Hersha Hospitality Trust Announces Third Quarter 2022

– Third Quarter 2022 Net Income of $2.82 Per Share –

– Third Quarter 2022 Adjusted Funds from Operations¹ of $0.33 Per Share –

– Comparable ADR Growth of 16% vs. Third Quarter 2019 –

– Comparable Portfolio Hotel EBITDA Growth of 8.4% vs. Third Quarter of 2019 –

– Comparable Portfolio EBITDA Margin Growth of 249 bps vs. Third Quarter of 2019-

PHILADELPHIA, Oct. 26, 2022 (GLOBE NEWSWIRE) — Hersha Hospitality Trust (NYSE: HT) (“Hersha,” “Company,” “we” or “our”), proprietor of high-quality resorts in city gateway markets and regional resort locations, right this moment introduced outcomes for the third quarter ended September 30, 2022.

Third Quarter 2022 Financial Results

Net earnings relevant to widespread shareholders was roughly $115.5 million, or $2.82 per diluted widespread share, within the third quarter 2022, in comparison with a internet loss relevant to widespread shareholders of roughly ($19.5 million), or ($0.50) per diluted widespread share, within the third quarter 2021.   Third quarter 2022 outcomes have been primarily pushed by a $167.8 million Gain on Disposition of Hotel Properties and improved efficiency on the Company’s resorts as in comparison with third quarter 2021.

Mr. Jay H. Shah, Hersha’s Chief Executive Officer, said, “Performance in the third quarter was driven by strength in our urban markets in September, benefiting from the return of midweek business travel and strong weekend leisure demand. For the first time, our comparable RevPAR growth of 3.7% in September surpassed the comparable month of 2019. We are seeing this trend accelerate into October, which is on pace to record RevPAR growth of approximately 8% as compared to 2019. Strong results from September also resulted in higher portfolio RevPAR for the quarter as compared to 2019. In addition to the strength of our Non-Resort portfolio, our Resort portfolio had yet another stellar quarter, recording 24.3% RevPAR growth to 2019, and nearly 5% growth to 2021 despite the impact of Hurricane Ian at our South Florida Properties.”

Mr. Shah continued, “In addition to our operational outperformance, we had an extremely active and productive third quarter on the transactions and refinancing front. This operational and transaction momentum has carried over into the fourth quarter, in which we are forecasting a continuation of growth compared to 2019, with each month outpacing September’s RevPAR growth for the comparable portfolio. We are very pleased with our team’s execution of our strategic plan in 2022 thus far, which has allowed us to drive industry leading results at our properties, meaningfully improve our financial and operational flexibility, and with the resumption of our dividend, return cash to stockholders.”

¹ Non-GAAP monetary measure. An rationalization of sure non-GAAP monetary measures used on this press launch, together with, amongst others, AFFO, in addition to reconciliations of these non-GAAP monetary measures to GAAP internet earnings, is included on the finish of this press launch.

Third Quarter 2022 Operating Results

The Company’s 26 comparable resort portfolio generated 71.7% occupancy, an Average Daily Rate (“ADR”) of $289.75, and Revenue per Available Room (“RevPAR”) of $207.66 throughout the third quarter 2022.

Rates remained sturdy throughout the comparable portfolio, with ADR development of 16% from 2019. This persevering with pricing energy, coupled with ongoing value controls and aggressive asset administration methods, helped drive very sturdy working margins throughout the quarter.

The Comparable portfolio generated $30.89M in EBITDA for the quarter, a rise of over 8% from 2019. EBITDA margin for the comparable portfolio of 32% represented a 249-basis level enhance to 2019. EBITDA margins at our resorts elevated 704 foundation factors and regardless of a seasonal shift to extra leisure-oriented journey within the third quarter our non-resort business transient centered resorts realized EBITDA margin development of 71 foundation factors in comparison with the third quarter of 2019.

As a results of the outperformance at a number of of our resorts, we accrued incentive administration charges of roughly $600K within the third quarter, which have been initially forecasted to be recorded at 12 months finish.

Markets

In the third quarter, three of our high 5 EBITDA producing belongings have been situated in Northeast city markets. The Boston Envoy led the best way for the portfolio for the second straight quarter with $4.1M in EBITDA, and was joined by the Westin Philadelphia and Hyatt Union Square, which each produced over $2M in EBITDA. The Boston Envoy and Hyatt Union Square each exceeded 2019 EBITDA and EBITDA margin efficiency within the quarter.

