholder
. The Shareholder
will, with respect to any Registration Statement where Restricted Shares were
registered under the Securities Act, indemnify and hold harmless the Company,
each of the Company’s directors and officers, and each other person, if any,
who controls the Company (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, a “Company
Indemnified Party”), against any expenses, losses, claims, judgments, damages
or liabilities, whether joint or several, insofar as such expenses, losses,
claims, judgments, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or allegedly untrue statement of
a material fact contained in any Registration Statement under which the sale of
such Restricted Shares was registered under the Securities Act, any preliminary
Prospectus, final Prospectus or summary Prospectus contained in such
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary to
make the statement therein not misleading, if the statement or omission was
made in reliance upon and in conformity with information furnished in writing
to the Company by the Shareholder expressly for use therein. The Shareholder’s indemnification obligations
hereunder shall be limited to the amount of any net proceeds actually received
by the Shareholder.
(c)
Notification
of Indemnification
. Promptly after
receipt by an indemnified party under this Section 4 of notice of the
commencement of any action (including any action by a governmental authority),
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 4, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties;
provided
,
however
, that an indemnified party
shall have the right to retain its own counsel, with the reasonable fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel
in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 4, but the omission so to deliver
written notice to the indemnifying party shall not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 4.
22
17. UNDERWRITING AND DISTRIBUTION.
(a)
Rule 144
. The Company covenants that it shall file all
reports required to be filed by it under the Securities Act and the Exchange
Act and shall take such further action as the Shareholder may reasonably
request, all to the extent required from time to time to enable the Shareholder
to sell Restricted Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities
Act, or any similar provision thereto, but not Rule 144A.
18. MISCELLANEOUS.
(a)
Assignment;
No Third Party Beneficiaries
. This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part and shall be
binding on its successors. This
Agreement and the rights, duties and obligations of the Shareholder hereunder
may be assigned, transferred or delegated by the Shareholder, in whole or in
part, in conjunction with and to the extent of any permitted transfer of
Restricted Shares to an affiliate of the Shareholder in accordance with
applicable law, which affiliate agrees in writing to be subject to and bound by
all duties and obligations set forth in this Agreement, whereupon any such
assignee, transferee or delegable would have all rights, duties and obligations
hereunder in addition to the Shareholder to the extent that the Shareholder
continues to own Restricted Shares. This
Agreement and the rights, duties and obligations of the Shareholder hereunder
may be assigned, transferred or delegated by the Shareholder, in whole or in
part, in conjunction with and to the extent of any permitted transfer of 1/3 or
more of the Shares issued to the Shareholder under the Deferral Agreement or if
less, all the Restricted Shares then held by the Shareholder to a person or
entity that is not an affiliate of the Shareholder in accordance with
applicable law and which person or entity agrees in writing to be subject to
and bound by all duties and obligations set forth in this Agreement, whereupon
any such assignee, transferee or delegable would have all rights, duties and
obligations hereunder;
provided
,
however
, that the rights, duties and
obligations hereunder may not be assigned, transferred or delegated to a person
that is not an affiliate of the Shareholder may not be further assigned,
transferred or delegated by such person.
This Agreement is not intended to confer any rights or benefits on any
persons that are not party hereto other than as expressly set forth in Section 4
and this Section 6.1.
(b)
Notices
.
All notices, demands, requests, consents, approvals or other communications
(collectively, “Notices
”
) required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, or facsimile, addressed as set forth below, or to such other address
as such party shall have specified most recently by written notice provided in
accordance with this Section 6.2.
Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile;
provided
,
that if such service or transmission is not on a Business Day or is after
normal business hours, then such notice shall be deemed given on the next
Business Day. Notice otherwise sent as
provided herein shall be deemed given on the next Business Day following timely
delivery of such notice to a reputable air courier service with an order for next-day
delivery.
23
To the Company:
TravelCenters of America
LLC
24601 Center Ridge Road
Westlake, Ohio 44145
Attn: Thomas M. O’Brien, President
Facsimile: (440) 808-3301
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attn.: Louis Goodman
Facsimile: (617) 573-4822
To the Shareholder:
Hospitality Properties
Trust
400 Centre Street
Newton,
Massachusetts 02458
Attn: John G. Murray, President
Facsimile: (617) 969-5730
with a copy (which
shall not constitute notice) to:
Sullivan &
Worcester LLP
One Post Office Square
Boston,
Massachusetts 02109
Attn: Richard Teller
Facsimile: (617) 338-2880
(c)
Severability
. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, if any
term or provision hereof shall be deemed to be invalid or unenforceable, the
parties hereto shall mutually agree upon an amendment to this Agreement to
include a term or provision as similar in purpose to such invalid or
unenforceable term or provision as may be reasonably possible and which term or
provision is valid and enforceable.
(d)
Counterparts
. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
(e)
Entire
Agreement
. This Agreement (including
all agreements entered into pursuant hereto and all certificates and
instruments delivered pursuant hereto and thereto) constitute the entire
agreement of the parties with respect to the subject matter hereof and
24
supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.
(f)
Modifications
and Amendments
. No amendment,
modification or termination of this Agreement shall be binding upon any party
unless executed in writing by such party.
(g)
Titles
and Headings
. Titles and headings of
sections of this Agreement are for convenience only and shall not affect the
construction of any provision of this Agreement.
(h)
Waivers
and Extensions
. Any party entitled
to benefits under this Agreement may waive any right, breach or default which
such party has the right to waive;
provided
, that such waiver will not
be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement. Waivers may be made in advance or after the
right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained. No waiver or extension of
time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.
(i)
Remedies
Cumulative
. If the Company fails to
observe or perform any covenant or agreement to be observed or performed under
this Agreement, the Shareholder may proceed to protect and enforce its rights
by suit in equity or action at law, whether for specific performance of any
term contained in this Agreement or for an injunction against the breach of any
such term or in aid of the exercise of any power granted in this Agreement or
to enforce any other legal or equitable right, or to take any one or more of
such actions, without being required to post a bond. None of the rights, powers or remedies
conferred under this Agreement shall be mutually exclusive, and each such
right, power or remedy shall be cumulative and in addition to any other right,
power or remedy, whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.
(j)
Governing
Law
. This Agreement shall be
governed by and interpreted and construed in accordance with the laws of the
State of Delaware applicable to contracts formed and to be performed entirely
within the State of Delaware, without regard to
the conflicts of law provisions thereof to the extent such principles or rules would
require or permit the application of the laws of another jurisdiction. The Company and the Shareholder irrevocably
and unconditionally submit to the exclusive jurisdiction of any state or
federal court sitting in the State of Delaware, in any action arising out of or
relating to this Agreement, agree that all claims in respect of the action may
be heard and determined in any such court and agree not to bring any action
arising out of or relating to this Agreement in any other court. In any action, the Company and the
Shareholder irrevocably and unconditionally waive and agree not to assert by
way of motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above court, that such action is brought in an inconvenient
forum or that the venue of such action is improper. Without limiting the foregoing, the Company
and the Shareholder agree that service of process at each parties respective
addresses as provided for in Section 6.2 shall be deemed effective service
of process on such party.
25
(k)
Non-liability
of Trustees
. THE AMENDED AND
RESTATED DECLARATION OF TRUST OF HOSPITALITY PROPERTIES TRUST, DATED
AUGUST 21, 1995, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS AND
SUPPLEMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY
PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST AS SO
AMENDED AND SUPPLEMENTED, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF
HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES
TRUST. ALL PERSONS DEALING WITH
HOSPITALITY PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF
ANY OBLIGATION.
(l)
Legends
. The Shareholder understands and agrees that
the certificate representing the Shares issued to the Shareholder pursuant to
the Deferral Agreement (and any certificate or certificates issued in
replacement thereof) shall bear the following legends:
(a) “These securities have not been
registered under the Securities Act of 1933.
They may not be sold, offered for sale, pledged or hypothecated in the
absence of a registration statement in effect with respect to the securities
under the Securities Act or an opinion of counsel (which counsel shall be
reasonably satisfactory to TravelCenters of America LLC) that such registration
is not required or unless sold pursuant to Rule 144 of the Securities Act.”;
(b) any legend generally appearing of
certificates for the Company’s shares;
(c) and any legend required by applicable
state securities laws; and
(c) “These securities are subject to and
shall be transferable only upon the terms and conditions of the Deferral
Agreement, dated August 11, 2008, among TravelCenters of America LLC,
Hospitality Properties Trust and certain of their affiliates, A
copy of which is on file with the Secretary of TravelCenters of America LLC.”
Signatures
appear on the next page
26
Executed under seal
as
of the date first above written.
|
|
|
TRAVELCENTERS
OF AMERICA LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Thomas M. O’Brien
|
|
|
|
|
Name: Thomas M. O’Brien
|
|
|
|
|
Title: President
|
|
|
|
HOSPITALITY
PROPERTIES TRUST
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
John G. Murray
|
|
|
|
|
Name: John G. Murray
|
|
|
|
|
Title: President
|
27
Exhibit 99.1
|
400 Centre Street, Newton,
MA 02458-2076
|
|
tel: (617) 964-8389 fax:
(617) 969-5730
|
|
FOR IMMEDIATE RELEASE
|
Contacts:
|
|
|
Timothy
A. Bonang, Director of Investor Relations, or
|
|
|
Carlynn
Finn, Manager of Investor Relations
|
|
|
(617)
796-8232
|
|
|
www.hptreit.com
|
Hospitality
Properties Trust Announces 2008 Second Quarter Results and a Rent Deferral
Agreement with a Tenant
Newton, MA (August 11, 2008).
Hospitality Properties Trust (NYSE: HPT) today announced its operating
results for the quarter and six months ended June 30, 2008 and a rent
deferral agreement with a tenant.
Results for the quarter and six months ended June 30,
2008:
HPT’s net income (loss) available for common shareholders for the
periods ended June 30, 2008 compared to the same periods in 2007 were as
follows:
|
|
|
3 Months Ended June 30,
|
|
6 Months Ended June 30,
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
(in thousands, except per share data)
|
|
|
Net income (loss) available for common
shareholders
|
|
$
|
(24,549
|
)
|
$
|
46,812
|
|
$
|
23,737
|
|
$
|
85,825
|
|
|
Net income (loss) available for common
shareholders per share
|
|
$
|
(0.26
|
)
|
$
|
0.50
|
|
$
|
0.25
|
|
$
|
0.93
|
|
|
Weighted average common shares outstanding
|
|
93,942
|
|
93,868
|
|
93,918
|
|
92,323
|
|
The 2008 periods include a non-cash impairment charge of $53.2 million,
or $0.57 per share, related to the write down of certain intangible assets
arising from HPT’s January 2007 acquisition of TravelCenters of America, Inc.
to their estimated fair market value as of June 30, 2008. The results for the 2008 periods also reflect
the non-accrual of $3.5 million, or $0.04 per share, of straight line rent for
the quarter ended June 30, 2008, and a non-cash charge of $19.9 million,
or $0.21 per share, to record a reserve for the straight line rent receivable
recorded in periods prior to the three months ended June 30, 2008. The straight line rent amounts relate to HPT’s
lease with TravelCenters of America LLC (AMEX:TA) for 145 travel centers. Effective July 1, 2008, HPT and TA have
entered a rent deferral arrangement (see below).
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the New York Stock
Exchange.
No shareholder, Trustee or officer is
personally liable for any act or obligation of the Trust.
HPT’s funds from operations, or FFO, for the periods ended June 30,
2008 compared to the same periods in 2007 were as follows:
|
|
|
3 Months Ended June 30,
|
|
6 Months Ended June 30,
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
|
|
$
|
97,491
|
|
$
|
111,541
|
|
$
|
208,395
|
|
$
|
210,003
|
|
|
FFO per share
|
|
$
|
1.04
|
|
$
|
1.19
|
|
$
|
2.22
|
|
$
|
2.27
|
|
|
Weighted average common shares outstanding
|
|
93,942
|
|
93,868
|
|
93,918
|
|
92,323
|
|
FFO for the 2008 periods were affected by the
non-accrual of straight line rent and the non-cash charge to record a reserve
for straight line rent discussed above. See page 6 for a reconciliation of
FFO to net income available to common shareholders.
Rent Deferral Arrangement with TA:
Simultaneously with the announcement of these operating results, HPT
also announced that it has entered an agreement with TA to permit TA to defer
rent up to $5 million/month for up to 30 months beginning July 1, 2008.
When TA was created by HPT and TA shares were distributed to HPT
shareholders on January 31, 2007, TA was capitalized with approximately
$200 million of cash and working capital.
Later in 2007, TA and HPT acquired Petro Stopping Centers, L.P. and TA
completed an equity offering for net proceeds of approximately $205
million. At the time of these
transactions, HPT and TA believed that TA was adequately capitalized to meet
all of its obligations to HPT. However,
since then there have been material changes in the market conditions in which
TA operates. Specifically, the price of
diesel fuel which TA buys and sells at its travel centers has increased by
approximately 138% since the TA spin off on January 31, 2007 and by
approximately 109% since the Petro transaction was completed on May 30,
2007, through June 30, 2008. These
increased costs and the slowing of the U.S. economy during the past year have
adversely affected TA’s business and increased its working capital
requirements.
TA has undertaken a restructuring of its business to adjust to these
changed market conditions. Earlier today,
TA announced its results for the three months ended June 30, 2008, which
shows that TA has materially improved its financial results from those reported
during prior periods. HPT believes that
TA’s operating cash flows were sufficient to meet TA’s rent obligations in the
three months ended June 30, 2008.
However, while certain TA operating issues appear to have heen
corrected, TA’s balance sheet flexibility and liquidity remain a concern as
potential fuel price increases will likely directly impact TA’s working capital
requirements. In these circumstances,
HPT and TA have agreed upon a rent deferral arrangement to allow TA to build a
working capital cushion in the event that current adverse market conditions
persist for an extended period.
Significant terms of this arrangement include:
·
TA currently
leases 185 travel centers from HPT under two leases for combined rent of $18.8
million per month. This rent amount
periodically increases pursuant to formulas in the leases. TA will have the option to
2
defer its monthly rent payments to HPT by up
to $5 million/month for periods beginning July 1, 2008 until December 31,
2010.
·
TA will not be
obligated to pay cash interest on the deferred rent through December 31,
2009.
·
TA
will issue 1,540,000 TA common shares to HPT (
i.e
., 9.6% of TA’s shares
outstanding after this new issuance). In
the event TA does not defer its monthly rent payments for the full permitted
amounts through December 31, 2009, the pro-rata amount of TA shares issued
to HPT may be repurchased by TA for nominal consideration.
·
In the event
that any rents which have been deferred remain unpaid or additional rent
amounts are deferred after December 31, 2009, interest on all such amounts
will be payable to HPT monthly at the rate of 12% per annum, beginning January 1,
2010.
