UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-11527
HOSPITALITY PROPERTIES TRUST
Maryland 04-3262075
(State of incorporation) (IRS Employer Identification No.)
400 Centre Street, Newton, Massachusetts 02458
617-964-8389
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 [X] No [ ]
Shares outstanding
Class at August 9, 1999
- -------------------------------------- ---------------------
Common shares of beneficial 56,449,743
Interest, $0.01 par value per share
<PAGE>
HOSPITALITY PROPERTIES TRUST
FORM 10-Q
JUNE 30, 1999
INDEX
PART I Financial Information (Unaudited) Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1999 and
December 31, 1998..............................................3
Consolidated Statements of Income - Three and Six Months Ended
June 30, 1999 and 1998..........................................4
Condensed Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1999 and 1998....................................5
Notes to Condensed Consolidated Financial Statements................6
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations...........................................8
Item 3.
Quantitative and Qualitative Disclosures About Market Risk..........13
Certain Important Factors...........................................15
PART II Other Information
Item 2.
Changes in Securities...............................................15
Item 4.
Submission of Matters to a Vote of Security Holders.................15
Item 6.
Exhibits and Reports on Form 8-K....................................15
Signature...........................................................17
2
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<TABLE>
<CAPTION>
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
June 30, December 31,
1999 1998
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Real estate properties ........................................... $ 2,225,410 $ 1,887,735
Accumulated depreciation ......................................... (148,621) (112,924)
----------- -----------
2,076,789 1,774,811
Cash and cash equivalents ........................................ 94,692 24,610
Restricted cash (FF&E Reserves) .................................. 26,931 22,797
Other assets, net ................................................ 13,795 15,420
----------- -----------
$ 2,212,207 $ 1,837,638
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Senior notes, net of discount .................................... $ 414,766 $ 414,753
Revolving debt ................................................... -- --
Security and other deposits ...................................... 243,014 206,018
Other liabilities ................................................ 14,740 43,010
Shareholders' equity:
Series A Preferred shares, 9 1/2% Cumulative Redeemable; no
par value; 100,000,000 shares authorized; 3,000,000 and zero
shares issued and outstanding, respectively; liquidation
preference of $75,000 and zero, respectively ............... 72,438 --
Common shares of beneficial interest, $0.01 par value,
100,000,000 shares authorized, 56,441,743 and 45,595,539
issued and outstanding, respectively ....................... 564 456
Additional paid-in capital ................................... 1,506,199 1,230,849
Cumulative net income ........................................ 252,469 203,507
Dividends .................................................... (291,983) (260,955)
----------- -----------
Total shareholders' equity ................................. 1,539,687 1,173,857
----------- -----------
$ 2,212,207 $ 1,837,638
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
HOSPITALITY PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income .............................. $ 52,997 $ 40,430 $102,039 $ 72,904
FF&E reserve income ........................ 4,954 3,642 9,068 7,460
Interest income ............................ 1,040 122 1,157 1,200
-------- -------- -------- --------
Total revenues ......................... 58,991 44,194 112,264 81,564
-------- -------- -------- --------
Expenses:
Interest (including amortization of deferred
finance costs of $645, $290, $1,199 and
$1,879, respectively) .................. 9,759 5,156 19,694 9,395
Depreciation and amortization .............. 18,426 13,763 35,697 25,127
General and administrative ................. 3,196 2,605 6,367 4,818
-------- -------- -------- --------
Total expenses ......................... 31,381 21,524 61,758 39,340
-------- -------- -------- --------
Income before extraordinary item .............. 27,610 22,670 50,506 42,224
Extraordinary item: loss from early
extinguishment of debt ................. -- (298) -- (6,614)
-------- -------- -------- --------
Net income .................................... 27,610 22,372 50,506 35,610
Preferred dividends ........................... 1,544 -- 1,544 --
-------- -------- -------- --------
Net income available for common shareholders .. $ 26,066 $ 22,372 $ 48,962 $ 35,610
-------- -------- -------- --------
Weighted average shares outstanding ........... 51,590 42,397 48,618 41,097
======== ======== ======== ========
Basic earnings per common share:
Income before extraordinary item available for $ 0.51 $ 054 $ 1.01 $ 1.03
common shareholders
Extraordinary item ............................ -- (0.01) -- (0.16)
