February 25, 2014 - NEWTON, Mass.--Hospitality Properties Trust (NYSE: HPT) today announced its financial results for the quarter and year ended December 31, 2013.

Results for the Quarter Ended December 31, 2013:

Normalized funds from operations, or Normalized FFO, for the quarter ended December 31, 2013 were $103.3 million, or $0.71 per share, compared to Normalized FFO for the quarter ended December 31, 2012 of $93.9 million, or $0.76 per share.

Net income available for common shareholders was $27.6 million, or $0.19 per share, for the quarter ended December 31, 2013, compared to $18.5 million, or $0.15 per share, for the quarter ended December 31, 2012. Net income available for common shareholders for the quarter ended December 31, 2012 includes a $7.7 million, or $0.06 per share, loss on asset impairment.

The weighted average number of common shares outstanding was 145.0 million and 123.6 million for the quarters ended December 31, 2013 and 2012, respectively.

A reconciliation of net income available for common shareholders determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended December 31, 2013 and 2012 appears later in this press release.

Results for the Year Ended December 31, 2013:

Normalized FFO for the year ended December 31, 2013 were $410.4 million, or $2.98 per share, compared to Normalized FFO for the year ended December 31, 2012 of $374.7 million, or $3.03 per share.

Net income available for common shareholders was $101.0 million, or $0.73 per share, for the year ended December 31, 2013, compared to $103.8 million, or $0.84 per share, for the year ended December 31, 2012. Net income available for common shareholders for the year ended December 31, 2013 includes a $6.9 million, or $0.05 per share, income tax benefit recorded in connection with the restructuring of certain of HPT's taxable REIT subsidiaries, or TRSs, and was reduced by $5.6 million, or $0.04 per share, due to the liquidation preference for HPT's preferred shares that were redeemed during that year exceeding the carrying value for those preferred shares and an $8.0 million, or $0.06 per share, loss on asset impairment. Net income available for common shareholders for the year ended December 31, 2012 included a $10.6 million, or $0.09 per share, gain on sale of real estate and was reduced by $8.0 million, or $0.06 per share, due to the liquidation preference for HPT's preferred shares that were redeemed during that year exceeding the carrying value for those preferred shares and an $8.5 million, or $0.07 per share, loss on asset impairment.

The weighted average number of common shares outstanding was 137.6 million and 123.6 million for the years ended December 31, 2013 and 2012, respectively.

A reconciliation of net income available for common shareholders determined according to GAAP to FFO and Normalized FFO for the years ended December 31, 2013 and 2012 appears later in this press release.

Hotel Portfolio Performance:

For the quarter ended December 31, 2013 compared to the same period in 2012 for HPT's 287 comparable hotels: average daily rate, or ADR, increased 2.4% to $103.35; occupancy increased 3.5 percentage points to 68.9%; and revenue per available room, or RevPAR, increased 7.9% to $71.21.

During the quarter ended December 31, 2013, HPT had 25 comparable hotels under renovation for all or part of the quarter. For the quarter ended December 31, 2013 compared to the same period in 2012 for HPT's 262 comparable hotels not under renovation: ADR increased 2.1% to $104.91; occupancy increased 4.4 percentage points to 70.1%; and RevPAR increased 8.9% to $73.54.

For the year ended December 31, 2013 compared to the year ended December 31, 2012 for HPT's 285 comparable hotels: ADR increased 2.9% to $102.40; occupancy increased 3.2 percentage points to 71.9%; and RevPAR increased 7.7% to $73.63.

During the year ended December 31, 2013, HPT had 66 comparable hotels under renovation for all or part of the year. For the year ended December 31, 2013 compared to the year ended December 31, 2012 for HPT's 219 comparable hotels not under renovation: ADR increased 2.3% to $103.08; occupancy increased 5.0 percentage points to 74.1%; and RevPAR increased 9.7% to $76.38.

Tenants and Managers:

As of December 31, 2013, HPT had nine operating agreements with seven hotel operating companies for 291 hotels with 43,976 rooms which represent 67% of HPT's annual minimum returns and rents.

