UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of Report: May 8, 1997
HUMPHREY HOSPITALITY TRUST, INC.
(Exact name of registrant as specified in its charter)
Virginia 52-1889548
(State of Incorporation) (I.R.S. employer
identification no.)
12301 Old Columbia Pike, Silver Spring MD 20904 (301) 680-4343
(Address of principal executive offices) (Registrant's telephone number)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisitions or Disposition of Assets
On February 26, 1997, Humphrey Hospitality Trust, Inc., through its
partnership, Humphrey Hospitality L.P. (the "Partnership") completed the
acquisition of a 49-room Comfort Inn hotel located in Culpeper, Virginia. The
property was purchased from Gateway Partnerships I for an aggregate purchase
price of $1,900,000. The purchase price was financed with cash on hand of
$680,000, and the assumption of debt of approximately $1,220,000.
Contemporaneous with the purchase, the Partnership leased the property to
Humphrey Hospitality Management, Inc. pursuant to a percentage lease. The
property will continue to be operated as a hotel property.
On March 17, 1997, Humphrey Hospitality Trust, Inc., through its
partnership, Humphrey Hospitality L.P. completed the acquisition of a 79-room
Comfort Inn hotel located in New Castle, Pennsylvania. The property was
purchased from BCL Properties for an aggregate purchase price of $3,000,000. The
purchase price was financed with cash on hand of $3,000,000. Contemporaneous
with the purchase, the Partnership leased the property to Humphrey Hospitality
Management, Inc. pursuant to a percentage lease. The property will continue to
be operated as a hotel property.
On April 17, 1997, Humphrey Hospitality Trust, Inc., through its
partnership, Humphrey Hospitality L.P. completed the acquisition of a 62-room
Best Western hotel located in Harlan, Kentucky. The property was purchased from
Harlan Hotel Corporation for an aggregate purchase price of $2,625,000. The
purchase price was financed with cash on hand of $875,000, and borrowings from
the Partnership's credit facility of $1,750,000. Contemporaneous with the
purchase, the Partnership leased the property to Humphrey Hospitality
Management, Inc. pursuant to a percentage lease. The property will continue to
be operated as a hotel property.
On April 23, 1997, the Partnership completed the acquisition of a
62-room Holiday Inn Express hotel located in Danville, Kentucky. The property
was purchased from Danville Hotel Corporation for an aggregate purchase price of
$2,725,000. The purchase price was financed with borrowings from the
Partnership's credit facility of $2,725,000. Contemporaneous with the purchase,
the Partnership leased the property to Humphrey Hospitality Management, Inc.
pursuant to a percentage lease. The property will continue to be operated as a
hotel property.
On April 25, 1997, the Partnership completed the acquisition of a
56-room Comfort Inn hotel located in Murphy, North Carolina. The property was
purchased from Howard and Ward, Wheeling Inn, LLC. For an aggregate purchase
price of $1,975,000. The purchase price was financed with borrowings from the
Partnership's credit facility of $1,975,000. Contemporaneous with the purchase,
the Partnership leased the property to Humphrey Hospitality Management, Inc.
pursuant to a percentage lease. The property will continue to be operated as a
hotel property.
2
<PAGE>
Item 7. Financial Statements. Pro Forma Financial Information and Exhibits
(a) The following financial statement of the properties acquired and
described in Item 2 is contained at pages 4 through 6.
The Acquisition Hotels
Independent Auditors Report;
Historical Summary of Combined Gross Revenue and Direct
Operating Expenses;
Note to Historical Summary of Combined Gross Revenue and
Direct Operating Expenses
(b) The following pro forma financial statements required by Article
11 of Regulation S-X for Humphrey Hospitality Trust, Inc. and
Humphrey Hospitality, Management, Inc. are contained at pages 7
through 12.
Pro Forma Condensed Consolidated Statement of Income for the
Year Ended December 31, 1996 for Humphrey Hospitality Trust,
Inc.;
Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1996 for Humphrey Hospitality Trust, Inc.;
Pro Forma Condensed Statement of Operations for the Year Ended
December 31, 1996 for Humphrey Hospitality Management, Inc.