-------- -------- -------- --------
Net income available for common shareholders .. $ 0.51 $ 0.53 $ 1.01 $ 0.87
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
HOSPITALITY PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six For the Six
Months Ended Months Ended
June 30, June 30,
1999 1998
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................... $ 50,506 $ 35,610
Extraordinary loss from extinguishment of debt .................. -- 6,614
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization ............................... 35,697 25,127
Amortization of deferred finance costs as interest .......... 1,199 1,879
FF&E reserve income ......................................... (9,068) (7,460)
Net change in assets and liabilities ........................ 3,581 5,127
--------- ---------
Cash provided by operating activities ................... 81,915 66,897
--------- ---------
Cash flows from investing activities:
Real estate acquisitions ........................................ (332,741) (425,038)
Increase in security and other deposits ......................... 36,996 39,618
--------- ---------
Cash used in investing activities ....................... (295,745) (385,420)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of preferred shares, net ................. 72,438 --
Proceeds from issuance of common shares, net .................... 274,595 127,746
Proceeds from issuance of term debt, net of discount ............ -- 149,730
Repayment of credit facility .................................... (172,000) (209,000)
Draws on revolving credit facility .............................. 172,000 226,000
Deferred finance costs incurred ................................. -- (5,830)
Dividends paid to preferred shareholders ........................ (1,544) --
Dividends paid to common shareholders ........................... (61,577) (51,037)
--------- ---------
Cash provided by financing activities ................... 283,912 237,609
--------- ---------
Increase (decrease) in cash and equivalents ........................ 70,082 (80,914)
Cash and cash equivalents at beginning of period ................... 24,610 81,728
--------- ---------
Cash and cash equivalents at end of period ......................... $ 94,692 $ 814
========= =========
Supplemental cash flow information:
Cash paid for interest ...................................... $ 18,450 $ 4,148
Non-cash investing activities:
Property managers' deposits in owned FF&E reserves .......... 8,115 6,680
Purchases of fixed assets with funds from FF&E reserves ..... (4,934) (3,702)
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
HOSPITALITY PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements of Hospitality
Properties Trust and its subsidiaries have been prepared without audit. Certain
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements have been condensed or omitted. We
believe the disclosures made are adequate to make the information presented not
misleading. However, the accompanying financial statements should be read in
conjunction with the financial statements and notes thereto contained in our
Annual Report on Form 10-K for the year ended December 31, 1998. In the opinion
of management, all adjustments (which include only normal recurring adjustments)
considered necessary for a fair presentation have been included. All
intercompany transactions and balances between Hospitality Properties Trust and
its subsidiaries have been eliminated. Operating results for interim periods are
not necessarily indicative of the results that may be expected for the full
year.
In 1998, the Financial Accounting Standards Board issued Issue No. 98-9,
"Accounting for Contingent Rent in Interim Financial Periods" ("EITF 98-9"). We
had adopted the provisions of EITF 98-9 prospectively as of May 21, 1998 (the
date of the issuance of EITF 98-9) and continued to apply them until EITF 98-9
was rescinded during the fourth quarter 1998.
If EITF 98-9 was applicable for the three and six months ended June 30, 1999,
net income available for common shareholders would have been $25,032
($0.49/share) and $46,988 ($0.97/share), respectively. If EITF 98-9 was
applicable for the entire 1998 periods, for the three and six months ended June
30, 1998 income before extraordinary item and net income available for common
shareholders would have been $21,668 ($0.51/share) and $40,243 ($0.98/share) and
$21,370 ($0.50/share) and $33,629 ($0.82/share), respectively. The deferred
percentage rent balance as of June 30, 1999 and 1998 would have been $1,974 and
$1,981, respectively.
EITF 98-9 had no impact on our annual results of operations during 1998, the
only year EITF 98-9 was in effect, rather the accounting changes required by
EITF 98-9 deferred recognition of certain percentage rental income from the
second and third quarters to the fourth quarter within a fiscal year.
Note 2. Shareholders' Equity
In May 1999, we paid a $0.68 per share dividend to common shareholders for the
quarter ended March 31, 1999. On July 14, 1999, our Trustees declared a dividend
of $0.69 per common share to be paid to common shareholders of record as of July
27, 1999, which will be distributed on or about August 19, 1999.
