ht-20150630 10-Q Q2

 

 

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, 2015

 

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 July 28,  2015, the number of Class A common shares of beneficial interest outstanding was 47,794,833  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, 2015 [Unaudited] and December 31, 2014

3

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2015 and 2014 [Unaudited]

4

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014 [Unaudited]

6

 

Consolidated Statements of Equity for the Six Months Ended June 30, 2015 and 2014 [Unaudited]

7

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 [Unaudited]

9

 

Notes to the Consolidated Financial Statements

11

Item 2.

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

33

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

48

Item 4.

Controls and Procedures.

49

 

 

 

PART II.  OTHER INFORMATION

 

Item 1.

Legal Proceedings.

50

Item 1A.

Risk Factors.

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

50

Item 3.

Defaults Upon Senior Securities.

50

Item 4.

Mine Safety Disclosures.

50

Item 5.

Other Information.

50

Item 6.

Exhibits.

51

 

 

 

 

Signatures

52

 

 

 

 

 

 

 

 

 

 

2


 

Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2015 (UNAUDITED) AND DECEMBER 31, 2014

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

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2015

 

December 31, 2014

Assets:

 

 

 

 

 

 

Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets of $83,521 and $84,247

 

$

1,781,415 

 

$

1,745,483 

Investment in Unconsolidated Joint Ventures

 

 

10,327 

 

 

11,150 

Cash and Cash Equivalents

 

 

28,161 

 

 

21,675 

Escrow Deposits

 

 

16,903 

 

 

16,941 

Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of $40 and $39

 

 

10,714 

 

 

9,363 

Deferred Financing Costs, Net of Accumulated Amortization of $7,822 and $6,938

 

 

8,597 

 

 

8,605 

Due from Related Parties

 

 

6,347 

 

 

6,580 

Intangible Assets, Net of Accumulated Amortization of $3,730 and $3,514

 

 

7,150 

 

 

7,316 

Other Assets

 

 

34,452 

 

 

28,426 

Total Assets

 

$

1,904,066 

 

$

1,855,539 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

Line of Credit

 

$

128,500 

 

$

 -

Unsecured Term Loan

 

 

250,000 

 

 

250,000 

Unsecured Notes Payable

 

 

51,548 

 

 

51,548 

Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt of $53,325 and $54,132

 

 

605,480 

 

 

617,375 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

54,418 

 

 

54,116 

Dividends and Distributions Payable

 

 

17,402 

 

 

17,909 

Due to Related Parties

 

 

6,558 

 

 

7,203 

Total Liabilities

 

$

1,113,906 

 

$

998,151 

 

 

 

 

 

 

 

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, 2015 and December 31, 2014, 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, 2015 and December 31, 2014, 47,769,899 and 49,708,771 Shares Issued and Outstanding at June 30, 2015 and December 31, 2014, respectively

 

 

477 

 

 

497 

Common Shares:  Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2015 and December 31, 2014

 

 

 -

 

 

 -

Accumulated Other Comprehensive Loss

 

 

(979)

 

 

(358)

Additional Paid-in Capital

 

 

1,154,842 

 

 

1,194,547 

Distributions in Excess of Net Income

 

 

(393,943)

 

 

(365,381)

Total Shareholders' Equity

 

 

760,473 

 

 

829,381 

 

 

 

 

 

 

 

Noncontrolling Interests (Note 1):

 

 

 

 

 

 

Noncontrolling Interests - Common Units and LTIP Units

 

 

31,105 

 

 

29,082 

Noncontrolling Interests - Consolidated Variable Interest Entity

 

 

(1,418)

 

 

(1,075)

Total Noncontrolling Interests

 

 

29,687 

 

 

28,007 

 

 

 

 

 

 

 

Total Equity

 

 

790,160 

 

 

857,388 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

1,904,066 

 

$

1,855,539 

 

 

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, 2015 AND 2014 [UNAUDITED]

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Revenues

 

$

127,000 

 

$

111,487 

 