·
No rent deferrals are permitted for rent
periods after December 31, 2010. Any deferred rent (and interest
thereon) not paid will be due to HPT on July 1, 2011. Any deferred amounts (and interest) may be
prepaid at anytime.
·
This deferral
agreement also includes a prohibition on share purchases and dividends by TA
while any deferred rent remains unpaid and has change of control covenants so
that amounts deferred will be payable to HPT in the event TA experiences a
change of control while deferred rent is unpaid.
HPT pointed out that the
agreement it has entered with TA provides for rent deferral, not rent
forgiveness. HPT believes TA’s second
quarter 2008 results demonstrate that TA has a valuable business franchise
which can pay its rent obligations. This
agreement is intended by HPT to afford TA improved financial flexibility to
meet its working capital needs which have resulted from the unusual combination
of significant price increases during a period of slowing demand for the goods
and services which TA sells. Despite the
fact that this is a deferral agreement, HPT has determined that, due to the
uncertainties regarding TA’s ability to perform its obligations under the
leases, generally accepted accounting principles require HPT to reserve previously
accrued straight line rent and to defer recognition of future straight line and
deferred rents until circumstances change or these amounts are collected.
3
Hotel Portfolio Performance:
For the quarter and six months ended June 30,
2008 compared to the same periods last year, hotels owned by HPT produced
revenue per available room, or RevPAR, average daily rate, or ADR, and
occupancy as follows:
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
2007
|
|
Change
|
|
2008
|
|
2007
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RevPAR
|
|
$
|
82.80
|
|
$
|
81.10
|
|
2.1%
|
|
$
|
79.74
|
|
$
|
78.07
|
|
2.1%
|
|
ADR
|
|
110.25
|
|
107.99
|
|
2.1%
|
|
111.22
|
|
108.13
|
|
2.9%
|
|
Occupancy
|
|
75.1%
|
|
75.1%
|
|
—
|
|
71.7%
|
|
72.2%
|
|
-0.7pt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Dividend:
On July 9,
2008, HPT announced a regular quarterly common dividend of $0.77 per share
payable to shareholders of record on August 1, 2008; this dividend will be
paid on or about August 15, 2008.
Conference Call:
On Tuesday, August 12, 2008, at 11:00 a.m.
Eastern Time, John Murray, President and Chief Operating Officer, and Mark
Kleifges, Treasurer and Chief Financial Officer, will host a conference call to
discuss the results for the quarter and six months ended June 30, 2008 and
the rent deferral agreement with TA.
The
conference call telephone number is (888) 637-7725. Participants calling from outside the United
States and Canada should dial (913) 312-0866.
No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes
prior to the scheduled start of the call.
A replay of the conference call will be available through Tuesday, August 19,
2008. To hear the replay, dial (719) 457-0820. The replay pass code is 7663164.
A live audio webcast of the conference
call will also be available in a listen only mode on the company’s web site,
which is located at www.hptreit.com.
Participants wanting to access the webcast should visit the company’s
web site about five minutes before the call.
The archived webcast will be available for replay on HPT’s web site for
about one week after the call.
Supplemental Data:
A copy
of HPT’s Second Quarter 2008 Supplemental Operating and Financial Data is
available for download at HPT’s web site, www.hptreit.com.
Hospitality Properties Trust is a real estate investment trust, or
REIT, which owns 290 hotels and 185 travel centers located in 44 states, Puerto
Rico and Canada. HPT is headquartered in Newton, Massachusetts.
4
WARNING CONCERNING FORWARD LOOKING STATEMENTS
This press release contains forward looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 and other Federal Securities Laws.
These forward looking statements are based upon HPT’s present beliefs
and expectations, but they are not guaranteed to occur and they may not
occur. For example:
·
This
press release states that the agreement which HPT has entered with TA provides
for a rent deferral not for rent forgiveness, that this agreement will allow TA
to build a working capital cushion and improve TA’s financial flexibility and
that HPT believes TA has a valuable business franchise which can pay its rent
obligations. The implications of these
statements are that the rent deferral will provide TA with adequate working
capital to meet its business requirements and that TA will, in the future, pay
HPT the historical contractual rent, including the deferred amounts due
HPT. In fact, the deferral may not be
adequate for TA’s business and TA may be unable to pay rent to HPT at its
historical contractual rate or to pay HPT the deferred amounts.
Among other reasons why these forward looking
statements may not occur are the following, most or all of which are beyond HPT’s
control:
·
The
price which TA must pay to purchase diesel fuel and other products which it
sells may continue to materially increase, and these price increases may
increase TA’s working capital requirements more than currently expected;
·
The
current slowing of the U.S. economy may continue for longer or be worse than
HPT now anticipates. Such circumstances
may reduce the demand for TA’s goods and services and reduce TA’s ability to
generate the cash flows necessary to pay HPT’s 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, each of which may affect the demand for TA’s goods
and services by truckers, would adversely affect TA’s business and TA’s ability
to pay rents, including deferred amounts due to HPT; or
·
TA
may be or become unable to properly manage its business to produce adequate
cash flows to pay its obligations.
For these reasons, among others, investors
are cautioned not to place undue reliance upon the forward looking statements
and their implications in this press release.
5
Hospitality Properties Trust
CONSOLIDATED STATEMENT OF INCOME AND FUNDS
FROM OPERATIONS
(in thousands, except per share data)
(Unaudited)
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating revenues
(1)
|
|
$
|
244,566
|
|
$
|
249,774
|
|
$
|
467,006
|
|
$
|
474,245
|
|
|
Rental
income
(1)
|
|
87,561
|
|
77,540
|
|
177,517
|
|
135,150
|
|
|
FF&E
reserve income
(2)
|
|
6,342
|
|
5,769
|
|
12,525
|
|
11,208
|
|
|
Interest
income
|
|
306
|
|
658
|
|
906
|
|
3,806
|
|
|
Total
revenues
|
|
338,775
|
|
333,741
|
|
657,954
|
|
624,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating expenses
(1)
|
|
177,471
|
|
184,311
|
|
333,847
|
|
344,709
|
|
|
Interest
(including amortization of deferred financing costs
of $1,009, $913, $2,048 and $1,652,
respectively)
|
|
36,528
|
|
33,795
|
|
74,097
|
|
64,450
|
|
|
Depreciation and amortization
|
|
59,577
|
|
54,505
|
|
117,828
|
|
102,823
|
|
|
General and
administrative
|
|
9,595
|
|
9,160
|
|
21,039
|
|
16,953
|
|
|
TA spin off
costs
(3)
|
|
—
|
|
—
|
|
—
|
|
2,711
|
|
|
Reserve for
straight line rent receivable
(4)
|
|
19,613
|
|
—
|
|
19,613
|
|
—
|
|
|
Loss on
asset impairment
(5)
|
|
53,225
|
|
—
|
|
53,225
|
|
—
|
|
|
Total
expenses
|
|
356,009
|
|
281,771
|
|
619,649
|
|
531,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before gain on sale of real estate and income taxes
|
|
(17,234
|
)
|
51,970
|
|
38,305
|
|
92,763
|
|
|
Gain on sale
of real estate
(6)
|
|
629
|
|
—
|
|
1,274
|
|
—
|
|
|
Income
(loss) before income taxes
|
|
(16,605
|
)
|
51,970
|
|
39,579
|
|
92,763
|
|
|
Income tax
expense
|
|
(474
|
)
|
(743
|
)
|
(902
|
)
|
(1,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
(17,079
|
)
|
51,227
|
|
38,677
|
|
91,541
|
|
|
Income from
discontinued operations
(7)
|
|
—
|
|
3,055
|
|
—
|
|
6,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(17,079
|
)
|
54,282
|
|
38,677
|
|
97,654
|
|
|
Preferred
distributions
|
|
(7,470
|
)
|
(7,470
|
)
|
(14,940
|
)
|
(11,829
|
)
|
|
Net income
(loss) available for common shareholders
|
|
$
|
(24,549
|
)
|
$
|
46,812
|
|
$
|
23,737
|
|
$
|
85,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation
of FFO
(8)
:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for common
shareholders
|
|
$
|
(24,549
|
)
|
$
|
46,812
|
|
$
|
23,737
|
|
$
|
85,825
|
|
|
Add: FF&E
deposits not in net income
(discontinued
operations)
(2)
|
|
—
|
|
492
|
|
—
|
|
990
|
|
|
Depreciation and amortization (continuing
operations)
|
|
59,577
|
|
54,505
|
|
117,828
|
|
102,823
|
|
|
Depreciation and amortization (discontinued
operations)
(7)
|
|
—
|
|
754
|
|
—
|
|
1,507
|
|
|
Deferred percentage rent (continuing
operations)
(7)
|
|
1,550
|
|
1,612
|
|
3,102
|
|
3,097
|
|
|
Deferred percentage rent (discontinued
operations)
(7)(9)
|
|
—
|
|
72
|
|
—
|
|
257
|
|
|
Deferred additional returns (continuing
operations)
(10)
|
|
8,317
|
|
7,294
|
|
11,777
|
|
12,793
|
|
|
Loss on asset impairment (continuing
operations)
(5)
|
|
53,225
|
|
—
|
|
53,225
|
|
—
|
|
|
TA spin off costs (continuing operations)
(3)
|
|
—
|
|
—
|
|
—
|
|
2,711
|
|
|
Less: Gain on sale of real
estate (continuing operations)
(6)
|
|
(629
|
)
|
—
|
|
(1,274
|
)
|
—
|
|
|
Funds from operations (“FFO”)
|
|
$
|
97,491
|
|
$
|
111,541
|
|
$
|
208,395
|
|
$
|
210,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
93,942
|
|
93,868
|
|
93,918
|
|
92,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common
share amounts:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available for common shareholders
|
|
$
|
(0.26
|
)
|
$
|
0.47
|
|
$
|
0.25
|
|
$
|
0.86
|
|
|
Income from discontinued operations
available for common shareholders
|
|
$
|
0.00
|
|
$
|
0.03
|
|
$
|
0.00
|
|
$
|
0.07
|
|
|
Net income (loss) available for common
shareholders
|
|
$
|
(0.26
|
)
|
$
|
0.50
|
|
$
|
0.25
|
|
$
|
0.93
|
|
|
FFO
(8)
|
|
$
|
1.04
|
|
$
|
1.19
|
|
$
|
2.22
|
|
$
|
2.27
|
|
|
Common distributions declared
|
|
$
|
0.77
|
|
$
|
0.76
|
|
$
|
1.54
|
|
$
|
1.52
|
|
See
Notes on page 6
6
|
(1)
|
|
At
June 30, 2008, each of our 290 hotels are included in one of eleven
operating agreements of which 198 are leased to 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)
|
|
Various percentages of
total sales at most of our hotels are escrowed as reserves for future
renovations or refurbishment, or FF&E Reserve escrows. At June 30,
2008, we own all the FF&E escrows for our hotels. Through July 26,
2007, we had a security and remainder interest in the FF&E Reserve
escrows for our former Homestead Studio Suites hotels (see Note 7). When we
own the FF&E Reserve escrows at hotels leased to third parties we report
payments into the escrow as additional rent.
When we had a security and remainder
interest in the FF&E Reserve escrows of our Homestead Studio Suites
hotels, deposits were not included in revenue. We do not report the
amounts which are escrowed as FF&E reserves for our managed hotels as
FF&E reserve income in our consolidated statement of income.
|
|
|
|
|
|
(3)
|
|
During the first quarter
of 2007, we expensed $2,711 of costs in connection with the spin off of our
former subsidiary, TravelCenters of America LLC, or TA, to our shareholders
on January 31, 2007.
|
|
|
|
|
|
(4)
|
|
During the second
quarter of 2008, we recorded a $19,613, or $.21 per share, non-cash reserve
for the straight line rent receivable relating to our lease with TA for 145
travel centers.
|
|
|
|
|
|
(5)
|
|
During the second
quarter of 2008, we recorded a $53,225, or $.57 per share, non-cash loss on
asset impairment related to the write down of certain intangible assets
arising from our TA acquisition to their estimated fair value.
|
|
|
|
|
|
(6)
|
|
On February 5, 2008, we sold our Park Plaza hotel in North
Phoenix, Arizona for $8,000 and recognized a gain on sale of $645. On
June 18, 2008, we sold our AmeriSuites hotel in Atlantic Beach, North
Carolina for $6,350 and recognized a gain on sale of $629.
|
|
|
|
|
|
(7)
|
|
Income from
discontinued operations relates to the 18 Homestead Studio Suites hotels that
we sold in July 2007. We have reclassified our consolidated statement of
income for all periods presented to show the results of operations of the
hotels which have been sold as discontinued.
|
|
|
|
|
|
(8)
|
|
We compute FFO as
shown. Our calculation of FFO differs from the National Association of Real Estate
Investment Trusts, or NAREIT, definition because we include FF&E deposits
not included in net income (loss) (see Note 2), deferred percentage rent (see
Note 9) and deferred additional returns (see Note 10) and exclude loss on
asset impairment (see Note 5) and TA spin off costs (see Note 3). We consider
FFO to be an appropriate measure of performance for a REIT, along with net
income and cash flows 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, it may facilitate comparison of operating performance among REITs.
FFO 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. FFO is among
the important factors considered by our board of trustees when determining
the amount of distributions to shareholders. Other important factors include,
but are not limited to, requirements to maintain our status as a REIT,
limitations in our revolving 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.
|
|
|
|
|
|
(9)
|
|
In calculating net
income (loss) 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 FFO for each quarter
of the year. The fourth quarter FFO calculation excludes the amounts
recognized during the first three quarters.
|
|
|
|
|
|
(10)
|
|
Our
share of the operating results of our managed hotels in excess of the minimum
returns due to us, or additional returns, are generally determined based upon
annual calculations. In calculating net income
(loss)
, 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 (loss), we include these
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.
|
7
Hospitality Properties Trust
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except share data)
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties, at cost:
|
|
|
|
|
|
|
Land
|
|
$
|
1,392,390
|
|
$
|
1,377,520
|
|
|
Buildings, improvements and equipment
|
|
4,958,778
|
|
4,818,711
|
|
|
|
|
6,351,168
|
|
6,196,231
|
|
|
Accumulated depreciation
|
|
(950,212
|
)
|
(849,470
|
)
|
|
|
|
5,400,956
|
|
5,346,761
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
13,492
|
|
23,401
|
|
|
Restricted cash (FF&E reserve escrow)
|
|
37,003
|
|
28,134
|
|
|
Other assets, net
|
|
190,424
|
|
281,011
|
|
|
|
|
$
|
5,641,875
|
|
$
|
5,679,307
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
$
|
401,000
|
|
$
|
158,000
|
|
|
Senior notes, net of discounts
|
|
1,693,245
|
|
1,842,756
|
|
|
Convertible senior notes
|
|
575,000
|
|
575,000
|
|
|
Mortgage payable
|
|
3,597
|
|
3,635
|
|
|
Security deposits
|
|
169,406
|
|
169,406
|
|
|
Accounts payable and other liabilities
|
|
122,716
|
|
134,705
|
|
|
Due to affiliate
|
|
4,697
|
|
4,617
|
|
|
Dividends payable
|
|
4,754
|
|
4,754
|
|
|
Total liabilities
|
|
2,974,415
|
|
2,892,873
|
|
|
|
|
|
|
|
|
|
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; 93,951,260 and 93,892,719 shares issued
and outstanding, respectively
|
|
940
|
|
939
|
|
|
Additional paid-in capital
|
|
3,050,766
|
|
3,048,881
|
|
|
Cumulative net income
|
|
1,749,755
|
|
1,711,079
|
|
|
Cumulative preferred distributions
|
|
(108,701
|
)
|
(93,761
|
)
|
|
Cumulative common distributions
|
|
(2,415,439
|
)
|
(2,270,843
|
)
|
|
Total shareholders’ equity
|
|
2,667,460
|
|
2,786,434
|
|
|
|
|
$
|
5,641,875
|
|
$
|
5,679,307
|
|
(end)
8
Exhibit 99.2
HOSPITALITY PROPERTIES TRUST
Second Quarter 2008
Supplemental Operating and Financial Data
Unless otherwise noted all amounts in this
report are unaudited.
