2fed30a370db4de

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to ____

 

COMMISSION FILE NUMBER: 001-14765

 

HERSHA HOSPITALITY TRUST

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland

 

251811499

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

44 Hersha Drive, Harrisburg, PA

 

17102

(Address of Registrant’s Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (717) 236-4400

 

Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days.

xYes No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

xYes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

 

 

 

Large accelerated filer x

Accelerated filer 

 

Non-accelerated filer 

Small reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes xNo

 

As of November 6, 2013, the number of Class A common shares of beneficial interest outstanding was 202,675,886 and there were no Class B common shares of beneficial interest outstanding.

 

 


 

 

 Hersha Hospitality Trust

Table of Contents

 

 

 

 

 

 

 

 

PART I.  FINANCIAL INFORMATION

Page

Item 1.

Financial Statements.

 

 

Consolidated Balance Sheets as of September 30, 2013 [Unaudited] and December 31, 2012

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012 [Unaudited]

 

Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2013 and 2012 [Unaudited]

 

Consolidated Statements of Equity for the Nine Months Ended September 30, 2013 and 2012 [Unaudited]

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 [Unaudited]

 

Notes to the Consolidated Financial Statements

11 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

39 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

56 

Item 4.

Controls and Procedures.

58 

 

 

 

PART II.  OTHER INFORMATION

 

Item 1.

Legal Proceedings.

59 

Item 1A.

Risk Factors.

59 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

59 

Item 3.

Defaults Upon Senior Securities.

59 

Item 4.

Mine Safety Disclosures.

59 

Item 5.

Other Information.

59 

Item 6.

Exhibits.

60 

 

 

 

 

Signatures

61 

 

 

 

 

 

 

 

 

 

2


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2013 [UNAUDITED] AND DECEMBER 31, 2012

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2013

 

December 31, 2012

Assets:

 

 

 

 

 

 

Investment in Hotel Properties, Net of Accumulated Depreciation, Including Consolidation of Variable Interest Entity Assets of $86,138 and $86,657

 

$

1,487,605 

 

$

1,466,713 

Investment in Unconsolidated Joint Ventures

 

 

14,251 

 

 

16,007 

Development Loans Receivable

 

 

 -

 

 

28,425 

Cash and Cash Equivalents

 

 

46,588 

 

 

69,059 

Escrow Deposits

 

 

30,175 

 

 

26,792 

Hotel Accounts Receivable, Net of Allowance for Doubtful Accounts of $18 and $365

 

 

11,344 

 

 

11,538 

Deferred Financing Costs, Net of Accumulated Amortization of $6,701 and $4,841

 

 

8,344 

 

 

8,695 

Due from Related Parties

 

 

6,318 

 

 

8,488 

Intangible Assets, Net of Accumulated Amortization of $3,348 and $2,413

 

 

8,023 

 

 

8,698 

Deposits on Hotel Acquisitions

 

 

15,486 

 

 

37,750 

Other Assets

 

 

24,927 

 

 

25,514 

Hotel Assets Held for Sale

 

 

178,695 

 

 

 -

 

 

 

 

 

 

 

Total Assets

 

$

1,831,756 

 

$

1,707,679 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

Line of Credit

 

$

79,700 

 

$

 -

Unsecured Term Loan

 

 

150,000 

 

 

100,000 

Unsecured Notes Payable

 

 

51,548 

 

 

51,548 

Mortgages Payable, including Net Unamortized Premium and Consolidation of Variable Interest Entity Debt of $56,107 and $57,256

 

 

568,496 

 

 

641,160 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

34,465 

 

 

33,838 

Dividends and Distributions Payable

 

 

15,950 

 

 

15,621 

Due to Related Parties

 

 

7,224 

 

 

4,403 

Liabilities Related to Hotel Assets Held for Sale

 

 

79,291 

 

 

 -

 

 

 

 

 

 

 

Total Liabilities

 

 

986,674 

 

 