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors
Humphrey Hospitality Trust, Inc.
We have audited the accompanying historical summary of combined gross
revenue and direct operating expenses (the Historical Summary) of the Best
Western-Harlan, Holiday Inn Express-Danville, Comfort Inn-Murphy, Comfort
Inn-Culpeper and the Comfort Inn-New Castle hotels (collectively, The
Acquisition Hotels), for the year ended December 31, 1996. The Historical
Summary are the responsibility of the management of The Acquisition Hotels. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Historical Summary are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the Historical Summary. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the Historical
Summary. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary were prepared for the purpose of
complying with rules and regulations of the Securities and Exchange Commission
(for inclusion in the Form 8-K of Humphrey Hospitality Trust, Inc.) as described
in Note 1 to the Historical Summary, and is not intended to be a complete
presentation of The Acquisition Hotels' revenue and expenses.
In our opinion, such Historical Summary present fairly, in all material
respects, the gross revenue and direct operating expenses of The Acquisition
Hotels for the year ended December 31, 1996 in conformity with the accounting
principles described in Note 1.
REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
March 26, 1997
4
<PAGE>
The Acquisition Hotels
HISTORICAL SUMMARY OF COMBINED GROSS REVENUE
AND DIRECT OPERATING EXPENSES
Year ended December 31, 1996
Gross revenue $ 4,248,570
--------------
Direct operating expenses
Salaries and wages 852,925
Room expenses 230,007
Utilities 151,595
Repairs and maintenance 140,184
Administration 201,654
Marketing and promotion 209,889
Telephone 53,145
Franchise fees 200,842
Taxes and insurance 203,300
Land lease 38,990
--------------
Total direct operating expenses 2,282,531
--------------
EXCESS OF REVENUE OVER EXPENSES $ 1,966,039
==============
5
<PAGE>
The Acquisition Hotels
NOTE TO HISTORICAL SUMMARY OF COMBINED
GROSS REVENUE AND DIRECT OPERATING EXPENSES
December 31, 1996
Note 1. Basis of Presentation
The Historical Summary of combined gross revenue and direct operating
expenses (the Historical Summary) relate to the operations of five hotel
properties as follows:
<TABLE>
<CAPTION>
# of Date of
Acquisition Hotels Rooms Location Acquisition
- -------------------------------- ----------- ------------------------ ----------------------
<S> <C>
Best Western 62 Harlan, Kentucky April 17, 1997
Holiday Inn Express 62 Danville, Kentucky April 23, 1997
Comfort Inn 56 Murphy, North Carolina April 25, 1997
Comfort Inn 49 Culpeper, Virginia February 26,1997
Comfort Inn 79 New Castle, Pennsylvania March 17, 1997
</TABLE>
The above hotels, collectively referred to as The Acquisition Hotels were
acquired from unaffiliated parties by Humphrey Hospitality Trust, Inc. through
its partnership, Humphrey Hospitality Limited Partnership (the Partnership).
The Historical Summary has been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for real estate operations
acquired or to be acquired. The Historical Summary is not representative of the
actual operations for the year presented, as certain revenue and expenses which
may not be comparable to the revenue and expenses expected to be incurred by the
Partnership in the proposed operations of the Acquisition Hotels have been
excluded. All revenue and expenses associated with the operations of a
restaurant on the site of the Comfort Inn - New Castle have been excluded from
the Historical Summary because the restaurant was not acquired by the
Partnership. Expenses excluded consist of management fees , interest,
depreciation and amortization and other indirect costs not directly related to
the future operations of the Acquisition Hotels.
Revenue is recognized as earned.
