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Hersha Hospitality Trust Announces Second Quarter 2022 Results

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Hersha Hospitality Trust
Hersha Hospitality Trust

- Second Quarter 2022 Net Income of $0.05 Per Share -

- Second Quarter 2022 Adjusted Funds from Operations1 of $0.56 Per Share -

- ADR Growth of 12.2% vs. Second Quarter 2019 -

- Comparable Portfolio EBITDA Exceeds Second Quarter of 2019 -

- Comparable Portfolio EBITDA Margin of 38.7%, Exceeds Q2 2019 by 236 bps -

PHILADELPHIA, Aug. 03, 2022 (GLOBE NEWSWIRE) -- Hersha Hospitality Trust (NYSE: HT) (“Hersha,” “Company,” “we” or “our”), owner of high-quality hotels in urban gateway markets and regional resort destinations, today announced results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Results

(Unaudited in thousands, except per share amounts)

 

Three Months Ended June 30, 2022

 

 

 

2022

 

 

2021

 

Net income (loss)

$

9,212

 

$

(23,523

)

Net income (loss) per common share

$

0.05

 

$

(0.73

)

 

 

 

 

Adjusted FFO1

$

25,745

 

$

(1,666

)

Adjusted FFO per common share and OP Unit

$

0.56

 

$

(0.04

)

Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “The resurgence of our gateway urban markets coupled with continued out-performance in our resort markets allowed us to generate quarterly comparable portfolio EBITDA of $47.4M, ahead of our results in the second quarter of 2019. With the acceleration through the quarter of the demand recovery in the midweek business transient and group segments, we drove ADR growth in every one of our markets. While our marquee South Florida properties, the Cadillac Hotel and Beach Club in Miami and the Parrot Key Resort and Villas in Key West, were once again among our top cash flow drivers, the other three of our top five EBITDA producers hailed from our core Northeast markets of New York, Boston, and Washington D.C. The Envoy Hotel was our highest EBITDA generating hotel during the second quarter while the Hyatt Union Square and The Westin Philadelphia rounded out the group.”

Mr. Shah continued, “Based on the trends we saw in July, the ongoing momentum from our corporate customers, and strong forward bookings for the second half of the year, we remain very encouraged with the sustainability of the recovery in our markets. Our differentiated and experiential luxury and lifestyle portfolio along with our unique New York City cluster is very well positioned to continue outperforming our peers. We expect to benefit from long runways in the business travel, convention, group, and international channels as their recoveries continue to take hold in our markets."

Second Quarter 2022 Operating Results

The Company’s 32 comparable hotel portfolio generated 72.6% occupancy, an Average Daily Rate (“ADR”) of $286.78, and Revenue per Available Room (“RevPAR”) of $208.26 during the second quarter 2022.

Strong ADR growth coupled with ongoing cost controls and aggressive asset management strategies helped drive very strong operating margins during the quarter. Comparable GOP margin was 49.1%, which exceeded the second quarter 2019 by 282 basis points. Comparable hotel EBITDA margin of 38.7% was 236 basis points higher than the second quarter 2019. EBITDA margins at our resort properties increased 1,080 basis points as compared to second quarter 2019.

Our resort portfolio generated RevPAR growth of 36.5% driven by 37.9% ADR growth compared to second quarter 2019. On Miami Beach, occupancy and ADR growth led to 66.2% RevPAR growth at the Cadillac Hotel & Beach Club, the highest quarterly growth in the portfolio. In Coconut Grove, the Ritz-Carlton drove 49.7% ADR growth resulting in 44.2% RevPAR growth. The Parrot Key Hotel & Resort ended the period with 79.1% ADR growth leading to a RevPAR growth of 59.4% to $368.30.

On the West Coast, The Sanctuary Beach Resort continued to outperform, ending the period with a RevPAR of $440.48, the highest in our resort portfolio and an improvement of 28.7% driven by 49.4% ADR growth to $572.48. The Hotel Milo in Santa Barbara ended the second quarter with an ADR of $424.26, a 67.6% increase resulting in 40.4% RevPAR growth.

