HERSHA HOSPITALITY TRUST - FORM 8-K - EX-99.1 - May 5, 2016

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8-K - 8-K - HERSHA HOSPITALITY TRUSTht-20160505x8k.htm
EX-10.4 - EX-10.4 - HERSHA HOSPITALITY TRUSTht-20160505xex10_4.htm
EX-10.1 - EX-10.1 - HERSHA HOSPITALITY TRUSTht-20160505xex10_1.htm
EX-10.3 - EX-10.3 - HERSHA HOSPITALITY TRUSTht-20160505xex10_3.htm
EX-10.2 - EX-10.2 - HERSHA HOSPITALITY TRUSTht-20160505xex10_2.htm
EX-10.5 - EX-10.5 - HERSHA HOSPITALITY TRUSTht-20160505xex10_5.htm



Exhibit 99.1

  

 

Unaudited Pro Forma Consolidated Financial Information

 

HERSHA HOSPITALITY TRUST



Pro Forma Consolidated Balance Sheet

As of March 31, 2016

(Unaudited, Dollar Amounts in Thousands)

 

The accompanying unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2016 for the Company, presents the closing of the transaction with Cindat to form a joint venture that initially invests in seven of our limited service hotels in Manhattan as if this transaction occurred on March 31, 2016.



The unaudited pro forma consolidated balance sheet should be read in conjunction with (i) the Company’s unaudited financial statements as of and for the three months ended March 31, 2016 included in our Quarterly Report on Form 10-Q, filed with the SEC on May 2, 2016, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 4, 2016, related to this transaction,  (iii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May2, 2016, related to this transaction, and (iv) the notes to the pro forma consolidated balance sheet included in this Form 8-K.  In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.



The following unaudited pro forma consolidated balance sheet is not necessarily indicative of the financial condition of the Company assuming such contribution had been completed as of March 31, 2016, nor is it indicative of future financial condition of the Company.





6

 

 

HERSHA HOSPITALITY TRUST



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

 

(A)

 

 

(B)

 

 

 

 



 

Historical

 

Contribution of JV Properties to Owner JV

 

Pro Forma

 

Assets:

 

 

 

 

 

 

 

 

 

 

Investment in Hotel Properties,
net of Accumulated Depreciation

 

$

 1,702,891 

 

$

 -

 

$

 1,702,891 

 

Investment in Unconsolidated Joint Ventures

 

 

 9,853 

 

 

 -

 

 

 9,853 

 

Cash and Cash Equivalents

 

 

 23,677 

 

 

 167,543 

 

 

 191,220 

 

Other Assets

 

 

 87,626 

 

 

 (3,518)

 

 

 84,108 

 

Hotel Assets Held for Sale

 

 

 264,784 

 

 

 (264,784)

 

 

 -

 

Total Assets

 

 

 2,088,831 

 

$

 (100,759)

 

$

 1,988,072 

 



 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

Line of Credit

 

$

 178,550 

 

$

 (178,550)

 

$

 -

 

Unsecured Term Loan

 

 

 547,829 

 

 

 (39,400)

 

 

 508,429 

 

Unsecured Notes Payable

 

 

 50,538 

 

 

 -

 

 

 50,538 

 

Mortgages Payable

 

 

 495,604 

 

 

 -

 

 

 495,604 

 

Deferred Gain

 

 

 -

 

 

 175,392 

 

 

 175,392 

 

Other Liabilities

 

 

 77,464 

 

 

 (2,998)

 

 

 74,466 

 

Debt Related to Assets Held for Sale

 

 

 55,203 

 

 

 (55,203)

 

 

 -

 

Total Liabilities

 

$

 1,405,188 

 

$

 (100,759)

 

$

 1,304,429 

 



 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

$

 650,957 

 

$

 -

 

$

 650,957 

 

Noncontrolling Interests

 

 

 32,686 

 

 

 -

 

 

 32,686 

 

Total Equity

 

 

 683,643 

 

 

 -

 

 

 683,643 

 



 

 

 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

 2,088,831 

 

$

 (100,759)

 

$

 1,988,072 

 



 

 

 

 

 

 

 

 

 

 



 

7

 

 

Notes and Management’s Assumptions to the

Pro Forma Consolidated Balance Sheet

As of March 31, 2016 

(Unaudited, Dollar Amounts in Thousands)



(A)

Represents the unaudited Consolidated Balance Sheet of Hersha as of March 31, 2016 as filed on Form 10-Q. 



(B)

Represents the adjustment for Hersha’s contribution of the JV Properties to the Owner JV, which includes seven limited service hotels in Manhattan.  In exchange for the contribution, Hersha acquired a 30% common equity interest and a $37.0 million preferred equity interest that entitles us to a 9% cumulative return.    Owner JV refinanced the JV Properties and proceeds were distributed to Hersha and Cindat, reducing Hersha’s investment in joint ventures to $0.



