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Hersha Hospitality Announces Third Quarter Results

The Revolving Credit Facility, which was formerly a secured facility, will be unsecured and matures three years from the closing date, with the option for an additional one year extension. The Term Loan will be funded as a single draw of $100 million on the closing date and up to $50 million will be available on a delayed draw basis for up to sixty days after the closing date. The Term Loan also matures three years from the closing date with two additional one year extension options. The Company anticipates closing on the new Facility in November 2012.

Outlook for 2012

The Company is amending its 2012 Outlook to reflect third quarter performance, the impact of Hurricane Sandy and its outlook for the fourth quarter. This outlook reflects management’s best estimates of disruption resulting from the storm, but it is an evolving situation with many factors, such as the repair work, full power restoration in New York City and other factors beyond the Company’s control. Based on these estimates, the Company is issuing the following operating expectations for 2012:

Metric

 

2012 Expectation

Total consolidated RevPAR growth: 5.0% to 6.5%
Same-store consolidated RevPAR growth: 3.0% to 4.5%

Dividend

For the third quarter of 2012, the Company paid dividends of $0.06 per common share and OP Unit and $0.50 per Series A and Series B preferred share.

Third Quarter 2012 Conference Call

The Company will host a conference call to discuss its financial results at 9:00 AM Eastern time on Thursday, November 1, 2012. A live webcast of the conference call will be available online on the Company’s website at www.hersha.com. The conference call can be accessed by dialing (888) 452-4023 or (719) 325-2469 for international participants. A replay of the call will be available from 12:00 noon Eastern Time on November 1, 2012, through midnight Eastern Time on November 15, 2012. The replay can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international participants. The passcode for the call and the replay is 9289141. A replay of the webcast will be available on the Company’s website for a limited time.

About Hersha Hospitality

Hersha Hospitality Trust is a self-advised real estate investment trust, which owns 64 hotels in major urban gateway markets including New York City, Washington DC, Boston, Philadelphia, Los Angeles and Miami totaling 9,221 rooms. HT follows a highly selective investment approach and leverages operational advantage through rigorous and sustainable asset management practices. For further information on the Company visit our website at www.hersha.com.

Forward Looking Statement

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. These forward-looking statements may include statements related to the Company’s ability to outperform, the ongoing recovery of the lodging industry and the markets in which the Company’s hotel properties are located, the Company’s ability to generate internal and external growth, the completion of acquisitions under contract, the Company’s ability to identify and complete the acquisition of hotel properties in new markets, the Company’s ability to enter into contracts for and complete the disposition of non-core assets, the Company’s ability to complete the hotel redevelopment projects, the Company’s ability to increase margins, including Hotel EBITDA margins, and the Company’s operating expectations for the full 2012 calendar year. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed by the Company with the Securities and Exchange Commission on February 29, 2012 and other documents filed by the Company with the Securities and Exchange Commission.

       
HERSHA HOSPITALITY TRUST
Balance Sheet (unaudited)
(in thousands, except shares and per share data)
 
September 30, 2012 December 31, 2011
Assets:

Investment in Hotel Properties, net of Accumulated Depreciation, (including consolidation of variable interest entity assets of $89,661 and $0)

$ 1,477,151 $ 1,340,876
Investment in Unconsolidated Joint Ventures 16,581 38,839
Development Loans Receivable 33,425 35,747
Cash and Cash Equivalents 57,274 24,568
Escrow Deposits 25,874 27,321
Hotel Accounts Receivable, net of Allowance for Doubtful Accounts of $180 and $495 15,273 11,353
Deferred Financing Costs, net of Accumulated Amortization of $9,882 and $9,138 8,245 9,023
Due from Related Parties 8,729 6,189
Intangible Assets, net of Accumulated Amortization of $2,038 and $1,357 9,061 8,013
Deposits on Hotel Acquisitions 36,000 19,500
Other Assets 14,332 15,651
Hotel Assets Held for Sale - 93,829
   
Total Assets $ 1,701,945   $ 1,630,909  
 
Liabilities and Equity:
Line of Credit $ 28,000 $ 51,000

Mortgages and Notes Payable, including net Unamortized Premium (including consolidation of variable interest entity debt of $57,639 and $0)

751,999 707,374
Accounts Payable, Accrued Expenses and Other Liabilities 33,348 31,140
Dividends and Distributions Payable 15,616 13,908
Due to Related Parties 5,143 2,932
Liabilities Related to Assets Held for Sale - 61,758
   
Total Liabilities   834,106     868,112  
 
Redeemable Noncontrolling Interests - Common Units $ 15,015 $ 14,955
 
Equity:
Shareholders' Equity:

Preferred Shares: 8% Series A, $.01 Par Value, 29,000,000 shares authorized, 2,400,000 Shares Issued and Outstanding (Aggregate Liquidation Preference $60,000) at September 30, 2012 and December 31, 2011

24 24

Preferred Shares: 8% Series B, $.01 Par Value, 4,600,000 shares authorized, 4,600,000 Shares Issued and Outstanding (Aggregate Liquidation Preference $115,000) at September 30, 2012 and December 31, 2011