TABLE OF CONTENTS
|
|
|
Page
|
|
|
|
|
|
CORPORATE INFORMATION
|
|
|
|
|
|
|
|
Company
Profile
|
5
|
|
|
Investor
Information
|
6
|
|
|
Research
Coverage
|
7
|
|
|
|
|
|
FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Key
Financial Data
|
9
|
|
|
Consolidated
Balance Sheet
|
10
|
|
|
Consolidated
Statement of Income
|
11
|
|
|
Notes
to Consolidated Statement of Income
|
12
|
|
|
Consolidated
Statement of Cash Flows
|
13
|
|
|
Calculation
of EBITDA
|
14
|
|
|
Calculation
of Funds from Operations (FFO)
|
15
|
|
|
Segment
Information
|
16
|
|
|
Debt
Summary
|
18
|
|
|
Debt
Maturity Schedule
|
19
|
|
|
Leverage
Ratios, Coverage Ratios and Public Debt Covenants
|
20
|
|
|
FF&E
Reserve Escrows
|
21
|
|
|
2008
Acquisitions and Dispositions Information
|
22
|
|
|
2008
Financing Activities
|
23
|
|
|
|
|
|
OPERATING
AGREEMENTS AND PORTFOLIO INFORMATION
|
|
|
|
|
|
|
|
Summary
of Operating Agreements
|
25
|
|
|
Portfolio
by Operating Agreement, Manager and Brand
|
26
|
|
|
Operating
Statistics by Hotel Operating Agreement
|
27
|
|
|
Coverage
by Operating Agreement
|
28
|
|
|
Operating
Agreement Expiration Schedule
|
29
|
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. THESE FORWARD LOOKING STATEMENTS
APPEAR IN A NUMBER OF PLACES IN THIS REPORT AND INCLUDE BUT ARE NOT LIMITED TO
STATEMENTS REGARDING OUR INTENT, BELIEF OR EXPECTATION, OR THE INTENT, BELIEF
OR EXPECTATION OF OUR TRUSTEES AND OFFICERS WITH RESPECT TO:
·
OUR
MANAGERS’ OR TENANTS’ ABILITIES TO PAY RETURNS OR RENT TO US;
·
OUR
ABILITY TO PURCHASE ADDITIONAL PROPERTIES;
·
OUR
INTENT TO REFURBISH OR REBRAND CERTAIN OF OUR PROPERTIES;
·
OUR
ABILITY TO PAY INTEREST AND DEBT PRINCIPAL AND MAKE DISTRIBUTIONS;
·
OUR
POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS;
·
OUR
TAX STATUS AS A REAL ESTATE INVESTMENT TRUST;
·
OUR
ABILITY TO APPROPRIATELY BALANCE THE USE OF DEBT AND EQUITY AND TO RAISE
CAPITAL; AND
·
OTHER
MATTERS.
ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE
FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. SUCH FACTORS INCLUDE, WITHOUT LIMITATION:
·
THE
IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS (INCLUDING THE RECENT
CHANGES IN THE CAPITAL MARKETS) ON US AND OUR MANAGERS AND TENANTS;
·
COMPLIANCE
WITH AND CHANGES TO LAWS AND REGULATIONS AFFECTING THE REAL ESTATE, HOTEL,
TRANSPORATION AND TRAVEL CENTER INDUSTRIES; AND
·
COMPETITION
WITHIN THE REAL ESTATE, HOTEL AND TRAVEL CENTER INDUSTRIES GENERALLY AND AMONG
REITS.
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;
·
HOTEL ROOM DEMAND IS USUALLY
A REFLECTION OF GENERAL ECONOMIC ACTIVITY IN THE UNITED STATES; AND IF HOTEL
ROOM DEMAND BECOMES DEPRESSED BECAUSE OF A GENERAL SLOWING OF THE ECONOMY, THE
OPERATING RESULTS OF OUR HOTELS MAY DECLINE, THE FINANCIAL RESULTS OF OUR
MANAGERS AND TENANTS MAY DECLINE AND OUR OPERATORS AND TENANTS MAY BE
UNABLE TO PAY OUR RETURNS OR RENTS;
·
THE PRICE WHICH TA MUST PAY
TO PURCHASE DIESEL FUEL AND OTHER PRODUCTS WHICH IT SELLS MAY CONTINUE TO
MATERIALLY INCREASE, AND THESE PRICE INCREASES MAY INCREASE TA’S WORKING
CAPITAL REQUIREMENTS MORE THAN CURRENTLY EXPECTED;
·
THE CURRENT SLOWING OF THE
U.S. ECONOMY MAY CONTINUE FOR LONGER OR BE WORSE THAN HPT NOW
ANTICIPATES. SUCH CIRCUMSTANCES MAY REDUCE
THE DEMAND FOR TA’S GOODS AND SERVICES AND REDUCE TA’S ABILITY TO GENERATE THE
CASH FLOWS NECESSARY TO PAY HPT’S 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, EACH OF WHICH MAY AFFECT THE DEMAND FOR TA’S GOODS AND SERVICES BY
TRUCKERS, WOULD ADVERSELY AFFECT TA’S BUSINESS AND TA’S ABILITY TO PAY RENTS,
INCLUDING DEFERRED AMOUNTS DUE TO HPT; OR
·
TA MAY BE OR BECOME
UNABLE TO PROPERLY MANAGE ITS BUSINESS TO PRODUCE ADEQUATE CASH FLOWS TO PAY
ITS OBLIGATIONS; AND
·
WE MAY BE UNABLE TO
IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE
PRICES, AQCUISITION FINANCING TERMS, MANAGEMENT AGREEMENTS OR LEASE TERMS FOR
NEW PROPERTIES.
THESE UNEXPECTED RESULTS COULD OCCUR FOR MANY DIFFERENT REASONS, SOME
OF WHICH, SUCH AS NATURAL DISASTERS OR CHANGES IN OUR MANAGERS’ OR TENANTS’
REVENUES OR COSTS, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY, ARE
BEYOND OUR CONTROL.
OTHER RISKS MAY ADVERSELY IMPACT US, AS DESCRIBED MORE FULLY IN
OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007 UNDER “ITEM
1A. RISK FACTORS.”
FORWARD
LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
YOU
SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT
AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD LOOKING
STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
COMPANY PROFILE
|
The Company:
Hospitality Properties Trust is a real
estate investment trust, or REIT. As
of June 30, 2008, we owned 290 hotels and 185 travel centers located in
44 states, Puerto Rico, and Canada. At June 30, 2008, our properties
were operated by operating 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.
|
|
Strategy:
Our business strategy is to maintain and
grow an investment portfolio of high quality hotels and travel centers
operated by experienced managers. Our properties are managed or leased under
long term agreements that provide us cash flows in the form of minimum
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
|
|
Management:
Hospitality Properties Trust is managed by
Reit Management & Research LLC, or RMR. RMR was founded in 1986 to
manage public investments in real estate. As of June 30, 2008, RMR
managed one of the largest portfolios of
publicly owned real estate in the United States, including over 1,300
properties, located in 45 states, Washington, DC, Puerto Rico and Ontario,
Canada. RMR has approximately 550 employees
in its headquarters and regional offices
located throughout the Country. In addition to managing HPT, RMR and its affiliates also
manage HRPT Properties Trust, a
publicly traded REIT that primarily
owns office buildings and industrial
properties, Senior Housing Properties
Trust, a publicly traded REIT that primarily owns senior living properties, eight publicly
traded mutual funds, which principally
invest in securities of real estate companies (excluding securities of companies managed
by RMR and its affiliates) and two
real estate based operating companies in the healthcare and travel center
industries. The public companies managed by RMR and its affiliates had
combined total market capitalization of approximately $14 billion as of June 30,
2008. 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 provides management services to HPT at costs that
are lower than HPT would have to pay for similar quality services.
|
|
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 do not have any investments in joint ventures or partnerships.
|
|
Stock Exchange Listing:
|
|
Corporate Headquarters:
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
Senior Unsecured Debt Ratings:
|
|
|
|
|
|
|
|
Standard &
Poor’s — BBB
|
|
|
|
Moody’s
— Baa2
|
|
|
Portfolio Data by Manager (as of 6/30/08):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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%
|
|
$
|
1,778,777
|
|
28%
|
|
$
|
153,270
|
|
27%
|
|
Marriott International
|
|
125
|
|
17,926
|
|
42%
|
|
1,540,123
|
|
24%
|
|
157,191
|
|
27%
|
|
Hyatt
|
|
23
|
|
2,784
|
|
6%
|
|
302,902
|
|
5%
|
|
21,837
|
|
4%
|
|
Carlson
|
|
11
|
|
2,096
|
|
5%
|
|
202,251
|
|
3%
|
|
12,920
|
|
2%
|
|
TA
(2)(3)
|
|
185
|
|
N/A
|
|
N/A
|
|
2,525,186
|
|
40%
|
|
225,796
|
|
40%
|
|
Total
|
|
475
|
|
42,946
|
|
100%
|
|
$
|
6,349,239
|
|
100%
|
|
$
|
571,014
|
|
100%
|
Operating Statistics by Operating Agreement (Q2 2008):
|
|
|
|
|
|
|
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
|
|
Q2
|
|
LTM
|
|
Q2
|
|
LTM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
InterContinental (no. 1)
|
|
31
|
|
3,844
|
|
$
|
37,882
|
|
7%
|
|
1.29
|
x
|
1.14
|
x
|
3.2%
|
|
6.2%
|
|
InterContinental (no. 2)
|
|
76
|
|
9,220
|
|
50,000
|
|
9%
|
|
1.55
|
x
|
1.42
|
x
|
0.9%
|
|
1.5%
|
|
InterContinental (no. 3)
|
|
14
|
|
4,139
|
|
44,258
|
|
8%
|
|
1.59
|
x
|
1.36
|
x
|
1.6%
|
|
5.2%
|
|
InterContinental (no. 4)
|
|
10
|
|
2,937
|
|
21,130
|
|
4%
|
|
1.18
|
x
|
1.18
|
x
|
0.2%
|
|
0.2%
|
|
Marriott (no. 1)
|
|
53
|
|
7,610
|
|
58,544
|
|
10%
|
|
1.74
|
x
|
1.60
|
x
|
-0.5%
|
|
3.5%
|
|
Marriott (no. 2)
|
|
18
|
|
2,178
|
|
20,643
|
|
3%
|
|
1.25
|
x
|
1.20
|
x
|
-2.0%
|
|
-0.8%
|
|
Marriott (no. 3)
(6)
|
|
34
|
|
5,026
|
|
43,974
|
|
8%
|
|
1.47
|
x
|
1.26
|
x
|
-0.5%
|
|
2.0%
|
|
Marriott (no. 4)
|
|
19
|
|
2,756
|
|
28,508
|
|
5%
|
|
1.29
|
x
|
1.22
|
x
|
1.0%
|
|
4.1%
|
|
Marriott (no. 5)
(6)
|
|
1
|
|
356
|
|
5,522
|
|
1%
|
|
0.36
|
x
|
0.61
|
x
|
-5.2%
|
|
4.2%
|
|
Hyatt
|
|
23
|
|
2,784
|
|
21,837
|
|
4%
|
|
1.19
|
x
|
0.85
|
x
|
31.0%
|
|
28.8%
|
|
Carlson
|
|
11
|
|
2,096
|
|
12,920
|
|
2%
|
|
1.51
|
x
|
1.61
|
x
|
3.3%
|
|
5.3%
|
|
TA (no. 1)
(2)(3)
|
|
145
|
|
N/A
|
|
159,619
|
|
28%
|
|
1.43
|
x
|
1.17
|
x
|
N/A
|
|
N/A
|
|
TA (no. 2)
(2)
|
|
40
|
|
N/A
|
|
66,177
|
|
11%
|
|
1.51
|
x
|
1.14
|
x
|
N/A
|
|
N/A
|
|
Total / Average
|
|
475
|
|
42,946
|
|
$
|
571,014
|
|
100%
|
|
|
|
|
|
2.1%
|
|
4.2%
|
(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 a rent deferral arrangement with TA which provides TA the option to
defer payments of up to $5 million/month of rent under the two lease for the
period July 1, 2008 until December 31, 2010. TA rents presented in this report are for
periods through June 30, 2008 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 $163,660,
$167,714, $172,770 and $177,827 in 2009, 2010, 2011 and 2012, respectively.
(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.
(5) We define RevPAR as hotel room
revenue per day per available room.
RevPar change is the RevPar percentage change in the periods ending June 30,
2008 over the comparable year earlier periods.
(6) Effective January 1, 2008 we
entered into a new lease for our Marriott Kauai Resort Beach Club hotel with a
subsidiary of Marriott International, Inc.
This hotel was previously included in Marriott agreement no. 3 and
leased to one of our taxable REIT subsidiaries.
