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Hersha Hospitality Trust Reports Operating Results (10-Q)

November 06, 2012 | About:
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10qk

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Hersha Hospitality Trust (HT) filed Quarterly Report for the period ended 2012-09-30.

Hersha Hospitality Trust has a market cap of $942.1 million; its shares were traded at around $4.66 with a P/E ratio of 12.2 and P/S ratio of 3.3. The dividend yield of Hersha Hospitality Trust stocks is 5.1%.

Highlight of Business Operations:

Our total revenues for the three months ended September 30, 2012 consisted of hotel operating revenues, interest income from our development loan program and other revenue. Hotel operating revenues were approximately 99.5% and 99.1% of total revenues for the three months ended September 30, 2012 and 2011, respectively. Hotel operating revenues are recorded for wholly owned hotels that are leased to our wholly owned TRS and hotels owned through joint venture interests that are consolidated in our financial statements. Hotel operating revenues increased $16,505, or 20.6%, to $96,558 for the three months ended September 30, 2012 compared to $80,053 for the same period in 2011. This increase in hotel operating revenues was primarily attributable to the acquisition of hotel properties consummated since September 30, 2011.

Total hotel operating expenses increased 27.8% to approximately $53,249 for the three months ended September 30, 2012 from $41,675 for the three months ended September 30, 2011. Consistent with the increase in hotel operating revenues, hotel operating expenses increased primarily due to the acquisitions consummated since September 30, 2011, as mentioned above. The acquisitions also resulted in an increase in depreciation and amortization of 14.6% or $1,880 to $14,719 for the three months ended September 30, 2012 from $12,839 for the three months ended September 30, 2011. Similarly, real estate and personal property tax and property insurance increased $1,023, or 21.4%, in the three months ended September 30, 2012 when compared to the same period in 2011 due to our acquisitions along with a general overall increase in tax assessments and tax rates as the economy improves, which was partially offset by reductions resulting from our rigorous management of this expense.

Our total revenues for the nine months ended September 30, 2012 consisted of hotel operating revenues, interest income from our development loan program and other revenue. Hotel operating revenues were approximately 99.3% and 98.5% of total revenues for the nine months ended September 30, 2012 and 2011, respectively. Hotel operating revenues increased $50,691, or 24.5%, to $257,547 for the nine months ended September 30, 2012 from $206,856 for the same period in 2011. This increase in hotel operating revenues was primarily attributable to the acquisitions consummated in 2012 and 2011 and improved lodging fundamentals in the markets where our hotels are located.

Total hotel operating expenses increased 28.6% to approximately $144,594 for the nine months ended September 30, 2012 from $112,422 for the nine months ended September 30, 2011. Consistent with the increase in hotel operating revenues, hotel operating expenses increased primarily due to the acquisitions consummated since September 30, 2011, as mentioned above. The acquisitions also resulted in an increase in depreciation and amortization of 12.6%, or $4,717, to $42,304 for the nine months ended September 30, 2012 from $37,587 for the nine months ended September 30, 2011. Similarly, real estate and personal property tax and property insurance increased $1,880, or 13.2%, in the nine months ended September 30, 2012 when compared to the same period in 2011 due to our acquisitions, partially offset by rigorous management of these expenses.

To qualify as a REIT, we must distribute annually at least 90% of our taxable income. This distribution requirement limits our ability to retain earnings and requires us to raise additional capital in order to grow our business and acquire additional hotel properties. However, there is no assurance that we will be able to borrow funds or raise additional equity capital on terms acceptable to us, if at all. In addition, we cannot guarantee that we will continue to make distributions to our shareholders at the current rate or at all. Due to the seasonality of our business, cash provided by operating activities fluctuates significantly from quarter to quarter. We believe that, based on our current estimates, which include the addition of cash provided by hotels acquired during 2012, our cash provided by operating activities will be sufficient over the next 12 months to fund the payment of our dividend at its current level. However, our Board of Trustees continues to evaluate the dividend policy in the context of our overall liquidity and market conditions and may elect to reduce or suspend these distributions. Cash provided by operating activities for the nine months ended September 30, 2012 was $48,999 and cash used for the payment of distributions and dividends for the nine months ended September 30, 2012 was $44,294.

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