HERSHA HOSPITALITY TRUST [HT] Filings

10-Q 1 ht-20220630.htm 10-Q ht-20220630

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 June 30, 2022

☐

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	☐	Smaller 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 August 9, 2022, the number of Class A common shares of beneficial interest outstanding was 39,594,963 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	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income (Loss)	7
	Consolidated Statements of Equity	8
	Consolidated Statements of Cash Flows	12
	Notes to the Consolidated Financial Statements	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	53

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55

	Signatures	56

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2022 (UNAUDITED) AND DECEMBER 31, 2021

(IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS)


	June 30, 2022		December 31, 2021
Assets:
Investment in Hotel Properties, Net of Accumulated Depreciation	$	1,335,479	$	1,665,097
Investment in Unconsolidated Joint Ventures	5,486		5,580
Cash and Cash Equivalents	87,918		72,238
Escrow Deposits	12,764		12,707
Hotel Accounts Receivable	8,242		8,491
Due from Related Parties	534		2,495
Intangible Assets, Net of Accumulated Amortization of $7,075 and $6,944	1,204		1,335
Right of Use Assets	30,152		43,442
Other Assets	36,152		21,759
Hotel Assets Held for Sale	318,716		—
Total Assets	$	1,836,647	$	1,833,144

Liabilities and Equity:
Line of Credit	$	118,684	$	118,684
Term Loans, Net of Unamortized Deferred Financing Costs (Note 5)	496,527		496,085
Unsecured Notes Payable, Net of Unamortized Discount and Unamortized Deferred Financing Costs (Note 5)	201,386		198,490
Mortgages Payable, Net of Unamortized Premium and Unamortized Deferred Financing Costs	229,605		304,614
Lease Liabilities	47,744		53,691
Accounts Payable, Accrued Expenses and Other Liabilities	38,990		43,207
Dividends and Distributions Payable	6,044		6,044
Liabilities Related to Hotel Assets Held for Sale	79,787		—
Due to Related Parties	482		1,723
Total Liabilities	$	1,219,249	$	1,222,538

Redeemable Noncontrolling Interests - Consolidated Joint Venture (Note 1)	$	5,274	$	2,310

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 June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021; 39,514,661 and 39,325,025 Shares Issued and Outstanding at June 30, 2022 and December 31, 2021, respectively	396		394
Common Shares: Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding at June 30, 2022 and December 31, 2021	—		—
Accumulated Other Comprehensive Income (Loss)	15,629		(2,747)
Additional Paid-in Capital	1,154,367		1,155,034
Distributions in Excess of Net Income	(612,951)		(595,454)
Total Shareholders' Equity	557,588		557,374

Noncontrolling Interests (Note 1)	54,536		50,922

Total Equity	612,124		608,296

Total Liabilities and Equity	$	1,836,647	$	1,833,144

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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS)


	Three Months Ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenue:
Hotel Operating Revenues:
Room	$	98,242	$	56,539	$	163,374	$	95,889
Food & Beverage	15,710		7,230		24,766		10,304
Other Operating Revenues	9,247		6,314		16,886		11,043
Other Revenues	91		13		132		25
Total Revenues	123,290		70,096		205,158		117,261
Operating Expenses:
Hotel Operating Expenses:
Room	19,447		12,350		34,037		21,548
Food & Beverage	11,607		5,409		20,011		8,282
Other Operating Expenses	36,039		23,551		62,395		43,660
Insurance Recoveries in Excess of Property Losses	(987)		(711)		(962)		(711)
Hotel Ground Rent	1,531		1,064		2,621		2,164
Real Estate and Personal Property Taxes and Property Insurance	8,335		9,466		16,818		19,537
General and Administrative (including Share Based Payments of $3,299 and $2,589 and $5,840 and $4,758 for the three and six months ended June 30, 2022 and 2021, respectively)	6,491		5,287		11,809		10,231
Terminated Transaction Costs	—		36		—		390
Loss on Impairment of Assets	—		222		—		222
Depreciation and Amortization	17,003		21,014		36,279		42,816
Total Operating Expenses	99,466		77,688		183,008		148,139

Operating Income (Loss)	23,824		(7,592)		22,150		(30,878)

Interest Income	1		4		2		5
Interest Expense	(14,769)		(14,982)		(29,006)		(28,411)
Other (Expense) Income	(108)		(84)		(207)		377
Gain on Disposition of Hotel Properties	—		—		—		48,352

Loss on Debt Extinguishment	—		(129)		—		(3,069)
Income (Loss) Before Results from Unconsolidated Joint Venture Investments and Income Taxes	8,948		(22,783)		(7,061)		(13,624)

Income (Loss) from Unconsolidated Joint Ventures	357		(589)		(579)		(1,247)




Income (Loss) Before Income Taxes	9,305		(23,372)		(7,640)		(14,871)