5
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
INVESTOR INFORMATION
Board of Trustees
|
Barry
M. Portnoy
|
Adam
D. Portnoy
|
|
Managing Trustee
|
Managing Trustee
|
|
|
|
|
Frank
J. Bailey
|
William
A. Lamkin
|
|
Independent Trustee
|
Independent Trustee
|
|
|
|
|
John
L. Harrington
|
|
|
Independent Trustee
|
|
Senior Management
|
John
G. Murray
|
Mark
L. Kleifges
|
|
President, Chief Operating Officer and Secretary
|
Treasurer and Chief Financial Officer
|
|
|
|
|
Ethan
S. Bornstein
|
|
|
Senior Vice President
|
|
|
Contact Information
|
|
|
|
|
|
|
|
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
|
6
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
RESEARCH COVERAGE
Equity Research Coverage
|
Keefe, Bruyette & Woods
|
Stifel, Nicolaus
|
|
Smedes
Rose
|
Rod
Petrik
|
|
(212)
887-3696
|
(410)
454-4131
|
|
|
|
|
Morgan Keegan
|
UBS
|
|
Napoleon
Overton
|
William
Truelove
|
|
(901)
579-4865
|
(212)
713-8825
|
|
|
|
|
Morgan Stanley
|
Wachovia Securities
|
|
Celeste
Mellet Brown
|
Jeffrey
Donnelly
|
|
(212)
761-3896
|
(617)
603-4262
|
|
|
|
|
RBC
|
|
|
Mike
Salinsky
|
|
|
(216)
378-7627
|
|
Debt Research Coverage
|
Credit Suisse
|
UBS
|
|
Matthew
Lynch
|
Michael
Dimler
|
|
(212)
325-6456
|
(203)
719-3841
|
Rating Agencies
|
Moody’s Investors Service
|
Standard and Poor’s
|
|
Maria
Maslovsky
|
Emile
Courtney
|
|
(212)
553-4831
|
(212)
438-7824
|
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.
7
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
KEY FINANCIAL DATA
(amounts
in thousands, except per share data)
|
|
|
As of and For the Three Months Ended
|
|
|
|
|
6/30/2008
|
|
3/31/2008
|
|
12/31/2007
|
|
9/30/2007
|
|
6/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding (at end of
period)
|
|
93,951
|
|
93,893
|
|
93,893
|
|
93,890
|
|
93,869
|
|
|
Weighted average common shares outstanding
- basic and diluted
(1)
|
|
93,942
|
|
93,893
|
|
93,891
|
|
93,872
|
|
93,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Price at end of period
|
|
$
|
24.46
|
|
$
|
34.02
|
|
$
|
32.22
|
|
$
|
40.65
|
|
$
|
41.49
|
|
|
High during period
|
|
$
|
34.43
|
|
$
|
37.17
|
|
$
|
43.18
|
|
$
|
44.30
|
|
$
|
47.88
|
|
|
Low during period
|
|
$
|
24.26
|
|
$
|
29.50
|
|
$
|
32.02
|
|
$
|
36.00
|
|
$
|
40.75
|
|
|
Annualized dividends paid per share
|
|
$
|
3.08
|
|
$
|
3.08
|
|
$
|
3.08
|
|
$
|
3.08
|
|
$
|
3.04
|
|
|
Annualized dividend yield (at end of
period)
|
|
12.6%
|
|
9.1%
|
|
9.6%
|
|
7.6%
|
|
7.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book Capitalization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
2,672,842
|
|
$
|
2,667,619
|
|
$
|
2,579,391
|
|
$
|
2,558,154
|
|
$
|
2,731,994
|
|
|
Plus: total shareholders’ equity
|
|
2,667,460
|
|
2,762,420
|
|
2,786,434
|
|
2,782,728
|
|
2,711,505
|
|
|
Total book capitalization
|
|
$
|
5,340,302
|
|
$
|
5,430,039
|
|
$
|
5,365,825
|
|
$
|
5,340,882
|
|
$
|
5,443,499
|
|
|
Total debt / total book capitalization
|
|
50.1%
|
|
49.1%
|
|
48.1%
|
|
47.9%
|
|
50.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,641,875
|
|
$
|
5,711,717
|
|
$
|
5,679,307
|
|
$
|
5,647,155
|
|
$
|
5,790,013
|
|
|
Total liabilities
|
|
$
|
2,974,415
|
|
$
|
2,949,297
|
|
$
|
2,892,873
|
|
$
|
2,864,427
|
|
$
|
3,078,508
|
|
|
Real estate, at cost
|
|
$
|
6,351,168
|
|
$
|
6,264,855
|
|
$
|
6,196,231
|
|
$
|
6,154,580
|
|
$
|
6,259,353
|
|
|
Total debt / real estate, at cost
|
|
42.1%
|
|
42.6%
|
|
41.6%
|
|
41.6%
|
|
43.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Capitalization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt (book value)
|
|
$
|
2,672,842
|
|
$
|
2,667,619
|
|
$
|
2,579,391
|
|
$
|
2,558,154
|
|
$
|
2,731,994
|
|
|
Plus: market value of preferred shares (at
end of period)
|
|
293,808
|
|
331,157
|
|
314,333
|
|
362,717
|
|
394,674
|
|
|
Plus: market value of common shares (at end
of period)
|
|
2,298,041
|
|
3,194,240
|
|
3,025,232
|
|
3,816,629
|
|
3,894,625
|
|
|
Total market capitalization
|
|
$
|
5,264,691
|
|
$
|
6,193,016
|
|
$
|
5,918,956
|
|
$
|
6,737,500
|
|
$
|
7,021,293
|
|
|
Total debt / total market capitalization
|
|
50.8%
|
|
43.1%
|
|
43.6%
|
|
38.0%
|
|
38.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
338,775
|
|
$
|
319,179
|
|
$
|
326,760
|
|
$
|
334,310
|
|
$
|
333,741
|
|
|
EBITDA
(2)(4)
|
|
$
|
141,963
|
|
$
|
156,371
|
|
$
|
154,317
|
|
$
|
159,502
|
|
$
|
153,057
|
|
|
Net income (loss) available for common
shareholders
(3)(4)(5
)
|
|
$
|
(24,549
|
)
|
$
|
48,286
|
|
$
|
75,984
|
|
$
|
142,390
|
|
$
|
46,812
|
|
|
Funds from operations (FFO) available for
common shareholders
(4)(6)
|
|
$
|
97,491
|
|
$
|
110,904
|
|
$
|
108,270
|
|
$
|
113,572
|
|
$
|
111,541
|
|
|
Common distributions declared
|
|
$
|
72,342
|
|
$
|
72,298
|
|
$
|
72,298
|
|
$
|
72,295
|
|
$
|
72,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available for common shareholders
(3)(4)
|
|
$
|
(0.26
|
)
|
$
|
0.51
|
|
$
|
0.81
|
|
$
|
0.48
|
|
$
|
0.47
|
|
|
Income from discontinued operations
available for common shareholders
(5)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1.03
|
|
$
|
0.03
|
|
|
Net income (loss) available for common
shareholders
(3)(4)(5)
|
|
$
|
(0.26
|
)
|
$
|
0.51
|
|
$
|
0.81
|
|
$
|
1.52
|
|
$
|
0.50
|
|
|
FFO available for common shareholders
(4)(6)
|
|
$
|
1.04
|
|
$
|
1.18
|
|
$
|
1.15
|
|
$
|
1.21
|
|
$
|
1.19
|
|
|
Common distributions declared
|
|
$
|
0.77
|
|
$
|
0.77
|
|
$
|
0.77
|
|
$
|
0.77
|
|
$
|
0.76
|
|
|
FFO payout ratio
|
|
74.2%
|
|
65.2%
|
|
67.0%
|
|
63.6%
|
|
63.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(2)
/ interest expense
|
|
3.9x
|
|
4.2x
|
|
4.1x
|
|
4.2x
|
|
4.5x
|
|
|
EBITDA
(2)
/ interest expense
and preferred distributions
|
|
3.2x
|
|
3.5x
|
|
3.4x
|
|
3.5x
|
|
3.7x
|
|
(1) HPT had no outstanding dilutive common share equivalents
during the periods presented.
(2) See page 14 for our calculation of EBITDA.
(3) 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.
(4) 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.
(5) Includes for the quarter ended September 30, 2007, a
$95,711, or a $1.02 per share, gain from the sale of real estate.
(6) See page 15 for our calculation of FFO.
9
Hospitality Properties Trust
Supplemental Operating
and Financial Data
June 30, 2008
CONSOLIDATED BALANCE
SHEET
(dollars in thousands, except share data)
|
|
|
As of
June 30,
2008
|
|
As of
December 31,
2007
|
|
|
|
|
|
|
(Audited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties, at cost:
|
|
|
|
|
|
|
Land
|
|
$
|
1,392,390
|
|
$
|
1,377,520
|
|
|
Buildings, improvements and equipment
|
|
4,958,778
|
|
4,818,711
|
|
|
|
|
6,351,168
|
|
6,196,231
|
|
|
Accumulated depreciation
|
|
(950,212
|
)
|
(849,470
|
)
|
|
|
|
5,400,956
|
|
5,346,761
|
|
|
Cash and cash equivalents
|
|
13,492
|
|
23,401
|
|
|
Restricted cash (FF&E reserve escrow)
|
|
37,003
|
|
28,134
|
|
|
Other assets, net
|
|
190,424
|
|
281,011
|
|
|
|
|
$
|
5,641,875
|
|
$
|
5,679,307
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
$
|
401,000
|
|
$
|
158,000
|
|
|
Senior notes, net of discounts
|
|
1,693,245
|
|
1,842,756
|
|
|
Convertible senior notes
|
|
575,000
|
|
575,000
|
|
|
Mortgage payable
|
|
3,597
|
|
3,635
|
|
|
Security deposits
|
|
169,406
|
|
169,406
|
|
|
Accounts payable and other liabilities
|
|
122,716
|
|
134,705
|
|
|
Due to affiliates
|
|
4,697
|
|
4,617
|
|
|
Dividends payable
|
|
4,754
|
|
4,754
|
|
|
Total liabilities
|
|
2,974,415
|
|
2,892,873
|
|
|
|
|
|
|
|
|
|
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; 93,951,260 and 93,892,719 shares
issued and outstanding, respectively
|
|
940
|
|
939
|
|
|
Additional paid-in capital
|
|
3,050,766
|
|
3,048,881
|
|
|
Cumulative net income
|
|
1,749,755
|
|
1,711,079
|
|
|
Cumulative preferred distributions
|
|
(108,701
|
)
|
(93,761
|
)
|
|
Cumulative common distributions
|
|
(2,415,439
|
)
|
(2,270,843
|
)
|
|
Total shareholders’ equity
|
|
2,667,460
|
|
2,786,434
|
|
|
|
|
$
|
5,641,875
|
|
$
|
5,679,307
|
|
10
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
CONSOLIDATED STATEMENT OF INCOME
(in
thousands, except per share data)
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
6/30/2008
|
|
6/30/2007
|
|
6/30/2008
|
|
6/30/2007
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
(1)
|
|
$
|
244,566
|
|
$
|
249,774
|
|
$
|
467,006
|
|
$
|
474,245
|
|
|
Minimum rent
(1)
|
|
87,561
|
|
77,540
|
|
177,517
|
|
135,150
|
|
|
FF&E reserve income
(2)
|
|
6,342
|
|
5,769
|
|
12,525
|
|
11,208
|
|
|
Interest income
|
|
306
|
|
658
|
|
906
|
|
3,806
|
|
|
Total revenues
|
|
338,775
|
|
333,741
|
|
657,954
|
|
624,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
177,471
|
|
184,311
|
|
333,847
|
|
344,709
|
|
|
Interest (including amortization of
deferred financing costs of $1,009, $913, $2,048 and $1,652, respectively)
|
|
36,528
|
|
33,795
|
|
74,097
|
|
64,450
|
|
|
Depreciation and amortization
|
|
59,577
|
|
54,505
|
|
117,828
|
|
102,823
|
|
|
General and administrative
|
|
9,595
|
|
9,160
|
|
21,039
|
|
16,953
|
|
|
TA spin off costs
(3)
|
|
—
|
|
—
|
|
—
|
|
2,711
|
|
|
Reserve for straight line rent receivable
(4)
|
|
19,613
|
|
—
|
|
19,613
|
|
—
|
|
|
Loss on asset impairment
(5)
|
|
53,225
|
|
—
|
|
53,225
|
|
—
|
|
|
Total expenses
|
|
356,009
|
|
281,771
|
|
619,649
|
|
531,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before gain on sale of real
estate and income taxes
|
|
(17,234
|
)
|
51,970
|
|
38,305
|
|
92,763
|
|
|
Gain on sale of real estate
(6)
|
|
629
|
|
—
|
|
1,274
|
|
—
|
|
|
Income (loss) before income taxes
|
|
(16,605
|
)
|
51,970
|
|
39,579
|
|
92,763
|
|
|
Income tax expense
|
|
(474
|
)
|
(743
|
)
|
(902
|
)
|
(1,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
(17,079
|
)
|
51,227
|
|
38,677
|
|
91,541
|
|
|
Income from discontinued operations
(7)
|
|
—
|
|
3,055
|
|
—
|
|
6,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
(17,079
|
)
|
54,282
|
|
38,677
|
|
97,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred distributions
|
|
(7,470
|
)
|
(7,470
|
)
|
(14,940
|
)
|
(11,829
|
)
|
|
Net income (loss) available for common
shareholders
|
|
$
|
(24,549
|
)
|
$
|
46,812
|
|
$
|
23,737
|
|
$
|
85,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
93,942
|
|
93,868
|
|
93,918
|
|
92,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available for common shareholders
|
|
$
|
(0.26
|
)
|
$
|
0.47
|
|
$
|
0.25
|
|
$
|
0.86
|
|
|
Income from discontinued operations
available for common shareholders
|
|
$
|
—
|
|
$
|
0.03
|
|
$
|
—
|
|
$
|
0.07
|
|
|
Net income (loss) available for common
shareholders
|
|
$
|
(0.26
|
)
|
$
|
0.50
|
|
$
|
0.25
|
|
$
|
0.93
|
|
See notes to consolidated statement of income
on page 12.