New York

In the second quarter, New York was the largest EBITDA contributing market in our portfolio generating $9.4M. Our Manhattan hotels ran 76% occupancy at an ADR of $297.82. Pricing power remained robust in New York as ADR was 10.3% above 2019 levels in the quarter. Performance built throughout the quarter as RevPAR and EBITDA improved 26% and 43%, respectively, from April to June. The Hyatt Union Square, Hilton Garden Inn Tribeca, and Nu Hotel exceeded Q2 2019 EBITDA levels and helped drive our New York City portfolio EBITDA to reach 90% of our second quarter 2019 EBITDA.

Hotel Dispositions

On April 27, 2022 we entered into a definitive agreement to sell seven of our non-core Urban Select Service properties outside of New York (the “USS Portfolio”) for gross proceeds of $505 million, or approximately $360,000 per key. The closing of this transaction is anticipated to be completed in two tranches with the sale of six assets to be completed in early August while one asset is expected to close later in the year due to the timing of the CMBS loan assumption process for this asset.

Presented below are some summary statistics for our comparable portfolio excluding the USS Portfolio for the three months ending June 30, 2022.

Comparable Portfolio excl USS Portfolio

Metric

Q2 2022

Q2 2019

Growth

ADR

$312

$267

17.2%

RevPAR

$226

$224

1.0%

EBITDA

$37,064

$33,195

11.7%

GOP

47.6%

43.1%

448 bps

EBITDA

37.0%

32.8%

414 bps

Financing

The Company exited the covenant waiver period as of June 30, 2022 and has entered into a new $500M revolving credit agreement that will be effective concurrently with the closing of the first tranche of the USS Portfolio sale. The Company completed the second quarter 2022 with approximately $101 million of cash & cash equivalents and deposits. As of June 30, 2022, the Company’s consolidated debt had a weighted average interest rate of 4.68% and a weighted average life-to-maturity of 2.2 years.

Preferred Dividend Distribution

Hersha’s Board of Trustees declared a cash dividend of $0.4297 per Series C Preferred Share and a cash dividend of $0.40625 per Series D Preferred Share and Series E Preferred Share for the second quarter ending June 30, 2022. The preferred share dividends were paid on July 15, 2022, to holders of record as of July 1, 2022. We remain current on all dividends for each of our series of Preferred Shares.

2022 Outlook

Due to the uncertainty surrounding the lodging industry stemming from macro-economic conditions, and the effects of the Covid-19 Pandemic, the Company will forego providing full-year 2022 guidance.

Second Quarter 2022 Conference Call

The Company will host a conference call to discuss these results at 9:00 AM Eastern Time on Thursday, August 4, 2022. Hosting the call will be Mr. Jay H. Shah, Chief Executive Officer, Mr. Neil H. Shah, President and Chief Operating Officer, and Mr. Ashish Parikh, Chief Financial Officer.

A live audio webcast of the conference call will be available on the Company’s website at www.hersha.com. The conference call can be accessed by dialing 1-844-200-6205 or 1-929-526-1599 for international participants and entering the passcode 706439 approximately 10 minutes in advance of the call. A replay of the call will be available from 11:00 AM Eastern Time on Thursday, August 4, 2022 through 11:59 PM Eastern Time on Thursday, September 4, 2022. The replay can be accessed by dialing 1-866-813-9403 or +44-204-525-0658 for international participants. The passcode for the replay is 431719. A replay of the webcast will be available on the Company’s website for a limited time.

About Hersha Hospitality Trust

Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high-quality hotels in urban gateway markets and regional resort destinations. As of August 3, 2022, the Company's 36 hotels totaling 5,802 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT.”

Non-GAAP Financial Measures and Key Performance Metrics

Common key performance metrics utilized by the lodging industry are occupancy, average daily rate ("ADR"), and revenue per available room ("RevPAR"). Occupancy is calculated as the percentage total rooms sold compared to rooms available to be sold, while ADR measures the average rate earned per occupied room, calculated as total room revenue divided by total rooms sold. RevPAR is a derivative of these two metrics which shows the total room revenue earned per room available to be sold. Management uses these metrics in comparison to other hotels in our self-defined competitive peer set within proximity to each of our hotel properties.