In April 1999 we issued 3 million shares of 9 1/2% Series A Cumulative
Redeemable Preferred Shares raising net proceeds of approximately $72,438. The
net proceeds were used to repay amounts outstanding under our revolving credit
facility. On May 18, 1999, our Trustees declared a dividend on the preferred
shares of $0.51459 per preferred share to be paid to preferred shareholders of
record as of June 15, 1999, which was distributed on June 30, 1999.
In May and June 1999 we issued 10,812,400 common shares of beneficial interest,
raising net proceeds of $274,595. The net proceeds were used to repay all
amounts outstanding under our revolving credit facility, acquire hotels and for
general business purposes.
We do not present diluted earnings per share because we have no dilutive
instruments.
Note 3. Indebtedness
As of June 30, 1999, we had zero outstanding on our revolving credit facility.
During the first quarter of 1999 we borrowed $172,000 to partially fund
acquisitions. The balance was reduced to zero in May 1999 with proceeds from the
offerings discussed in Note 2.
6
<PAGE>
HOSPITALITY PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Note 4. Real Estate Properties
During the six months ended June 30, 1999, certain of our subsidiaries purchased
three Candlewood Suites(R) hotels, eighteen Homestead Village(R) hotels, three
Residence Inn by Marriott(R) hotels, one Courtyard by Marriott(R) hotel, six
TownePlace Suites by Marriott(R) hotels and six Sumner Suites(R) for
approximately $332,741, paid for with the proceeds from the offerings discussed
in Note 2 and cash on hand.
Each of these hotels is leased as part of a pool of properties to affiliates of
the sellers.
Note 5. Significant Tenant
At June 30, 1999, 53 Courtyard by Marriott(R) properties which we own were
leased to a special purpose subsidiary of Host Marriott Corporation ("Host") and
managed by a subsidiary of Marriott International, Inc. ("Marriott"). The
results of operations for the twenty-four weeks ended June 18, 1999, and June
19, 1998, and summarized balance sheet data of the Host subsidiary to which our
Courtyard by Marriott(R) hotels are leased are as follows (000s):
Twenty-four weeks Twenty-four weeks
ended ended
June 18, 1999 June 19, 1998
(unaudited) (unaudited)
----------------- -----------------
Total hotel sales
Rooms ............................ $ 97,106 $ 94,993
Food and beverage ................ 7,135 7,025
Other ............................ 3,859 3,640
--------- ---------
Total hotel sales ................ 108,100 105,658
--------- ---------
Departmental expenses
Rooms ............................ 20,969 19,595
Food and beverage ................ 6,146 5,893
Other operating departments ...... 1,032 1,005
General and administrative ....... 11,386 10,970
Utilities ........................ 3,485 3,587
Repairs, maintenance and accidents 4,028 4,022
Marketing and sales .............. 2,979 943
Chain services ................... 2,335 4,015
--------- ---------
Total departmental expenses ...... 52,360 50,030
--------- ---------
House profit .............................. 55,740 55,628
Subtenant retainage ....................... (27,671) --
--------- ---------
Sublease income earned by Tenant .......... 28,069 55,628
Other ..................................... 1,211 --
--------- ---------
Total revenue ............................. 29,280 55,628
Investment expenses
Base and percentage rent ............. 24,713 24,480
FF&E contribution .................... -- 5,283
Management fees ...................... -- 13,193
Real estate tax ...................... -- 3,681
Other ................................ 91 1,129
--------- ---------
Total investment expenses ........ 24,804 47,766
--------- ---------
Income before taxes ....................... 4,476 7,862
Provision for income taxes ................ -- 3,145
--------- ---------
Net income ....................... $ 4,476 $ 4,717
========= =========
June 18, 1999 December 31, 1998
(unaudited)
-------------- -----------------
Assets $ 65,016 $ 58,884
Liabilities 41,348 39,692
Equity 23,668 19,192
7
<PAGE>
Beginning on January 1, 1999, Host subleased these 53 Courtyard by Marriott(R)
properties to a subsidiary of Crestline Capital Corporation ("Crestline").
