Normalized FFO Per Share of $0.87 in 2Q14 vs. $0.78 in 2Q13

Comparable Property RevPAR Growth of 11.2% for Hotels Not Under Renovation

NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter and six months ended June 30, 2014.

(1) Reconciliations of net income available for common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, Normalized FFO, earnings before interest, taxes, depreciation and amortization, or EBITDA, and Adjusted EBITDA appear later in this press release.

John Murray, President and Chief Operating Officer of Hospitality Properties Trust, made the following statement regarding today's announcement:

"We are very pleased with the portfolio's operating performance in the second quarter of 2014. Our Normalized FFO per share increased approximately 11.5% from the second quarter of 2013. Our hotel portfolio outperformed industry RevPAR for the seventh quarter in a row. I believe these results reflect the success of our extensive hotel renovation program."

Results for the Three and Six Months Ended June 30, 2014 and Recent Activities:

  • Net Income Available for Common Shareholders: Net income available for common shareholders for the quarter ended June 30, 2014 was $48.7 million, or $0.33 per share, compared to $37.3 million, or $0.27 per share, for the quarter ended June 30, 2013.

    Net income available for common shareholders for the six months ended June 30, 2014 was $81.1 million, or $0.54 per share, compared to $56.7 million, or $0.43 per share, for the six months ended June 30, 2013. Normalized FFO for the six months ended June 30, 2014 were $242.4 million, or $1.62 per share, compared to Normalized FFO for the six months ended June 30, 2013 of $202.4 million, or $1.53 per share.

  • Normalized FFO: Normalized FFO for the quarter ended June 30, 2014 were $129.7 million, or $0.87 per share, compared to Normalized FFO for the quarter ended June 30, 2013 of $109.2 million, or $0.78 per share. The $0.09, or 11.5%, increase in Normalized FFO per share is due primarily to increases in annual minimum returns and rents that resulted from HPT's funding of improvements to its hotels and travel centers and the impact of HPT's hotel acquisitions since April 1, 2014.

    Normalized FFO for the six months ended June 30, 2014 were $242.4 million, or $1.62 per share, compared to Normalized FFO for the six months ended June 30, 2013 of $202.4 million, or $1.53 per share. Adjusted EBITDA for the six months ended June 30, 2014 compared to the same period in 2013 increased 11.5% to $324.8 million.

  • Adjusted EBITDA: Adjusted EBITDA for the quarter ended June 30, 2014 compared to the same period in 2013 increased 11.1% to $170.7 million.

    Adjusted EBITDA for the six months ended June 30, 2014 compared to the same period in 2013 increased 11.5% to $324.8 million. For the six months ended June 30, 2014 compared to the same period in 2013 for HPT's 288 comparable hotels that it owned continuously since January 1, 2013: ADR increased 4.8% to $111.94; occupancy increased 3.0 percentage points to 74.7%; and RevPAR increased 9.2% to $83.62.

  • Comparable Hotel RevPAR: For the quarter ended June 30, 2014 compared to the same period in 2013 for HPT's 288 hotels that it owned continuously since April 1, 2013, or comparable hotels: average daily rate, or ADR, increased 6.2% to $113.50; occupancy increased 1.7 percentage points to 78.6%; and revenue per available room, or RevPAR, increased 8.5% to $89.21.

    For the six months ended June 30, 2014 compared to the same period in 2013 for HPT's 288 comparable hotels that it owned continuously since January 1, 2013: ADR increased 4.8% to $111.94; occupancy increased 3.0 percentage points to 74.7%; and RevPAR increased 9.2% to $83.62. During the six months ended June 30, 2014, HPT had 29 comparable hotels under renovation for all or part of the period. For the quarter ended June 30, 2014 compared to the same period in 2013 for HPT's 259 comparable hotels not under renovation: ADR increased 4.6% to $111.46; occupancy increased 4.8 percentage points to 76.6%; and RevPAR increased 11.6% to $85.38.

  • Comparable RevPAR for Hotels Not Under Renovation: During the quarter ended June 30, 2014, HPT had 21 comparable hotels under renovation for all or part of the quarter. For the quarter ended June 30, 2014 compared to the same period in 2013 for HPT's 267 comparable hotels not under renovation: ADR increased 6.2% to $112.12; occupancy increased 3.6 percentage points to 80.2%; and RevPAR increased 11.2% to $89.92.

    During the six months ended June 30, 2014, HPT had 29 comparable hotels under renovation for all or part of the period. For the quarter ended June 30, 2014 compared to the same period in 2013 for HPT's 259 comparable hotels not under renovation: ADR increased 4.6% to $111.46; occupancy increased 4.8 percentage points to 76.6%; and RevPAR increased 11.6% to $85.38. As of June 30, 2014, approximately 69% of HPT's aggregate annual minimum returns and rents from its hotels were secured by guarantees and security deposits from HPT's managers and tenants pursuant to the terms of its hotel operating agreements.

  • Hotel Coverage of Minimum Returns and Rents: For the three months ended June 30, 2014, the aggregate coverage ratio of (x) total property level revenues minus FF&E reserve escrows, if any, and all property level expenses which are not subordinated to minimum returns and minimum rent payments to HPT to (y) HPT's minimum returns and rents due from hotels was 1.09x.

    As of June 30, 2014, approximately 69% of HPT's aggregate annual minimum returns and rents from its hotels were secured by guarantees and security deposits from HPT's managers and tenants pursuant to the terms of its hotel operating agreements.