6
<PAGE>
Humphrey Hospitality Trust, Inc.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1996
(Unaudited, in thousands)
This unaudited pro forma condensed consolidated statement of income of
Humphrey Hospitality Trust, Inc. is presented as if the acquisition of the
Acquisition Hotels had occurred on January 1, 1996 and the percentage leases for
the Acquisition Hotels were effective on January 1, 1996. It should be read in
conjunction with the consolidated financial statements of Humphrey Hospitality
Trust, Inc. for the year ended December 31, 1996, previously filed with the
Securities and Exchange Commission in Form 10-K, and the Historical Summary of
Combined Gross Revenue and Direct Operating Expenses of the Acquisition Hotels
for the year ended December 31, 1996 at pages ____ through ____. In management's
opinion, all adjustments necessary to reflect the effects of the above
transactions have been made. This unaudited pro forma condensed consolidated
statement of income is not necessarily indicative of what actual results of
operations of the Company would have been assuming such acquisitions have been
completed as of January 1, 1996, nor does it purport to represent the results of
operations for future periods.
<TABLE>
<CAPTION>
Pro Forma
Historical Acquisition
Company Hotels Total
---------- ----------- -----
<S> <C>
Operating data:
Percentage lease revenue $3,958 $1,833 (A) $5,791
Other revenue 47 - 47
Depreciation and amortization 736 481 (B) 1,217
Real estate and personal property
taxes and property insurance 252 124 (C) 376
Interest expense 493 614 (D) 1,107
General and administrative 411 28 439
Land lease - 39 (E) 39
Minority interest 435 83 (F) 518
------ ------ ------
Net income $1,678 $ 464 $2,142
====== ====== ======
Net income per common share
and common share equivalents $ .70 $ - $ .88 (G)
====== ====== ======
Weighted average common shares
and common share equivalents
outstanding. 3,033,602 3,033,602
========= =========
</TABLE>
7
<PAGE>
_____________________________
(A) Represents lease payments from the Lessee to the Partnership calculated
on a pro forma basis using the rent provisions in the Percentage Leases
and the historical room and other revenue of the Acquisition Hotels.
(B) Represents pro forma depreciation on the Acquisition Hotels ($473) and
amortization of deferred franchise costs ($8). Depreciation is computed
based upon estimated useful lives of 40 years for buildings and
improvements and 5 years for furniture and equipment. These estimated
useful lives are based on management's knowledge of the properties and
the hotel industry in general.
(C) Represents real estate and personal property taxes and property
insurance to be paid by the Partnership.
(D) Represents interest computed on approximately $7.0 million of debt
assumed and/or incurred in connection with the purchase of the
Acquisition Hotels.
(E) Represents land lease payments on the Best Western-Harlan hotel to be
paid by the Partnership.
(F) Represents pro forma minority interest for the Acquisition Hotels
calculated at 15.18% of lease income minus depreciation and
amortization, real estate and personal property taxes, property
insurance, interest, and general and administrative expenses.
(G) Net income per common share and common share equivalents are computed
by dividing net income before allocation to minority interest by the
weighted average number of shares of common stock and common stock
equivalents outstanding for the period.
8
<PAGE>
Humphrey Hospitality Trust, Inc.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited, in thousands)
This unaudited pro forma condensed consolidated balance sheet is of
Humphrey Hospitality Trust, Inc. is presented as if the acquisition of the
Acquisition Hotels had occurred on December 31, 1996. Such pro forma information
is based upon the consolidated balance sheet of Humphrey Hospitality Trust, Inc.
as of December 31, 1996. It should be read in conjunction with the consolidated
financial statements of Humphrey Hospitality Trust, Inc. for the year ended
December 31, 1996, previously filed with the Securities and Exchange Commission
in Form 10-K. In management's opinion, all adjustments necessary to reflect the
effects of the above transactions have been made. This unaudited pro forma
condensed consolidated balance sheet is not necessarily indicative of what the
actual financial position would have been assuming such transactions had been
completed as of December 31, 1996, nor does it purport to represent the future
financial position of the Company.
