Hersha Hospitality Announces 2005 Third Quarter Results

Business Wire, Nov 8, 2005

PHILADELPHIA -- Hersha Hospitality Trust (AMEX: HT), a real estate investment trust (REIT) and owner of nationally franchised, upscale and midscale hotels, today announced results for the third quarter and nine months ended September 30, 2005.

Financial Highlights

--Net income available to common shareholders declined to $1.7 million compared to $2.3 million for the 2004 third quarter

--Net income available to common shareholders per share was $0.09, compared to $0.13 for the 2004 third quarter

--Net income available to common shareholders per share was impacted by an increase in diluted weighted average shares outstanding from 19,46,4312 to 23,207,264 resulting from the September 2004 equity offering and due to the distributions paid on the 2.4 million Series A Preferred Shares issued during the 2005 third quarter

--Adjusted Funds from Operations (Adjusted FFO) rose 38.3 percent to $7.0 million from $5.0 million for the 2004 third quarter

--Adjusted FFO per fully diluted weighted average share and unit outstanding increased 15.4 percent to $0.30, compared to $0.26 for the 2004 third quarter notwithstanding a 19.2 percent increase in diluted weighted average shares outstanding

--Declared 27th consecutive common dividend of $0.18 per common share since 1999 IPO

"Hersha had one of its most active quarters since our IPO," said Jay H. Shah, Hersha president and chief operating officer. "Our strategy of purchasing young, premium-branded hotels in markets with high barriers to new competition has resulted in a high-quality, industry-leading portfolio. Additionally, we continued to grow our joint venture program, which mitigates downside and ramp-up risk on attractive assets in difficult to source markets. The significant increase in both our total portfolio and same store revenue per available room (RevPAR) highlights the strength and long-term, upside potential of our assets in high-growth, high-barriers-to-competition markets.

"During the third quarter, we closed on our joint venture investments in eight hotel properties with a wide range of full-service and select-service Marriott- and Hilton-branded assets in two separate transactions. Seven of these properties were within the Mystic Partners joint venture, while the other asset, the Courtyard by Marriott in South Boston, is part of another joint venture. These hotels are in strong central business districts and stable suburban office markets throughout Connecticut, Rhode Island and Massachusetts," Shah stated. "Year to date, we have acquired outright or acquired a joint venture interest in 18 properties in the Northeastern corridor, a region we believe has the greatest long-term potential for hotel ownership. The median age of the properties we have acquired during the year is less than four years, creating a balance of stabilized and ramp up hotels in the portfolio with great potential for synergies and economies of scale. We continue to find attractive acquisition opportunities and have an active pipeline."

Operating Highlights

--RevPAR for the total portfolio for the quarter ended September 30, 2005 rose 13.2 percent over the same period last year to $86.98, with an 8.3 percent improvement in average daily rate (ADR) to $112.09, and a 4.6 percent increase in occupancy to 77.6 percent.

--Same-store RevPAR for the 2005 third quarter rose 7.6 percent to $81.12 over the same period last year, reflecting a 2.4 percent increase in ADR to $103.90 and a 5.0 percent rise in occupancy to 78.1 percent. The company includes all hotels owned for the entire third quarter of 2004 and 2005 in its same-store comparisons (totaling 25 hotels).

"Our core markets remain strong with continued upside for our portfolio," Shah stated. "New supply remains contained, especially in our markets, which we see continuing for the next several years. In many cases, we are creating unique joint ventures to lock up new properties under development.

"We believe these relationships potentially give way to future deals, often before they reach market," Shah added. "By affiliating with hotel companies with strong ties to their respective markets, we believe we create sufficient downside protection with solid operators and developers."

Joint Ventures

The company entered into an agreement in June to form a joint venture with Waterford Hospitality Group, named Mystic Partners, to acquire nine hotels. The nine-hotel portfolio includes Marriott and Hilton-branded hotels aggregating 1,707 rooms, located in Connecticut and Rhode Island. Hersha owns a 66.7 percent interest in the portfolio's seven stabilized hotels and a 50 percent interest in the two newly developed hotels in Hartford, Conn. through this joint venture.

"The company closed on seven of the nine hotels in the 2005 third quarter and already in the fourth quarter, we have closed on one more, the 392-room Hilton Hartford in downtown Hartford," Shah noted. "We expect to close on the ninth and final property, the 409-room Marriott Hartford Downtown in downtown Hartford, before the end of the 2005 fourth quarter. This recent joint venture with Waterford Hospitality Group is the kind of arrangement we seek to establish with regional developers."