11
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
NOTES TO CONSOLIDATED STATEMENT OF INCOME
(in
thousands, except per share data)
|
(1)
|
|
At June 30, 2008,
each of our 290 hotels are included in one of eleven operating agreements of
hotels of which 198 are leased to 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)
|
|
Various percentages of
total sales at most of our hotels are escrowed as reserves for future
renovations or refurbishment, or FF&E reserve escrows. At June 30, 2008,
we own all the FF&E escrows for our hotels. Through July 26, 2007,
we had a security and remainder interest in the FF&E reserve escrows for
our former Homestead Studio Suites hotels (see Note 7). When we own the
FF&E reserve escrows at hotels leased to third parties we report payments
into the escrow as additional rent. When we had a security and remainder
interest in the FF&E reserve escrows of our Homestead Studio Suites
hotels, deposits were not included in revenue. We do not report the amounts
which are escrowed as FF&E reserves for our managed hotels as FF&E
reserve income in our consolidated statement of income.
|
|
|
|
|
|
(3)
|
|
During the first quarter
of 2007, we expensed $2,711 of costs in connection with the spin off of our
former subsidiary, TravelCenters of America LLC, or TA, to our shareholders
on January 31, 2007.
|
|
|
|
|
|
(4)
|
|
During the second quarter
of 2008, we recorded a $19,613, or $.21 per share, non-cash reserve for the
straight line rent receivable relating to our TA No. 1 lease.
|
|
|
|
|
|
(5)
|
|
During the second quarter
of 2008, we recorded a $53,225, or $.57 per share, non-cash loss on asset
impairment related to the write down of certain intangible assets arising
from our TA acquisition to their estimated fair value.
|
|
|
|
|
|
(6)
|
|
On February 5, 2008,
we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and
recognized a gain on sale of $645. On June 18, 2008, we sold our
AmeriSuites hotel in Pine Knoll Shores, North Carolina for $6,350 and
recognized a gain on sale of $629.
|
|
|
|
|
|
(7)
|
|
Income from discontinued
operations relates to the 18 Homestead Studio Suites hotels that we sold in
July, 2007. We have reclassified our consolidated statement of income for all
periods presented to show the results of operations of the hotels which have
been sold as discontinued.
|
12
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
|
|
|
For the Six Months Ended
|
|
|
|
|
6/30/2008
|
|
6/30/2007
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
38,677
|
|
$
|
97,654
|
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
117,828
|
|
104,330
|
|
|
Amortization of deferred financing costs as interest
|
|
2,048
|
|
1,652
|
|
|
Straight line rent income
|
|
(3,786
|
)
|
(7,186
|
)
|
|
Reserve for straight line rent receivable
|
|
19,613
|
|
—
|
|
|
Other non-cash (income) expense, net
|
|
564
|
|
(1,282
|
)
|
|
FF&E reserve income and deposits
|
|
(33,328
|
)
|
(29,072
|
)
|
|
Loss on asset impairment
|
|
53,225
|
|
—
|
|
|
Gain on sale of real estate
|
|
(1,274
|
)
|
—
|
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
Increase in other assets
|
|
(2,382
|
)
|
(13,770
|
)
|
|
(Decrease) increase in accounts payable and other
|
|
(7,077
|
)
|
26,519
|
|
|
Increase in due to affiliate
|
|
81
|
|
984
|
|
|
Cash provided by operating activities
|
|
184,189
|
|
179,829
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Real estate acquisitions
|
|
(113,926
|
)
|
(2,579,143
|
)
|
|
FF&E reserve fundings
|
|
(27,291
|
)
|
(43,060
|
)
|
|
Proceeds from sale of real estate
|
|
13,684
|
|
—
|
|
|
Cash used in investing activities
|
|
(127,533
|
)
|
(2,622,203
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Issuance of common shares, net
|
|
—
|
|
343,452
|
|
|
Issuance of preferred shares, net
|
|
—
|
|
306,891
|
|
|
Issuance of senior notes, net of discount
|
|
—
|
|
298,866
|
|
|
Issuance of convertible senior notes
|
|
—
|
|
575,000
|
|
|
Repayment of senior notes
|
|
(150,000
|
)
|
—
|
|
|
Draws on revolving credit facility
|
|
430,000
|
|
784,000
|
|
|
Repayments of revolving credit facility
|
|
(187,000
|
)
|
(126,000
|
)
|
|
Draws on interim credit facility
|
|
—
|
|
1,400,000
|
|
|
Repayments of interim credit facility
|
|
—
|
|
(1,400,000
|
)
|
|
Deferred financing costs incurred
|
|
(30
|
)
|
(14,879
|
)
|
|
Distributions to preferred shareholders
|
|
(14,940
|
)
|
(8,989
|
)
|
|
Distributions to common shareholders
|
|
(144,595
|
)
|
(136,522
|
)
|
|
Distribution of TA to common shareholders
|
|
—
|
|
(121,166
|
)
|
|
Cash (used in) provided by financing activities
|
|
(66,565
|
)
|
1,900,653
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
(9,909
|
)
|
(541,721
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
23,401
|
|
553,256
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
13,492
|
|
$
|
11,535
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
70,854
|
|
$
|
48,716
|
|
|
|
|
|
|
|
|
|
Non cash investing activities:
|
|
|
|
|
|
|
Property managers’ deposits in FF&E reserve
|
|
$
|
35,742
|
|
$
|
26,739
|
|
|
Property managers’ purchases with FF&E reserve
|
|
(54,164
|
)
|
(66,478
|
)
|
|
|
|
|
|
|
|
|
Non cash financing activities:
|
|
|
|
|
|
|
Issuance of common shares
|
|
$
|
1,886
|
|
$
|
1,627
|
|
|
Distribution of TA to common shareholders
|
|
—
|
|
(216,084
|
)
|
13
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
CALCULATION OF EBITDA
(in thousands)
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
6/30/2008
|
|
6/30/2007
|
|
6/30/2008
|
|
6/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(1)
|
|
$
|
(17,079
|
)
|
$
|
54,282
|
|
$
|
38,677
|
|
$
|
97,654
|
|
|
Plus:
|
Interest expense
|
|
36,528
|
|
33,795
|
|
74,097
|
|
64,450
|
|
|
|
Depreciation and amortization (continuing operations)
|
|
59,577
|
|
54,505
|
|
117,828
|
|
102,823
|
|
|
|
Depreciation and amortization (discontinued operations)
(2)
|
|
—
|
|
754
|
|
—
|
|
1,507
|
|
|
|
Deferred percentage rent (continuing operations)
(3)
|
|
1,550
|
|
1,612
|
|
3,102
|
|
3,097
|
|
|
|
Deferred percentage rent (discontinued operations)
(2) (3)
|
|
—
|
|
72
|
|
—
|
|
257
|
|
|
|
Deferred additional returns (continuing operations)
(4)
|
|
8,317
|
|
7,294
|
|
11,777
|
|
12,793
|
|
|
|
Income taxes (continuing operations)
|
|
474
|
|
743
|
|
902
|
|
1,222
|
|
|
|
Loss on asset impairment (continuing operations)
(5)
|
|
53,225
|
|
—
|
|
53,225
|
|
—
|
|
|
Less:
|
Gain on sale of real estate (continuing operations
(6)
|
|
(629
|
)
|
—
|
|
(1,274
|
)
|
—
|
|
|
EBITDA
|
|
$
|
141,963
|
|
$
|
153,057
|
|
$
|
298,334
|
|
$
|
283,803
|
|
|
(1)
|
|
Net income (loss) for
the three month and six month periods ended June 30, 2008 includes a
non-cash reserve of $19,613 for the straight line rent receivable relating to
our TA No. 1 lease.
|
|
(2)
|
|
On July 26, 2007,
we sold our 18 Homestead Studio Suites® hotels. We reclassified our
consolidated statement of income for all periods presented to show the
results of operations of the hotels which have been sold as discontinued.
|
|
(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 second
quarter of 2008, we recorded a $53,225, or $.57 per share, non-cash loss on
asset impairment related to the write down of certain intangible assets
arising from our TA acquisition to their estimated fair value.
|
|
(6)
|
|
On February 5,
2008, we sold our Park Plaza hotel in North Phoenix, Arizona for $8,000 and
recognized a gain on sale of $645.
|
|
|
|
On June 18, 2008,
we sold our AmeriSuites hotel in Pine Knoll Shores, North Carolina for $6,350
and recognized a gain on sale of $629.
|
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 and loss on asset impairment less gain on sale of real estate. 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.
14
Hospitality
Properties Trust
Supplemental
Operating and Financial Data
June 30,
2008
CALCULATION
OF FUNDS FROM OPERATIONS (FFO)
(in thousands,
except per share data)
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
6/30/2008
|
|
6/30/2007
|
|
6/30/2008
|
|
6/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for common shareholders
(1)
|
|
$
|
(24,549
|
)
|
$
|
46,812
|
|
$
|
23,737
|
|
$
|
85,825
|
|
|
Plus:
|
FF&E deposits not in net income
(2)
|
|
—
|
|
492
|
|
—
|
|
990
|
|
|
|
Depreciation and amortization (continuing operations)
|
|
59,577
|
|
54,505
|
|
117,828
|
|
102,823
|
|
|
|
Depreciation and amortization (discontinued operations)
(3)
|
|
—
|
|
754
|
|
—
|
|
1,507
|
|
|
|
Deferred percentage rent (continuing operations)
(4)
|
|
1,550
|
|
1,612
|
|
3,102
|
|
3,097
|
|
|
|
Deferred percentage rent (discontinued operations)
(3) (4)
|
|
—
|
|
72
|
|
—
|
|
257
|
|
|
|
Deferred additional returns (continuing operations)
(5)
|
|
8,317
|
|
7,294
|
|
11,777
|
|
12,793
|
|
|
|
Loss on asset impairment (continuing operations)
(6)
|
|
53,225
|
|
—
|
|
53,225
|
|
—
|
|
|
|
TA spin off costs (continuing operations)
(7)
|
|
—
|
|
—
|
|
—
|
|
2,711
|
|
|
Less:
|
Gain on sale of real estate (continuing operations
(8)
|
|
(629
|
)
|
—
|
|
(1,274
|
)
|
—
|
|
|
FFO available for common shareholders
|
|
$
|
97,491
|
|
$
|
111,541
|
|
$
|
208,395
|
|
$
|
210,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
93,942
|
|
93,868
|
|
93,918
|
|
92,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for common shareholders per share
|
|
$
|
(0.26
|
)
|
$
|
0.50
|
|
$
|
0.25
|
|
$
|
0.93
|
|
|
FFO available for common shareholders per share
|
|
$
|
1.04
|
|
$
|
1.19
|
|
$
|
2.22
|
|
$
|
2.27
|
|
|
(1)
|
|
Net
income (loss) and FFO for the three month and six month periods ended
June 30, 2008 includes a non-cash reserve of $19,613, or $0.21 per
share, for the straight line rent receivable relating to our TA No. 1
lease.
|
|
(2)
|
|
Various
percentages of total sales at most of our hotels are escrowed as reserves for
future renovations or refurbishment, or FF&E Reserve escrows. At
June 30, 2008, we own all the FF&E escrows for our hotels. Through
July 26, 2007, we had a security and remainder interest in the FF&E
Reserve escrows for our former Homestead Studio Suites hotels (see Note 3).
When we own the FF&E Reserve escrows at hotels leased to third parties we
report payments into the escrow as additional rent. When we had a security
and remainder interest in the FF&E Reserve escrows of our Homestead
Studio Suites hotels, deposits were not included in revenue. We do not report
the amounts which are escrowed as FF&E reserves for our managed hotels as
FF&E reserve income in our consolidated statement of income.
|
|
(3)
|
|
On
July 26, 2007, we sold our 18 Homestead Studio Suites® hotels. We
reclassified our consolidated statement of income for all periods presented
to show the results of operations of the hotels which have been sold as
discontinued.
|
|
(4)
|
|
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.
|
|
(5)
|
|
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.
|
|
(6)
|
|
During
the second quarter of 2008, we recorded a $53,225, or $.57 per share,
non-cash loss on asset impairment related to the write down of certain
intangible assets arising from our TA acquisition to their estimated fair
value.
|
|
(7)
|
|
During
the first quarter of 2007, we expensed $2,711 of costs in connection with the
spin off of our former subsidiary, TravelCenters of America, LLC, or TA, to
our shareholders on January 31, 2007.
|
|
(8)
|
|
On
February 5, 2008, we sold our Park Plaza hotel in North Phoenix, Arizona
for $8,000 and recognized a gain on sale of $645. On June 18, 2008, we
sold our AmeriSuites hotel in Pine Knoll Shores, North Carolina for $6,350
and recognized a gain on sale of $629.
|
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 FF&E deposits not included in net
income (see Note 2), deferred percentage rent (see Note 4) and deferred additional
returns (see Note 5) and exclude loss on
asset impairment (see note 6) and TA spin off costs (see Note 7). 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 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.