However, Host remains the primary obligor under the leases. Accordingly,
beginning January 1, 1999, Host reports rental income as compared to hotel sales
in the prior year.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations (dollar amounts in thousands except per share amounts)
Three Months Ended June 30, 1999 versus 1998
Rental income for the 1999 second quarter was $52,997, a 31% increase over
rental income of $40,430 for the 1998 second quarter. This increase was due to
the full impact on rent of 51 hotels acquired in 1998, 27 hotels acquired in the
first quarter of 1999 and the partial impact on rent of 10 hotels acquired
during the second quarter of 1999. Rental income is comprised principally of
minimum rent, which was $51,963 for the 1999 second quarter, a 32% increase over
minimum rent of $39,428 for the 1998 second quarter. Minimum rent increased
because of the acquisitions discussed above. Rental income also includes
percentage rents which were $1,034 in the 1999 second quarter, a 3% increase
over percentage rent of $1,002 for the 1998 second quarter. FF&E reserve income
represents amounts paid by our tenants into restricted accounts owned by us, the
purpose of which is to accumulate funds for future capital expenditures at our
properties. The terms of our leases require these amounts to be calculated as a
percentage of total hotel sales at the properties. The FF&E reserve income for
the 1999 second quarter was $4,954, a 36% increase over FF&E reserve income for
the 1998 second quarter of $3,642. This increase is due principally to the
impact of additional hotels owned and the increased level of total hotel sales
experienced at our hotels. Interest income for the 1999 second quarter was
$1,040, a $918 increase from interest income of $122 for the 1998 second
quarter. This increase was due to a higher average cash balance in the 1999
period versus the 1998 period offset slightly by a lower average interest rate.
Interest expense for the 1999 second quarter was $9,759, an 89% increase over
interest expense of $5,156 for the 1998 second quarter. The increase was due to
higher average borrowing during the 1999 period. Borrowing increased primarily
as a result of two separate issuances of senior unsecured notes in November and
December 1998 for a total of $265,000. Depreciation and amortization expense for
the 1999 second quarter was $18,426, a 34% increase over depreciation and
amortization expense of $13,763 for the 1998 second quarter. This increase was
due principally to the full quarter's impact of the depreciation of 51 hotels
acquired in 1998, 27 hotels acquired in the first quarter of 1999 and the
partial impact of the depreciation of 10 hotels acquired during the second
quarter of 1999. General and administrative expense for the 1999 second quarter
was $3,196, a 23% increase over general and administrative expense of $2,605 in
the 1998 second quarter. This increase is due principally to the impact of
additional hotels purchased throughout 1998 and in the first half of 1999 on
advisory fees.
Income before extraordinary item for the 1999 second quarter was $27,610, a 22%
increase over income before extraordinary item for the 1998 second quarter of
$22,670. The increase was primarily due to higher rental income partially offset
by increases in depreciation and interest expense. These increases were
primarily the result of hotel acquisitions and debt issuances discussed above.
Net income available for common shareholders for the 1999 second quarter was
$26,066, a 17% increase over net income available for common shareholders for
the 1998 period of $22,372. The increase due to the net effect of the factors
discussed above was partially offset by preferred dividends in the 1999 period.
On a per share basis, income before extraordinary item available for common
shareholders was $0.51, a 6% decrease from the 1998 second quarter. The decrease
results from the net effect of the factors discussed above, offset by the 22%
increase in the weighted average shares outstanding that resulted from our
common share issuances during 1998 and in the second quarter of 1999.
Funds from operations, or FFO, is defined as net income before extraordinary and
non-recurring items plus depreciation and amortization of real estate assets
plus deposits made into refurbishment escrows which are not included in revenue.
Cash available for distribution, or CAD, is FFO less refurbishment escrows plus
amortization of deferred financing costs and other non-cash charges. For the
three months ended June 30, 1999, FFO was $47,854 ($0.93 per share) and CAD was
$40,525 ($0.79 per share). FFO was $38,794 ($0.92 per share) and CAD was
$33,331($0.79 per share) in the 1998 period. Growth in FFO and CAD is primarily
related to the effects on revenues and expenses of acquisitions in 1998 and 1999
discussed above.