846,570 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interests - Common Units (Note 1)

 

$

 -

 

$

15,321 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

Preferred Shares:  $.01 Par Value, 29,000,000 shares Authorized, 7,600,000 Series B and C  Shares Issued and Outstanding at September 30, 2013 and 7,000,000 Series A  and B Preferred Shares Issued and Outstanding at December 31, 2012, with Liquidation Preferences of $25 Per Share (Note 1)

 

 

76 

 

 

70 

Common Shares:  Class A, $.01 Par Value, 300,000,000 Shares Authorized at September 30, 2013 and December 31, 2012, 202,673,802 and 198,672,356 Shares Issued and Outstanding at September 30, 2013 and December 31, 2012, respectively

 

 

2,027 

 

 

1,986 

Common Shares:  Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding

 

 

 -

 

 

 -

Accumulated Other Comprehensive Loss

 

 

(422)

 

 

(1,786)

Additional Paid-in Capital

 

 

1,198,760 

 

 

1,178,292 

Distributions in Excess of Net Income

 

 

(383,991)

 

 

(348,734)

Total Shareholders' Equity

 

 

816,450 

 

 

829,828 

 

 

 

 

 

 

 

Noncontrolling Interests (Note 1):

 

 

 

 

 

 

Noncontrolling Interests - Common Units

 

 

28,786 

 

 

15,484 

Noncontrolling Interests - Consolidated Variable Interest Entity

 

 

(154)

 

 

476 

Total Noncontrolling Interests

 

 

28,632 

 

 

15,960 

 

 

 

 

 

 

 

Total Equity

 

 

845,082 

 

 

845,788 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

1,831,756 

 

$

1,707,679 

 

 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

3


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2013

 

2012

 

2013

 

2012

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Revenues

 

$

90,250 

 

$

79,102 

 

$

246,019 

 

$

214,827 

Interest Income from Development Loans

 

 

 -

 

 

463 

 

 

158 

 

 

1,602 

Other Revenues

 

 

41 

 

 

50 

 

 

135 

 

 

164 

Total Revenues

 

 

90,291 

 

 

79,615 

 

 

246,312 

 

 

216,593 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Operating Expenses

 

 

50,297 

 

 

43,512 

 

 

137,550 

 

 

119,107 

Gain on Insurance Settlements

 

 

 -

 

 

 -

 

 

(403)

 

 

 -

Hotel Ground Rent

 

 

245 

 

 

214 

 

 

739 

 

 

622 

Real Estate and Personal Property Taxes and Property Insurance

 

 

6,331 

 

 

5,015 

 

 

17,754 

 

 

13,781 

General and Administrative (including Share Based Payments of $1,992 and $1,923 and $6,819 and $6,322 for the three and nine months ended September 30, 2013 and 2012, respectively)

 

 

5,251 

 

 

4,705 

 

 

15,942 

 

 

15,207 

Acquisition and Terminated Transaction Costs

 

 

27 

 

 

86 

 

 

803 

 

 

1,168 

Depreciation and Amortization

 

 

14,572 

 

 

12,488 

 

 

41,156 

 

 

35,611 

Gain on Hotel Acquisitions, Net

 

 

 -

 

 

 -

 

 

(12,108)

 

 

 -

Total Operating Expenses

 

 

76,723 

 

 

66,020 

 

 

201,433 

 

 

185,496 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

13,568 

 

 

13,595 

 

 

44,879 

 

 

31,097 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income

 

 

450 

 

 

407 

 

 

1,375 

 

 

859 

Interest Expense

 

 

10,528 

 

 

9,387 

 

 

29,573 

 

 

27,863 

Other Expense

 

 

261 

 

 

42 

 

 

837 

 

 

564 

Loss on Debt Extinguishment

 

 

 -

 

 

 

 

545 

 

 

249 

Income Before Income (Loss) from Unconsolidated Joint Venture
Investments, Income Taxes and Discontinued Operations

 

 

