SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUGUST 12, 2003
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
HERSHA HOSPITALITY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 001-14765 251811499
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
148 Sheraton Drive, Box A
New Cumberland, Pennsylvania 17070
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(Address of Principal Executive Offices) (Zip Code)
(717) 770-2405
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following document is being furnished as an exhibit to this Current
Report on Form 8-K:
Exhibit 99.1 Press release, dated August 12, 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
This Current Report on Form 8-K and the earnings press release attached hereto
are being furnished by Hersha Hospitality Trust (the "Company") pursuant to Item
12 of Form 8-K, insofar as it discloses historical information regarding the
Company's results of operations or financial condition for the three and six
months ended June 30, 2003.
On August 12, 2003, the Company issued a press release regarding its earnings
for the three and six months ended June 30, 2003. A copy of this release is
being furnished as Exhibit 99 to this Current Report on Form 8-K and is
incorporated herein by reference.
The information in this Current Report on Form 8-K, including Exhibit 99, shall
not be deemed "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liability of that section,
nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such a filing.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HERSHA HOSPITALITY TRUST
August 12, 2003 /s/ Ashish Parikh
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Ashish Parikh
Chief Financial Officer
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[GRAPHIC OMITTED] HERSHA HOSPITALITY TRUST
HERSHA ---------------------------------------------------------------
148 Sheraton Drive
New Cumberland, PA 17070
Phone: 717-770-2406
Fax: 717-774-0461
www.hersha.com
HERSHA HOSPITALITY TRUST ANNOUNCES 2ND QUARTER 2003 RESULTS
HARRISBURG, PA, August 12, 2003--Hersha Hospitality Trust (AMEX:HT), owner of
nationally franchised mid-priced hotels, today announced results for the second
quarter and six months ended June 30, 2003.
Percentage lease revenues during the six month period ended June 30, 2003 were
$7,295,537, an increase of $401,648, or 5.5%, as compared to percentage lease
revenues of $6,893,889 for the same period during 2002. Percentage lease
revenues during the three month period ended June 30, 2003 were $4,061,784, an
increase of $86,842, or 2.2%, as compared to percentage lease revenues of
$3,974,942 for the same period during 2002.
The increase in lease revenues is primarily attributable to an increase in fixed
lease revenue from several properties acquired in prior periods. This increase
in fixed lease revenue was slightly offset by a decrease in the percentage lease
revenues from properties previously leased to Noble Investment Group, Ltd.
("Noble"), an independent third party management company.
The Company had previously entered into leases with Noble to lease and manage
four hotels in the metropolitan Atlanta market. Noble elected not to renew these
leases upon expiration of the current terms. The leases for the Hampton Inn
Newnan, GA and Hampton Inn Peachtree City, GA expired on April 20, 2003 and the
leases for the Comfort Suites Duluth, GA and Holiday Inn Express Duluth, GA
expired on May 20, 2003.
On the respective lease termination dates, the Company leased these properties
to its wholly owned taxable REIT subsidiary, 44 New England Management Company
(the "TRS Lessee") and engaged Hersha Hospitality Management, L.P. to operate
the hotels under management contracts. The consolidated financial statements as
of June 30, 2003 include the operating results of these four hotels under the
TRS structure. Previously, revenues on the consolidated financial statements
were derived primarily from lease payments which were made out of the net
operating income of the properties pursuant to percentage leases. Under the TRS
structure, total revenues from these hotel properties and the related operating
expenses are also being reported in the consolidated statements of operations.
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Net income allocated to common shareholders decreased by approximately $279,504
for the six months that ended June 30, 2003 to $338,544, as compared to net
income of $618,048 for the same period during 2002. Net income allocated to
common shareholders decreased by $273,417 for the three months that ended June
30, 2003 to $34,338, as compared to net income of $307,755 for the same period
during 2002. These decreases in net income are primarily attributable to
distributions with respect to our Series A Preferred Units, during the three and
six month periods ended June 30, 2003, which units were not outstanding during
the prior periods.
On April 21, 2003, CNL Hospitality Properties, L.P. ("CHPLP") purchased from
Hersha Hospitality Limited Partnership ("HHLP"), the Company's operating
partnership subsidiary, $10.0 million of convertible preferred units of limited
partnership interest in HHLP ("Series A Preferred Units"). At the same time,
HHLP and CHPLP agreed to form a joint venture investment partnership to acquire
hotel real estate assets utilizing up to an additional $40.0 million of joint
venture funding from CHPLP. CHPLP purchased an additional $5.0 million of Series
A Preferred Units on May 21, 2003.