  • During the three months ended December 31, 2013, 122 hotels owned by HPT were operated by subsidiaries of Marriott International, Inc. (NASDAQ: MAR), or Marriott, under three contracts. Marriott contract No. 1 includes 53 hotels and provides for annual minimum return payments to HPT of up to $67.5 million (approximately $16.9 million per quarter). Because there is no guarantee or security deposit for this contract, the minimum returns HPT receives under this contract are limited to available hotel cash flow after payment of operating expenses. During the three months ended December 31, 2013, HPT realized returns under its Marriott contract No. 1 of $16.9 million. Marriott contract No. 234 includes 68 hotels and requires annual minimum returns to HPT of $105.8 million (approximately $26.5 million per quarter). During the three months ended December 31, 2013, HPT realized returns under its Marriott contract No. 234 of $21.5 million. Marriott was not required to make any guaranty payments to HPT during the period because the hotels under the Marriott contract No. 234 generated cash flows in excess of the guaranty threshold amount on a cumulative basis for the year ended December 31, 2013. At December 31, 2013, there was $30.7 million remaining under Marriott's guaranty under contract No. 234 to cover future payment shortfalls for up to 90% of the minimum returns due to HPT. Marriott contract 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 December 31, 2013 of $2.5 million was paid to HPT.
  • During the three months ended December 31, 2013, HPT was paid the contractual amounts due under its management contract with subsidiaries of InterContinental Hotels Group, plc (LON: IHG; NYSE: IHG (ADRs)), or InterContinental, including 91 hotels and requiring minimum returns to HPT of $139.5 million per year (approximately $34.9 million per quarter). At December 31, 2013, the available security deposit which HPT held to cover future payment shortfalls was $27.8 million.
  • As of December 31, 2013, HPT's remaining 78 hotels are operated under five contracts: one management agreement with Sonesta International Hotels Corporation, or Sonesta (22 hotels); one management contract with a subsidiary of Wyndham Worldwide Corporation (NYSE: WYN), or Wyndham (22 hotels); one management contract with a subsidiary of Hyatt Hotels Corporation (NYSE: H), or Hyatt (22 hotels); one management contract with a subsidiary of Carlson Hotels Worldwide, or Carlson (11 hotels); and one lease with a subsidiary of Morgans Hotel Group Co. (NASDAQ: MHGC) (1 hotel). Minimum returns and rents due HPT are partially guaranteed under the Wyndham, Hyatt and Carlson contracts. The payments due HPT under these contracts for the three months ended December 31, 2013 were paid to HPT.
  • For the three months ended December 31, 2013, the aggregate coverage ratio of (x) total hotel cash flow available to pay HPT's minimum returns and rents due from hotels to (y) HPT's minimum returns and rents due from hotels was 0.75x (0.08x to 0.95x). As of December 31, 2013, approximately 71% 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 the hotel operating agreements.

As of December 31, 2013, HPT had two leases with TravelCenters of America LLC (NYSE: TA), or 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 December 31, 2013, all payments due to HPT from TA under these leases were current. For the three months ended September 30, 2013, the aggregate coverage ratio of (x) total cash flow at the leased travel centers available to pay HPT's minimum rent due from TA to (y) HPT's minimum rent due from TA was 1.76x. Data for the three months ended December 31, 2013 is currently not available from TA.

Recent Investment and Disposition Activities:

In January 2014, HPT entered an agreement to sell its Sonesta ES Suites hotel in Myrtle Beach, SC with a net book value of $4.0 million at December 31, 2013, for $4.9 million, excluding closing costs. HPT currently expects to complete this sale in the second quarter of 2014.

In September 2013, HPT entered an agreement to acquire a 223 room full service hotel located in Orlando, FL for $21.0 million, excluding closing costs. HPT plans to convert this hotel to a "Sonesta" brand hotel and add it to its management contract with Sonesta, that currently covers 22 hotels.

Recent Financing Activities:

In November 2013, HPT issued 9,775,000 common shares in a public offering at a price of $28.00 per share and raised net proceeds of approximately $261.7 million (after deducting offering expenses and underwriters' discounts). The net proceeds from this offering were used to repay amounts outstanding under HPT's revolving credit facility and for general business purposes.

In January 2014, HPT entered into an amended and restated credit agreement for $1.15 billion, which included its existing $750 million unsecured revolving credit facility and existing $400 million unsecured term loan.

  • Under the amendment, the maturity date of HPT's $750 million unsecured revolving credit facility was extended from September 7, 2015 to July 15, 2018. The interest rate paid on borrowings under the revolving credit facility agreement was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments. Both the interest rate premium and facility fee are subject to adjustment based upon changes to HPT's credit ratings. Subject to meeting certain conditions and payment of a fee, HPT may extend the maturity date to July 15, 2019.
  • Under the amendment, the maturity date of HPT's $400 million term loan was extended from March 13, 2017 to April 15, 2019. The interest paid on borrowings under the term loan was reduced from LIBOR plus 145 basis points to LIBOR plus 120 basis points. The interest rate premium is subject to adjustments based on changes to HPT's credit ratings. HPT may prepay the term loan without penalty at any time.

In February 2014, HPT redeemed at par plus accrued interest all of its 7.875% Senior Notes due 2014 ($311.8 million in total).

Supplemental Data:

A copy of HPT's Fourth Quarter 2013 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.

HPT is a real estate investment trust, or REIT, which owns or leases hotels and travel centers located in 44 states, Puerto Rico and Canada. HPT is headquartered in Newton, MA.

Please see the following pages for a more detailed statement of HPT's operating results and financial condition and for an explanation of HPT's calculation of FFO and Normalized FFO.

About Hospitality Properties Trust

HPT is a real estate investment trust, or REIT, which owns or leases hotels and travel centers located in 44 states, Puerto Rico and Canada. HPT is headquartered in Newton, MA.

Contact: Timothy A. Bonang / Katie Strohacker

617-796-8232 / 617-796-8232

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