8
<PAGE>
Six Months Ended June 30, 1999 versus 1998
Rental income for the first six months of 1999 was $102,039, a 40% increase over
rental income of $72,904 for the first six months of 1998. This increase was due
to the full impact of 51 hotels acquired in 1998, and the partial impact of 37
hotels acquired in the first half of 1999. Minimum rent was $100,065 for the
first six months of 1999, a 41% increase over minimum rent of $70,923 for the
first six months of 1998. Minimum rent increased because of the acquisitions
discussed above. Percentage rent was $1,974 in the first six months of 1999,
essentially unchanged from percentage rent of $1,981 for the first six months of
1998. The FF&E reserve income for the first six months of 1999 was $9,068, a 22%
increase over FF&E reserve income for the first six months of 1998. This
increase is due principally to the impact of additional hotels owned and the
increased level of total hotel sales experienced at our hotels. Interest income
for the first six months of 1999 was $1,157, a $43 decrease from interest income
of $1,200 for the first six months of 1998. This decrease was to the net effect
of a lower average interest rate offset by a higher average cash balance in the
1999 period versus the 1998 period.
Interest expense for the first six months of 1999 was $19,694, a 110% increase
over interest expense of $9,395 for the first six months of 1998. The increase
was primarily due to higher average borrowing during the 1999 period. Borrowing
increased primarily as a result of three separate issuances of senior unsecured
notes in February, November and December of 1998 for a total of $414,766, net of
discount. Depreciation and amortization expense for the first six months of 1999
was $35,697, a 42% increase over depreciation and amortization expense of
$25,127 for the first six months of 1998. This increase was due principally to
the full impact of the depreciation of 51 hotels acquired in 1998 and the
partial impact of 37 hotels acquired during 1999. General and administrative
expense for the first six months of 1999 was $6,367, a 32% increase over general
and administrative expense in the first six months of 1998 of $4,818. This
increase is principally the impact of additional hotels purchased in 1998 and
1999.
Income before extraordinary item for the first six months of 1999 was $50,506, a
20% increase over income before extraordinary item for the first six months of
1998 of $42,224. The increase was primarily due to higher rental income,
partially offset by increases in depreciation and interest expense. These
increases primarily reflect the impact of hotel acquisitions during 1998 and
1999.
Net income available for common shareholders for the first six months of 1999
was $48,962, a 37% increase over income available for common shareholders for
the 1998 period of $35,610. The increase due to the net effect of the factors
discussed above was partially offset by preferred dividends in the 1999 period.
On a per share basis, income before extraordinary item available for common
shareholders was $1.01, a 2% decrease from the 1998 income before extraordinary
item available for common shareholders of $1.03. The decrease was due to the
factors discussed above, offset by the 18% increase in the weighted average
shares outstanding that resulted from our common share issuances during 1998 and
in the second quarter of 1999.
For the six months of 1999, FFO was $91,092 ($1.87 per share) and CAD was
$77,434 ($1.59 per share). FFO was $72,511 ($1.76 per share) and CAD was $62,288
($1.52 per share) in the 1998 period. Growth in FFO and CAD is primarily related
to the effects on revenues and expenses of acquisitions in 1998 and 1999.
Cash flow provided by (used for) operating, investing and financing activities
was $81,915, ($295,745) and $283,912, respectively, for the first six months of
1999. Cash flow from operations in 1999 increased 22% from $66,897 in 1998
primarily due to the impact on rental revenue from investments made in 1998 and
1999. Cash used in investing activities decreased in 1999 from 1998 levels
primarily because of investments in 35 hotels during the first half of 1998 for
$425,038 versus the investment in 37 hotels during the first half of 1999 for
$332,741. Cash provided by financing activities increased from 1998 levels due
to the issuance of 3 million preferred shares (net proceeds of $72,438) and 10.8
million common shares (net proceeds of $274,595) during the first six months of
1999 versus the issuance of 3,958 common shares (net proceeds of $127,746) and
$149,730 of term debt (net of discount) in the first six months of 1998.
Liquidity and Capital Resources (dollar amounts in thousands except per share
amounts)
Our total assets increased to $2.2 billion as of June 30, 1999 from $1.8 billion
as of December 31, 1998. The increase resulted primarily from hotel acquisitions
completed in the first six months of 1999.