A summary of the three and six months ended June 30, 2003 is presented below:
(in thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---------- ---------- --------- ---------
Total Revenues $ 5,004 $ 4,039 $ 8,282 $ 7,011
Income Before Distribution to
Preferred Unitholders and
Minority Interest $ 1,392 $ 1,272 $ 1,810 $ 1,586
Distributions to Preferred
Unitholders $ 264 $ - $ 264 $ -
Income Allocated to Minority
Interest $ 1,094 $ 964 $ 1,208 $ 968
---------- ---------- --------- ---------
Net Income allocated to
common shareholders $ 34 $ 308 $ 338 $ 618
---------- ---------- --------- ---------
Basic Earnings Per Share $ 0.01 $ 0.12 $ 0.13 $ 0.25
Diluted Earnings Per Share $ - $ - $ - $ 0.21
Funds from Operations. The National Association of Real Estate Investment Trusts
(NAREIT) developed FFO as a relative non-GAAP financial measure of performance
and liquidity of an equity REIT in order to recognize that income-producing real
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estate historically has not depreciated on the basis determined under GAAP. FFO,
as defined under the definition adopted by NAREIT in April 2002 and as presented
by us, is net income (loss) (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from debt restructuring or
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. FFO does not represent cash
flows from operating activities in accordance with GAAP (which, unlike FFO,
generally reflects all cash effects of transactions and other events in the
determination of net income) and should not be considered an alternative to net
income as an indication of our performance or to cash flow as a measure of
liquidity or ability to make distributions. We consider FFO a meaningful,
additional measure of operating performance because it primarily excludes the
effects of the assumption that the value of real estate assets diminishes
predictably over time, and because it is widely used by industry analysts as a
performance measure. Comparison of our presentation of FFO to similarly titled
measures for other REITs may not necessarily be meaningful due to possible
differences in the application of the NAREIT definition used by such REITs or
the use of other definitions of that term.
Funds from Operations ("FFO") were $2,500,059 for the three months ended June
30, 2003, which was an increase of $173,218, or 7.4% over FFO in the comparable
period in 2002, which was $2,326,841. The increase in FFO for the three months
ended June 30, 2003 was primarily a result of increased percentage lease
revenues, increased interest revenue from development line funding and lower
borrowing costs during the quarter. FFO was partially offset due to the
recognition of hotel operating expenses in excess of income from hotel
operations. These income and expense items were recognized during the quarter
due to the TRS structure implemented to lease the assets previously leased to
Noble. Although total FFO increased for the period, FFO per diluted share and
unit decreased to $0.27 for the quarter ending June 30, 2003 from $0.30 for the
similar period in 2002 due to the issuance of 150,000 Series A Preferred Units
during the current period.
Funds from Operations were $4,005,843 for the six months ended June 30, 2003,
which was an increase of approximately $344 or 9.4% over FFO in the comparable
period in 2002, which was $3,662,027. The increase in FFO during the six months
ending June 30, 2003 was primarily due to the reasons mentioned above. FFO per
diluted share and unit remained consisted at $0.48 per share during the six
months ending June 30, 2003.
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The following table reconciles FFO and FFO per weighted average diluted
share/unit for the three and six months ended June 30, 2003 and 2002 to their
most directly comparable GAAP measures, net income and net income per weighted
average diluted share (in thousands, except per share data):
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
----------- ---------- ---------- ----------
Net Income allocated
to Common
Shareholders $ 34 $ 308 $ 338 $ 618
Minority Interest
allocated to Common
LP Unitholders 1,094 964 1,208 968
Distributions to
Preferred
Unitholders 264 - 264 -
Depreciation and
Amortization 1,108 1,055 2,196 2,076
----------- ---------- ---------- ----------
Funds from
Operations $ 2,500 $ 2,327 $ 4,006 $ 3,662
=========== ========== ========== ==========
Weighted Average
Shares for Basic
Earnings
Per Share 2,578,703 2,575,459 2,578,247 7,561,942
Basic Earnings
Per Share $ 0.01 $ 0.12 $ 0.13 $ 0.25
Weighted Average
Shares for Diluted
Earnings
Per Share 2,578,703 2,575,459 2,578,247 7,561,942
Diluted Earnings
Per Share $ - $ - $ - $ 0.21
Weighted Average
Shares for Diluted
FFO 9,166,834 7,675,181 8,426,285 7,561,942
Funds from Operations
per Diluted
Share/Unit $ 0.27 $ 0.30 $ 0.48 $ 0.48
=========== ========== ========== ==========
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Hersha Hospitality Trust is a self-advised real estate investment trust that
owns mid-priced hotels in the eastern United States with strong, national
franchise affiliations. The Company focuses on acquisition and joint venture
opportunities in primary and secondary markets near major metropolitan markets.
Further inquiries regarding Hersha Hospitality Trust should be directed to
Ashish Parikh, CFO, at (717) 770-2405.
Certain matters within this press release are discussed using forward-looking
language as specified in the Private Securities Litigation Reform Act of 1995,
and, as such, may involve known and unknown risks, uncertainties and other
factors that may cause the actual results or performance to differ from those
projected in the forward-looking statement.
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Contact:
Hersha Hospitality Trust
Ashish Parikh, 717-770-2405
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