Our non-resort portfolio EBITDA contribution rose from slightly below 54% in July to 77% in September, leading to a blended 64% for the third quarter. Weekday RevPAR elevated 33% throughout this time interval together with positive factors of ~38% in Washington D.C and Philadelphia, respectively, and slightly below 12% in Boston.

Our New York Urban portfolio produced roughly $10M in EBITDA for the quarter, the best contribution of any market. EBITDA margin of 38.1% was a rise of 180 bps to 2019. In September, our New York portfolio exceeded 2019 RevPAR by 1.8% regardless of decrease occupancies, driving an 11% enhance in EBITDA from September of 2019. Excluding our Holiday Inn Express Chelsea, which is underneath renovation, we’re forecasting RevPAR and EBITDA development to 2019 in every month of the 4th quarter for our New York Urban portfolio.

Our resort portfolio generated RevPAR development of 24.3% pushed by 29.5% ADR development in comparison with the third quarter 2019. In South Florida, we thankfully sustained no materials harm from Hurricane Ian however estimate that roughly $500K of income was misplaced on account of journey disruption brought on by the storm ensuing from transient business and group cancellations.

In what is often the slowest quarter for our South Florida properties, each the Cadillac and Parrot Key Hotel & Villas maintained pricing energy and generated over $1M in EBITDA. While 2019 was a disrupted 12 months for these properties, the Cadillac and Parrot Key achieved EBITDA development in comparison with the third quarter of 2019 of 425% and 100%, respectively.

Fourth Quarter and Full-Year 2022 Outlook

The Company is offering its working and monetary expectations for the fourth quarter and full-year 2022 following its third quarter 2022 efficiency. The Company’s expectations don’t construct in any acquisitions, inclinations or capital market actions for 2022 other than these highlighted on this launch. Based on administration’s present outlook for its resorts and the markets wherein it operates and doesn’t bear in mind any unanticipated developments in its business or modifications in its working atmosphere, the Company’s 2022 expectations are as follows:

Hersha’s fourth quarter and full-year 2022 outlook is predicated on quite a lot of elements, lots of that are exterior the Company’s management, together with uncertainty surrounding any new disruptions from the COVID-19 pandemic and different macro-economic elements, together with inflation, will increase in rates of interest, provide chain disruptions and the opportunity of an financial recession or slowdown in 2022, all of that are topic to vary.

Subsequent Events

We lately introduced that we accomplished the gross sales of the Hotel Milo Santa Barbara and the Pan Pacific Seattle for $125 million. We additionally accomplished the sale of Courtyard Sunnyvale on October 26, 2022, the final remaining asset from the beforehand introduced Urban Select Service disposition.

We have additionally entered right into a definitive settlement to promote the leasehold curiosity on the Gate Hotel at JFK Airport for $11M, which we anticipate to shut previous to year-end. This asset was leased to an area governmental company for the previous 5 years and generated over $20 million of EBITDA throughout that interval. Upon completion of the federal government contract, the property was closed, and we decided the capital funding required to finish a wanted important renovation wouldn’t meet our return necessities.

The sale of Hotel Milo Santa Barbara and Pan Pacific Seattle, coupled with the inclinations of the Urban Select Service portfolio and the pending disposition of the Gate Hotel JFK Airport whole roughly $650M in gross proceeds. Cash proceeds from these gross sales are forecasted to scale back our whole debt by roughly $500M whereas producing unrestricted money of practically $120M.

Financing

Concurrent with the shut of the primary tranche of the USS-7 disposition, the Company entered into a brand new $500M Credit Facility on August 4, 2022. The facility consists of a $400 million Term Loan and an undrawn $100 million revolving credit score line. The services will bear curiosity at 2.50% over the relevant adjusted time period SOFR. The $500 million Credit Facility matures in August 2024 and has one 12-month extension choice topic to sure circumstances, which might lead to an prolonged maturity to August 2025.

The Company utilized an present swap to hedge $300 million of the brand new time period mortgage at a hard and fast charge of roughly 3.93%. Following the refinancings, 72% of the Company’s excellent debt is both fastened or hedged by varied spinoff devices. The Company’s third-quarter weighted common rate of interest was roughly 4.38% throughout all borrowings with a weighted common life-to-maturity of roughly 2.5 years. As we shut this 12 months, we anticipate to take care of a big quantity of economic and operational flexibility with a projected money steadiness exceeding $200 million and a $100 million undrawn line of credit score.