An explanation of Funds from Operations (“FFO”), AFFO, Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), EBITDAre, Adjusted EBITDA and Hotel EBITDA, as well as reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP measures, is included at the end of this release.

Cautionary Statements Regarding Forward Looking Statements

Certain matters within this press release are discussed using “forward-looking statements,” including those with regard to the potential future impact of COVID-19, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. One of the most significant factors is the ongoing impact of the current outbreak of COVID-19 on the United States, regional and global economies, the broader financial markets, the Company’s customers and employees, governmental responses thereto and the operation changes the Company has and may implement in response thereto. These forward-looking statements may include statements related to, among other things: assumptions regarding the impact to international and domestic business and leisure travel pertaining to any pandemic or outbreak of disease, including COVID-19, the Company’s access to capital on the terms and timing the Company expects, the Company’s expectations regarding future interest rates and the impact of inflation on the Company’s results of operations, the restoration of public confidence in domestic and international travel, permanent structural changes in demand for conference centers by business and leisure clientele, the economic growth, labor markets, real estate values, lodging fundamentals, corporate travel, and the economic vibrancy of our target markets, the Company’s ability to grow operating cash flow, the Company’s ability to match or outperform its competitors’ performance, the ability of the Company’s hotels to achieve stabilized or projected revenue, cap rates or EBITDA multiples consistent with our expectations, the stability of the lodging industry and the markets in which the Company’s hotel properties are located, the Company’s ability to generate internal and external growth, and the Company’s ability to increase margins, including hotel EBITDA margins. Certain statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company’s current beliefs as to the outcome and timing of future events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “believe,” “could,” “outlook,” “consider,” “expect,” “anticipate,” “forecast,” “project,” “likely,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” and words of similar import. Because these forward-looking statements relate to future events, the Company’s plans, strategies, prospects and future financial performance, and involve known and unknown risks that are difficult to predict and may be outside the Company’s control, they are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. Therefore, you should not rely on any of these forward-looking statements. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed by the Company with the Securities and Exchange Commission (“SEC”) and other documents filed by the Company with the SEC from time to time. All information provided in this press release, unless otherwise stated, is as of August 3, 2022, and the Company undertakes no duty to update this information unless required by law.

HERSHA HOSPITALITY TRUST

 

 

 

Balance Sheet (unaudited)

 

 

 

(in thousands, except shares and per share amounts)

 

 

 

 

 

 

 

 

June 30, 2022

 

December 31, 2021

Assets:

 

 

 

Investment in Hotel Properties, Net of Accumulated Depreciation

$

1,335,479

 

 

$

1,665,097

 

Investment in Unconsolidated Joint Ventures

 

5,486

 

 

 

5,580

 

Cash and Cash Equivalents

 

87,918

 

 

 

72,238

 

Escrow Deposits

 

12,764

 

 

 

12,707

 

Hotel Accounts Receivable

 

8,242

 

 

 

8,491

 

Due from Related Parties

 

534

 

 

 

2,495

 

Intangible Assets, Net of Accumulated Amortization of $7,075 and $6,944

 

1,204

 

 

 

1,335

 

Right of Use Assets

 

30,152

 

 

 

43,442

 

Other Assets

 

36,152

 

 

 

21,759

 

Hotel Assets Held for Sale

 

318,716

 

 

 

 

Total Assets

 

1,836,647

 

 

 

1,833,144

 

 

 

 

 

Liabilities and Equity:

 

 

 

Line of Credit

$

118,684

 

 

$

118,684

 

Term Loan, Net of Unamortized Deferred Financing Costs

 

496,527

 

 

 

496,085

 

Unsecured Notes Payable, Net of Unamortized Discounts and Unamortized Deferred Financing Costs

 

201,386

 

 

 

198,490

 

Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs

 

229,605

 

 

 

304,614

 

Lease Liabilities

 

47,744

 

 

 

53,691

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

38,990

 

 

 

43,207

 

Dividends and Distributions Payable

 

6,044

 

 

 

6,044

 

Liabilities Related to Hotel Assets Held for Sale

 

79,787

 

 

 

 

Due to Related Parties

 

482

 

 

 

1,723

 

Total Liabilities

$

1,219,249

 

 