The JV Properties contributed to Owner JV had a net book value of $264.8 million and were classified as hotel assets held for Sale on our consolidated balance sheet as of March 31, 2016.  Cindat cash contributions to Owner JV for its 70% common equity interest were based on JV Properties being valued at $543.5 million.  The contribution of our interests in the JV Properties, net of our interest retained, resulted in a deferred gain of $175.4 million.  Other assets of $1.0 million were contributed to the Owner JV while other liabilities of $3.0 million were assumed by Owner JV.



Proceeds resulting from the transactions noted above were $440.7 million, which were used to pay down $55.2 million in mortgage indebtedness, $178.6 million in outstanding borrowings on our line of credit, and $39.4 million in borrowings under our term loan. Escrow deposits of $4.5 million were returned to us as a result of the repayment of mortgage indebtedness.   





8

 

 

HERSHA HOSPITALITY TRUST

 

Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2015 

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

 

The accompanying unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2015 for the Company presents the contribution of JV Properties to the Owner JV as if the contribution occurred on January 1, 2015. 



The unaudited pro forma consolidated statement of operations should be read in conjunction with (i) the Company’s audited financial statements for the year ended December 31, 2015 included in our Annual  Report on Form 10-K, filed with the SEC on February 17, 2016, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 4, 2016, related to this joint venture formation,  (iii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 2, 2016, related to this transaction, and (iv) the notes to the pro forma consolidated statement of operations included in this Form 8-K.  In management’s opinion, adjustments necessary to reflect the effects of the joint venture have been made based on management’s best estimate.

 

The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what actual results of Hersha would have been assuming if such contribution had been completed as of January 1, 2015, nor is it indicative of the results of operations for future periods.

9

 

 







 

 

 

 

 

 



 

For the Year Ended December 31, 2015



 

(A)

 

(B)

 

 



 

Historical

 

Contribution of JV Properties to Owner JV

 

Pro Forma

Revenue:

 

 

 

 

 

 

Hotel Operating Revenues

 

$                        470,272 

 

$                        (81,966)

 

$                        388,306 

Other Revenues

 

 113 

 

 246 

 

 359 

Total Revenue

 

 470,385 

 

 (81,720)

 

 388,665 

Operating Expenses:

 

 

 

 

 

 

Hotel Operating Expenses

 

 254,313 

 

 (39,150)

 

 215,163 

Hotel Ground Rent

 

 3,137 

 

 -

 

 3,137 

Real Estate and Personal Property Taxes and Property Insurance

 

 34,518 

 

 (8,927)

 

 25,591 

General and Administrative

 

 20,515 

 

 (8)

 

 20,507 

Acquisition and Terminated Transaction Costs

 

 1,119 

 

 (43)

 

 1,076 

Depreciation and Amortization

 

 74,390 

 

 (7,820)

 

 66,570 

Total Operating Expenses

 

 387,992 

 

 (55,948)

 

 332,044 



 

 

 

 

 

 

Operating Income

 

 82,393 

 

 (25,772)

 

 56,621 



 

 

 

 

 

 

Interest Income

 

 193 

 

 -

 

 193 

Interest Expense

 

 (43,557)

 

 3,614 

 

 (39,943)

Other Expense

 

 (367)

 

 2 

 

 (365)

Loss on Debt Extinguishment

 

 (561)

 

 -

 

 (561)



 

 

 

 

 

 

Income Before Income from
Unconsolidated Joint Venture Investments and Income Taxes

 

 38,101 

 

 (22,156)

 

 15,945 



 

 

 

 

 

 

Income from Unconsolidated Joint Venture Investments

 

 965 

 

 3,330 

 

 4,295 



 

 

 

 

 

 

Income Before Income Taxes

 

 39,066 

 

 (18,826)

 

 20,240 



 

 

 

 

 

 

Income Tax Benefit

 

 3,141 

 

 (1,206)

 

 1,935 



 

 

 

 

 

 

Net Income

 

 42,207 

 

 (20,032)

 

 22,175 



 

 

 

 

 

 

(Income) Loss Allocated to Noncontrolling Interests

 

 (411)

 

 769 

 

 358 

Preferred Distributions

 

 (14,356)

 

 -

 

 (14,356)



 

 

 

 

 

 

Net Income applicable to Common Shareholders

 

$                          27,440 

 

$                        (19,262)

 

$                            8,178 

10

 

 



 

 

 

 

 

 







 

 

 

 

 

 

Earnings Per Share from Continuing Operations applicable to
Common Shareholders:

 

 

 

 

 

 

Basic

 

$                             0.56 

 

 

 

$                              0.12 

Diluted

 

$                             0.56 

 

 

 

$                              0.12 



 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

Basic

 

 47,786,811 

 

 

 

 47,786,811 

Diluted

 

 48,369,658 

 

 

 

 48,369,658 



 

 

 

 

 

 



11

 

 

HERSHA HOSPITALITY TRUST

 

Notes and Management’s Assumptions to the

Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2015 

(Unaudited, Dollar Amounts in Thousands Except per Share Data)



(A)

Represents Hersha’s Consolidated Statement of Operations for the year ended December 31, 2015 as filed in our Annual Report on Form 10-K.