Dividends

Hersha paid a money dividend of $0.4297 per Series C Preferred Share, $0.40625 per Series D Preferred Share, and $0.40625 per Series E Preferred Share for the third quarter ended September 30, 2022. The most well-liked share dividends have been paid October 17, 2022 to holders of file as of October 1, 2022.

The Company additionally declared money dividends totaling $0.05 per widespread share and per restricted partnership unit for the third quarter ended September 30, 2022. These widespread share dividends and restricted partnership unit distributions have been paid October 17, 2022 to holders of file as of September 30, 2022.

As beforehand introduced, the Board continues to observe and consider market circumstances and, if in one of the best pursuits of the Company, intends to declare a particular money dividend to holders of widespread shares and restricted partnership items within the fourth quarter of 2022, topic to the necessities of the Company’s qualification as an actual property funding belief.

Third Quarter 2022 Conference Call

The Company will host a convention name to debate these outcomes at 9:00 AM Eastern Time on Thursday, October 27, 2022. Hosting the decision will likely be Mr. Jay H. Shah, Chief Executive Officer, Mr. Neil H. Shah, President and Chief Operating Officer, and Mr. Ashish Parikh, Chief Financial Officer.

A dwell audio webcast of the convention name will likely be out there on the Company’s web site at www.hersha.com. The convention name will be accessed by dialing 1-844-200-6205 or 1-929-526-1599 for worldwide individuals and getting into the passcode 279255 roughly 10 minutes upfront of the decision. A replay of the decision will likely be out there from 11:00 AM Eastern Time on Thursday, October 27, 2022, by 11:59 PM Eastern Time on Saturday, November 26, 2022. The replay will be accessed by dialing 1-866 813-9403 or +44-204-525-0658 for worldwide individuals. The passcode for the replay is 177094. A replay of the webcast will likely be out there on the Company’s web site for a restricted time.

About Hersha Hospitality Trust

Hersha Hospitality Trust (HT) is a self-advised actual property funding belief within the hospitality sector, which owns and operates luxurious and way of life resorts in city gateway and regional resort markets. The Company’s 27 resorts totaling 4,125 rooms are situated in New York, Washington, DC, Boston, Philadelphia, South Florida, and California.

The Company’s widespread shares are traded on The New York Stock Exchange underneath the ticker “HT.” For extra info on the Company, and the Company’s resort portfolio, please go to the Company’s web site at www.hersha.com. 

Non-GAAP Financial Measures and Key Performance Metrics

Common key efficiency metrics utilized by the lodging {industry} are occupancy, common day by day charge (“ADR”), and income per out there room (“RevPAR”). Occupancy is calculated as the proportion whole rooms offered in comparison with rooms out there to be offered, whereas ADR measures the common charge earned per occupied room, calculated as whole room income divided by whole rooms offered. RevPAR is a spinoff of those two metrics which reveals the full room income earned per room out there to be offered. Management makes use of these metrics compared to different resorts in our self-defined aggressive peer set inside proximity to every of our resort properties.

An rationalization of Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), EBITDA for actual property (“EBITDAre”), Adjusted EBITDA and Hotel EBITDA, in addition to reconciliations of such non-GAAP monetary measures to probably the most instantly comparable U.S. GAAP measures, is included on the finish of this launch.