Income Tax (Expense) Benefit	(93)		(151)		(114)		438

Net Income (Loss)	9,212		(23,523)		(7,754)		(14,433)

(Income) Loss Allocated to Noncontrolling Interests - Common Units	(379)		2,945		2,345		2,623
Income Allocated to Noncontrolling Interests - Consolidated Joint Venture	(691)		(1,968)		(2,964)		(1,810)
Preferred Distributions	(6,043)		(6,044)		(12,087)		(12,087)

Net Income (Loss) Applicable to Common Shareholders	$	2,099	$	(28,590)	$	(20,460)	$	(25,707)

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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE/UNIT AND PER SHARE AMOUNTS)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Earnings (Loss) Per Share:
BASIC
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$	0.05	$	(0.73)	$	(0.52)	$	(0.66)

DILUTED
Income (Loss) from Continuing Operations Applicable to Common Shareholders	$	0.05	$	(0.73)	$	(0.52)	$	(0.66)

Weighted Average Common Shares Outstanding:
Basic	39,277,269		39,097,820		39,254,536		39,034,707
Diluted*	40,453,785		39,097,820		39,254,536		39,034,707

*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 June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Common Units and Vested LTIP Units	5,262,313	4,279,355	5,264,772	4,314,347
Unvested Stock Awards and LTIP Units Outstanding	—	939,591	791,544	581,989
Contingently Issuable Share Awards	—	408,202	318,893	594,125
Total Potentially Dilutive Securities Excluded from the Denominator	5,262,313	5,627,148	6,375,209	5,490,461

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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net Income (Loss)	$	9,212	$	(23,523)	$	(7,754)	$	(14,433)
Other Comprehensive Income
Change in Fair Value of Derivative Instruments	5,353		2,539		20,842		9,004
Reclassification Adjustment for Change in Fair Value of Derivative Instruments Included in Net Income (Loss)	—		(141)		—		159
Total Other Comprehensive Income	$	5,353	$	2,398	$	20,842	$	9,163

Comprehensive Income (Loss)	14,565		(21,125)		13,088		(5,270)
Less: Comprehensive (Income) Loss Attributable to Noncontrolling Interests - Common Units	(1,011)		2,712		(121)		1,711
Less: Comprehensive Income Attributable to Noncontrolling Interests - Consolidated Joint Venture	(691)		(1,968)		(2,964)		(1,810)
Less: Preferred Distributions	(6,043)		(6,044)		(12,087)		(12,087)

Comprehensive Income (Loss) Attributable to Common Shareholders	$	6,820	$	(26,425)	$	(2,084)	$	(17,456)

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 SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARES)


	Redeemable Noncontrolling Interests	Shareholders' Equity									Noncontrolling Interests
	Consolidated Joint Venture ($)	Common Shares	Class A Common Shares ($)	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 ($)	Total Equity ($)
Balance at March 31, 2022	4,583	39,354,893	394	—	14,703,214	147	1,153,486	10,908	(615,740)	549,195	6,926,253	51,809	601,004
Issuance Costs/Other	—	—	—	—	—	—	(10)	—	—	(10)	—	—	(10)
Unit Conversion	—	50,000	1	—	—	—	425	—	—	426	(50,000)	(426)	—
Dividends and Distributions declared:

Preferred Shares	—	—	—	—	—	—	—	—	(6,044)	(6,044)	—	—	(6,044)



Share Based Compensation:
Grants	—	109,768	1	—	—	—	—	—	—	1	194,427	—	1
Amortization	—	—	—	—	—	—	1,157	—	—	1,157		2,142	3,299

Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	—	4,721	—	4,721	—	632	5,353
Adjustment to Record Noncontrolling Interest at Redemption Value	691	—	—	—	—	—	(691)	—	—	(691)	—	—	(691)
Net Income	—	—	—	—	—	—	—	—	8,833	8,833	—	379	9,212
Balance at June 30, 2022	5,274	39,514,661	396	—	14,703,214	147	1,154,367	15,629	(612,951)	557,588	7,070,680	54,536	612,124

Table of Contents

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARES)


	Redeemable Noncontrolling Interests	Shareholders' Equity									Noncontrolling Interests
	Consolidated Joint Venture ($)	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)
Balance at March 31, 2021	—	39,132,307	391	—	14,703,214	147	1,154,579	(12,509)	(530,535)	612,073	5,943,014	49,172	661,245



Dividends and Distributions declared:

Preferred Shares	—	—	—	—	—	—	—	—	(6,044)	(6,044)	—	—	(6,044)



Share Based Compensation:
Grants	—	85,168	1	—	—	—	365	—	—	366	19,477	65	431
Amortization	—	—	—	—	—	—	681	—	—	681	—	1,468	2,149
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	—	1,485	—	1,485	—	912	2,397
Adjustment to Record Noncontrolling Interest at Redemption Value	1,968	—	—	—	—	—	(1,968)	—	—	(1,968)	—	—	(1,968)

