dcae8a584916407

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2014

 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to ____

 

COMMISSION FILE NUMBER: 001-14765

 

HERSHA HOSPITALITY TRUST

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

251811499

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

44 Hersha Drive, Harrisburg, PA

 

17102

(Address of Registrant’s Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (717) 236-4400

 

Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days.

Yes No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

 

 

 

Large accelerated filer 

Accelerated filer 

 

Non-accelerated filer 

Small reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes No

 

As of August 5, 2014, the number of Class A common shares of beneficial interest outstanding was 200,729,931 and there were no Class B common shares of beneficial interest outstanding.

 

 


 

 

 Hersha Hospitality Trust

Table of Contents

 

 

 

 

 

 

 

 

PART I.  FINANCIAL INFORMATION

Page

Item 1.

Financial Statements.

 

 

Consolidated Balance Sheets as of June 30, 2014 [Unaudited] and December 31, 2013

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013 [Unaudited]

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2014 and 2013 [Unaudited]

 

Consolidated Statements of Equity for the Six Months Ended June 30, 2014 and 2013 [Unaudited]

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 [Unaudited]

 

Notes to the Consolidated Financial Statements

11 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

35 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

51 

Item 4.

Controls and Procedures.

52 

 

 

 

PART II.  OTHER INFORMATION

 

Item 1.

Legal Proceedings.

53 

Item 1A.

Risk Factors.

53 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

53 

Item 3.

Defaults Upon Senior Securities.

53 

Item 4.

Mine Safety Disclosures.

53 

Item 5.

Other Information.

53 

Item 6.

Exhibits.

54 

 

 

 

 

Signatures

55 

 

 

 

 

 

 

 

 

 

2


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2014 [UNAUDITED] AND DECEMBER 31, 2013

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2014

 

December 31, 2013

Assets:

 

 

 

 

 

 

Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets of $85,006 and $85,759

 

$

1,760,893 

 

$

1,535,835 

Investment in Unconsolidated Joint Ventures

 

 

11,593 

 

 

12,044 

Cash and Cash Equivalents

 

 

29,191 

 

 

36,213 

Escrow Deposits

 

 

21,159 

 

 

25,938 

Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of $192 and $43

 

 

13,156 

 

 

9,141 

Deferred Financing Costs, Net of Accumulated Amortization of $6,354 and $7,070

 

 

8,913 

 

 

7,570 

Due from Related Parties

 

 

6,358 

 

 

11,124 

Intangible Assets, Net of Accumulated Amortization of $3,299 and $3,227

 

 

7,515 

 

 

7,603 

Deposits on Hotel Acquisitions

 

 

 -

 

 

18,586 

Other Assets

 

 

35,013 

 

 

27,460 

Hotel Assets Held for Sale

 

 

 -

 

 

56,583 

Total Assets

 

$

1,893,791 

 

$

1,748,097 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

Line of Credit

 

$

27,000 

 

$

 -

Unsecured Term Loan

 

 

250,000 

 

 

150,000 

Unsecured Notes Payable

 

 

51,548 

 

 

51,548 

Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt of $54,926 and $55,714

 

 

615,229 

 

 

571,953 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

52,797 

 

 

40,852 

Dividends and Distributions Payable

 

 

15,830 

 

 

15,955 

Due to Related Parties

 

 

6,386 

 

 

4,815 

Liabilities Related to Hotel Assets Held for Sale

 

 

 -

 

 

45,835 

Total Liabilities

 

$

1,018,790 

 

$

880,958 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

Preferred Shares:  $.01 Par Value, 29,000,000 Shares Authorized, 4,600,000 Series B and 3,000,000 Series C Shares Issued and Outstanding at June 30, 2014 and December 31, 2013, with Liquidation Preferences of $25 Per Share (Note 1)

 

$

76 

 

$

76 

Common Shares:  Class A, $.01 Par Value, 300,000,000 Shares Authorized at June 30, 2014 and December 31, 2013, 200,676,750 and 202,759,419 Shares Issued and Outstanding at June 30, 2014 and December 31, 2013, respectively

 

 

2,007 

 

 

2,028 

Common Shares:  Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2014 and December 31, 2013

 

 

 -

 

 

 -

Accumulated Other Comprehensive Loss

 

 

(894)

 

 

(376)

Additional Paid-in Capital

 

 

1,190,875 

 

 

1,200,798 

Distributions in Excess of Net Income

 