In April 1999 we issued 3 million shares of 9 1/2% Series A Cumulative
Redeemable Preferred Shares raising gross proceeds of $75,000 (net proceeds of
$72,438). The net proceeds were used to repay amounts outstanding under our
revolving credit facility. In May and June 1999 we issued 10,812,400 shares of
beneficial interest, par value $0.01 per
9
<PAGE>
share, raising gross proceeds of $289,907 (net proceeds of $274,595). The net
proceeds were used to repay amounts outstanding under our bank credit facility,
acquire hotels and for general business purposes.
During the six months ended June 30, 1999, we purchased 18 Homestead Suites(R),
three Candlewood Suites(R), three Residence Inn by Marriott(R) hotels, one
Courtyard by Marriott(R) hotel, six TownePlace Suites by Marriott(R) hotels and
six Sumner Suites(R) for approximately $332,741, all paid for with the proceeds
from the offerings discussed above and cash on hand.
We have agreed to acquire an additional three hotels from Marriott for an
additional total investment of approximately $30,826. The acquisition of these
three hotels is expected to occur during the remainder of 1999.
At June 30, 1999, we had $94,692 of cash and cash equivalents and zero
outstanding on our $300,000 revolving credit. From time to time, including
currently, we consider entering or pursuing transactions which would provide
equity or debt capital of various forms and on various terms. On January 15,
1998, our shelf registration statement for up to $2 billion of securities,
including debt securities, was declared effective by the Securities and Exchange
Commission. An effective shelf registration statement enables us to issue
specific securities to the public on an expedited basis by filing a prospectus
supplement with the SEC. Currently, we have $1.0 billion available on our shelf
registration statement. We believe that the capital available to us from time to
time will be sufficient to enable the execution of our business plan and the
funding of our existing commitments.
All our investments are leased to and operated by third parties. All costs of
operating and maintaining our hotels are paid by our tenants. All of our leases
require a percentage (usually 5%) of total hotel sales to be escrowed by the
tenant or operator as a reserve for renovations and refurbishment ("FF&E
Reserve"). Funds escrowed in the FF&E reserve accounts are used for improvements
to, and refurbishment of, our hotels. As of June 30, 1999, we and our eleven
tenants had approximately $35.4 million on deposit in these refurbishment escrow
accounts.
To maintain our status as a real estate investment trust ("REIT") under the
Internal Revenue Code , we must meet certain requirements including the
distribution of at least 95% of our taxable income to our shareholders. As a
REIT, we expect not to pay federal income taxes.
Distributions are based principally on cash available for distribution, which is
net income plus depreciation and amortization of real estate assets and certain
non-cash charges less FF&E reserve income. Cash available for distribution may
not equal cash provided by operating activities because the cash flow of the
Company is affected by other factors not included in the cash available for
distribution calculation.
On May 18, 1999, our Trustees declared a dividend on the preferred shares of
$0.51459 per preferred share to be paid to preferred shareholders of record as
of June 15, 1999, which was distributed on June 30, 1999.
Distributions with respect to the first quarter 1998 results of $0.68 per share
were made in May 1999. Distributions declared with respect to second quarter
1999 results of $0.69 per share will be paid to shareholders on or about August
19, 1999. Distributions to shareholders for a year in excess of taxable income
for that year constitute return of capital.
Funding for current expenses and distributions is provided for by our
operations, primarily our leasing of owned properties.
Property Leases
As of June 30, 1999, we own or are committed to purchase 210 hotels which are
grouped into combinations and leased to eleven separate affiliates of publicly
owned hotel companies including Marriott, Host Marriott, Crestline, Wyndham
International, Inc., Homestead Village, Inc., Candlewood Hotel Company and
ShoLodge, Inc. The tables on the following pages summarize the key terms of our
leases and the most recent operating results of our tenants.