15
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
SEGMENT INFORMATION
(in thousands)
|
|
|
For the Three Months Ended June 30, 2008
|
|
|
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
|
|
$
|
244,566
|
|
$
|
—
|
|
$
|
—
|
|
$
|
244,566
|
|
|
Minimum rent
|
|
31,110
|
|
56,451
|
|
—
|
|
87,561
|
|
|
FF&E reserve income
|
|
6,342
|
|
—
|
|
—
|
|
6,342
|
|
|
Interest income
|
|
—
|
|
—
|
|
306
|
|
306
|
|
|
Total revenues
|
|
282,018
|
|
56,451
|
|
306
|
|
338,775
|
|
|
Hotel operating expenses
|
|
(177,471
|
)
|
—
|
|
—
|
|
(177,471
|
)
|
|
Operating income
|
|
104,547
|
|
56,451
|
|
306
|
|
161,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
—
|
|
—
|
|
36,528
|
|
36,528
|
|
|
Depreciation and amortization expense
|
|
38,657
|
|
20,920
|
|
—
|
|
59,577
|
|
|
General and administrative expense
|
|
—
|
|
—
|
|
9,595
|
|
9,595
|
|
|
Reserve for straight line rent receivable
|
|
—
|
|
19,613
|
|
—
|
|
19,613
|
|
|
Loss on asset impairment
|
|
—
|
|
53,225
|
|
—
|
|
53,225
|
|
|
Total expenses
|
|
38,657
|
|
93,758
|
|
46,123
|
|
178,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before gain on sale of real estate and income taxes
|
|
65,890
|
|
(37,307
|
)
|
(45,817
|
)
|
(17,234
|
)
|
|
Gain on sale of real estate
|
|
629
|
|
—
|
|
—
|
|
629
|
|
|
Income (loss) before income taxes
|
|
66,519
|
|
(37,307
|
)
|
(45,817
|
)
|
(16,605
|
)
|
|
Income tax expense
|
|
—
|
|
—
|
|
(474
|
)
|
(474
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
66,519
|
|
$
|
(37,307
|
)
|
$
|
(46,291
|
)
|
$
|
(17,079
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2008
|
|
|
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
|
|
$
|
467,006
|
|
$
|
—
|
|
$
|
—
|
|
$
|
467,006
|
|
|
Minimum rent
|
|
62,000
|
|
115,517
|
|
—
|
|
177,517
|
|
|
FF&E reserve income
|
|
12,525
|
|
—
|
|
—
|
|
12,525
|
|
|
Interest income
|
|
—
|
|
—
|
|
906
|
|
906
|
|
|
Total revenues
|
|
541,531
|
|
115,517
|
|
906
|
|
657,954
|
|
|
Hotel operating expenses
|
|
(333,847
|
)
|
—
|
|
—
|
|
(333,847
|
)
|
|
Operating income
|
|
207,684
|
|
115,517
|
|
906
|
|
324,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
—
|
|
—
|
|
74,097
|
|
74,097
|
|
|
Depreciation and amortization expense
|
|
77,084
|
|
40,744
|
|
—
|
|
117,828
|
|
|
General and administrative expense
|
|
—
|
|
—
|
|
21,039
|
|
21,039
|
|
|
Reserve for straight line rent receivable
|
|
—
|
|
19,613
|
|
—
|
|
19,613
|
|
|
Loss on asset impairment
|
|
—
|
|
53,225
|
|
—
|
|
53,225
|
|
|
Total expenses
|
|
77,084
|
|
113,582
|
|
95,136
|
|
285,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before gain on sale of real estate and income taxes
|
|
130,600
|
|
1,935
|
|
(94,230
|
)
|
38,305
|
|
|
Gain on sale of real estate
|
|
1,274
|
|
—
|
|
—
|
|
1,274
|
|
|
Income (loss) before income taxes
|
|
131,874
|
|
1,935
|
|
(94,230
|
)
|
39,579
|
|
|
Income tax expense
|
|
—
|
|
—
|
|
(902
|
)
|
(902
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
131,874
|
|
$
|
1,935
|
|
$
|
(95,132
|
)
|
$
|
38,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,220,782
|
|
$
|
2,382,626
|
|
$
|
38,467
|
|
$
|
5,641,875
|
|
16
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
SEGMENT INFORMATION
(in thousands)
|
|
|
For the Three Months Ended June 30, 2007
|
|
|
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
|
|
$
|
249,774
|
|
$
|
—
|
|
$
|
—
|
|
$
|
249,774
|
|
|
Minimum rent
|
|
29,324
|
|
48,216
|
|
—
|
|
77,540
|
|
|
Percentage rent
|
|
—
|
|
|
|
|
|
|
|
|
FF&E reserve income
|
|
5,769
|
|
—
|
|
—
|
|
5,769
|
|
|
Interest income
|
|
—
|
|
—
|
|
658
|
|
658
|
|
|
Total revenues
|
|
284,867
|
|
48,216
|
|
658
|
|
333,741
|
|
|
Hotel operating expenses
|
|
(184,311
|
)
|
—
|
|
—
|
|
(184,311
|
)
|
|
Operating income
|
|
100,556
|
|
48,216
|
|
658
|
|
149,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
—
|
|
—
|
|
33,795
|
|
33,795
|
|
|
Depreciation and amortization expense
|
|
36,616
|
|
17,889
|
|
—
|
|
54,505
|
|
|
General and administrative expense
|
|
—
|
|
—
|
|
9,160
|
|
9,160
|
|
|
TA spin off costs
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total expenses
|
|
36,616
|
|
17,889
|
|
42,955
|
|
97,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
63,940
|
|
30,327
|
|
(42,297
|
)
|
51,970
|
|
|
Income tax expense
|
|
—
|
|
—
|
|
(743
|
)
|
(743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
63,940
|
|
$
|
30,327
|
|
$
|
(43,040
|
)
|
$
|
51,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2007
|
|
|
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
|
|
$
|
474,245
|
|
$
|
—
|
|
$
|
—
|
|
$
|
474,245
|
|
|
Minimum rent
|
|
58,485
|
|
76,665
|
|
—
|
|
135,150
|
|
|
FF&E reserve income
|
|
11,208
|
|
—
|
|
—
|
|
11,208
|
|
|
Interest income
|
|
—
|
|
—
|
|
3,806
|
|
3,806
|
|
|
Total revenues
|
|
543,938
|
|
76,665
|
|
3,806
|
|
624,409
|
|
|
Hotel operating expenses
|
|
(344,709
|
)
|
—
|
|
—
|
|
(344,709
|
)
|
|
Operating income
|
|
199,229
|
|
76,665
|
|
3,806
|
|
279,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
—
|
|
—
|
|
64,450
|
|
64,450
|
|
|
Depreciation and amortization expense
|
|
72,365
|
|
30,458
|
|
—
|
|
102,823
|
|
|
General and administrative expense
|
|
—
|
|
—
|
|
16,953
|
|
16,953
|
|
|
TA spin off costs
|
|
—
|
|
—
|
|
2,711
|
|
2,711
|
|
|
Total expenses
|
|
72,365
|
|
30,458
|
|
84,114
|
|
186,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
126,864
|
|
46,207
|
|
(80,308
|
)
|
92,763
|
|
|
Income tax expense
|
|
—
|
|
—
|
|
(1,222
|
)
|
(1,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
126,864
|
|
$
|
46,207
|
|
$
|
(81,530
|
)
|
$
|
91,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,385,519
|
|
$
|
2,367,892
|
|
$
|
36,602
|
|
$
|
5,790,013
|
|
17
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
DEBT SUMMARY
(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%
|
|
$
|
3,597
|
|
07/01/11
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Floating Rate Debt:
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility (LIBOR + 55 bps)
|
|
3.040%
|
(1)
|
$
|
401,000
|
|
10/24/10
|
(2)
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured Fixed Rate Debt:
|
|
|
|
|
|
|
|
|
|
|
Senior notes due 2010
|
|
9.125%
|
|
$
|
50,000
|
|
07/15/10
|
|
2.0
|
|
|
Senior notes due 2012
|
|
6.850%
|
|
125,000
|
|
07/15/12
|
|
4.0
|
|
|
Senior notes due 2013
|
|
6.750%
|
|
300,000
|
|
02/15/13
|
|
4.6
|
|
|
Senior notes due 2015
|
|
5.125%
|
|
300,000
|
|
02/15/15
|
|
6.6
|
|
|
Senior notes due 2016
|
|
6.300%
|
|
275,000
|
|
06/15/16
|
|
8.0
|
|
|
Senior notes due 2017
|
|
5.625%
|
|
300,000
|
|
03/15/17
|
|
8.7
|
|
|
Senior notes due 2018
|
|
6.700%
|
|
350,000
|
|
01/15/18
|
|
9.6
|
|
|
Convertible senior notes due 2027
|
|
3.800%
|
|
575,000
|
|
03/15/27
|
(3)
|
18.7
|
|
|
Total / weighted average unsecured fixed rate debt
|
|
5.637%
|
|
$
|
2,275,000
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average secured fixed rate debt / total
|
|
8.300%
|
|
$
|
3,597
|
|
|
|
3.0
|
|
|
Weighted average unsecured floating rate debt / total
|
|
3.040%
|
|
401,000
|
|
|
|
2.3
|
|
|
Weighted average unsecured fixed rate debt / total
|
|
5.637%
|
|
2,275,000
|
|
|
|
10.1
|
|
|
Weighted average debt / total
|
|
5.252%
|
|
$
|
2,679,597
|
|
|
|
8.9
|
|
|
(1)
|
Interest
rate at June 30, 2008.
|
|
(2)
|
The
credit facility may be extended at our option to October 24, 2011 upon
payment of an extension fee.
|
|
(3)
|
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.
|
18
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
DEBT MATURITY SCHEDULE
(dollars in
thousands)
|
|
|
Scheduled Principal Payments During Period
|
|
|
|
|
Secured
|
|
Unsecured
|
|
Unsecured
|
|
|
|
|
|
|
Fixed Rate
|
|
Floating
|
|
Fixed
|
|
|
|
|
Year
|
|
Debt
|
|
Rate Debt
|
|
Rate Debt
|
|
Total
|
|
|
2008
|
|
$
|
39
|
|
$
|
—
|
|
$
|
—
|
|
$
|
39
|
|
|
2009
|
|
84
|
|
—
|
|
—
|
|
84
|
|
|
2010
|
|
91
|
|
401,000
|
(1)
|
50,000
|
|
451,091
|
|
|
2011
|
|
3,383
|
|
—
|
|
—
|
|
3,383
|
|
|
2012
|
|
—
|
|
—
|
|
125,000
|
|
125,000
|
|
|
2013
|
|
—
|
|
—
|
|
300,000
|
|
300,000
|
|
|
2014
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
2015
|
|
—
|
|
—
|
|
300,000
|
|
300,000
|
|
|
2016
|
|
—
|
|
—
|
|
275,000
|
|
275,000
|
|
|
2017
|
|
—
|
|
—
|
|
300,000
|
|
300,000
|
|
|
2018
|
|
—
|
|
—
|
|
350,000
|
|
350,000
|
|
|
2027
|
|
—
|
|
—
|
|
575,000
|
(2)
|
575,000
|
|
|
|
|
$
|
3,597
|
|
$
|
401,000
|
|
$
|
2,275,000
|
|
$
|
2,679,597
|
|
|
(1)
|
|
The credit facility may
be extended at our option to October 24, 2011 upon payment of an
extension fee.
|
|
|
|
|
|
(2)
|
|
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.
|
19
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT
COVENANTS
|
|
|
As of and For the Three Months Ended
|
|
|
|
|
6/30/2008
|
|
3/31/2008
|
|
12/31/2007
|
|
9/30/2007
|
|
6/30/2007
|
|
|
Leverage Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt / total assets
|
|
47.4%
|
|
46.7%
|
|
45.4%
|
|
45.3%
|
|
47.2%
|
|
|
Total debt / real estate assets, at cost
|
|
42.1%
|
|
42.6%
|
|
41.6%
|
|
41.6%
|
|
43.6%
|
|
|
Total debt / total book capitalization
|
|
50.1%
|
|
49.1%
|
|
48.1%
|
|
47.9%
|
|
50.2%
|
|
|
Total debt / total market capitalization
|
|
50.8%
|
|
43.1%
|
|
43.6%
|
|
38.0%
|
|
38.9%
|
|
|
Secured debt / total assets
|
|
0.1%
|
|
0.1%
|
|
0.1%
|
|
0.1%
|
|
0.1%
|
|
|
Variable rate debt / total debt
|
|
15.0%
|
|
14.8%
|
|
6.1%
|
|
5.4%
|
|
24.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coverage Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(1)
/
interest expense
|
|
3.9x
|
|
4.2x
|
|
4.1x
|
|
4.2x
|
|
4.5x
|
|
|
EBITDA
(1)
/
interest expense and preferred distributions
|
|
3.2x
|
|
3.5x
|
|
3.4x
|
|
3.5x
|
|
3.7x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Debt Covenants:
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt / adjusted total assets - allowable maximum 60.0%
|
|
41.2%
|
|
41.9%
|
|
41.2%
|
|
41.2%
|
|
43.2%
|
|
|
Secured debt / adjusted total assets - allowable maximum 40.0%
|
|
6.0%
|
|
0.1%
|
|
0.1%
|
|
0.1%
|
|
0.1%
|
|
|
Consolidated income available for debt service / debt service -
required minimum 1.50x
|
|
3.17x
|
|
3.69x
|
|
4.47x
|
|
3.63x
|
|
3.90x
|
|
|
Total unencumbered assets to unsecured debt - required minimum 150% /
200%
|
|
240.3%
|
|
238.7%
|
|
220.1%
|
|
218.6%
|
|
209.2%
|
|
|
(1)
|
See page 14 for
our calculation of EBITDA.
|
|
|
|
|
(2)
|
Adjusted total assets
and unencumbered assets include original cost of real estate assets 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.
|
20
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
FF&E RESERVE ESCROWS
(1)
(dollars in
thousands)
|
|
|
As of and For the Three Months Ended
|
|
|
|
|
6/30/2008
|
|
3/31/2008
|
|
12/31/2007
|
|
9/30/2007
|
|
6/30/2007
|
|
|
HPT Owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FF&E reserves (beginning of period)
|
|
$
|
45,469
|
|
$
|
28,134
|
|
$
|
25,698
|
|
$
|
30,684
|
|
$
|
32,444
|
|
|
Manager deposits
|
|
16,246
|
|
19,496
|
|
14,642
|
|
17,287
|
|
15,180
|
|
|
HPT fundings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlson
(2)
|
|
125
|
|
172
|
|
197
|
|
136
|
|
—
|
|
|
Marriott
(3)
|
|
5,431
|
|
9,772
|
|
3,016
|
|
1,532
|
|
3,291
|
|
|
Hyatt
(4)
|
|
1,500
|
|
600
|
|
7,500
|
|
7,500
|
|
11,000
|
|
|
InterContinental
(5)
|
|
—
|
|
9,691
|
|
1,300
|
|
—
|
|
1,467
|
|
|
Hotel improvements
|
|
(31,768
|
)
|
(22,396
|
)
|
(24,219
|
)
|
(31,441
|
)
|
(32,698
|
)
|
|
FF&E reserves (end of period)
|
|
$
|
37,003
|
|
$
|
45,469
|
|
$
|
28,134
|
|
$
|
25,698
|
|
$
|
30,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant Owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FF&E reserves (beginning of period)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
$
|
152
|
|
|
Manager deposits
|
|
—
|
|
—
|
|
—
|
|
—
|
|
512
|
|
|
HPT fundings
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel improvements
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(663
|
)
|
|
FF&E reserves (end of period)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FF&E reserves (beginning of period)
|
|
$
|
45,469
|
|
$
|
28,134
|
|
$
|
25,698
|
|
$
|
30,685
|
|
$
|
32,596
|
|
|
Manager deposits
|
|
16,246
|
|
19,496
|
|
14,642
|
|
17,287
|
|
15,692
|
|
|
HPT fundings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlson
(2)
|
|
125
|
|
172
|
|
197
|
|
136
|
|
—
|
|
|
Marriott
(3)
|
|
5,431
|
|
9,772
|
|
3,016
|
|
1,532
|
|
3,291
|
|
|
Hyatt
(4)
|
|
1,500
|
|
600
|
|
7,500
|
|
7,500
|
|
11,000
|
|
|
InterContinental
(5)
|
|
—
|
|
9,691
|
|
1,300
|
|
—
|
|
1,467
|
|
|
Hotel improvements
|
|
(31,768
|
)
|
(22,396
|
)
|
(24,219
|
)
|
(31,442
|
)
|
(33,361
|
)
|
|
FF&E reserves (end of period)
|
|
$
|
37,003
|
|
$
|
45,469
|
|
$
|
28,134
|
|
$
|
25,698
|
|
$
|
30,685
|
|
|
(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. At June 30, 2008, we own all the FF&E
reserve escrows for all our hotels. Through July 26, 2007, we had a
security and remainder interest in the escrow account of our former Homestead
Studio Suites® hotels.
|
|
(2)
|
Pursuant
to our agreement with Carlson for the management of 11 hotels, we agreed to
fund certain rebranding costs and other capital improvements. To the extent
our fundings exceed $12,000, the minimum return payable by Carlson to us
increases as these funds are advanced. At June 30, 2008, we have funded
$37,411 under this agreement.
|
|
(3)
|
Represents
FF&E reserve deposits for our Marriott branded hotels not funded by hotel
operations but separately funded by us. The operating agreements for our
Marriott branded 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 increases by a percentage of the
amounts we fund.
|
|
(4)
|
Pursuant
to our agreement with Hyatt for the management of 23 hotels, we agreed to
fund certain rebranding costs and other capital improvements. To the extent
our funding exceeds $8,000, the minimum return payable by Hyatt to us
increases as these funds are advanced. At June 30, 2008, we have funded
$73,600 under this agreement.
|
|
(5)
|
Pursuant
to our management agreements with InterContinental, we agreed to fund certain
rebranding costs and capital improvements. Generally, our annual minimum
returns increase by a percentage of the amounts we fund.
|
21
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
2008 ACQUISITIONS AND DISPOSITIONS INFORMATION
(dollars in
thousands)
2008
ACQUISITIONS (through 6/30/2008):
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Purchase
|
|
|
Date
|
|
|
|
|
|
|
|
of Rooms
|
|
Operating
|
|
Purchase
|
|
Price per
|
|
|
Acquired
|
|
Properties
|
|
Brand
|
|
Location
|
|
/ Suites
|
|
Agreement
|
|
Price
|
|
Room / Suite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no
hotel acquisitions during the six months ended June 30, 2008.