3,229 

 

 

4,570 

 

 

15,299 

 

 

3,280 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Unconsolidated Joint Ventures

 

 

227 

 

 

237 

 

 

(21)

 

 

(79)

Loss from Remeasurement of Investment in Unconsolidated Joint Venture

 

 

 -

 

 

(1,668)

 

 

 -

 

 

(1,892)

Income (Loss) from Unconsolidated Joint Venture Investments

 

 

227 

 

 

(1,431)

 

 

(21)

 

 

(1,971)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

3,456 

 

 

3,139 

 

 

15,278 

 

 

1,309 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit

 

 

2,375 

 

 

 -

 

 

2,282 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

 

5,831 

 

 

3,139 

 

 

17,560 

 

 

1,309 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations  (Note 12):

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Gain on Disposition of Hotel Properties

 

 

(11)

 

 

(183)

 

 

1,032 

 

 

11,269 

Impairment of Discontinued Assets

 

 

(6,591)

 

 

 -

 

 

(10,314)

 

 

 -

Income from Discontinued Operations, Net of Income Taxes

 

 

3,070 

 

 

2,938 

 

 

4,431 

 

 

2,791 

(Loss) Income from Discontinued Operations

 

 

(3,532)

 

 

2,755 

 

 

(4,851)

 

 

14,060 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

2,299 

 

 

5,894 

 

 

12,709 

 

 

15,369 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss Allocated to Noncontrolling Interests

 

 

164 

 

 

279 

 

 

628 

 

 

223 

Preferred Distributions

 

 

(3,589)

 

 

(3,500)

 

 

(11,022)

 

 

(10,500)

Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares

 

 

 -

 

 

 -

 

 

(2,250)

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income Applicable to Common Shareholders

 

$

(1,126)

 

$

2,673 

 

$

65 

 

$

5,092 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

4


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations Applicable to Common Shareholders

 

$

0.01 

 

$

0.00 

 

$

0.02 

 

$

(0.05)

 

(Loss) Income from Discontinued Operations Applicable to Common Shareholders

 

 

(0.02)

 

 

0.01 

 

 

(0.02)

 

 

0.07 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income Applicable to Common Shareholders

 

$

(0.01)

 

$

0.01 

 

$

0.00 

 

$

0.02 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations Applicable to Common Shareholders

 

$

0.01 

 

$

0.00 

 

$

0.02 

 

$

(0.05)

 

(Loss) Income from Discontinued Operations Applicable to Common Shareholders

 

 

(0.02)

 

 

0.01 

 

 

(0.02)

 

 

0.07 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income Applicable to Common Shareholders

 

$

(0.01)

 

$

0.01 

 

$

0.00 

 

$

0.02 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

198,878,496 

 

 

196,360,325 

 

 

198,186,963 

 

 

184,394,561 

 

Diluted

 

 

201,644,633 

 

*

196,360,325 

 

*

201,488,088 

 

*

184,394,561 

*

 

*Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and common units of limited partnership interest (“Common Units”) in the Operating Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these shares and units in the numerator and denominator would have no impact.  In addition, potentially dilutive common shares, if any, have been excluded from the denominator if they are anti-dilutive to income (loss) from continuing operations applicable to common shareholders.

 

The following table summarizes potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

   

 

 

2013

 

 

2012

 

 

2013

 

 

2012

   

 

 

 

 

 

 

 

 

 

 

 

 

Common Units of Limited Partnership Interest

 

 

6,914,716 

 

 

7,172,832 

 

 

6,986,004 

 

 

7,231,104 

Unvested Stock Awards Outstanding

 

 

 -

 

 

687,551 

 

 

 -

 

 

308,654 

Contingently Issuable Share Awards

 

 

 -

 

 

2,345,079 

 

 

 -

 

 

2,364,550 

Options to Acquire Common Shares Outstanding

 

 

 -

 

 

 -

 

 

 -

 

 

368,111 

Total Potentially Dilutive Securities Excluded from the Denominator

 

 

6,914,716 

 

 

10,205,462 

 

 

6,986,004 

 

 

10,272,419 

 

The Accompanying Notes Are an Integral Part of These Consolidated Financial Statements.