9
<PAGE>
Humphrey Hospitality Trust, Inc.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
ASSETS Company Adjustments Company
---------- ----------- ---------
<S> <C>
Net investment in hotel properties $21,405 $12,345 (A) $33,750
Cash and cash equivalents 7,101 (5,598) (A) 1,503
Accounts receivable from lessee 1,067 - 1,067
Reserve from replacements 68 - 68
Deferred expenses, net 373 158 (A) 531
Other assets 207 9 (A) 216
------- ------- -------
$30,221 $ 6,914 $37,135
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages and bonds payable $ 8,151 $ 6,914 (A) $15,065
Obligations under capital leases 34 - 34
Dividend payable 561 - 561
Accounts payable and accrued expenses 83 - 83
Minority interest 3,247 - 3,247
Shareholders' equity
Common stock 35 - 35
Additional paid-in capital 18,202 - 18,202
Undistributed earnings (deficit) (92) - (92)
------- ------- -------
$30,221 $ 6,914 $37,135
======= ======= =======
</TABLE>
________________________________
(A) Reflects the purchase of five hotel properties, the Acquisition Hotels,
from unaffiliated parties for a purchase price of $12,225,000 plus
related costs of acquisition. The purchase price was paid through the
use of cash, borrowings from the Company's credit facility and the
assumption of certain debt.
10
<PAGE>
Humphrey Hospitality Management, Inc.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Year ended December 31, 1996
(Unaudited, in thousands)
This unaudited pro forma condensed statement of operations of Humphrey
Hospitality Management, Inc. (the Lessee) is presented as if the acquisition and
operation of the Acquisition Hotels, by the Company and the Lessee,
respectively, had occurred and/or commenced on January 1, 1996. It should be
read in conjunction with the financial statements of Humphrey Hospitality
Management, Inc., previously filed with the Securities and Exchange Commission
in Form 10-K of Humphrey Hospitality Trust, Inc., for the year ended December
31, 1996 and the Historical Summary of Combined Gross Revenue and Direct
Operating Expenses of the Acquisition Hotels for the year ended December 31,
1996 at pages ____ through ____. In management's opinion, all adjustments
necessary to reflect the effects of the above transactions have been made. This
unaudited pro forma condensed statement of operations is not necessarily
indicative of what the actual results of the Company would have been assuming
such transactions had been completed as of January 1, 1996, nor does it purport
to represent the results of operations for future periods.
11
<PAGE>
Humphrey Hospitality Management, Inc.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Year ended December 31, 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Historical Acquisition Pro
Lessee Hotels Adjustments Forma
---------- ----------- ----------- -----
<S> <C>
Total revenue $8,579 $4,249 $ (1)(A) $12,827
----- ----- -------- ------
Expenses
Salaries and wages 2,062 853 - 2,915
Room expense 434 230 - 664
Telephone 183 53 - 236
Marina expense 43 - - 43
Administrative 387 202 (90)(B) 499
Marketing and promotion 254 210 (23)(B) 441
Utilities 430 152 - 582
Repairs and maintenance 227 140 - 367
Taxes and insurance 150 203 (128)(C) 225
Franchise fees 421 201 - 622
Land lease expense - 39 (39)(D) -
Lease payments 3,957 - 1,833 (E) 5,790
----- ------ --------- -------
8,548 2,283 1,553 12,384
----- ------ --------- -------
Net income $ 31 $1,966 $ (1,554) $ 443
====== ====== ========= =======
</TABLE>
____________________________
(A) Decrease reflects the elimination of non-recurring investment and other
revenue.
(B) Decrease reflects certain administrative costs to be paid by the Partnership
and the elimination of non- recurring administrative and marketing and
promotion expenses.
(C) Decrease reflects real estate and personal property taxes and casualty
insurance to be paid by the Partnership and the reduction in insurance
costs.
(D) Decrease reflects land lease expense to be paid by the Partnership.
(E) Represents lease payments calculated on a pro forma basis using the rent
provisions in the Percentage Leases and the historical revenue of the
Acquisition Hotels.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
Humphrey Hospitality Trust, Inc.
Date: May 08, 1997 By: /s/ James I. Humphrey, Jr.
-------------------- --------------------------
James I. Humphrey Jr.
Chairman and President