10
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
Lease Pool
Courtyard by Residence Inn by Residence Residence Marriott(R)/Residence
Marriott(R) Marriott(R) Inn(R)/Courtyard Inn(R)/Courtyard Inn(R)/Courtyard(R)/
by Marriott(R) by Marriott(R) TownePlace Suite(R)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of Hotels 53 18 14 9 17
Number of Rooms 7,610 2,178 1,819 1,336 2,663
Number of States 24 14 7 8 7
Tenant Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of
Host subleased Host subleased Marriott Marriott Marriott
to subsidiary of to subsidiary of
Crestline Crestline
Manager Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of
Marriott Marriott Marriott Marriott Marriott
Investment at
June 30, 1999
(000s) $506,464 $173,223 $148,812 $129,377 $201,643 (1)
Security Deposits
(000s) $50,540 $17,220 $14,881 $12,938 $21,322 (1)
End of Initial Lease
Term 2012 2010 2014 2012 2013
Renewal Options (2) 3 for 12 years 1 for 10 years, 1 for 12 years, 2 for 10 years 2 for 10 years
each 2 for 15 years 1 for 10 years each each
each
Current Annual
Minimum Rent
(000s) $50,646 $17,322 $14,881 $12,938 $21,322
Percentage Rent (3) 5.0% 7.5% 7.0% 7.0% 7.0%
First Six Months
1999: Occupancy 81.3% 83.3% 82.5% 77.0% 69.4%
ADR $93.44 $101.47 $87.43 $103.31 $83.90
RevPAR $75.97 $84.52 $72.13 $79.55 $58.23
1998: Occupancy 80.5% 84.4% 79.8%
ADR $92.31 $104.05 $84.64 (4) (4)
RevPAR $74.31 $87.82 $67.54
- -------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Amount includes $170.8 million invested as of June 30, 1999 and $30.8 million in commitments expected to be funded
later in 1999. The current security deposit of $18,094 will be increased to $21,322 as the outstanding commitments
are funded.
(2) Renewal options may be exercised by the tenant for all, but not less than all, of the hotels within a lease pool.
(3) Each lease provides for payment to us as additional rent of a percentage of increases in total hotel sales over base
year levels.
(4) Because a majority of these properties were not open or had operating histories of less than one year as of January
1, 1998, a display of comparative operating results is not meaningful.
</FN>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
Lease Pool
Wyndham(R) Summerfield Sumner Candlewood Candlewood Homestead
Suites(R) Suites(R) Suites(R) Suites(R) Village(R)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Number of Hotels 12 15 20 17 17 18
Number of Rooms 2,321 1,822 2,409 1,839 2,053 2,399
Number of States 8 8 12 13 13 5
Tenant Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of
Wyndham Wyndham ShoLodge Candlewood Candlewood Homestead
Manager Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of Subsidiary of
Wyndham Wyndham ShoLodge Candlewood Candlewood Homestead
Investment at
June 30, 1999
(000s) $182,570 $240,000 $205,000 $118,500 $142,400 $145,000
Security Deposits
(000s) $18,325 $15,000 $21,280 $12,081 $14,253 $15,960
End of Initial Lease
Term 2012 2015 2011(1) 2011 2011 2015
Renewal Options (2) 4 for 12 4 for 12 5 for 10 3 for 15 3 for 15 2 for 15
years each years each years each years each years each years each
Current Annual
Minimum Rent
(000s) $18,325 $25,000 $21,280 $12,081 $14,253 $15,960
Percentage Rent (3) 8.0% 7.5% 8.0% 10.0% 10.0% 10.0%
First Six Months
1999: Occupancy 71.2% 81.3% 61.1% (4) 66.7% (5) 67.1% (5) 74.0% (5)
ADR $99.47 $121.56 $79.34 (4) $59.62 (5) $59.94 (5) $52.46 (5)
RevPAR $70.82 $98.83 $48.48 (4) $39.77 (5) $40.22 (5) $38.82 (5)
1998: Occupancy 77.3% 83.6% (5) 61.7% (4) 68.7% (5) 76.3% (5)
ADR $98.82 $119.32 (5) $77.71 (4) $54.47 (5) (6) $44.41 (5)
RevPAR $76.39 $99.75 (5) $47.95 (4) $37.42 (5) $33.88 (5)
=================================================================================================================
<FN>
(1) During the second quarter of 1999 the initial lease term was extended by three years to June 30, 2011.
(2) Renewal options may be exercised by the tenant for all, but not less than all, of the hotels within a lease pool.
(3) Each lease provides for payment to us as additional rent of a percentage of increases in total hotel sales over base
year levels.