 

 

 

5


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2013

 

 

2012

 

 

2013

 

 

2012

Net Income

$

2,299 

 

 

5,894 

 

 

12,709 

 

 

15,369 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Derivative Instruments

 

(669)

 

 

(628)

 

 

2,302 

 

 

(226)

Less: Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income

 

(331)

 

 

(294)

 

 

(938)

 

 

(870)

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

1,299 

 

 

4,972 

 

 

14,073 

 

 

14,273 

Less:  Comprehensive Loss Attributable to Noncontrolling Interests

 

164 

 

 

279 

 

 

628 

 

 

223 

Less:  Preferred Distributions

 

(3,589)

 

 

(3,500)

 

 

(11,022)

 

 

(10,500)

Less:  Extinguishment of Issuance Costs Upon Redemption of Series A Preferred Shares

 

 -

 

 

 -

 

 

(2,250)

 

 

 -

Comprehensive (Loss) Income Attributable to Common Shareholders

$

(2,126)

 

$

1,751 

 

$

1,429 

 

$

3,996 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

6


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

Noncontrolling Interests

 

Redeemable Noncontrolling Interests

 

Class A
Common Shares

Class B
Common Shares

Preferred Shares

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Distributions in Excess of Net Earnings

Total Shareholders' Equity

 

Common Units

Consolidated Joint Ventures

Consolidated Variable Interest Entity

Total Noncontrolling Interests

Total Equity

 

Common Units

Balance at December 31, 2012

$           1,986 

$                    - 

$                   70 

$                  1,178,292 

$                     (1,786)

$                   (348,734)

$                    829,828 

 

$                     15,484 

$                          - 

$                      476 

$                       15,960 

$            845,788 

 

$                       15,321 

Unit Conversion/Redemption

 -

 -

(234)

 -

 -

(233)

 

(767)

 -

 -

(767)
(1,000)

 

 -

Reclassification of Noncontrolling Interest

 -

 -

 -

 -

 -

 -

 -

 

15,321 

 -

 -

15,321 
15,321 

 

(15,321)

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

Preferred Stock Offering, Net of Costs

 -

 -

30 
72,340 

 -

 -

72,370 

 

 -

 -

 -

 -

72,370 

 

 -

Preferred Stock Redemption

 -

 -

(24)
(59,976)

 -

 -

(60,000)

 

 -

 -

 -

 -

(60,000)

 

 -

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock ($0.18 per share)

 -

 -

 -

 -

 -

(37,572)
(37,572)

 

 -

 -

 -

 -

(37,572)

 

 -

Preferred Stock

 -

 -

 -

 -

 -

(11,022)
(11,022)

 

 -

 -

 -

 -

(11,022)

 

 -

Common Units ($0.18 per share)

 -

 -

 -

 -

 -

 -

 -

 

(1,254)

 -

 -

(1,254)
(1,254)

 

 -

Dividend Reinvestment Plan

 -

 -

 -

27 

 -

 -

27 

 

 -

 -

 -

 -

27 

 

 -

Stock Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 -

 

 

 

Grants

40 

 -

 -

285 

 -

 -

325 

 

 -

 -

 -

 -

325 

 

 -

Amortization

 -

 -

 -

8,026 

 -

 -

8,026 

 

 -

 -

 -

 -

8,026 

 

 -

Change in Fair Value of Derivative Instruments

 -

 -

 -

 -

1,364 

 -

1,364 

 

 -

 -

 -

 -

1,364 

 

 -

Net Income (Loss)

 -

 -

 -

 -

 -

13,337 
13,337 

 

 -

(630)
(628)
12,709 

 