On
March 17, 2008 we acquired land and improvements at our Petro travel
center in Sparks, Nevada for $42,500.
This acquisition includes 42 acres of land, a 45,000 sq. ft. travel
center, including a restaurant, convenience store, and casino plus an adjacent
office building and hotel (71 keys).
2008
DISPOSITIONS (through 6/30/08):
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Sales
|
|
|
Date
|
|
|
|
|
|
|
|
of Rooms
|
|
Operating
|
|
Sales
|
|
Price per
|
|
|
Disposed
|
|
Properties
|
|
Brand
|
|
Location
|
|
/ Suites
|
|
Agreement
|
|
Price
|
|
Room / Suite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/5/08
|
|
1
|
|
Park Plaza
|
|
North Phoenix, AZ
|
|
166
|
|
Carlson
|
|
$8,000
|
|
$48
|
|
|
6/18/08
|
|
1
|
|
AmeriSuites
|
|
Pine Knoll Shores, NC
|
|
111
|
|
Hyatt
|
|
6,350
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2008
|
|
2
|
|
|
|
|
|
277
|
|
|
|
$14,350
|
|
$52
|
|
22
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
2008 FINANCING ACTIVITIES
(share amounts and
dollars in thousands)
|
|
|
For the Three Months Ended
|
|
|
|
|
6/30/2008
|
|
3/31/2008
|
|
|
|
|
|
|
|
|
|
Debt Transactions:
(1)
|
|
|
|
|
|
|
New debt raised
|
|
$
|
—
|
|
$
|
—
|
|
|
Total new debt
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Debt retired
|
|
—
|
|
(150,000
|
)
|
|
Net debt
|
|
$
|
—
|
|
$
|
(150,000
|
)
|
|
|
|
|
|
|
|
|
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.
23
OPERATING AGREEMENTS
AND PORTFOLIO INFORMATION
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
SUMMARY OF OPERATING AGREEMENTS
(dollars in
thousands)
|
Operating Agreement
|
|
Marriott (no. 1)
|
|
Marriott (no. 2)
|
|
Marriott
(no. 3) (1)
|
|
Marriott (no. 4)
|
|
Marriott
(no. 5)
(1)
|
|
InterContinental
(no. 1)
|
|
InterContinental
(no. 2)
|
|
InterContinental
(no. 3)
|
|
InterContinental
(no. 4)
|
|
Hyatt
|
|
Carlson
|
|
TA (no. 1)
|
|
TA (no. 2)
|
|
Total / Range /
Average (all
investments)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Properties
|
|
53
|
|
18
|
|
34
|
|
19
|
|
1
|
|
31
|
|
76
|
|
14
|
|
10
|
|
23
|
|
11
|
|
145
|
|
40
|
|
475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Rooms /
Suites
|
|
7,610
|
|
2,178
|
|
5,026
|
|
2,756
|
|
356
|
|
3,844
|
|
9,220
|
|
4,139
|
|
2,937
|
|
2,784
|
|
2,096
|
|
(2)
|
|
—
|
|
42,946
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
®
|
|
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 Carlson
SM
|
|
TravelCenters of America
®
|
|
Petro Stopping Centers
®
|
|
17 Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of States
|
|
24
|
|
14
|
|
14
|
|
14
|
|
1
|
|
16
|
|
29
|
|
7 plus Ontario and
Puerto Rico
|
|
5
|
|
14
|
|
7
|
|
39
|
|
25
|
|
44 plus Ontario and
Puerto Rico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Subsidiaries of
InterContinental
|
|
Subsidiaries of
InterContinental
|
|
Subsidiary of Hyatt
|
|
Subsidiary of Carlson
|
|
TA
|
|
TA
|
|
5 Managers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Our TRS and a subsidiary
of InterContinental
|
|
Our TRS
|
|
Our TRS
|
|
Our TRS
|
|
Subsidiary of TA
|
|
Subsidiary of TA
|
|
5 Tenants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment at
June 30, 2008
(3)
|
|
$586,878
|
|
$206,613
|
|
$425,375
|
|
$274,222
|
|
$47,035
|
|
$436,708
|
|
$589,429
|
|
$512,300
|
|
$240,340
|
|
$302,902
|
|
$202,251
|
|
$1,819,681
|
|
$705,505
|
|
$6,349,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of Current
Term
|
|
2012
|
|
2010
|
|
2019
|
|
2015
|
|
2019
|
|
2031
|
|
2028
|
|
2029
|
|
2030
|
|
2030
|
|
2030
|
|
2022
|
|
2024
|
|
2010-2031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal Options
(4)
|
|
3 for 12 years each
|
|
1 for 10 years, 2 for 15
years each
|
|
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
|
|
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
|
|
$58,544
|
|
$20,643
|
|
$43,974
|
|
$28,508
|
|
$5,522
|
|
$37,882
|
|
$50,000
|
|
$44,258
|
|
$21,130
|
|
$21,837
|
|
$12,920
|
|
$159,619
(5)(6)
|
|
$66,177
(5)
|
|
$571,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Return
(7)
|
|
—
|
|
—
|
|
$711
|
|
—
|
|
—
|
|
—
|
|
$10,000
|
|
$3,458
|
|
$1,750
|
|
50% of cash flow in
excess of minimum
return
(8)
|
|
50% of cash flow in
excess of minimum
return
(8)
|
|
—
|
|
—
|
|
$15,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Return
/ Rent
(9)
|
|
5% of revenues above
1994/95 revenues
|
|
7.5% of revenues above
1996 revenues
|
|
7% of revenues above
2000/01 revenues
|
|
7.0% 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
|
|
7.5% of revenues above
2006/07 revenues
|
|
7.5% of revenues above
2007 revenues
|
|
—
|
|
—
|
|
3% of non-fuel revenues
and .3% of fuel revenues above 2011 revenues
|
|
3% of non-fuel revenues
and .3% of fuel revenues above 2012 revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security Deposit
|
|
$50,540
|
|
$17,220
|
|
$36,204
|
|
$28,508
|
|
—
|
|
$36,872
(10)
|
|
—
|
|
$36,872
(10)
|
|
$36,872
(10)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$169,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Limited guarantee
provided by InterContinental
|
|
Limited guarantee
provided by InterContinental
|
|
Limited guarantee
provided by InterContinental
|
|
Limited guarantee
provided by InterContinental
|
|
Limited guarantee
provided by Hyatt
|
|
Limited guarantee
provided by Carlson
|
|
TA guarantee
|
|
TA guarantee
|
|
|
|
|
(1)
|
|
Effective
January 1, 2008, we entered into a new lease for our Marriott Kauai
Resort Beach Club with a subsidiary of Marriott International, Inc. This
hotel was previously included in Marriott agreement no. 3 and leased to one
of our taxable REIT subsidiaries.
|
|
(2)
|
|
18
of our TA properties include hotels. The rooms associated with these hotels
have been excluded from total hotel rooms.
|
|
(3)
|
|
Excludes
expenditures made from FF&E reserves funded from hotel operations, but
includes amounts separately funded by us.
|
|
(4)
|
|
Renewal
options may be exercised by the manager or tenant for all, but not less than
all, of the properties within each combination.
|
|
(5)
|
|
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. TA rents presented in this report are for periods
through June 30, 2008 and do not reflect any rent deferral.
|
|
(6)
|
|
The
amount of minimum rent payable to us by TA is scheduled to increase to
$163,660, $167,714, $172,770 and $177,827 in 2009, 2010, 2011 and 2012,
respectively.
|
|
(7)
|
|
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 managment fees.
|
|
(8)
|
|
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.
|
|
(9)
|
|
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.
|
|
(10)
|
|
A
single $36,872 deposit secures InterContinental’s obligations under the
InterContinental No. 1, No. 3 and No. 4 portfolios.
|
25
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
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
|
|
6%
|
|
|
InterContinental
(no. 2)
|
|
76
|
|
16%
|
|
9,220
|
|
21%
|
|
589,429
|
|
9%
|
|
64
|
|
50,000
|
|
9%
|
|
|
InterContinental
(no. 3)
|
|
14
|
|
3%
|
|
4,139
|
|
10%
|
|
512,300
|
|
8%
|
|
124
|
|
44,258
|
|
8%
|
|
|
InterContinental
(no. 4)
|
|
10
|
|
2%
|
|
2,937
|
|
7%
|
|
240,340
|
|
4%
|
|
82
|
|
21,130
|
|
4%
|
|
|
Marriott (no. 1)
|
|
53
|
|
11%
|
|
7,610
|
|
18%
|
|
586,878
|
|
9%
|
|
77
|
|
58,544
|
|
10%
|
|
|
Marriott (no. 2)
|
|
18
|
|
4%
|
|
2,178
|
|
5%
|
|
206,613
|
|
3%
|
|
95
|
|
20,643
|
|
3%
|
|
|
Marriott (no. 3)
|
|
34
|
|
7%
|
|
5,026
|
|
12%
|
|
425,375
|
|
7%
|
|
85
|
|
43,974
|
|
8%
|
|
|
Marriott (no. 4)
|
|
19
|
|
4%
|
|
2,756
|
|
6%
|
|
274,222
|
|
4%
|
|
100
|
|
28,508
|
|
5%
|
|
|
Marriott (no. 5)
|
|
1
|
|
—
|
|
356
|
|
1%
|
|
47,035
|
|
1%
|
|
132
|
|
5,522
|
|
1%
|
|
|
Hyatt
|
|
23
|
|
5%
|
|
2,784
|
|
6%
|
|
302,902
|
|
5%
|
|
109
|
|
21,837
|
|
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
|
|
1,819,681
|
|
29%
|
|
N/A
|
|
159,619
|
|
29%
|
|
|
TA (no. 2)
(3)
|
|
40
|
|
8%
|
|
N/A
|
|
N/A
|
|
705,505
|
|
11%
|
|
N/A
|
|
66,177
|
|
11%
|
|
|
Total
|
|
475
|
|
100%
|
|
42,946
|
|
100%
|
|
$
|
6,349,239
|
|
100%
|
|
$
|
89
|
|
$
|
571,014
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Manager:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
InterContinental
|
|
131
|
|
28%
|
|
20,140
|
|
47%
|
|
$
|
1,778,777
|
|
28%
|
|
$
|
88
|
|
$
|
153,270
|
|
27%
|
|
|
Marriott
International
|
|
125
|
|
27%
|
|
17,926
|
|
42%
|
|
1,540,123
|
|
24%
|
|
86
|
|
157,191
|
|
27%
|
|
|
Hyatt
|
|
23
|
|
5%
|
|
2,784
|
|
6%
|
|
302,902
|
|
5%
|
|
109
|
|
21,837
|
|
4%
|
|
|
Carlson
|
|
11
|
|
2%
|
|
2,096
|
|
5%
|
|
202,251
|
|
3%
|
|
96
|
|
12,920
|
|
2%
|
|
|
TA
(3)(4)
|
|
185
|
|
38%
|
|
N/A
|
|
N/A
|
|
2,525,186
|
|
40%
|
|
N/A
|
|
225,796
|
|
40%
|
|
|
Total
|
|
475
|
|
100%
|
|
42,946
|
|
100%
|
|
$
|
6,349,239
|
|
100%
|
|
$
|
89
|
|
$
|
571,014
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Brand:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AmeriSuites
®
/ Hyatt
PlaceTM
|
|
23
|
|
5%
|
|
2,784
|
|
7%
|
|
$
|
302,902
|
|
5%
|
|
$
|
109
|
|
|
|
|
|
|
Candlewood Suites
®
|
|
76
|
|
16%
|
|
9,220
|
|
21%
|
|
589,411
|
|
9%
|
|
64
|
|
|
|
|
|
|
Country
Inn & Suites by CarlsonSM
|
|
5
|
|
1%
|
|
753
|
|
2%
|
|
74,827
|
|
1%
|
|
99
|
|
|
|
|
|
|
Courtyard by
Marriott
®
|
|
71
|
|
15%
|
|
10,280
|
|
24%
|
|
846,728
|
|
13%
|
|
82
|
|
|
|
|
|
|
Crowne Plaza
®
|
|
12
|
|
3%
|
|
4,406
|
|
10%
|
|
367,655
|
|
6%
|
|
83
|
|
|
|
|
|
|
Holiday Inn
®
|
|
3
|
|
1%
|
|
697
|
|
2%
|
|
35,526
|
|
1%
|
|
51
|
|
|
|
|
|
|
InterContinental
®
|
|
5
|
|
1%
|
|
1,479
|
|
3%
|
|
309,876
|
|
5%
|
|
210
|
|
|
|
|
|
|
Marriott Hotels
®
|
|
3
|
|
1%
|
|
1,356
|
|
3%
|
|
117,254
|
|
2%
|
|
86
|
|
|
|
|
|
|
Park Plaza
®
Hotels & Resorts
|
|
1
|
|
0%
|
|
368
|
|
1%
|
|
11,533
|
|
0%
|
|
31
|
|
|
|
|
|
|
Radisson
Hotels & Resorts
®
|
|
5
|
|
1%
|
|
975
|
|
2%
|
|
115,890
|
|
2%
|
|
119
|
|
|
|
|
|
|
Residence Inn by
Marriott
®
|
|
37
|
|
8%
|
|
4,695
|
|
11%
|
|
451,602
|
|
7%
|
|
96
|
|
|
|
|
|
|
SpringHill Suites
by Marriott
®
|
|
2
|
|
0%
|
|
264
|
|
1%
|
|
20,833
|
|
0%
|
|
79
|
|
|
|
|
|
|
Staybridge Suites
®
|
|
35
|
|
7%
|
|
4,338
|
|
10%
|
|
476,309
|
|
7%
|
|
110
|
|
|
|
|
|
|
TownePlace Suites
by Marriott
®
|
|
12
|
|
3%
|
|
1,331
|
|
3%
|
|
103,707
|
|
2%
|
|
78
|
|
|
|
|
|
|
TravelCenters of
America
®
|
|
145
|
|
30%
|
|
N/A
|
|
N/A
|
|
1,819,681
|
|
29%
|
|
N/A
|
|
|
|
|
|
|
Petro Stopping
Centers
®
|
|
40
|
|
8%
|
|
N/A
|
|
N/A
|
|
705,505
|
|
11%
|
|
N/A
|
|
|
|
|
|
|
Total
|
|
475
|
|
100%
|
|
42,946
|
|
100%
|
|
$
|
6,349,239
|
|
100%
|
|
$
|
89
|
|
|
|
|
|
|
(1)
|
18 of our TA properties include a hotel. 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 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. TA rents presented in this report are for periods
through June 30, 2008 and do not reflect any rent deferral.