 

(346,562)

 

 

(364,568)

Total Shareholders' Equity

 

 

845,502 

 

 

837,958 

 

 

 

 

 

 

 

Noncontrolling Interests (Note 1):

 

 

 

 

 

 

Noncontrolling Interests - Common Units

 

 

30,209 

 

 

29,523 

Noncontrolling Interests - Consolidated Variable Interest Entity

 

 

(710)

 

 

(342)

Total Noncontrolling Interests

 

 

29,499 

 

 

29,181 

 

 

 

 

 

 

 

Total Equity

 

 

875,001 

 

 

867,139 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

1,893,791 

 

$

1,748,097 

 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

3


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2014

 

2013

 

2014

 

2013

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Revenues

 

$

111,487 

 

 

90,526 

 

$

191,404 

 

 

155,768 

 

Interest Income from Development Loans

 

 

 -

 

 

12 

 

 

 -

 

 

158 

 

Other Revenues

 

 

66 

 

 

 

 

99 

 

 

206 

 

Total Revenues

 

 

111,553 

 

 

90,539 

 

 

191,503 

 

 

156,132 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Expenses

 

 

56,948 

 

 

47,077 

 

 

105,724 

 

 

87,253 

 

Insurance Recoveries

 

 

(2,557)

 

 

 -

 

 

(4,602)

 

 

(403)

 

Hotel Ground Rent

 

 

595 

 

 

266 

 

 

1,005 

 

 

494 

 

Real Estate and Personal Property Taxes and Property Insurance

 

 

7,180 

 

 

5,607 

 

 

13,986 

 

 

11,423 

 

General and Administrative (including Share Based Payments of $1,449 and $2,439 for the three months ended June 30, 2014 and 2013, respectively, and $2,561 and $4,827 for the six months ended June 30, 2014 and 2013, respectively)

 

 

4,738 

 

 

5,691 

 

 

8,640 

 

 

10,841 

 

Acquisition and Terminated Transaction Costs

 

 

1,672 

 

 

773 

 

 

1,806 

 

 

776 

 

Depreciation and Amortization

 

 

17,457 

 

 

13,886 

 

 

33,800 

 

 

26,584 

 

Total Operating Expenses

 

 

86,033 

 

 

73,300 

 

 

160,359 

 

 

136,968 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

25,520 

 

 

17,239 

 

 

31,144 

 

 

19,164 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

277 

 

 

469 

 

 

675 

 

 

925 

 

Interest Expense

 

 

(10,745)

 

 

(10,167)

 

 

(20,793)

 

 

(19,582)

 

Other Expense

 

 

(214)

 

 

 -

 

 

(330)

 

 

 -

 

Gain on Disposition of Hotel Properties

 

 

7,227 

 

 

 -

 

 

7,227 

 

 

 -

 

Gain on Hotel Acquisitions, net

 

 

13,609 

 

 

12,107 

 

 

13,609 

 

 

12,107 

 

Development Loan Recovery

 

 

22,494 

 

 

 -

 

 

22,494 

 

 

 -

 

Loss on Debt Extinguishment

 

 

 -

 

 

(284)

 

 

(644)

 

 

(545)

 

Income Before Income (Loss) from Unconsolidated Joint Venture Investments, Income Taxes and Discontinued Operations

 

 

58,168 

 

 

19,364 

 

 

53,382 

 

 

12,069 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Unconsolidated Joint Venture Investments

 

 

419 

 

 

148 

 

 

(1)

 

 

(248)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

58,587 

 

 

19,512 

 

 

53,381 

 

 

11,821 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

 

(1)

 

 

(1,439)

 

 

107 

 

 

(309)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

 

58,586 

 

 

18,073 

 

 

53,488 

 

 

11,512 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations  (Note 11):

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on Disposition of Discontinued Assets

 

 

 -

 

 

1,043 

 

 

81 

 

 

1,043 

 

Impairment of Discontinued Assets

 

 

 -

 

 

(3,723)

 

 

(1,800)

 

 

(3,723)

 

Income from Discontinued Operations, Net of Income Taxes

 

 

 -

 

 

2,692 

 

 

304 

 

 

1,577 

 

Income (Loss) from Discontinued Operations

 

 

 -

 

 

12 

 

 

(1,415)

 

 

(1,103)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

58,586 

 

 

18,085 

 

 

52,073 

 

 

10,409 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Income) Loss Allocated to Noncontrolling Interests