Cautionary Statements Regarding Forward Looking Statements

Certain issues inside this press launch are mentioned utilizing “forward-looking statements,” inside the that means of the secure harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements could embody statements associated to, amongst different issues: assumptions relating to the affect to worldwide and home business and leisure journey pertaining to any pandemic or outbreak of illness, together with COVID-19, the affect from macroeconomic elements (together with inflation, will increase in rates of interest, provide chain disruptions, and potential financial slowdown or a recession), the Company’s entry to capital on the phrases and timing the Company expects, the Company’s expectations relating to future rates of interest and the affect of inflation on the Company’s outcomes of operations, the restoration of public confidence in home and worldwide journey, everlasting structural modifications in demand for convention facilities by business and leisure clientele, the financial development, labor markets, actual property values, lodging fundamentals, company journey, and the financial vibrancy of our goal markets, the Company’s capability to develop working money stream, the Company’s capability to match or outperform its rivals’ efficiency, the power of the Company’s resorts to realize stabilized or projected income, ADR or RevPar development or EBITDA multiples in keeping with our expectations, the steadiness of the lodging {industry} and the markets wherein the Company’s resort properties are situated, the Company’s capability to generate inside and exterior development, the Company’s capability to extend margins, together with Hotel EBITDA margins, the Company’s capability to shut on the sale of the Gate Hotel at JFK Airport and cut back the Company’s whole debt and generate unrestricted money, the Company’s capability preserve a big quantity of economic and operational flexibility, and the Company’s expectations relating to any potential declaration of a particular money dividend to holders of widespread shares and restricted partnership items within the fourth quarter 2022.   Certain statements contained on this press launch, together with people who specific a perception, expectation or intention, in addition to these that aren’t statements of historic truth, are forward-looking statements inside the that means of the federal securities legal guidelines and as such are primarily based upon the Company’s present beliefs as to the end result and timing of future occasions. Forward-looking statements are usually identifiable by use of forward-looking terminology akin to “believe,” “could,” “outlook,” “consider,” “expect,” “anticipate,” “forecast,” “project,” “trend,” “likely,” “estimate,” “plan,” “believe,” “continue,” “maintain,” “intend,” “should,” “may” and phrases of comparable import. Because these forward-looking statements relate to future occasions, the Company’s plans, methods, prospects and future monetary efficiency, and contain identified and unknown dangers which might be troublesome to foretell and could also be exterior the Company’s management, they don’t seem to be ensures of future outcomes and are topic to dangers, uncertainties and assumptions that might trigger precise outcomes to vary materially from these expressed in any forward-looking assertion.   Therefore, you shouldn’t depend on any of those forward-looking statements.   For an outline of things that will trigger the Company’s precise outcomes or efficiency to vary from its forward-looking statements, please evaluate the knowledge underneath the heading “Risk Factors” included within the Company’s most up-to-date Annual Report on Form 10-Ok and subsequent Quarterly Reports on Form 10-Q filed by the Company with the Securities and Exchange Commission (“SEC”) and different paperwork filed by the Company with the SEC now and again.   All info offered on this press launch, until in any other case said, is as of October 26, 2022, and the Company undertakes no responsibility to replace this info until required by regulation.  

Non-GAAP Measures

FFO and AFFO

The National Association of Real Estate Investment Trusts (“NAREIT”) developed Funds from Operations (“FFO”) as a non-GAAP monetary measure of efficiency of an fairness REIT with a purpose to acknowledge that income-producing actual property traditionally has not depreciated on the idea decided underneath GAAP. We calculate FFO relevant to widespread shares and Common Units in accordance with the December 2018 Financial Standards White Paper of NAREIT, which we confer with because the White Paper. The White Paper defines FFO as internet earnings (loss) (computed in accordance with GAAP) excluding depreciation and amortization associated to actual property, positive factors and losses from the sale of sure actual property belongings, positive factors and losses from change in management, and impairment write-downs of sure actual property belongings and investments in entities when the impairment is instantly attributable to decreases within the worth of depreciable actual property held by an entity. Our interpretation of the NAREIT definition is that non-controlling curiosity in internet earnings (loss) needs to be added again to (deducted from) internet earnings (loss) as a part of reconciling internet earnings (loss) to FFO. Our FFO computation will not be akin to FFO reported by different REITs that don’t compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition in a different way than we do.

The GAAP measure that we consider to be most instantly akin to FFO, internet earnings (loss) relevant to widespread shareholders, contains loss from the impairment of sure depreciable belongings, our funding in unconsolidated joint ventures and land, depreciation and amortization bills, positive factors or losses on property gross sales, non-controlling curiosity and most well-liked dividends. In computing FFO, we get rid of this stuff as a result of, in our view, they don’t seem to be indicative of the outcomes from our property operations. We decided that the loss from the impairment of sure depreciable belongings, together with investments in unconsolidated joint ventures and land, was pushed by a measurable lower within the honest worth of sure resort properties and different belongings as decided by our evaluation of these belongings in accordance with relevant GAAP. As such, these impairments have been eradicated from internet earnings (loss) to find out FFO.

Hersha additionally presents Adjusted Funds from Operations (AFFO), which displays FFO in accordance with the NAREIT definition additional adjusted by:

• deducting or including again earnings tax profit or expense;
• including again non-cash share-based compensation expense;
• including again acquisition and terminated transaction bills;
• including again amortization of reductions, premiums, and deferred financing prices;
• including again write-offs of deferred financing prices on debt extinguishment;
• including again straight-line amortization of floor lease expense; and
• including again curiosity expense that has been paid-in-kind.