|
|
(4)
|
The amount of annual minimum rent payable to us by TA is scheduled to
increase to $163,660, $167,714, $172,770 and $177,827 in 2009, 2010, 2011 and
2012, respectively.
|
26
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
OPERATING STATISTICS BY HOTEL OPERATING AGREEMENT
|
|
|
|
|
No. of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of
|
|
Rooms /
|
|
Second Quarter
(1)
|
|
Year to Date
(1)
|
|
|
|
|
Hotels
|
|
Suites
|
|
2008
|
|
2007
|
|
Change
|
|
2008
|
|
2007
|
|
Change
|
|
|
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
InterContinental (no. 1)
|
|
31
|
|
3,844
|
|
$
|
114.99
|
|
$
|
110.44
|
|
4.1%
|
|
$
|
115.02
|
|
$
|
110.50
|
|
4.1%
|
|
|
InterContinental (no. 2)
|
|
76
|
|
9,220
|
|
72.47
|
|
70.53
|
|
2.8%
|
|
72.33
|
|
70.28
|
|
2.9%
|
|
|
InterContinental (no. 3)
|
|
14
|
|
4,139
|
|
148.62
|
|
143.90
|
|
3.3%
|
|
148.21
|
|
142.90
|
|
3.7%
|
|
|
InterContinental (no. 4)
|
|
10
|
|
2,937
|
|
110.64
|
|
110.43
|
|
0.2%
|
|
112.82
|
|
111.06
|
|
1.6%
|
|
|
Marriott (no. 1)
|
|
53
|
|
7,610
|
|
125.42
|
|
125.55
|
|
-0.1%
|
|
127.00
|
|
126.69
|
|
0.2%
|
|
|
Marriott (no. 2)
|
|
18
|
|
2,178
|
|
121.21
|
|
118.83
|
|
2.0%
|
|
121.56
|
|
118.94
|
|
2.2%
|
|
|
Marriott (no. 3)
(2)
|
|
34
|
|
5,026
|
|
111.98
|
|
110.21
|
|
1.6%
|
|
111.43
|
|
108.85
|
|
2.4%
|
|
|
Marriott (no. 4)
|
|
19
|
|
2,756
|
|
119.89
|
|
116.68
|
|
2.8%
|
|
124.14
|
|
120.56
|
|
3.0%
|
|
|
Marriott (no. 5)
(2)
|
|
1
|
|
356
|
|
223.93
|
|
222.28
|
|
0.7%
|
|
230.01
|
|
216.58
|
|
6.2%
|
|
|
Hyatt
|
|
23
|
|
2,784
|
|
102.87
|
|
97.92
|
|
5.1%
|
|
105.00
|
|
96.66
|
|
8.6%
|
|
|
Carlson
|
|
11
|
|
2,096
|
|
102.20
|
|
98.24
|
|
4.0%
|
|
106.42
|
|
101.63
|
|
4.7%
|
|
|
Total/Average
|
|
290
|
|
42,946
|
|
$
|
110.25
|
|
$
|
107.99
|
|
2.1%
|
|
$
|
111.22
|
|
$
|
108.13
|
|
2.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCCUPANCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
InterContinental (no. 1)
|
|
31
|
|
3,844
|
|
77.6%
|
|
78.3%
|
|
-0.7pt
|
|
74.7%
|
|
74.9%
|
|
-0.2pt
|
|
|
InterContinental (no. 2)
|
|
76
|
|
9,220
|
|
76.1%
|
|
77.5%
|
|
-1.4pt
|
|
72.9%
|
|
74.9%
|
|
-2.0pt
|
|
|
InterContinental (no. 3)
|
|
14
|
|
4,139
|
|
80.4%
|
|
81.7%
|
|
-1.3pt
|
|
76.9%
|
|
78.5%
|
|
-1.6pt
|
|
|
InterContinental (no. 4)
|
|
10
|
|
2,937
|
|
73.6%
|
|
73.6%
|
|
0.0pt
|
|
71.2%
|
|
72.1%
|
|
-0.9pt
|
|
|
Marriott (no. 1)
|
|
53
|
|
7,610
|
|
70.9%
|
|
71.2%
|
|
-0.3pt
|
|
66.8%
|
|
67.0%
|
|
-0.2pt
|
|
|
Marriott (no. 2)
|
|
18
|
|
2,178
|
|
75.6%
|
|
78.7%
|
|
-3.1pt
|
|
70.9%
|
|
75.6%
|
|
-4.7pt
|
|
|
Marriott (no. 3)
(2)
|
|
34
|
|
5,026
|
|
77.1%
|
|
78.7%
|
|
-1.6pt
|
|
72.2%
|
|
74.5%
|
|
-2.3pt
|
|
|
Marriott (no. 4)
|
|
19
|
|
2,756
|
|
74.4%
|
|
75.7%
|
|
-1.3pt
|
|
72.7%
|
|
72.8%
|
|
-0.1pt
|
|
|
Marriott (no. 5)
(2)
|
|
1
|
|
356
|
|
80.5%
|
|
85.5%
|
|
-5.0pt
|
|
81.8%
|
|
85.8%
|
|
-4.0pt
|
|
|
Hyatt
|
|
23
|
|
2,784
|
|
72.7%
|
|
58.3%
|
|
14.4pt
|
|
69.3%
|
|
57.2%
|
|
12.1pt
|
|
|
Carlson
|
|
11
|
|
2,096
|
|
69.7%
|
|
70.2%
|
|
-0.5pt
|
|
67.7%
|
|
69.1%
|
|
-1.4pt
|
|
|
Total/Average
|
|
290
|
|
42,946
|
|
75.1%
|
|
75.1%
|
|
0.0pt
|
|
71.7%
|
|
72.4%
|
|
-0.5pt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
InterContinental (no. 1)
|
|
31
|
|
3,844
|
|
$
|
89.23
|
|
$
|
86.48
|
|
3.2%
|
|
$
|
85.92
|
|
$
|
82.77
|
|
3.8%
|
|
|
InterContinental (no. 2)
|
|
76
|
|
9,220
|
|
55.15
|
|
54.66
|
|
0.9%
|
|
52.73
|
|
52.64
|
|
0.2%
|
|
|
InterContinental (no. 3)
|
|
14
|
|
4,139
|
|
119.49
|
|
117.57
|
|
1.6%
|
|
113.97
|
|
112.18
|
|
1.6%
|
|
|
InterContinental (no. 4)
|
|
10
|
|
2,937
|
|
81.43
|
|
81.28
|
|
0.2%
|
|
80.33
|
|
80.07
|
|
0.3%
|
|
|
Marriott (no. 1)
|
|
53
|
|
7,610
|
|
88.92
|
|
89.39
|
|
-0.5%
|
|
84.84
|
|
84.88
|
|
0.0%
|
|
|
Marriott (no. 2)
|
|
18
|
|
2,178
|
|
91.64
|
|
93.52
|
|
-2.0%
|
|
86.19
|
|
89.92
|
|
-4.1%
|
|
|
Marriott (no. 3)
(2)
|
|
34
|
|
5,026
|
|
86.34
|
|
86.74
|
|
-0.5%
|
|
80.45
|
|
81.09
|
|
-0.8%
|
|
|
Marriott (no. 4)
|
|
19
|
|
2,756
|
|
89.20
|
|
88.33
|
|
1.0%
|
|
90.25
|
|
87.77
|
|
2.8%
|
|
|
Marriott (no. 5)
(2)
|
|
1
|
|
356
|
|
180.26
|
|
190.05
|
|
-5.2%
|
|
188.15
|
|
185.83
|
|
1.3%
|
|
|
Hyatt
|
|
23
|
|
2,784
|
|
74.79
|
|
57.09
|
|
31.0%
|
|
72.77
|
|
55.29
|
|
31.6%
|
|
|
Carlson
|
|
11
|
|
2,096
|
|
71.23
|
|
68.96
|
|
3.3%
|
|
72.05
|
|
70.23
|
|
2.6%
|
|
|
Total/Average
|
|
290
|
|
42,946
|
|
$
|
82.80
|
|
$
|
81.10
|
|
2.1%
|
|
$
|
79.74
|
|
$
|
78.07
|
|
2.1%
|
|
|
(1)
|
|
Includes data for the calendar periods indicated, except for our
Marriott® branded hotels, which include data for comparable fiscal periods.
|
|
(2)
|
|
Effective January 1, 2008 we entered into a new lease for our
Marriott Kauai Resort Beach Club hotel with a subsidiary of Marriott
International, Inc. This hotel was previously included in Marriott
agreement no. 3 and leased to one of our taxable REIT subsidiaries. Prior
periods have been adjusted to remove of the Kauai property from Marriott (no.
3) and report its results in Marriott (no. 5).
|
|
|
|
|
|
|
|
“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.
|
27
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
COVERAGE BY
OPERATING AGREEMENT
(1)
|
|
|
For the Twelve Months Ended
(2)
|
|
|
Operating Agreement
|
|
6/30/2008
|
|
3/31/2008
|
|
12/31/2007
|
|
9/30/2007
|
|
6/30/2007
|
|
|
InterContinental (no. 1)
|
|
1.14x
|
|
1.12x
|
|
1.09x
|
|
1.08x
|
|
1.08x
|
|
|
InterContinental (no. 2)
|
|
1.42x
|
|
1.42x
|
|
1.43x
|
|
1.42x
|
|
1.39x
|
|
|
InterContinental (no. 3)
|
|
1.36x
|
|
1.37x
|
|
1.33x
|
|
1.31x
|
|
1.26x
|
|
|
InterContinental (no. 4)
|
|
1.18x
|
|
1.30x
|
|
1.39x
|
|
1.41x
|
|
1.47x
|
|
|
Marriott (no. 1)
|
|
1.60x
|
|
1.62x
|
|
1.63x
|
|
1.58x
|
|
1.54x
|
|
|
Marriott (no. 2)
|
|
1.20x
|
|
1.25x
|
|
1.33x
|
|
1.32x
|
|
1.37x
|
|
|
Marriott (no. 3)
(3)
|
|
1.26x
|
|
1.26x
|
|
1.29x
|
|
1.27x
|
|
1.25x
|
|
|
Marriott (no. 4)
|
|
1.22x
|
|
1.23x
|
|
1.22x
|
|
1.18x
|
|
1.18x
|
|
|
Marriott (no. 5)
(3)
|
|
0.61x
|
|
0.76x
|
|
0.80x
|
|
0.80x
|
|
0.65x
|
|
|
Hyatt
|
|
0.85x
|
|
0.69x
|
|
0.53x
|
|
0.49x
|
|
0.49x
|
|
|
Carlson
|
|
1.61x
|
|
1.66x
|
|
1.70x
|
|
1.64x
|
|
1.62x
|
|
|
TA (no. 1)
(4)
|
|
1.17x
|
|
1.19x
|
|
1.26x
|
|
1.39x
|
|
1.45x
|
|
|
TA (no. 2)
(4) (5)
|
|
1.14x
|
|
1.07x
|
|
1.09x
|
|
1.15x
|
|
1.31x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended (2)
|
|
|
Operating Agreement
|
|
6/30/2008
|
|
3/31/2008
|
|
12/31/2007
|
|
9/30/2007
|
|
6/30/2007
|
|
|
InterContinental (no. 1)
|
|
1.29x
|
|
1.09x
|
|
0.93x
|
|
1.25x
|
|
1.21x
|
|
|
InterContinental (no. 2)
|
|
1.55x
|
|
1.32x
|
|
1.25x
|
|
1.57x
|
|
1.55x
|
|
|
InterContinental (no. 3)
|
|
1.59x
|
|
1.29x
|
|
1.22x
|
|
1.35x
|
|
1.64x
|
|
|
InterContinental (no. 4)
|
|
1.18x
|
|
1.22x
|
|
1.25x
|
|
1.08x
|
|
1.65x
|
|
|
Marriott (no. 1)
|
|
1.74x
|
|
1.40x
|
|
1.55x
|
|
1.71x
|
|
1.83x
|
|
|
Marriott (no. 2)
|
|
1.25x
|
|
0.87x
|
|
1.34x
|
|
1.30x
|
|
1.48x
|
|
|
Marriott (no. 3)
(3)
|
|
1.47x
|
|
1.01x
|
|
1.19x
|
|
1.39x
|
|
1.50x
|
|
|
Marriott (no. 4)
|
|
1.29x
|
|
1.37x
|
|
1.21x
|
|
1.00x
|
|
1.33x
|
|
|
Marriott (no. 5)
(3)
|
|
0.36x
|
|
0.68x
|
|
0.44x
|
|
1.00x
|
|
0.94x
|
|
|
Hyatt
|
|
1.19x
|
|
1.08x
|
|
0.58x
|
|
0.55x
|
|
0.55x
|
|
|
Carlson
|
|
1.51x
|
|
1.66x
|
|
1.47x
|
|
1.78x
|
|
1.74x
|
|
|
TA (no. 1)
(4)
|
|
1.43x
|
|
0.88x
|
|
0.85x
|
|
1.54x
|
|
1.52x
|
|
|
TA (no. 2)
(4) (5)
|
|
1.51x
|
|
0.94x
|
|
0.93x
|
|
1.18x
|
|
1.25x
|
|
|
(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)
|
|
Effective
January 1, 2008, we entered into a new lease for our Marriott Kauai
Resort Beach Club hotel with a subsidiary of Marriott
International, Inc. This hotel was previously included in Marriott
agreement no. 3 and leased to one of our taxable REIT subsidiaries. Coverage
ratios have calculated assuming the current operating agreements were in
place for all periods presented. As part of the new guaranteed lease
agreement for this hotel, we have agreed to provide funding for major capital
projects at this hotel; as these improvements are funded our guaranteed rents
will increase.
|
|
(4)
|
|
Includes
data for periods prior to our ownership of some properties.
|
|
(5)
|
|
Includes
data for periods some properties were not operated by the current operator.
|
|
|
|
|
|
|
|
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.
|
28
Hospitality Properties Trust
Supplemental Operating and Financial Data
June 30, 2008
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
|
|
20,643
|
|
3.6%
|
|
3.6%
|
|
|
2011
|
|
—
|
|
—
|
|
—
|
|
|
2012
|
|
58,544
|
|
10.3%
|
|
13.9%
|
|
|
2013
|
|
—
|
|
—
|
|
13.9%
|
|
|
2014
|
|
—
|
|
—
|
|
13.9%
|
|
|
2015
|
|
28,508
|
|
5.0%
|
|
18.9%
|
|
|
2016
|
|
—
|
|
—
|
|
18.9%
|
|
|
2017
|
|
—
|
|
—
|
|
18.9%
|
|
|
2018 and thereafter
|
|
463,319
|
|
81.1%
|
|
100.0%
|
|
|
Total
|
|
$
|
571,014
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining term
|
|
15.0 years
|
|
|
|
|
|
29