Hersha Hospitality Trust Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

ht-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒

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

For the quarterly period ended September 30, 2020

☐

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						25-1811499
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

44 Hersha Drive

Harrisburg

17102

(Address of Principal Executive Offices)

(Zip Code)

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

Former name, former address and former fiscal year, if changed since last report: Not applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Shares of Beneficial Interest, par value $.01 per share	HT	New York Stock Exchange
6.875% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PC	New York Stock Exchange
6.500% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PD	New York Stock Exchange
6.500% Series E Cumulative Redeemable Preferred Shares of Beneficial Interest, par $.01 per share	HT-PE	New York Stock Exchange

Indicate by check mark whether the registrant (1) 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 (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒Yes ☐No

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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Yes ☐No

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

Yes ☒No

As of November 9, 2020, the number of Class A common shares of beneficial interest outstanding was 38,843,482 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, 2020 [Unaudited] and December 31, 2019.	4
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 [Unaudited].	5
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019 [Unaudited].	7
	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2020 and 2019 [Unaudited].	8
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 [Unaudited].	12
	Notes to the Consolidated Financial Statements [Unaudited].	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	55
Item 4.	Controls and Procedures.	56

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings.	57
Item 1A.	Risk Factors.	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	77
Item 3.	Defaults Upon Senior Securities.	77
Item 4.	Mine Safety Disclosures.	77
Item 5.	Other Information.	77
Item 6.	Exhibits.	78

	Signatures.	79

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

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


	September 30, 2020		December 31, 2019
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation	$	1,883,335	$	1,975,973
Investment in Unconsolidated Joint Ventures	7,082		8,446
Cash and Cash Equivalents	13,139		27,012
Escrow Deposits	7,124		9,973
Hotel Accounts Receivable	3,741		9,213
Due from Related Parties	1,910		6,113
Intangible Assets, Net of Accumulated Amortization of $6,796 and $6,545	1,786		2,137
Right of Use Assets	44,447		45,384
Other Assets	22,895		38,177
Hotel Assets Held for Sale	40,195		—
Total Assets	$	2,025,654	$	2,122,428

Liabilities and Equity:
Line of Credit	$	115,000	$	48,000
Term Loans, Net of Unamortized Deferred Financing Costs (Note 5)	697,836		697,183
Unsecured Notes Payable, Net of Unamortized Deferred Financing Costs (Note 5)	50,776		50,736
Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs	331,409		332,280
Lease Liabilities	54,042		54,548
Accounts Payable, Accrued Expenses and Other Liabilities	67,000		47,626
Dividends and Distributions Payable	—		17,058


Total Liabilities	$	1,316,063	$	1,247,431

Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 1)	$	—	$	3,196

Equity:
Shareholders' Equity:
Preferred Shares: $.01 Par Value, 29,000,000 Shares Authorized, 3,000,000 Series C, 7,701,700 Series D and 4,001,514 Series E Shares Issued and Outstanding at September 30, 2020 and December 31, 2019, with Liquidation Preferences of $25.00 Per Share (Note 1)	$	147	$	147
Common Shares: Class A, $.01 Par Value, 104,000,000 Shares Authorized at September 30, 2020 and December 31, 2019; 38,843,482 and 38,652,650 Shares Issued and Outstanding at September 30, 2020 and December 31, 2019, respectively	389		387
Common Shares: Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at September 30, 2020 and December 31, 2019	—		—
Accumulated Other Comprehensive (Loss) Income	(22,747)		1,010
Additional Paid-in Capital	1,150,057		1,144,808
Distributions in Excess of Net Income	(470,534)		(338,695)
Total Shareholders' Equity	657,312		807,657

Noncontrolling Interests (Note 1)	52,279		64,144

Total Equity	709,591		871,801

Total Liabilities and Equity	$	2,025,654	$	2,122,428

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue:
Hotel Operating Revenues:
Room	$	27,546	$	108,909	$	113,768	$	319,374
Food & Beverage	2,441		15,870		12,652		48,351
Other Operating Revenues	3,734		10,140		14,651		29,350
Other Revenues	25		76		253		214
Total Revenues	33,746		134,995		141,324		397,289
Operating Expenses:
Hotel Operating Expenses:
Room	7,436		24,000		30,150		70,103
Food & Beverage	2,344		12,605		13,686		39,427
Other Operating Expenses	17,965		43,476		67,806		128,273

Hotel Ground Rent	1,062		1,228		3,183		3,452
Real Estate and Personal Property Taxes and Property Insurance	10,597		10,717		30,508		29,111
General and Administrative (including Share Based Payments of $1,936 and $2,009, and $6,191 and $7,441 for the three and nine months ended September 30, 2020 and 2019, respectively)	4,397		5,613		14,418		19,313
Loss on Impairment of Assets	—		—		1,069		—
Depreciation and Amortization	24,055		24,092		72,565		72,184