$

222,688 

 

$

191,404 

 

Other Revenues

 

 

30 

 

 

66 

 

 

54 

 

 

99 

 

Total Revenues

 

 

127,030 

 

 

111,553 

 

 

222,742 

 

 

191,503 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Expenses

 

 

64,134 

 

 

56,948 

 

 

121,489 

 

 

105,724 

 

Insurance Recoveries

 

 

 -

 

 

(2,557)

 

 

 -

 

 

(4,602)

 

Hotel Ground Rent

 

 

727 

 

 

595 

 

 

1,455 

 

 

1,005 

 

Real Estate and Personal Property Taxes and Property Insurance

 

 

8,222 

 

 

7,180 

 

 

16,492 

 

 

13,986 

 

General and Administrative (including Share Based Payments of $1,655 and $1,449 and $3,194 and $2,561 for the three and six months ended June 30, 2015 and 2014, respectively)

 

 

5,423 

 

 

4,738 

 

 

9,770 

 

 

8,640 

 

Acquisition and Terminated Transaction Costs

 

 

190 

 

 

1,672 

 

 

308 

 

 

1,806 

 

Depreciation and Amortization

 

 

18,328 

 

 

17,457 

 

 

36,581 

 

 

33,800 

 

Total Operating Expenses

 

 

97,024 

 

 

86,033 

 

 

186,095 

 

 

160,359 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

30,006 

 

 

25,520 

 

 

36,647 

 

 

31,144 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

51 

 

 

277 

 

 

99 

 

 

675 

 

Interest Expense

 

 

(10,688)

 

 

(10,745)

 

 

(21,323)

 

 

(20,793)

 

Other Expense

 

 

(156)

 

 

(214)

 

 

(325)

 

 

(330)

 

Gain on Disposition of Hotel Properties

 

 

 -

 

 

7,227 

 

 

 -

 

 

7,227 

 

Gain on Hotel Acquisitions, net

 

 

 -

 

 

13,609 

 

 

 -

 

 

13,609 

 

Development Loan Recovery

 

 

 -

 

 

22,494 

 

 

 -

 

 

22,494 

 

Loss on Debt Extinguishment

 

 

(222)

 

 

 -

 

 

(222)

 

 

(644)

 

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

 

 

18,991 

 

 

58,168 

 

 

14,876 

 

 

53,382 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Unconsolidated Joint Venture Investments

 

 

526 

 

 

419 

 

 

252 

 

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

19,517 

 

 

58,587 

 

 

15,128 

 

 

53,381 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit/(Expense)

 

 

109 

 

 

(1)

 

 

109 

 

 

107 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

 

19,626 

 

 

58,586 

 

 

15,237 

 

 

53,488 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations  (Note 11):

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on Disposition of Discontinued Assets

 

 

 -

 

 

 -

 

 

 -

 

 

81 

 

Impairment of Discontinued Assets

 

 

 -

 

 

 -

 

 

 -

 

 

(1,800)

 

Income from Discontinued Operations, Net of Income Taxes

 

 

 -

 

 

 -

 

 

 -

 

 

304 

 

Loss from Discontinued Operations

 

 

 -

 

 

 -

 

 

 -

 

 

(1,415)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

19,626 

 

 

58,586 

 

 

15,237 

 

 

52,073 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Income) Loss Allocated to Noncontrolling Interests

 

 

(405)

 

 

(1,655)

 

 

38 

 

 

(1,148)

 

Preferred Distributions

 

 

(3,589)

 

 

(3,589)

 

 

(7,178)

 

 

(7,178)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Applicable to Common Shareholders

 

$

15,632 

 

$

53,342 

 

$

8,097 

 

$

43,747 

 

 

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, 2015 AND 2014 [UNAUDITED]

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Applicable to Common Shareholders

 

$

0.32 

 

$

1.07 

 

$

0.16 

 

$

0.90 

 

 

Loss from Discontinued Operations Applicable to Common Shareholders

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

(0.03)