 

 

(1,655)

 

 

(210)

 

 

(1,148)

 

 

463 

 

Preferred Distributions

 

 

(3,589)

 

 

(3,589)

 

 

(7,178)

 

 

(7,433)

 

Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares

 

 

 -

 

 

 -

 

 

 -

 

 

(2,250)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Applicable to Common Shareholders

 

$

53,342 

 

$

14,286 

 

$

43,747 

 

$

1,189 

 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

4


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Applicable to Common Shareholders

 

$

0.27 

 

$

0.07 

 

$

0.22 

 

$

0.01 

 

 

Loss from Discontinued Operations Applicable to Common Shareholders

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

(0.01)

 

 

Net Income Applicable to Common Shareholders

 

$

0.27 

 

$

0.07 

 

$

0.22 

 

$

0.00 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Applicable to Common Shareholders

 

$

0.27 

 

$

0.07 

 

$

0.22 

 

$

0.01 

 

 

Loss from Discontinued Operations Applicable to Common Shareholders

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

(0.01)

 

 

Net Income Applicable to Common Shareholders

 

$

0.27 

 

$

0.07 

 

$

0.22 

 

$

0.00 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

198,494,473 

 

 

198,633,051 

 

 

199,612,898 

 

 

197,835,465 

 

 

Diluted*

 

 

200,213,554 

 

 

201,201,337 

 

 

201,015,581 

 

 

201,083,900 

 

 

 

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and common units of limited partnership interest (“Common Units”) in the Operating Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these shares and units in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

 

The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

   

 

 

2014

 

 

2013

 

 

2013

 

 

2012

   

 

 

 

 

 

 

 

 

 

 

 

 

Common Units of Limited Partnership Interest

 

 

6,914,716 

 

 

6,944,496 

 

 

6,914,716 

 

 

7,022,238 

Total Potentially Dilutive Securities Excluded from the Denominator

 

 

6,914,716 

 

 

6,944,496 

 

 

6,914,716 

 

 

7,022,238 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

 

5


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30, 2014

 

 

2014

 

 

2013

 

 

2014

 

 

2013

Net Income

$

58,586 

 

$

18,085 

 

$

52,073 

 

 

10,409 

Other Comprehensive (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Derivative Instruments

 

(1)

 

 

2,519 

 

 

256 

 

 

2,971 

Less: Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income

 

(418)

 

 

(312)

 

 

(774)

 

 

(608)

 

$

(419)

 

$

2,207 

 

$

(518)

 

$

2,363 

Comprehensive Income

 

58,167 

 

 

20,292 

 

 

51,555 

 

 

12,772 

Less:  Comprehensive (Income) Loss Attributable to Noncontrolling Interests

 

(1,655)

 

 

(210)

 

 

(1,148)

 

 

463 

Less:  Preferred Distributions

 

(3,589)

 

 

(3,589)

 

 

(7,178)

 

 

(7,433)

Less:  Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares

 

 -

 

 

 -

 

 

 -

 

 

(2,250)

Comprehensive Income Attributable to Common Shareholders

$

52,923 

 

$

16,493 

 

$

43,229 

 

$

3,552 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

6


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

Noncontrolling Interests

 

 

Common Shares

Class A Common Shares ($)

Class B Common Shares ($)

Preferred Shares

Preferred Shares ($)

Additional Paid-In Capital ($)

Accumulated Other Comprehensive Loss ($)

Distributions in Excess of Net Earnings ($)

Total Shareholders' Equity ($)

 

Common Units

Common Units ($)

Consolidated Variable Interest Entity ($)

Total Noncontrolling Interests ($)

Total Equity ($)

Balance at December 31, 2013

202,759,419 
2,028 

 -

7,600,000 
76 
1,200,798 
(376)
(364,568)
837,958 

 

6,914,716 
29,523 
(342)
29,181 
867,139 

Repurchase of Common Shares

(2,626,854)
(26)

 -

 -

 -

(13,686)

 -

(1,621)
(15,333)

 

 -

 -

 -

 -

(15,333)

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares ($0.12 per share)

 -

 -

 -

 -

 -

 -

 -

(24,120)
(24,120)

 

 -

 -

 -

 -

(24,120)

Preferred Shares

 -

 -

 -

 -

 -

 -

 -

(7,178)
(7,178)

 

 -

 -

 -

 -

(7,178)

Common Units ($0.12 per share)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 