 -

Balance at September 30, 2013

$           2,027 

$                    - 

$                   76 

$                  1,198,760 

$                        (422)

$                   (383,991)

$                    816,450 

 

$                     28,786 

$                          - 

$                    (154)

$                       28,632 

$            845,082 

 

$                                  - 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

7


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

Noncontrolling Interests

 

Redeemable Noncontrolling Interests

 

Class A
Common Shares

Class B
Common Shares

Preferred Shares

Additional Paid-In Capital

Accumulated Other Comprehensive Loss

Distributions in Excess of Net Earnings

Total Shareholders' Equity

 

Common Units

Consolidated Joint Ventures

Consolidated Variable Interest Entity

Total Noncontrolling Interests

Total Equity

 

Common Units

Balance at December 31, 2011

$           1,699 

$                    - 

$                   70 

$                  1,041,027 

$                     (1,151)

$                   (310,974)

$                    730,671 

 

$                     16,864 

$                     307 

$                          - 

$                       17,171 

$             747,842 

 

$                       14,955 

Unit Conversion

 -

 -

375 

 -

 -

376 

 

(376)

 -

 -

(376)

 -

 

 -

Reallocation of Noncontrolling Interest

 -

 -

 -

(528)

 -

 -

(528)

 

 -

 -

 -

 -

(528)

 

528 

Common Stock Issuance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Offering, Net of Costs

240 

 -

 -

128,430 

 -

 -

128,670 

 

 -

 -

 -

 -

128,670 

 

 -

Common Stock Option Cancellation

25 

 -

 -

(25)

 -

 

 -

 

 -

 -

 -

 -

 -

 

 -

Dividends and Distributions declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock ($0.18 per share)

 -

 -

 -

 -

 -

(34,217)
(34,217)

 

 -

 -

 -

 -

(34,217)

 

 -

Preferred Stock

 -

 -

 -

 -

 -

(10,500)
(10,500)

 

 -

 -

 -

 -

(10,500)

 

 -

Common Units ($0.18 per share)

 -

 

 

 -

 -

 -

 -

 

(748)

 -

 -

(748)
(748)

 

(552)

Dividend Reinvestment Plan

 -

 -

 -

16 

 -

 -

16 

 

 -

 -

 -

 -

16 

 

 -

Stock Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants

20 

 -

 -

2,428 

 -

 -

2,448 

 

 -

 -

 -

 -

2,448 

 

 -

Amortization

 -

 -

 -

5,004 

 -

 -

5,004 

 

 -

 -

 -

 -

5,004 

 

 -

Consolidation of Variable Interest Entity

 -

 -

 -

 -

 -

 -

 -

 

 -

 

956 
956 
956 

 

 -

Deconsolidation of Consolidated Joint Ventures

 -

 -

 -

 -

 -

 -

 -

 

 -

(307)

 -

(307)
(307)

 

 -

Change in Fair Value of Derivative Instruments

 -

 -

 -

 -

(1,096)

 -

(1,096)

 

 -

 -

 -

 -

(1,096)

 

 -

Net Income (Loss)

 -

 -

 -

 -

 -

15,592 
15,592 

 

115 

 -

(423)
(308)
15,284 

 

85 

Balance at September 30, 2012

$           1,985 

$                    - 

$                   70 

$                  1,176,727 

$                     (2,247)

$                   (340,099)

$                    836,436 

 

$                     15,855 

$                           - 

$                     533 

$                       16,388 

$             852,824 

 

$                       15,016 

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

 

8


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

Operating Activities:

 

 

 

 

 

 

Net Income

 

$

12,709 

 

$

15,369 

Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:

 

 

 

 

 

 

Gain on Acquisition of Hotel Assets

 

 

(12,108)

 

 

 -

Gain on Disposition of Hotel Assets

 

 

(1,032)

 

 

(11,269)

Impairment of Assets

 

 

10,314 

 

 

 -

Deferred Taxes

 

 

(2,205)

 

 

 -

Depreciation

 