 

 

Net Income Applicable to Common Shareholders

 

$

0.32 

 

$

1.07 

 

$

0.16 

 

$

0.87 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Applicable to Common Shareholders

 

$

0.32 

 

$

1.06 

 

$

0.16 

 

$

0.89 

 

 

Loss from Discontinued Operations Applicable to Common Shareholders

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

(0.03)

 

 

Net Income Applicable to Common Shareholders

 

$

0.32 

 

$

1.06 

 

$

0.16 

 

$

0.86 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

48,530,716 

 

 

49,623,618 

 

 

49,053,846 

 

 

49,903,225 

 

 

Diluted*

 

 

49,043,914 

 

 

50,053,389 

 

 

49,562,728 

 

 

50,303,394 

 

 

 

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because 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,

   

 

2015

 

2014

 

2015

 

2014

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Units and Vested LTIP Units

 

 

1,896,509 

 

 

1,728,679 

 

 

1,866,703 

 

 

1,728,679 

 

Total Potentially Dilutive Securities Excluded from the Denominator

 

 

1,896,509 

 

 

1,728,679 

 

 

1,866,703 

 

 

1,728,679 

 

 

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, 2015 AND 2014 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2015

 

 

2014

 

2015

 

2014

Net Income

$

19,626 

 

$

58,586 

 

$

15,237 

 

$

52,073 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Derivative Instruments

 

307 

 

 

(1)

 

 

89 

 

 

256 

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

 

(372)

 

 

(418)

 

 

(710)

 

 

(774)

 

$

(65)

 

$

(419)

 

$

(621)

 

$

(518)

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

19,561 

 

 

58,167 

 

 

14,616 

 

 

51,555 

Less:  Comprehensive (Income) Loss Attributable to Noncontrolling Interests

 

(405)

 

 

(1,655)

 

 

38 

 

 

(1,148)

Less:  Preferred Distributions

 

(3,589)

 

 

(3,589)

 

 

(7,178)

 

 

(7,178)

Comprehensive Income Attributable to Common Shareholders

$

15,567 

 

$

52,923 

 

$

7,476 

 

$

43,229 

 

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, 2015 AND 2014 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 and LTIP Units

Common Units and LTIP Units ($)

Consolidated Variable Interest Entity ($)

Total Noncontrolling Interests ($)

Total Equity ($)

Balance at December 31, 2014

49,708,771 
497 

 -

7,600,000 
76 
1,194,547 
(358)
(365,381)
829,381 

 

2,199,434 
29,082 
(1,075)
28,007 
857,388 

Repurchase of Common Shares

(1,964,151)
(20)

 -

 -

 -

(40,847)

 -

(9,500)
(50,367)

 

 -

 -

 -

 -

(50,367)

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares ($0.28 per share)

 -

 -

 -

 -

 -

 -

 -

(27,159)
(27,159)

 

 -

 -

 -

 -

(27,159)

Preferred Shares

 -

 -

 -

 -

 -

 -

 -

(7,178)
(7,178)

 

 -

 -

 -

 -

(7,178)

Common Units ($0.28 per share)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 

 -

(959)

 -

(959)
(959)

LTIP Units ($0.28 per share)

 -

 -

 -

 -

 -

 -

 -

 -

 -

 

 -

(345)

 -

(345)
(345)

Dividend Reinvestment Plan

477 

 -

 -

 -

 -

32 

 -

 -

32 

 

 -

 -

 -

 -

32 

Share Based Compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants

24,802 

 -

 -

 -

 -

459 

 -

 -

459 

 

128,842 

 -

 -

 -

459 

Amortization

 -

 -

 -

 -

 -

651 

 -

 -

651 

 

 -

3,022 

 -

3,022 
3,673 

Change in Fair Value of Derivative Instruments

 -

 -

 -

 -

 -

 -

(621)

 -

(621)

 

 -

 -

 -

 -

(621)

Net Income

 -

 -

 -

 -

 -

 -

 -

15,275 
15,275 

 