46 46

Common Shares: Class A, $.01 Par Value, 300,000,000 Shares Authorized at September 30, 2012 and December 31, 2011, 198,539,261 and 169,969,973 Shares Issued and Outstanding at September 30, 2012 and December 31, 2011, respectively

1,985 1,699

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

- -
Accumulated Other Comprehensive Loss (2,247 ) (1,151 )
Additional Paid-in Capital 1,176,727 1,041,027
Distributions in Excess of Net Income   (340,099 )   (310,974 )

Total Shareholders' Equity

836,436 730,671
 
Noncontrolling Interests:
Noncontrolling Interests - Common Units 15,855 16,864
Noncontrolling Interests - Consolidated Joint Ventures - 307
Noncontrolling Interests - Consolidated Variable Interest Entity   533     -  
Total Noncontrolling Interests 16,388 17,171
   
Total Equity 852,824 747,842
   
Total Liabilities and Equity $ 1,701,945   $ 1,630,909  
 
               
HERSHA HOSPITALITY TRUST
Summary Results (unaudited)
(in thousands, except shares and per share data)
 
Three Months Ended Nine Months Ended
September 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Revenues:
Hotel Operating Revenues $ 96,558 $ 80,053 $ 257,547 $ 206,856
Interest Income from Development Loans 463 656 1,602 2,810
Other Revenue   50     87     164     237  
Total Revenues   97,071     80,796     259,313     209,903  
 
Operating Expenses:
Hotel Operating Expenses 53,249 41,675 144,594 112,422
Hotel Ground Rent 214 182 622 693

Real Estate and Personal Property

Taxes and Property Insurance

5,804 4,781 16,083 14,203
General and Administrative 2,782 2,481 8,891 6,491
Stock Based Compensation 1,923 1,495 6,322 4,765
Acquisition and Terminated Transaction Costs 85 147 1,167 2,263
Depreciation and Amortization   14,719     12,839     42,304     37,587  
Total Operating Expenses   78,776     63,600     219,983     178,424  
 
Operating Income 18,295 17,196 39,330 31,479
 
Interest Income 407 144 859 363
Interest Expense 11,149 10,145 33,073 29,516
Other Expense 42 300 565 866
Loss on Debt Extinguishment   3     21     249     55  

Income before Income (Loss) from Unconsolidated Joint Venture Investments and Discontinued Operations

7,508 6,874 6,302 1,405
 
Unconsolidated Joint Ventures
Income (Loss) from Unconsolidated Joint Ventures 237 107 (79 ) (1,072 )
Impairment of Investment in Unconsolidated Joint Venture - (1,677 ) - (1,677 )

(Loss) Gain from Remeasurement of Investment in Unconsolidated Joint Ventures

  (1,668 )   -     (1,892 )   2,757  

(Loss) Income from Unconsolidated Joint Venture Investments

  (1,431 )   (1,570 )   (1,971 )   8  
 
Income from Continuing Operations 6,077 5,304 4,331 1,413
 
Discontinued Operations
(Loss) Gain on Disposition of Hotel Properties (183 ) 843 11,269 843
Impairment of Assets Held for Sale - (30,248 ) - (30,248 )
Income (Loss) from Discontinued Operations   -     1,597     (231 )   418  
(Loss) Income from Discontinued Operations (183 ) (27,808 ) 11,038 (28,987 )
       
Net Income (Loss) 5,894 (22,504 ) 15,369 (27,574 )
 
Loss Allocated to Noncontrolling Interests 279 1,000 223 1,619
Preferred Distributions   (3,500 )   (3,500 )   (10,500 )   (6,999 )
 
Net Income (Loss) Applicable to Common Shareholders $ 2,673   $ (25,004 ) $ 5,092   $ (32,954 )
 

Earnings per Share:

BASIC

Income (Loss) from Continuing Operations Applicable to Common Shareholders

$ 0.01 $ 0.01 $ (0.03 ) $ (0.03 )

Income (Loss) from Discontinued Operations

  0.00     (0.16 )   0.06     (0.17 )
 
Net Income (Loss) Applicable to Common Shareholders $ 0.01   $ (0.15 ) $ 0.03   $ (0.20 )
 
DILUTED

Income (Loss) from Continuing Operations Applicable to Common Shareholders

$ 0.01 $ 0.01 $ (0.03 ) $ (0.03 )
Income (Loss) from Discontinued Operations   0.00     (0.16 )   0.06     (0.17 )
 
Net Income (Loss) Applicable to Common Shareholders $ 0.01   $ (0.15 ) $ 0.03   $ (0.20 )
 

Weighted Average Common Shares Outstanding:

Basic 196,360,325 168,985,193 184,394,561 168,666,752
Diluted 199,392,955 172,266,298 184,394,561 168,666,752
 

Non-GAAP Measures

FFO and AFFO

The National Association of Real Estate Investment Trusts (“NAREIT”) developed Funds from Operations (“FFO”) as a non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. We calculate FFO applicable to common shares and Common Units in accordance with the April 2002 National Policy Bulletin of NAREIT, which we refer to as the White Paper. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP) excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated assets, plus certain non-cash items, such as loss from impairment of assets and depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our interpretation of the NAREIT definition is that noncontrolling interest in net income (loss) should be added back to (deducted from) net income (loss) as part of reconciling net income (loss) to FFO. Our FFO computation may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we do.

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