$

1,222,538

 

 

 

 

 

Redeemable Noncontrolling Interest - Consolidated Joint Venture

$

5,274

 

 

$

2,310

 

 

 

 

 

Equity:

 

 

 

Shareholders' Equity:

 

 

 

Preferred Shares: $0.01 Par Value, 29,000,000 Shares Authorized, 3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E Shares Issued and
Outstanding at June 30, 2022 and December 31, 2021, with Liquidation Preferences of $25 Per Share

$

147

 

 

$

147

 

Common Shares: Class A, $0.01 Par Value, 104,000,000 Shares Authorized at June 30, 2022 and December 31, 2021; 39,514,661 and 39,325,025 Shares Issued and Outstanding at June 30, 2022 and December 31, 2021, respectively

 

396

 

 

 

394

 

Common Shares: Class B, $0.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

Accumulated Other Comprehensive Income (Loss)

 

15,629

 

 

 

(2,747

)

Additional Paid-in Capital

 

1,154,367

 

 

 

1,155,034

 

Distributions in Excess of Net Income

 

(612,951

)

 

 

(595,454

)

Total Shareholders' Equity

 

557,588

 

 

 

557,374

 

 

 

 

 

Noncontrolling Interests - Common Units and LTIP Units

 

54,536

 

 

 

50,922

 

 

 

 

 

Total Equity

 

612,124

 

 

 

608,296

 

 

 

 

 

Total Liabilities and Equity

$

1,836,647

 

 

$

1,833,144

 

 

 

 

 


HERSHA HOSPITALITY TRUST

 

 

 

 

 

 

 

Summary Results (unaudited)

 

 

 

 

 

 

 

(in thousands, except shares and per share data)

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Revenues:

 

 

 

 

 

 

 

Hotel Operating Revenues:

 

 

 

 

 

 

 

Room

$

98,242

 

 

$

56,539

 

 

$

163,374

 

 

$

95,889

 

Food & Beverage

 

15,710

 

 

 

7,230

 

 

 

24,766

 

 

 

10,304

 

Other Operating Revenues

 

9,247

 

 

 

6,314

 

 

 

16,886

 

 

 

11,043

 

Total Hotel Operating Revenues

 

123,199

 

 

 

70,083

 

 

 

205,026

 

 

 

117,236

 

Other Revenue

 

91

 

 

 

13

 

 

 

132

 

 

 

25

 

Total Revenues

 

123,290

 

 

 

70,096

 

 

 

205,158

 

 

 

117,261

 

Operating Expenses:

 

 

 

 

 

 

 

Hotel Operating Expenses:

 

 

 

 

 

 

 

Room

 

19,447

 

 

 

12,350

 

 

 

34,037

 

 

 

21,548

 

Food & Beverage

 

11,607

 

 

 

5,409

 

 

 

20,011

 

 

 

8,282

 

Other Operating Expenses

 

36,039

 

 

 

23,551

 

 

 

62,395

 

 

 

43,660

 

Total Hotel Operating Expenses

 

67,093

 

 

 

41,310

 

 

 

116,443

 

 

 

73,490

 

Gain on Insurance Settlements

 

(987

)

 

 

(961

)

 

 

(962

)

 

 

(961

)

Property Losses in Excess of Insurance Recoveries

 

 

 

 

250

 

 

 

 

 

 

250

 

Hotel Ground Rent

 

1,531

 

 

 

1,064

 

 

 

2,621

 

 

 

2,164

 

Real Estate and Personal Property Taxes and Property Insurance

 

8,335

 

 

 

9,466

 

 

 

16,818

 

 

 

19,537

 

General and Administrative

 

3,192

 

 

 

2,698

 

 

 

5,969

 

 

 

5,473

 

Share Based Compensation

 

3,299

 

 

 

2,589

 

 

 

5,840

 

 

 

4,758

 

Terminated Transaction Costs

 

 

 

 

36

 

 

 

 

 

 

390

 

Depreciation and Amortization

 

17,003

 

 

 

21,014

 

 

 

36,279

 

 

 

42,816

 

Loss on Impairment of Assets

 

 

 

 

222

 

 

 

 

 

 

222

 