 -

305 
(343)
(38)
15,237 

Balance at June 30, 2015

47,769,899 
477 

 -

7,600,000 
76 
1,154,842 
(979)
(393,943)
760,473 

 

2,328,276 
31,105 
(1,418)
29,687 
790,160 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2015 AND 2014 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 and LTIP Units

Common Units and LTIP Units ($)

Consolidated Variable Interest Entity ($)

Total Noncontrolling Interests ($)

Total Equity ($)

Balance at December 31, 2013

50,689,855 
507 

 -

7,600,000 
76 
1,202,319 
(376)
(364,568)
837,958 

 

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

Repurchase of Common Shares

(656,714)
(7)

 

 

 

(13,705)

 

(1,621)
(15,333)

 

 -

 -

 -

 -

(15,333)

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares ($0.48 per share)

 -

 -

 -

 -

 -

 -

 -

(24,120)
(24,120)

 

 -

 -

 -

 -

(24,120)

Preferred Shares

 -

 -

 -

 -

 -

 -

 -

(7,178)
(7,178)

 

 -

 -

 -

 -

(7,178)

Common Units ($0.48 per share)

 -

 -

 

 -

 

 -

 -

 -

 -

 

 -

(830)

 -

(830)
(830)

Dividend Reinvestment Plan

1,078 

 -

 -

 -

 -

23 

 -

 -

23 

 

 -

 -

 -

 -

23 

Share Based Compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants

134,969 

 -

 -

 -

498 

 -

 -

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

50,169,188 
501 

 -

7,600,000 
76 
1,192,381 
(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.

 

 

 

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Table of Contents

 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

Operating Activities:

 

 

 

 

 

 

 

Net Income

 

$

15,237 

 

$

52,073 

 

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

 

 

 

 

 

 

 

Gain on Hotel Acquisitions, Net

 

 

 -

 

 

(13,609)

 

Development Loan Recovery

 

 

 -

 

 

(22,494)

 

Gain on Disposition of Hotel Properties

 

 

 -

 

 

(7,308)

 

Impairment of Hotel Assets

 

 

 -

 

 

1,800 

 

Deferred Taxes

 

 

(109)

 

 

(107)

 

Depreciation

 

 

36,368 

 

 

33,596 

 

Amortization

 

 

922 

 

 

990 

 

Loss on Debt Extinguishment

 

 

 

 

644 

 

Equity in Loss of Unconsolidated Joint Ventures

 

 

(252)

 

 

 

Distributions from Unconsolidated Joint Ventures

 

 

493 

 

 

312 

 

Loss Recognized on Change in Fair Value of Derivative Instrument

 

 

67 

 

 

67 

 

Share Based Compensation Expense

 

 

3,194 

 

 

2,561 

 

Change in Assets and Liabilities:

 

 

 

 

 

 

 

(Increase) Decrease in:

 

 

 

 

 

 

 

Hotel Accounts Receivable

 

 

(1,263)

 

 

(4,143)

 

Escrows

 

 

1,132 

 

 

(1,856)

 

Other Assets

 

 

(4,952)

 

 

(6,415)

 

Due from Related Parties

 

 

233 

 

 

4,767 

 

(Decrease) Increase in:

 

 

 

 

 

 

 

Due to Related Parties

 

 

(645)

 

 

1,571 

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

1,858 

 

 

(1,028)

 

Net Cash Provided by Operating Activities

 

$

52,287 

 

$

41,422 

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

Purchase of Hotel Property Assets

 

$

(33,511)

 

$

(174,037)

 

Deposits on Hotel Acquisitions, Net

 

 

(1,000)

 

 

 -

 

Capital Expenditures

 

 

(12,168)

 

 

(19,478)

 

Cash Paid for Hotel Development Projects

 

 

(916)

 

 

(3,063)

 

Proceeds from Disposition of Hotel Properties

 

 

 -

 

 

30,300 

 