  • Dividend: On July 10, 2014, HPT announced its regular quarterly common share distribution of $0.49 per common share ($1.96 per share per year).
  • Investment and Disposition Activity: In April 2014, HPT sold its Sonesta ES Suites branded hotel in Myrtle Beach, SC for net proceeds of $4.2 million.

    In May 2014, HPT acquired a 240 room full service hotel located in Ft. Lauderdale, FL for $65.0 million, excluding closing costs. HPT converted this hotel to a "Sonesta" brand hotel and added it to its management agreement with Sonesta International Hotels Corporation, or Sonesta.

  • Capital Markets: In July 2014, HPT announced it will redeem at par plus accrued interest all $280.0 million of its 5⅛% Senior Notes due 2015 on August 15, 2014.

Tenants and Managers: As of June 30, 2014, HPT had nine operating agreements with seven hotel operating companies for 291 hotels with 44,111 rooms, which represented 67% of HPT's total annual minimum returns and rents.

  • Marriott Agreements: During the three months ended June 30, 2014, 122 hotels owned by HPT were operated by subsidiaries of Marriott International, Inc. (NASDAQ: MAR), or Marriott, under three agreements. Marriott agreement No. 1 includes 53 hotels and provides for annual minimum return payments to HPT of up to $67.7 million (approximately $16.9 million per quarter). Because there is no guarantee or security deposit for this agreement, the minimum returns HPT receives under this agreement are limited to available hotel cash flow after payment of operating expenses. During the three months ended June 30, 2014, HPT realized returns under its Marriott No. 1 agreement of $18.8 million, including the recovery of $1.9 million of minimum return shortfalls from the first quarter of 2014. Marriott agreement No. 234 includes 68 hotels and requires annual minimum returns to HPT of $105.9 million (approximately $26.5 million per quarter). During the three months ended June 30, 2014, HPT realized returns under its Marriott No. 234 agreement of $26.3 million. During the three months ended June 30, 2014, $2.5 million of payments made to HPT under Marriott's guaranty during the first quarter of 2014 were repaid from the net operating results these hotels generated during the period in excess of the guaranty threshold. At June 30, 2014, there was $30.7 million remaining under Marriott's guaranty for the Marriott No. 234 agreement to cover future payment shortfalls for up to 90% of the minimum returns due to HPT. Marriott agreement No. 5 includes one resort hotel in Kauai, HI which is leased to Marriott on a full recourse basis. The contractual rent due HPT for this hotel for the three months ended June 30, 2014 of $2.5 million was paid to HPT.
  • InterContinental Agreement: During the three months ended June 30, 2014, HPT realized returns/rents of $34.9 million under its management agreement with subsidiaries of InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental, which includes 91 hotels and requires annual minimum returns/rent to HPT of $139.5 million (approximately $34.9 million per quarter). During the three months ended June 30, 2014, HPT replenished the available security deposit by $3.3 million for the payments HPT received during the period in excess of the minimum returns due to HPT for the period. At June 30, 2014, the available security deposit which HPT held to cover future payment shortfalls was $32.9 million.
  • Other Hotel Agreements: As of June 30, 2014, HPT's remaining 78 hotels are operated under five agreements: one management agreement with Sonesta (22 hotels) requiring annual minimum returns of $67.4 million (approximately $16.9 million per quarter); one management agreement with a subsidiary of Wyndham Worldwide Corporation (NYSE: WYN), or Wyndham (22 hotels), requiring annual minimum returns of $27.0 million per year (approximately $6.8 million per quarter); one management agreement with a subsidiary of Hyatt Hotels Corporation (NYSE: H), or Hyatt (22 hotels), requiring annual minimum returns of $22.0 million (approximately $5.5 million per quarter); one management agreement with a subsidiary of Carlson Hotels Worldwide, or Carlson (11 hotels), requiring annual minimum returns of $12.9 million (approximately $3.2 million per quarter); and one lease with a subsidiary of Morgans Hotel Group Co. (NASDAQ: MHGC) (1 hotel) requiring annual minimum rent of $6.0 million (approximately $1.5 million per quarter). Minimum returns and rents due HPT are partially guaranteed under the Wyndham, Hyatt and Carlson agreements. There is no guarantee or security deposit for the Sonesta agreement and the minimum returns HPT receives under this agreement are limited to available hotel cash flow after payment of operating expenses. The payments due to HPT under these agreements for the three months ended June 30, 2014 were paid to HPT.
  • Travel Center Agreements: As of June 30, 2014, HPT had two leases with TA for 185 travel centers located along the U.S. Interstate Highway system which represent 33% of HPT's total annual minimum returns and rents. As of June 30, 2014, all payments due to HPT from TA under these leases were current. Coverage data for the three months ended June 30, 2014 for TA is currently unavailable.

A copy of HPT's Second Quarter 2014 Supplemental Operating and Financial Data is available for download at HPT's website, www.hptreit.com. HPT's website is not incorporated as part of this press release.

About Hospitality Properties Trust

Hospitality Properties Trust is a real estate investment trust, or REIT, which owns a diverse portfolio of hotels and travel centers located in 44 states, Puerto Rico and Canada. HPT's properties are operated under long term management or lease agreements. HPT is headquartered in Newton, Massachusetts. www.hptreit.com

Contact: Katie Strohacker, Director, Investor Relations

617-796-8232

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