Total Operating Expenses

 

99,466

 

 

 

77,688

 

 

 

183,008

 

 

 

148,139

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

23,824

 

 

 

(7,592

)

 

 

22,150

 

 

 

(30,878

)

Interest Income

 

1

 

 

 

4

 

 

 

2

 

 

 

5

 

Interest Expense

 

(14,769

)

 

 

(14,982

)

 

 

(29,006

)

 

 

(28,411

)

Other (Expense) Income

 

(108

)

 

 

(84

)

 

 

(207

)

 

 

377

 

Gain on Disposition of Hotel Properties

 

 

 

 

 

 

 

 

 

 

48,352

 

Loss on Debt Extinguishment

 

 

 

 

(129

)

 

 

 

 

 

(3,069

)

Income (Loss) before Results from Unconsolidated Joint Venture Investments and Income Taxes

 

8,948

 

 

 

(22,783

)

 

 

(7,061

)

 

 

(13,624

)

 

 

 

 

 

 

 

 

Income (Loss) from Unconsolidated Joint Venture Investments

 

357

 

 

 

(589

)

 

 

(579

)

 

 

(1,247

)

 

 

 

 

 

 

 

 

Income (Loss) before Income Taxes

 

9,305

 

 

 

(23,372

)

 

 

(7,640

)

 

 

(14,871

)

Income Tax (Expense) Benefit

 

(93

)

 

 

(151

)

 

 

(114

)

 

 

438

 

Net Income (Loss)

 

9,212

 

 

 

(23,523

)

 

 

(7,754

)

 

 

(14,433

)

(Income) Loss Allocated to Noncontrolling Interests

 

 

 

 

 

 

 

Common Units

 

(379

)

 

 

2,945

 

 

 

2,345

 

 

 

2,623

 

Consolidated Joint Venture

 

(691

)

 

 

(1,968

)

 

 

(2,964

)

 

 

(1,810

)

Preferred Distributions

 

(6,043

)

 

 

(6,044

)

 

 

(12,087

)

 

 

(12,087

)

 

 

 

 

 

 

 

 

Net Income(Loss) Applicable to Common Shareholders

$

2,099

 

 

$

(28,590

)

 

$

(20,460

)

 

$

(25,707

)

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

BASIC

 

 

 

 

 

 

 

Net Income (Loss) Applicable to Common Shareholders

$

0.05

 

 

$

(0.73

)

 

$

(0.52

)

 

$

(0.66

)

DILUTED

 

 

 

 

 

 

 

Net Income (Loss) Applicable to Common Shareholders

$

0.05

 

 

$

(0.73

)

 

$

(0.52

)

 

$

(0.66

)

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

39,277,269

 

 

 

39,097,820

 

 

 

39,254,536

 

 

 

39,034,707

 

Diluted

 

40,453,785

 

 

 

39,097,820

 

 

 

39,254,536

 

 

 

39,034,707

 

Non-GAAP Measures

FFO and AFFO

The National Association of Real Estate Investment Trusts (“NAREIT”) developed Funds from Operations (“FFO”) as a non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. We calculate FFO applicable to common shares and Common Units in accordance with the December 2018 Financial Standards White Paper of NAREIT, which we refer to as the White Paper. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP) excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by an entity. Our interpretation of the NAREIT definition is that non-controlling interest in net income (loss) should be added back to (deducted from) net income (loss) as part of reconciling net income (loss) to FFO. Our FFO computation may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do.

The GAAP measure that we believe to be most directly comparable to FFO, net income (loss) applicable to common shareholders, includes loss from the impairment of certain depreciable assets, our investment in unconsolidated joint ventures and land, depreciation and amortization expenses, gains or losses on property sales, non-controlling interest and preferred dividends. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from our property operations. We determined that the loss from the impairment of certain depreciable assets, including investments in unconsolidated joint ventures and land, was driven by a measurable decrease in the fair value of certain hotel properties and other assets as determined by our analysis of those assets in accordance with applicable GAAP. As such, these impairments have been eliminated from net income (loss) to determine FFO.