Net Changes in Capital Expenditure Escrows

 

 

376 

 

 

3,487 

 

Proceeds from Insurance Claims

 

 

 -

 

 

1,032 

 

Distributions from Unconsolidated Joint Venture

 

 

592 

 

 

138 

 

Net Cash Used in Investing Activities

 

$

(46,627)

 

$

(161,621)

 

 

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, 2015 AND 2014 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2015

 

2014

 

Financing Activities:

 

 

 

 

 

 

 

Proceeds from Borrowings Under Line of Credit, Net

 

$

128,500 

 

$

27,000 

 

Proceeds from Unsecured Term Loan Borrowing

 

 

 -

 

 

100,000 

 

Principal Repayment of Mortgages and Notes Payable

 

 

(121,113)

 

 

(17,436)

 

Proceeds from Mortgages and Notes Payable

 

 

80,750 

 

 

54,500 

 

Cash Paid for Deferred Financing Costs

 

 

(394)

 

 

(3,316)

 

Repurchase of Common Shares

 

 

(50,367)

 

 

(15,333)

 

Settlement of Interest Rate Cap

 

 

(430)

 

 

(8)

 

Dividends Paid on Common Shares

 

 

(27,670)

 

 

(24,222)

 

Dividends Paid on Preferred Shares

 

 

(7,178)

 

 

(7,178)

 

Distributions Paid on Common Units

 

 

(1,272)

 

 

(830)

 

Net Cash Provided by Financing Activities

 

$

826 

 

$

113,177 

 

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

$

6,486 

 

$

(7,022)

 

Cash and Cash Equivalents - Beginning of Period

 

 

21,675 

 

 

36,213 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents - End of Period

 

$

28,161 

 

$

29,191 

 

 

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, 2015 AND 2014 [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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any future period.  Accordingly, readers of these consolidated interim financial statements should refer to the Company’s audited financial statements prepared in accordance with US GAAP, and the related notes thereto, for the year ended December 31, 2014, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as certain footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from this report pursuant to the rules of the Securities and Exchange Commission.

 

We are a self-administered Maryland real estate investment trust that was organized in May 1998 and completed our initial public offering in January 1999. Our common shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “HT.” We own our hotels and our investments in joint ventures through our operating partnership, Hersha Hospitality Limited Partnership (“HHLP”), for which we serve as the sole general partner.  As of June 30, 2015, we owned an approximate 95.4% partnership interest in HHLP, including a 1.0% general partnership interest.

 

Noncontrolling Interest

 

We classify the noncontrolling interests of our consolidated variable interest entity and common units and LTIP units of limited partnership interest in HHLP (“Common Units”) as equity. LTIP units are a special class of limited partnership interest in the Operating Partnership that are convertible into Common Units under certain circumstances.  The noncontrolling interest of Common Units totaled $31,105 as of June 30, 2015 and $29,082 as of December 31, 2014.  As of June 30, 2015, there were 2,328,276 Common Units outstanding with a fair market value of $59,697, based on the price per share of our common shares on the NYSE on such date. In accordance with the partnership agreement of HHLP, holders of these units may redeem them for cash unless we, in our sole and absolute discretion, elect to issue common shares on a one-for-one basis in lieu of paying cash.

 

Net income or loss attributed to Common Units, as well as the net income or loss related to the noncontrolling interests of our consolidated variable interest entity, is included in net income or loss in the consolidated statements of operations. Net income or loss attributed to the Common Units and the noncontrolling interests of our consolidated variable interest entity is excluded from net income or loss applicable to common shareholders in the consolidated statements of operations.

 

Shareholders’ Equity

 

Terms of the Series B and Series C Preferred Shares outstanding at June 30, 2015 and December 31, 2014 are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend Per Share  

 

 

Shares Outstanding

 

 

 

 

 

 

 

Six Months Ended June 30,

Series

 

June 30, 2015

 

December 31, 2014

 

 

Aggregate Liquidation Preference

 

Distribution Rate