Total Operating Expenses	67,856		121,731		233,385		361,863

Operating (Loss) Income	(34,110)		13,264		(92,061)		35,426

Interest Income	1		66		39		207
Interest Expense	(13,350)		(12,935)		(39,838)		(39,158)
Other Expense	(73)		(246)		(530)		(328)


Loss on Debt Extinguishment	—		(231)		—		(265)
Loss Before Results from Unconsolidated Joint Venture Investments and Income Taxes	(47,532)		(82)		(132,390)		(4,118)

(Loss) Income from Unconsolidated Joint Ventures	(669)		38		(2,189)		518




Loss Before Income Taxes	(48,201)		(44)		(134,579)		(3,600)

Income Tax Benefit (Expense)	28		551		(11,346)		1,784

Net (Loss) Income	(48,173)		507		(145,925)		(1,816)

Loss Allocated to Noncontrolling Interests - Common Units	5,032		442		15,093		1,554
Loss (Income) Allocated to Noncontrolling Interests - Consolidated Joint Venture	—		(340)		3,196		(188)
Preferred Distributions	(6,044)		(6,044)		(18,132)		(18,131)

Net Loss Applicable to Common Shareholders	$	(49,185)	$	(5,435)	$	(145,768)	$	(18,581)

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Earnings Per Share:
BASIC
Loss from Continuing Operations Applicable to Common Shareholders	$	(1.27)	$	(0.15)	$	(3.78)	$	(0.50)

DILUTED
Loss from Continuing Operations Applicable to Common Shareholders	$	(1.27)	$	(0.15)	$	(3.78)	$	(0.50)

Weighted Average Common Shares Outstanding:
Basic	38,639,048		38,878,818		38,604,483		39,039,665
Diluted*	38,639,048		38,878,818		38,604,483		39,039,665

*Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership (the “Operating Partnership” or “HHLP”) has been excluded from the numerator and the Class A common shares issuable upon any redemption of the Operating Partnership’s common units of limited partnership interest (“Common Units”) and the Operating Partnership’s vested LTIP units (“Vested LTIP Units”) have been omitted from the denominator for the purpose of computing diluted earnings per share because 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) 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,
	2020	2019	2020	2019
Common Units and Vested LTIP Units	3,959,204	3,379,354	3,913,922	3,356,033
Unvested Stock Awards and LTIP Units Outstanding	915,586	631,401	595,539	543,483
Contingently Issuable Share Awards	170,664	306,073	537,189	447,449
Total Potentially Dilutive Securities Excluded from the Denominator	5,045,454	4,316,828	5,046,650	4,346,965

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS]


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net (Loss) Income	$	(48,173)	$	507	$	(145,925)	$	(1,816)
Other Comprehensive Loss
Change in Fair Value of Derivative Instruments	3,710		(111)		(29,435)		(6,013)
Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income	1,066		(1,010)		3,271		(3,263)
Total Other Comprehensive Income (Loss)	$	4,776	$	(1,121)	$	(26,164)	$	(9,276)

Comprehensive Loss	(43,397)		(614)		(172,089)		(11,092)
Less: Comprehensive Loss Attributable to Noncontrolling Interests - Common Units	4,608		532		17,503		2,289
Less: Comprehensive Loss (Income) Attributable to Noncontrolling Interests - Consolidated Joint Venture	—		(340)		3,196		(188)
Less: Preferred Distributions	(6,044)		(6,044)		(18,132)		(18,131)

Comprehensive Loss Attributable to Common Shareholders	$	(44,833)	$	(6,466)	$	(169,522)	$	(27,122)

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]


	Shareholders' Equity									Noncontrolling Interests			Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at June 30, 2020	38,789,371	388	—	14,703,214	147	1,149,291	(27,097)	(427,393)	695,336	5,381,870	55,715	751,051	—








Share Based Compensation:
Grants	54,111	1	—	—	—	—	—	—	1	10,938	—	1	—
Amortization	—	—	—	—	—	766	—	—	766		1,168	1,934	—

Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	4,350	—	4,350	—	428	4,778	—

Net Income (Loss)	—	—	—	—	—	—	—	(43,141)	(43,141)	—	(5,032)	(48,173)	—
Balance at September 30, 2020	38,843,482	389	—	14,703,214	147	1,150,057	(22,747)	(470,534)	657,312	5,392,808	52,279	709,591	—

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]