Hersha also presents Adjusted Funds from Operations (AFFO), which reflects FFO in accordance with the NAREIT definition further adjusted by:

  • deducting or adding back income tax benefit or expense;

  • adding back non-cash share-based compensation expense;

  • adding back acquisition and terminated transaction expenses;

  • adding back amortization of discounts, premiums, and deferred financing costs;

  • adding back write-offs of deferred financing costs on debt extinguishment;

  • adding back straight-line amortization of ground lease expense; and

  • adding back interest expense that has been paid-in-kind.

FFO and AFFO do not represent cash flows from operating activities in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company’s performance or to cash flow as a measure of liquidity or ability to make distributions. We consider FFO and AFFO to be meaningful, additional measures of our operating performance because they exclude the effects of the assumption that the value of real estate assets diminishes predictably over time, and because they are widely used by industry analysts as performance measures. We evaluate our performance by reviewing AFFO, in addition to FFO, because we believe that adjusting FFO to exclude certain recurring and non-recurring items as described above provides useful supplemental information regarding our ongoing operating performance and that the presentation of AFFO, when combined with the primary GAAP presentation of net income (loss), more completely describes our operating performance. We show both FFO from consolidated hotel operations and FFO from unconsolidated joint ventures because we believe it is meaningful for the investor to understand the relative contributions from our consolidated and unconsolidated hotels. The display of both FFO from consolidated hotels and FFO from unconsolidated joint ventures allows for a detailed analysis of the operating performance of our hotel portfolio by management and investors. We present FFO and AFFO applicable to common shares and OP Units because our OP Units are redeemable for common shares. We believe it is meaningful for the investor to understand FFO and AFFO applicable to all common shares and OP Units. In addition, based on guidance provided by NAREIT, we have eliminated loss from the impairment of certain depreciable assets, including investments in unconsolidated joint ventures and land, from net (income) loss to arrive at FFO in each year presented.

The following table reconciles FFO and AFFO for the periods presented to the most directly comparable GAAP measure, net income (loss) applicable to common shares, for the same periods:

HERSHA HOSPITALITY TRUST

 

 

 

 

 

 

 

 

Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)

 

 

 

 

 

 

 

 

(in thousands, except shares and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

 

 

 

 

 

 

 

 

Net income (loss) applicable to common shares

 

$

2,099

 

 

$

(28,590

)

 

$

(20,460

)

 

$

(25,707

)

Income (loss) allocated to noncontrolling interest

 

 

1,070

 

 

 

(977

)

 

 

619

 

 

 

(813

)

(Income) loss from unconsolidated joint ventures

 

 

(357

)

 

 

589

 

 

 

579

 

 

 

1,247

 

Gain on disposition of hotel properties

 

 

 

 

 

 

 

 

 

 

 

(48,352

)

Loss from impairment of depreciable assets

 

 

 

 

 

222

 

 

 

 

 

 

222

 

Depreciation and amortization

 

 

17,003

 

 

 

21,014

 

 

 

36,279

 

 

 

42,816

 

Funds from consolidated hotel operations applicable to common shares and Partnership units

 

 

19,815

 

 

 

(7,742

)

 

 

17,017

 

 

 

(30,587

)

 

 

 

 

 

 

 

 

 

Income (loss) from unconsolidated joint venture investments

 

 

357

 

 

 

(589

)

 

 

(579

)

 

 

(1,247

)

Unrecognized pro rata interest in loss of unconsolidated joint venture

 

 

(79

)

 

 

(318

)

 

 

(298

)

 

 

(814

)

Depreciation and amortization of difference between purchase price and historical cost

 

 

21

 

 

 

21

 

 

 

42

 

 

 

42

 

Interest in depreciation and amortization of unconsolidated joint ventures

 

 

625

 

 

 

651

 

 

 

1,252

 

 

 

1,282

 

Funds from unconsolidated joint venture operations applicable to common shares and Partnership units

 

 

924

 

 

 

(235

)

 

 

417

 

 

 

(737

)

 

 

 

 

 

 

 

 

 

Funds from Operations applicable to common shares and Partnership units

 

 

20,739

 

 

 

(7,977

)

 

 

17,434

 

 

 

(31,324

)

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

93

 

 

 

151

 

 

 

114

 

 

 

(438

)