 -

(830)

 -

(830)
(830)

Dividend Reinvestment Plan

4,310 

 -

 -

 -

 -

23 

 -

 -

23 

 

 -

 -

 -

 -

23 

Share Based Compensation:

 

 

 

 -

 

 

 

 

 

 

 -

 

 

 -

 

Grants

539,875 

 -

 -

 -

494 

 -

 -

499 

 

 -

 -

 -

 -

499 

Amortization

 -

 -

 -

 -

 -

3,246 

 -

 -

3,246 

 

 -

 -

 -

 -

3,246 

Change in Fair Value of Derivative Instruments

 -

 -

 -

 -

 -

 -

(518)

 -

(518)

 

 -

 -

 -

 -

(518)

Net Income

 -

 -

 -

 -

 -

 -

 -

50,925 
50,925 

 

 -

1,516 
(368)
1,148 
52,073 

Balance at June 30, 2014

200,676,750 
2,007 

 -

7,600,000 
76 
1,190,875 
(894)
(346,562)
845,502 

 

6,914,716 
30,209 
(710)
29,499 
875,001 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

7


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

Noncontrolling Interests

 

Redeemable Noncontrolling Interests

 

Common Shares

Class A Common Shares ($)

Class B Common Shares ($)

Preferred Shares

Preferred Shares ($)

Additional Paid-In Capital ($)

Accumulated Other Comprehensive Loss ($)

Distributions in Excess of Net Earnings ($)

Total Shareholders' Equity ($)

 

Common Units

Common Units ($)

Consolidated Variable Interest Entity ($)

Total Noncontrolling Interests ($)

Total Equity ($)

 

Common Units

Common Units ($)

Balance at December 31, 2012

198,672,356 
1,986 

 -

7,000,000 
70 
1,178,292 
(1,786)
(348,734)
829,828 

 

4,048,254 
15,484 
476 
15,960 
845,788 

 

3,064,252 
15,321 

Unit Conversion/Redemption

27,790 

 -

 -

 -

(234)

 -

 -

(233)

 

(197,790)
(767)

 -

(767)
(1,000)

 

 -

 -

Reallocation of Noncontrolling Interest

 -

 -

 -

 -

 -

 -

 -

 -

 -

 

3,064,252 
15,251 

 -

15,251 
15,251 

 

(3,064,252)
(15,251)

Preferred Shares

 -

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 -

 

Preferred Share Offering, Net of Costs

 -

 -

 -

 -

30 
72,341 

 -

 -

72,371 

 

 -

 -

 -

 -

72,371 

 

 -

 -

Preferred Share Redemption

 -

 -

 -

 -

(24)
(59,976)

 -

 

(60,000)

 

 -

 -

 -

 -

(60,000)

 

 -

 -

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares ($0.12 per share)

 -

 -

 -

 -

 -

 -

 -

(25,414)
(25,414)

 

 -

 -

 -

 -

(25,414)

 

 -

 -

Preferred Shares

 -

 -

 -

 -

 -

 -

 -

(7,433)
(7,433)

 

 -

 -

 -

 -

(7,433)

 

 -

 -

Common Units ($0.12 per share)

 -

 -

 

 -

 

 -

 -

 -

 -

 

 -

(838)

 -

(838)
(838)

 

 -

 -

Dividend Reinvestment Plan

3,571 

 -

 -

 -

 -

19 

 -

 -

19 

 

 -

 -

 -

 -

19 

 

 -

 -

Share Based Compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants

3,963,929 
40 

 -

 -

 -

285 

 -

 -

325 

 

 -

 -

 -

 -

325 

 

 -

 -

Amortization

 -

 -

 -

 -

 -

6,187 

 -

 -

6,187 

 

 -

 -

 -

 -

6,187 

 

 -

 -

Change in Fair Value of Derivative Instruments

 -

 -

 -

 -

 -

 -

2,363 

 -

2,363 

 

 -

 -

 -

 -

2,363 

 

 -

 -

Net Income

 -

 -

 -

 -

 -

 -

 -

10,872 
10,872 

 

 -

37 
(430)
(393)
10,479 

 

 -

(70)

Balance at June 30, 2013

202,667,646 
2,027 

 -

7,000,000 
76 
1,196,914 
577 
(370,709)
828,885 

 

6,914,716 
29,167 
46 
29,213 
858,098 

 

 -

 -

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

 

