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Hersha Hospitality Trust Reports Operating Results (10-Q)

May 10, 2010 | About:
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10qk

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Hersha Hospitality Trust (HT) filed Quarterly Report for the period ended 2010-03-31.

Hersha Hospitality Trust has a market cap of $524.19 million; its shares were traded at around $4.79 with a P/E ratio of 5.84 and P/S ratio of 2.38. The dividend yield of Hersha Hospitality Trust stocks is 4.18%.HT is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Of the $46,700 in development loans receivable outstanding as of March 31, 2010, $15,000, or 32.1%, is invested in hotels that are operating and generating revenue, and $31,700, or 67.9%, is invested in hotel construction projects with significant progress made toward completion. As a result of previous impairment charges, we currently do not reflect on our balance sheet any value for the development loans to hotel development projects that are in the early phase of development that includes land acquisition and site preparation.

Total hotel operating expenses increased $4,019, or 14.3%, to approximately $32,163 for the three months ended March 31, 2010 from $28,144 for the three months ended March 31, 2009. Consistent with the increase in hotel operating revenues, hotel operating expenses increased primarily due to the acquisitions consummated since the comparable period in 2009, as mentioned above. The acquisitions also resulted in a $1,617, or 15.5%, increase in depreciation and amortization expense from $10,439 for the three months ended March 31, 2009 to $12,056 for the three months ended March 31, 2010. Real estate and personal property tax and property insurance increased $847, or 26.5%, in the three months ended March 31, 2010 when compared to the same period in 2009 primarily due to the acquisitions and from increases in assessments and rates at certain of the hotel properties. Property insurance expense also increased due to the acquisitions consummated since the comparable period in 2009.

General and administrative expense increased $1,354, or 91.5%, from $1,480, for the three months ended March 31, 2009 to $2,834 for the three months ended March 31, 2010. This increase was primarily due to an accrual for incentive compensation of $1,311 related to the Company s performance during the 2009 fiscal year which was not approved by our Board of Trustees until March 17, 2010 and therefore was not recorded until the first quarter of 2010. A similar charge was not included in the general and administrative expenses for the three months ended March 31, 2009. Non-cash stock based compensation expense increased $235 when comparing the three months ended March 31, 2010 to the same period in 2009 as a result of increased vesting of restricted shares and performance shares issued and earned during the three months ended March 31, 2010.

Beginning January 1, 2009, US GAAP requires that costs related to business combinations, which includes the acquisition of hotel properties, are required to be expensed currently rather than included in the value of the business acquired. As a result, amounts recorded on our consolidated statement of operations for acquisition and terminated transaction costs will fluctuate from period to period based on our acquisition activities. Acquisition and terminated transaction costs increased $3,329 from $7 for the three months ended March 31, 2009 to $3,336 for the three months ended March 31, 2010 due to acquisitions consummated during the three months ended March 31, 2010. Of these costs incurred, $3,228 related to our acquisition of three hotels acquired in the vicinity of Times Square in New York, NY and $20 related to our acquisition of the Hilton Garden Inn, Glastonbury, CT. The remaining costs related to transactions that we terminated during the quarter. Acquisition costs typically consist of transfer taxes, legal fees and other costs typically associated with acquiring a hotel property. No acquisitions were consummated during the same period in 2009.

Operating loss for the three months ended March 31, 2010 was $4,455 compared to operating income of $1,042 during the same period in 2009. The $5,497 decrease in operating income was primarily due to the acquisition and terminated transaction costs associated with the hotel acquisitions consummated during the three months ended March 31, 2010, in addition to a decrease in interest income from our development loans, offset by an increase in depreciation and amortization as mentioned above.

Interest expense increased $1,127 from $10,230 for the three months ended March 31, 2009 to $11,357 for the three months ended March 31, 2010. The increase in interest expense is due primarily to debt incurred related to hotel acquisitions consummated since the comparable period in 2009.

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