(B)

Represents the removal of income and expense related to the JV Properties contributed to Owner JV.  The removal of the JV Properties resulted in a reduction of approximately $22.4 million of income from continuing operations before income from unconsolidated joint ventures.  Income from unconsolidated joint ventures of $3.3 million is included as a result of our 9% preferred equity interest in the Owner JV.





12

 

 

HERSHA HOSPITALITY TRUST

 

Pro Forma Consolidated Statement of Operations

For the Three Months Ended March 31, 2016 

(Unaudited, Dollar Amounts in Thousands Except per Share Data)

 

The accompanying unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2016 for the Company presents the contribution of JV Properties to the Owner JV as if the contribution occurred on January 1, 2016.



The unaudited pro forma consolidated statement of operations should be read in conjunction with (i) the Company’s unaudited financial statements as of and for the three months ended March 31, 2016 included in our Quarterly Report on Form 10-Q, filed with the SEC on April 29, 2016, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 4, 2016, related to this transaction, (iii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 2, 2016, related to this transaction,and (iv) the notes to the pro forma consolidated balance sheet included in this Form 8-K.  In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate



The following unaudited Pro Forma Consolidated Statement of Operations is not necessarily indicative of what actual results of Hersha would have been assuming if such contribution had been completed as of January 1, 2016, nor is it indicative of the results of operations for future periods.



13

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

For the Three Months Ended March 31, 2016



 

(A)

 

(B)

 

 



 

Historical

 

Contribution of JV Properties to Owner JV

 

Pro Forma

Revenue:

 

 

 

 

 

 

Hotel Operating Revenues

 

$                        106,847 

 

$                        (12,594)

 

$                          94,253 

Other Revenues

 

 23 

 

 38 

 

 61 

Total Revenue

 

 106,870 

 

 (12,556)

 

 94,314 

Operating Expenses:

 

 

 

 

 

 

Hotel Operating Expenses

 

 65,718 

 

 (8,187)

 

 57,531 

Hotel Ground Rent

 

 893 

 

 -

 

 893 

Real Estate and Personal Property Taxes and Property Insurance

 

 9,156 

 

 (2,252)

 

 6,904 

General and Administrative

 

 5,400 

 

 -

 

 5,400 

Acquisition and Terminated Transaction Costs

 

 1,508 

 

 -

 

 1,508 

Depreciation and Amortization

 

 20,060 

 

 (2,103)

 

 17,957 

Total Operating Expenses

 

 102,735 

 

 (12,542)

 

 90,193 



 

 

 

 

 

 

Operating Income

 

 4,135 

 

 (14)

 

 4,121 



 

 

 

 

 

 

Interest Income

 

 46 

 

 -

 

 46 

Interest Expense

 

 (12,221)

 

 889 

 

 (11,332)

Other Expense

 

 (123)

 

 -

 

 (123)

Loss on Debt Extinguishment

 

 (42)

 

 -

 

 (42)



 

 

 

 

 

 

Loss Before Loss from
Unconsolidated Joint Venture Investments and Income Taxes

 

 (8,205)

 

 875 

 

 (7,330)



 

 

 

 

 

 

(Loss) Income from Unconsolidated Joint Venture Investments

 

 (214)

 

 833 

 

 619 



 

 

 

 

 

 

Loss Before Income Taxes

 

 (8,419)

 

 1,708 

 

 (6,711)



 

 

 

 

 

 

Income Tax Benefit

 

 -

 

 (1,144)

 

 (1,144)



 

 

 

 

 

 

Net Loss

 

 (8,419)

 

 564 

 

 (7,855)



 

 

 

 

 

 

Loss Allocated to Noncontrolling Interests

 

 687 

 

 (25)

 

 662 

Preferred Distributions

 

 (3,589)

 

 -

 

 (3,589)



 

 

 

 

 

 

Net Loss applicable to Common Shareholders

 

$                        (11,321)

 

$                               539 

 

$                        (10,782)

14

 

 



 

 

 

 

 

 



 

 

 

 

 

 

 

Earnings Per Share from Continuing Operations applicable to
Common Shareholders:

 

 

 

 

 

 

Basic

 

$                            (0.26)

 

 

 

$                            (0.22)

Diluted

 

$                            (0.26)

 

 

 

$                            (0.22)



 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

Basic

 

 44,379,327 

 

 

 

 44,379,327 

Diluted

 

 44,379,327 

 

 

 

 44,379,327 





15

 

 

HERSHA HOSPITALITY TRUST

 

Notes and Management’s Assumptions to the

Pro Forma Consolidated Statement of Operations

For the Three Months Ended March 31,  2016 

(Unaudited, Dollar Amounts in Thousands Except per Share Data)





(A)

Represents Hersha’s unaudited Consolidated Statement of Operations for the three months ended March 31, 2016 as filed on Form 10-Q.



(B)

Represents the removal of income and expense related to the JV Properties contributed to Owner JV.  The removal of the JV Properties resulted in a reduction of approximately $0.8 million of loss from continuing operations before income from unconsolidated joint ventures.  Income from unconsolidated joint ventures of $0.8 million is included as a result of our 9% preferred equity interest in the Owner JV.





16

 

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