FFO and AFFO don’t symbolize money flows from working actions in accordance with GAAP and shouldn’t be thought-about an alternative choice to internet earnings as a sign of the Company’s efficiency or to money stream as a measure of liquidity or capability to make distributions. We think about FFO and AFFO to be significant, further measures of our working efficiency as a result of they exclude the consequences of the belief that the worth of actual property belongings diminishes predictably over time, and since they’re broadly utilized by {industry} analysts as efficiency measures. We consider our efficiency by reviewing AFFO, along with FFO, as a result of we consider that adjusting FFO to exclude sure recurring and non-recurring gadgets as described above gives helpful supplemental info relating to our ongoing working efficiency and that the presentation of AFFO, when mixed with the first GAAP presentation of internet earnings (loss), extra utterly describes our working efficiency. We present each FFO from consolidated resort operations and FFO from unconsolidated joint ventures as a result of we consider it’s significant for the investor to grasp the relative contributions from our consolidated and unconsolidated resorts. The show of each FFO from consolidated resorts and FFO from unconsolidated joint ventures permits for an in depth evaluation of the working efficiency of our resort portfolio by administration and buyers. We current FFO and AFFO relevant to widespread shares and OP Units as a result of our OP Units are redeemable for widespread shares. We consider it’s significant for the investor to grasp FFO and AFFO relevant to all widespread shares and OP Units. In addition, primarily based on steerage offered by NAREIT, we have now eradicated loss from the impairment of sure depreciable belongings, together with investments in unconsolidated joint ventures and land, from internet (earnings) loss to reach at FFO in annually offered.

The following desk reconciles FFO and AFFO for the durations offered to probably the most instantly comparable GAAP measure, internet earnings (loss) relevant to widespread shares, for a similar durations:

EBITDAre and Adjusted EBITDA

Earnings earlier than curiosity expense, earnings taxes, depreciation and amortization (“EBITDA”) is a supplemental measure of our working efficiency and facilitates comparisons between us and different lodging REITs, resort homeowners who aren’t REITs and different capital-intensive corporations. NAREIT adopted EBITDA for actual property (“EBITDAre”) a measure calculated by including positive factors from the disposition of resort operations, with a purpose to promote an industry-wide measure of REIT working efficiency. We additionally modify EBITDAre for curiosity in amortization and write-off of deferred financing prices of our unconsolidated joint ventures, deferred financing prices write-offs in debt extinguishment, non-cash share-based compensation expense, acquisition and terminated transaction prices and internet working loss incurred on non-operation properties to calculate Adjusted EBITDA.

Our EBITDAre and Adjusted EBITDA computation will not be akin to EBITDAre or Adjusted EBITDA reported by different corporations that interpret the definition of EBITDA in a different way than we do. Management believes Adjusted EBITDA and EBITDAre to be significant measures of a REIT’s efficiency as a result of they’re broadly adopted by {industry} analysts, lenders and buyers and that they need to be thought-about together with, however not as an alternative choice to, GAAP internet earnings (loss) as a measure of the Company’s working efficiency.

Hotel EBITDA

Hotel EBITDA is a generally used measure of efficiency within the resort {industry} for a selected resort or group of resorts. We consider Hotel EBITDA gives a extra full understanding of the working outcomes of the person resort or group of resorts. We calculate Hotel EBITDA by using the full revenues generated from resort operations much less all working bills, property taxes, insurance and administration charges, which calculation excludes the Company bills not particular to a resort, akin to company overhead. Because Hotel EBITDA is restricted to particular person resorts or teams of resorts and to not the Company as a complete, it’s not instantly akin to any GAAP measure. In addition, our Hotel EBITDA computation will not be akin to Hotel EBITDA or different related metrics reported by different corporations that interpret the definition of Hotel EBITDA in a different way than we do. Management believes Hotel EBITDA to be a significant measure of efficiency of a portfolio of resorts as a result of it’s adopted by {industry} analysts, lenders and buyers and that it needs to be thought-about together with, however not as an alternative choice to, working earnings (loss) as reported in our unaudited abstract outcomes as a measure of our resort portfolio’s working efficiency.

Reconciliation of Non-GAAP Financial Measures Included in 2022 Outlook

Supplemental Schedules

The Company has revealed supplemental earnings schedules with a purpose to present further disclosure and monetary info for the good thing about the Company’s stakeholders. These will be discovered within the Investor Relations part and the “SEC Filings” and “News & Presentations” web page of the Company’s web site, www.hersha.com.