Non-cash share based compensation expense

 

 

3,299

 

 

 

2,589

 

 

 

5,840

 

 

 

4,758

 

Straight-line amortization of lease expense

 

 

118

 

 

 

128

 

 

 

298

 

 

 

257

 

Terminated transaction costs

 

 

 

 

 

36

 

 

 

 

 

 

390

 

Amortization of discounts, premiums, and deferred financing costs

 

 

1,496

 

 

 

1,227

 

 

 

2,944

 

 

 

2,504

 

Amortization of liability and reclassification of other comprehensive income for amended interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

424

 

Interest expense paid-in-kind

 

 

 

 

 

1,801

 

 

 

1,855

 

 

 

2,534

 

Deferred financing costs and debt premium written off in debt extinguishment

 

 

 

 

 

129

 

 

 

 

 

 

3,069

 

Loss on remediation of damage, excluding impairment of depreciable assets

 

 

 

 

 

250

 

 

 

 

 

 

250

 

 

 

 

 

 

 

 

 

 

Adjusted Funds from Operations

 

$

25,745

 

 

$

(1,666

)

 

$

28,485

 

 

$

(17,576

)

 

 

 

 

 

 

 

 

 

AFFO per Diluted Weighted Average Common Shares and Partnership Units Outstanding

 

$

0.56

 

 

$

(0.04

)

 

$

0.62

 

 

$

(0.39

)

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Common Shares and Partnership Units Outstanding

 

 

45,716,098

 

 

 

44,724,968

 

 

 

45,629,745

 

 

 

44,525,168

 

EBITDAre and Adjusted EBITDA

Earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) is a supplemental measure of our operating performance and facilitates comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. NAREIT adopted EBITDA for real estate (“EBITDAre”) a measure calculated by adding gains from the disposition of hotel operations, in order to promote an industry-wide measure of REIT operating performance. We also adjust EBITDAre for interest in amortization and write-off of deferred financing costs of our unconsolidated joint ventures, deferred financing costs write-offs in debt extinguishment, non-cash share-based compensation expense, acquisition and terminated transaction costs and net operating loss incurred on non-operation properties to calculate Adjusted EBITDA.

HERSHA HOSPITALITY TRUST

 

 

 

 

 

 

 

 

EBITDAre and Adjusted EBITDA

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Net income (loss)

 

$

9,212

 

 

$

(23,523

)

 

$

(7,754

)

 

$

(14,433

)

(Income) loss from unconsolidated joint ventures

 

 

(357

)

 

 

589

 

 

 

579

 

 

 

1,247

 

Interest expense

 

 

14,769

 

 

 

14,982

 

 

 

29,006

 

 

 

28,411

 

Non-operating interest income

 

 

(1

)

 

 

(4

)

 

 

(2

)

 

 

(5

)

Income tax expense (benefit)

 

 

93

 

 

 

151

 

 

 

114

 

 

 

(438

)

Depreciation and amortization

 

 

17,003

 

 

 

21,014

 

 

 

36,279

 

 

 

42,816

 

EBITDA from consolidated hotel operations

 

 

40,719

 

 

 

13,209

 

 

 

58,222

 

 

 

57,598

 

Gain on disposition of hotel properties

 

 

 

 

 

 

 

 

 

 

 

(48,352

)

Loss from impairment of depreciable assets

 

 

 

 

 

222

 

 

 

 

 

 

222

 

EBITDAre from consolidated hotel operations

 

 

40,719

 

 

 

13,431

 

 

 

58,222

 

 

 

9,468

 

Income (loss) from unconsolidated joint venture investments

 

 

357

 

 

 

(589

)

 

 

(579

)

 

 

(1,247

)

Unrecognized pro rata interest in loss of unconsolidated joint venture

 

 

(79

)

 

 

(318

)

 

 

(298

)

 

 

(814

)

Depreciation and amortization of difference between purchase price and historical cost

 

 

21

 

 

 

21

 

 

 

42

 

 

 

42

 

Adjustment for interest in interest expense, depreciation and amortization of unconsolidated joint ventures

 

 

1,011

 

 

 

970

 

 

 

1,973

 

 

 

1,908

 