8


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

Operating Activities:

 

 

 

 

 

 

Net Income

 

$

52,073 

 

 

10,409 

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Gain on Hotel Acquisitions, net

 

 

(13,609)

 

 

(12,107)

Development Loan Recovery

 

 

(22,494)

 

 

 -

Gain on Disposition of Hotel Properties

 

 

(7,308)

 

 

(1,043)

Impairment of Hotel Assets

 

 

1,800 

 

 

3,723 

Deferred Taxes

 

 

(107)

 

 

309 

Depreciation

 

 

33,596 

 

 

30,690 

Amortization

 

 

990 

 

 

1,246 

Loss on Debt Extinguishment

 

 

644 

 

 

470 

Equity in Loss of Unconsolidated Joint Ventures

 

 

 

 

248 

Distributions from Unconsolidated Joint Ventures

 

 

312 

 

 

12 

Loss Recognized on Change in Fair Value of Derivative Instrument

 

 

67 

 

 

106 

Share Based Compensation Expense

 

 

2,561 

 

 

4,827 

Change in Assets and Liabilities:

 

 

 

 

 

 

(Increase) Decrease in:

 

 

 

 

 

 

Hotel Accounts Receivable

 

 

(4,143)

 

 

(2,436)

Escrows

 

 

(1,856)

 

 

(4,048)

Other Assets

 

 

(6,415)

 

 

(6)

Due from Related Parties

 

 

4,767 

 

 

2,712 

Increase (Decrease) in:

 

 

 

 

 

 

Due to Related Parties

 

 

1,571 

 

 

1,736 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

(1,028)

 

 

3,861 

Net Cash Provided by Operating Activities

 

$

41,422 

 

$

40,709 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Purchase of Hotel Property Assets

 

$

(174,037)

 

$

(166,390)

Deposits on Hotel Acquisitions, Net

 

 

 -

 

 

264 

Capital Expenditures

 

 

(19,478)

 

 

(25,739)

Cash Paid for Hotel Development Projects

 

 

(3,063)

 

 

(9,907)

Proceeds from Disposition of Hotel Properties

 

 

30,300 

 

 

3,855 

Net Changes in Capital Expenditure Escrows

 

 

3,487 

 

 

(1,667)

Proceeds from Insurance Claims

 

 

1,032 

 

 

2,189 

Repayment of Development Loans Receivable

 

 

 -

 

 

15,122 

Distributions from Unconsolidated Joint Venture

 

 

138 

 

 

1,382 

Net Cash Used in Investing Activities

 

$

(161,621)

 

$

(180,891)

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

9


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

Financing Activities:

 

 

 

 

 

 

Proceeds from (Repayments of) Borrowings Under Line of Credit, Net

 

$

27,000 

 

$

66,200 

Proceeds from Unsecured Term Loan Borrowing

 

 

100,000 

 

 

50,000 

Principal Repayment of Mortgages and Notes Payable

 

 

(17,436)

 

 

(50,908)

Proceeds from Mortgages and Notes Payable

 

 

54,500 

 

 

60,000 

Cash Paid for Deferred Financing Costs

 

 

(3,316)

 

 

(2,235)

Proceeds from Issuance of Preferred Stock, Net

 

 

 -

 

 

72,371 

Redemption of Series A Preferred Shares

 

 

 -

 

 

(60,000)

Repurchase of Common Shares

 

 

(15,333)

 

 

 -

Redemption of Common Partnership Units

 

 

 -

 

 

(1,000)

Settlement of Interest Rate Cap

 

 

(8)

 

 

(661)

Dividends Paid on Common Shares

 

 

(24,222)

 

 

(25,154)

Dividends Paid on Preferred Shares

 

 

(7,178)

 

 

(7,344)

Distributions Paid on Common Partnership Units

 

 

(830)

 

 

(852)

Net Cash Provided by Financing Activities

 

$

113,177 

 

$

100,417 

 

 

 

 

 

 

 

Net Decrease in Cash and Cash Equivalents

 

$

(7,022)

 

$

(39,765)

Cash and Cash Equivalents - Beginning of Period

 

 

36,213 

 

 

69,059 

 

 

 

 

 

 

 

Cash and Cash Equivalents - End of Period

 

$

29,191 

 

$

29,294 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

 

 

10


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

NOTE 1 – BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements of Hersha Hospitality Trust (“we,” “us,” “our” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and with the general instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30