Net Income	—	—	—	—	—	—	—	—	(20,578)	(20,578)		(2,945)	(23,523)
Balance at June 30, 2021	1,968	39,217,475	392	—	14,703,214	147	1,153,657	(11,024)	(557,157)	586,015	5,962,491	48,672	634,687

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARES)


	Redeemable Noncontrolling Interests	Shareholders' Equity									Noncontrolling Interests
	Consolidated Joint Venture ($)	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)
Balance at December 31, 2021	2,310	39,325,025	394	—	14,703,214	147	1,155,034	(2,747)	(595,454)	557,374	6,926,253	50,922	608,296




Issuance Costs / Other	—	—	—	—	—	—	(48)	—	—	(48)	—	—	—
Unit Conversion	—	50,000	1	—	—	—	425	—	—	426	(50,000)	(426)	—
Dividends and Distributions declared:

Preferred Shares	—	—	—	—	—	—	—	—	(12,088)	(12,088)	—	—	(12,088)



Share Based Compensation:
Grants	—	139,636	1	—	—	—	(1)	—	—	—	194,427	—	—
Amortization	—	—	—	—	—	—	1,921	—	—	1,921		3,919	5,840
Change in Fair Value of Derivative Instruments	—	—	—	—	—	—	—	18,376	—	18,376	—	2,466	20,842

Adjustment to Record Noncontrolling Interest at Redemption Value	2,964	—	—	—	—	—	(2,964)	—	—	(2,964)	—	—	(2,964)
Net Income	—	—	—	—	—	—	—	—	(5,409)	(5,409)	—	(2,345)	(7,754)
Balance at June 30, 2022	5,274	39,514,661	396	—	14,703,214	147	1,154,367	15,629	(612,951)	557,588	7,070,680	54,536	612,124

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

HERSHA HOSPITALITY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARES)


	Redeemable Noncontrolling Interests	Shareholders' Equity									Noncontrolling Interests
	Consolidated Joint Venture ($)	Common Shares	Class A Common Shares ($)	Class B Common Shares ($)	Preferred Shares	Preferred Shares ($)	Additional Paid-In Capital ($)	Accumulated Other Comprehensive Loss ($)	Distributions in Excess of Net Income ($)	Total Shareholders' Equity ($)	Common Units and LTIP Units	Common Units and LTIP Units ($)	Total Equity ($)
Balance at December 31, 2020	—	38,843,482	389	—	14,703,214	147	1,150,985	(19,275)	(509,243)	623,003	5,392,808	49,246	672,249
Unit Conversion	—	225,000	2	—	—	—	2,870	—	—	2,872	(225,000)	(2,872)	—


Dividends and Distributions declared:

Preferred Shares	—	—	—	—	—	—	—	—	(36,262)	(36,262)	—	—	(36,262)



Share Based Compensation:
Grants	—	148,993	1	—	—	—	356	—	—

HERSHA HOSPITALITY TRUST [HT] Filings
HERSHA HOSPITALITY TRUST [HT-PE] Filings
HERSHA HOSPITALITY TRUST [HT-PD] Filings
HERSHA HOSPITALITY TRUST [HT-PC] Filings
10-Q	[2022-08-09]
10-Q	[2022-04-28]
10-K	[2022-02-24]
10-Q	[2021-10-27]
10-Q	[2021-07-28]
10-Q	[2021-04-29]
10-K	[2021-03-29]
10-Q	[2020-11-09]
10-Q	[2020-08-07]
10-Q	[2020-05-07]
10-K	[2020-02-25]
10-Q	[2019-11-06]
10-Q	[2019-07-31]
10-Q	[2019-04-30]
10-K	[2019-02-27]
10-Q	[2018-10-24]
10-Q	[2018-07-25]
10-Q	[2018-04-26]
10-K	[2018-02-23]
10-Q	[2017-10-26]
10-Q	[2017-07-27]
10-Q	[2017-04-27]
10-K	[2017-02-24]
10-Q	[2016-10-27]
10-Q	[2016-07-29]
10-Q	[2016-05-02]
10-K	[2016-02-17]
10-Q	[2015-10-29]
10-Q	[2015-07-29]
10-Q	[2015-04-28]
10-K	[2015-02-20]
10-Q	[2014-10-31]
10-Q	[2014-08-06]
10-Q	[2014-05-02]
10-K	[2014-02-27]
10-Q	[2013-11-07]
10-Q	[2013-08-01]
10-Q	[2013-05-02]
10-K	[2013-02-22]
10-Q	[2012-11-06]
10-Q	[2012-08-06]
10-Q	[2012-05-02]
10-K	[2012-02-29]

HERSHA HOSPITALITY TRUST [HT] Filings

HERSHA HOSPITALITY TRUST [HT-PE] Filings

HERSHA HOSPITALITY TRUST [HT-PD] Filings

HERSHA HOSPITALITY TRUST [HT-PC] Filings