EBITDAre from unconsolidated joint venture operations

 

 

1,310

 

 

 

84

 

 

 

1,138

 

 

 

(111

)

EBITDAre

 

 

42,029

 

 

 

13,515

 

 

 

59,360

 

 

 

9,357

 

Non-cash share based compensation expense

 

 

3,299

 

 

 

2,589

 

 

 

5,840

 

 

 

4,758

 

Straight-line amortization of lease expense

 

 

118

 

 

 

128

 

 

 

298

 

 

 

257

 

Terminated transaction costs

 

 

 

 

 

36

 

 

 

 

 

 

390

 

Loss on reclassification of other comprehensive income for interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

324

 

Deferred financing costs and debt premium written off in debt extinguishment

 

 

 

 

 

129

 

 

 

 

 

 

3,069

 

Loss on remediation of damage, excluding impairment of depreciable assets

 

 

 

 

 

250

 

 

 

 

 

 

250

 

Adjusted EBITDA

 

$

45,446

 

 

$

16,647

 

 

$

65,498

 

 

$

18,405

 

Our EBITDAre and Adjusted EBITDA computation may not be comparable to EBITDAre or Adjusted EBITDA reported by other companies that interpret the definition of EBITDA differently than we do. Management believes Adjusted EBITDA and EBITDAre to be meaningful measures of a REIT's performance because they are widely followed by industry analysts, lenders and investors and that they should be considered along with, but not as an alternative to, GAAP net income (loss) as a measure of the Company's operating performance.

Hotel EBITDA

Hotel EBITDA is a commonly used measure of performance in the hotel industry for a specific hotel or group of hotels. We believe Hotel EBITDA provides a more complete understanding of the operating results of the individual hotel or group of hotels. We calculate Hotel EBITDA by utilizing the total revenues generated from hotel operations less all operating expenses, property taxes, insurance and management fees, which calculation excludes the Company expenses not specific to a hotel, such as corporate overhead. Because Hotel EBITDA is specific to individual hotels or groups of hotels and not to the Company as a whole, it is not directly comparable to any GAAP measure. In addition, our Hotel EBITDA computation may not be comparable to Hotel EBITDA or other similar metrics reported by other companies that interpret the definition of Hotel EBITDA differently than we do. Management believes Hotel EBITDA to be a meaningful measure of performance of a portfolio of hotels because it is followed by industry analysts, lenders and investors and that it should be considered along with, but not as an alternative to, operating income (loss) as reported in our unaudited summary results as a measure of our hotel portfolio’s operating performance.

HERSHA HOSPITALITY TRUST

 

 

 

 

 

 

 

 

Hotel EBITDA

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

23,824

 

 

$

(7,592

)

 

$

22,150

 

 

$

(30,878

)

Other revenue

 

 

(91

)

 

 

(13

)

 

 

(132

)

 

 

(25

)

Gain on insurance settlement

 

 

(987

)

 

 

(961

)

 

 

(962

)

 

 

(961

)

Loss from impairment of depreciable assets and remediation

 

 

 

 

 

472

 

 

 

 

 

 

472

 

Depreciation and amortization

 

 

17,003

 

 

 

21,014

 

 

 

36,279

 

 

 

42,816

 

General and administrative

 

 

3,192

 

 

 

2,698

 

 

 

5,969

 

 

 

5,473

 

Share based compensation

 

 

3,299

 

 

 

2,589

 

 

 

5,840

 

 

 

4,758

 

Terminated transaction costs

 

 

 

 

 

36

 

 

 

 

 

 

390

 

Straight-line amortization of ground lease expense

 

 

118

 

 

 

128

 

 

 

298

 

 

 

257

 

Other

 

 

85

 

 

 

(91

)

 

 

63

 

 

 

(117

)

Hotel EBITDA

 

$

46,443

 

 

$

18,280

 

 

$

69,505

 

 

$

22,185

 

Supplemental Schedules

The Company has published supplemental earnings schedules in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. These can be found in the Investor Relations section and the “SEC Filings” and “News & Presentations” page of the Company’s website, www.hersha.com.

Contact:
Ashish Parikh, Chief Financial Officer
Phone: 215-238-1046