	Shareholders' Equity									Noncontrolling Interests			Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at June 30, 2019	39,240,924	393	—	14,703,214	147	1,152,939	(3,285)	(302,705)	847,489	4,279,946	64,574	912,063	2,856
Repurchase of Common Shares	(659,898)	(7)	—	—	—	(9,563)	—	—	(9,570)	—	—	(9,570)	—
Dividends and Distributions declared:
Common Shares ($0.84 per share)	—	—	—	—	—	—	—	(10,810)	(10,810)	—	—	(10,810)	—
Preferred Shares	—	—	—	—	—	—	—	(6,044)	(6,044)	—	—	(6,044)	—
Common Units ($0.84 per share)	—	—	—	—	—	—	—	—	—	—	(579)	(579)	—
LTIP Units ($0.84 per share)	—	—	—	—	—	—	—	—	—	—	(619)	(619)	—
Dividend Reinvestment Plan	389	—	—	—	—	6	—	—	6	—	—	6	—
Share Based Compensation:
Grants	28,487	—	—	—	—	—	—	—	—	—	—	—	—
Amortization	—	—	—	—	—	722	—	—	722	—	1,427	2,149	—

Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	(1,031)	—	(1,031)	—	(90)	(1,121)	—
Adjustment to Record Noncontrolling Interest at Redemption Value	—	—	—	—	—	(340)	—	—	(340)	—	—	(340)	340
Net Loss	—	—	—	—	—	—	—	949	949	—	(442)	507	—
Balance at September 30, 2019	38,609,902	386	—	14,703,214	147	1,143,764	(4,316)	(318,610)	821,371	4,279,946	64,271	885,642	3,196

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

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 [UNAUDITED]

[IN THOUSANDS, EXCEPT SHARES]


	Shareholders' Equity									Noncontrolling Interests			Redeemable Noncontrolling Interests
	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Income ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)	Consolidated Joint Venture ($)
Balance at December 31, 2019	38,652,650	387	—	14,703,214	147	1,144,808	1,010	(338,695)	807,657	4,279,946	64,144	871,801	3,196


Issuance Costs	—	—	—	—	—	(30)	—	—	(30)	—	—	(30)	—



Dividends and Distributions declared:

Preferred Shares	—	—	—	—	—	—	—	(1,007)	(1,007)	—	—	(1,007)	—


Dividend Reinvestment Plan	1,094	—	—	—	—	14	—	—	14	—	—	14	—
Share Based Compensation:
Grants	189,738	2	—	—	—	—	—	—

Price	14.77	EPS	0
Shares	39	P/E	660
MCap	577	P/FCF	8
Net Debt	655	EBIT	43
TEV	1,231	TEV/EBIT	29
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-09
10-Q	2020-06-30	Filed 2020-08-07
10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-02-25
10-Q	2019-09-30	Filed 2019-11-06
10-Q	2019-06-30	Filed 2019-07-31
10-Q	2019-03-31	Filed 2019-04-30
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-10-24
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-04-26
10-K	2017-12-31	Filed 2018-02-23
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-07-27
10-Q	2017-03-31	Filed 2017-04-27
10-K	2016-12-31	Filed 2017-02-24
10-Q	2016-09-30	Filed 2016-10-27
10-Q	2016-06-30	Filed 2016-07-29
10-Q	2016-03-31	Filed 2016-05-02
10-K	2015-12-31	Filed 2016-02-17
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-28
10-K	2014-12-31	Filed 2015-02-20
10-Q	2014-09-30	Filed 2014-10-31
10-Q	2014-06-30	Filed 2014-08-06
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-02-27
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-22
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-06
10-Q	2012-03-31	Filed 2012-05-02
10-K	2011-12-31	Filed 2012-02-29
10-Q	2011-09-30	Filed 2011-11-04
10-Q	2011-06-30	Filed 2011-08-08
10-Q	2011-03-31	Filed 2011-05-05
10-K	2010-12-31	Filed 2011-03-03
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-05

8-K	2020-11-09
8-K	2020-08-05
8-K	2020-05-28
8-K	2020-05-06
8-K	2020-04-02
8-K	2020-03-19
8-K	2020-02-24
8-K	2019-11-05
8-K	2019-09-10
8-K	2019-07-30
8-K	2019-05-30
8-K	2019-05-08
8-K	2019-04-29
8-K	2019-02-25
8-K	2018-10-23
8-K	2018-07-24
8-K	2018-06-04
8-K	2018-04-24
8-K	2018-02-21
8-K	2018-02-06

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EX-32.2	ht9302020ex322.htm

HT 10Q Quarterly Report

Hersha Hospitality Trust Earnings 2020-09-30