 

47,153 

 

 

41,520 

Amortization

 

 

1,930 

 

 

2,916 

Debt Extinguishment

 

 

471 

 

 

10 

Development Loan Interest Added to Principal

 

 

 -

 

 

(678)

Equity in Loss of Unconsolidated Joint Ventures

 

 

21 

 

 

1,971 

Distributions from Unconsolidated Joint Ventures

 

 

313 

 

 

1,269 

Loss Recognized on Change in Fair Value of Derivative Instrument

 

 

18 

 

 

221 

Stock Based Compensation Expense

 

 

6,819 

 

 

6,322 

Change in Assets and Liabilities:

 

 

 

 

 

 

(Increase) Decrease in:

 

 

 

 

 

 

Hotel Accounts Receivable

 

 

194 

 

 

(3,970)

Escrows

 

 

(895)

 

 

(2,267)

Other Assets

 

 

(1,672)

 

 

923 

Due from Related Parties

 

 

2,170 

 

 

(5,740)

Increase (Decrease) in:

 

 

 

 

 

 

Due to Related Parties

 

 

2,821 

 

 

2,281 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

3,172 

 

 

121 

Net Cash Provided by Operating Activities

 

$

70,193 

 

$

48,999 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

Purchase of Hotel Property Assets

 

$

(166,388)

 

$

(67,637)

Deposits on Hotel Acquisitions, Net

 

 

1,264 

 

 

(17,000)

Capital Expenditures

 

 

(35,984)

 

 

(22,890)

Cash Paid for Hotel Development Projects

 

 

(16,862)

 

 

(8,718)

Proceeds from Disposition of Hotel Properties and Investment in Unconsolidated Joint Venture

 

 

12,000 

 

 

63,738 

Net Changes in Capital Expenditure Escrows

 

 

(1,601)

 

 

(3,212)

Investment in Notes Receivable

 

 

 -

 

 

(150)

Repayment of Notes Receivable

 

 

 -

 

 

1,720 

Proceeds from Insurance Claims

 

 

2,189 

 

 

 -

Repayment of Development Loans Receivable

 

 

15,122 

 

 

3,000 

Distributions from Unconsolidated Joint Venture

 

 

1,422 

 

 

150 

Advances and Capital Contributions to Unconsolidated Joint Ventures

 

 

 -

 

 

(130)

Net Cash Used in Investing Activities

 

$

(188,838)

 

$

(51,129)

 

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

 

9


 

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 [UNAUDITED]

[IN THOUSANDS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

Financing Activities:

 

 

 

 

 

 

Proceeds from (Repayments of) Borrowings Under Line of Credit, Net

 

$

79,700 

 

$

(23,000)

Proceeds from Unsecured Term Loan Borrowing

 

 

50,000 

 

 

 -

Principal Repayment of Mortgages and Notes Payable

 

 

(52,589)

 

 

(123,823)

Proceeds from Mortgages and Notes Payable

 

 

60,000 

 

 

97,444 

Cash Paid for Deferred Financing Costs

 

 

(2,237)

 

 

(65)

Proceeds from Issuance of Preferred Stock, Net

 

 

72,370 

 

 

 -

Proceeds from Issuance of Common Stock, Net

 

 

 -

 

 

128,670 

Redemption of Preferred Stock

 

 

(60,000)

 

 

 -

Redemption of Common Partnership Units

 

 

(1,000)

 

 

 -

Settlement of Interest Rate Cap

 

 

(565)

 

 

(96)

Distributions to Partners in Consolidated Joint Ventures

 

 

 -

 

 

 -

Dividends Paid on Common Shares

 

 

(37,305)

 

 

(32,487)

Dividends Paid on Preferred Shares

 

 

(10,933)

 

 

(10,500)

Distributions Paid on Common Partnership Units

 

 

(1,267)

 

 

(1,307)

Net Cash Provided by Financing Activities

 

$

96,174 

 

$

34,836