(4) Includes the 14 hotels owned by us throughout the 1999 period.
(5) Includes information for periods prior to our acquisition of certain properties.
(6) Because a majority of these properties were not open or had operating histories of less than one year as of January
1, 1998, a display of comparative operating results is not meaningful.
</FN>
</TABLE>
12
<PAGE>
Seasonality
Our hotels have historically experienced seasonal differences typical of the
hotel industry with higher revenues in the second and third quarters of calendar
years compared with the first and fourth quarters. This seasonality is not
expected to cause fluctuations in our rental income because we believe that the
revenues generated by our hotels will be sufficient for the tenants to pay rents
on a regular basis notwithstanding seasonal fluctuations.
Year 2000
Our in-house computer systems environment is limited to software and hardware
developed by third parties and installed, operated and monitored by our
investment advisor. All of our computer systems (which are limited to financial
reporting and accounting systems) were installed within the last two years and
we believe these systems are Year 2000 compliant. All costs associated with our
computer systems are the responsibility of our investment advisor.
Our business is heavily dependent upon the efforts of third party tenants and
their affiliates which operate all of our hotels. Our leases and other
contractual relationships require these operators to conduct the daily
operations of our hotels and the scope of the operators' responsibilities
includes ensuring preparedness for the year 2000. Accordingly, our activities
related to year 2000 issues that might effect the systems used to run hotels
(which include reservations, financial, accounting, personnel, payroll, payables
and other systems) have been limited to inquiry and evaluation of our operators'
preparedness and contingency plans. Each tenant and operator as of June 30, 1999
(including Marriott, Host, Wyndham, Candlewood, Homestead and ShoLodge), has
responded to our inquiries related to the year 2000. Based on these responses,
we believe that these operators are in the process of studying their systems and
the systems of their vendors, suppliers and service providors to ensure
preparedness. Current levels of preparedness are varied and include partially
completed inventory and assessment of potential risks, testing, implementation
of plans for remediation and reprogramming. While we believe the efforts of our
tenants and their contingency plans described in their responses will be or are
adequate to address year 2000 concerns, there can be no guarantee that the
systems of other companies on which we rely will be year 2000 compliant on a
timely basis and will not have a material effect on us. Our costs related to the
year 2000 issues are expected to be zero.
If the efforts of our vendors and tenants to prepare for the year 2000 were
ineffective, our properties could be subject to significant adverse effects,
including, but not limited to, loss of business and growth opportunities,
reduced revenues and increased expenses which might cause operating losses by
our tenants. Continued or severe operating losses may inhibit our tenants'
ability to pay rent, delay the timeliness of rent payments, or cause one or more
of our tenants to ultimately default on their leases. Numerous lease defaults
could jeopardize our ability to maintain our financial results of operations and
meet our financial operating and capital obligations.
We do not currently have a contingency plan in place in the event we, or our
operators, do not successfully remedy year 2000 compliance issues that are
identified in a timely manner or fail to identify any year 2000 issues. We will
evaluate the status of our year 2000 compliance plan in the fourth quarter of
1999 and determine whether a plan is necessary.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to risks associated with interest rate changes. We manage our
exposure to this market risk through our monitoring of available financing
alternatives. Our strategy to manage exposure to changes in interest rates is
unchanged from December 31, 1998. We do not foresee any significant changes in
our exposure other than as described below to fluctuations in interest rates or
in how we manage this exposure in the near future. At June 30, 1999, our total
outstanding debt consisted of three issues of fixed rate, senior unsecured
notes:
Principal Balance Coupon Maturity Interest Payments Due
- ----------------- ------ -------- ---------------------
$115 million 8 1/4% 2005 Monthly
$150 million 7% 2008 Semi-Annually
$150 million 8 1/2% 2009 Monthly
No principal repayments are due under these notes until maturity.
Hypothetically, if at maturity these notes were refinanced at interest rates
which are 1/2 percentage point higher than shown above, our per annum interest
cost would increase by approximately $2 million. Based on the balances
outstanding as of June 30, 1999, a hypothetical immediate 1/2 percentage point
change in interest rates would change the fair value of our fixed rate debt
obligations by approximately $13 million.
13
<PAGE>
Each of our fixed rate debt arrangements allow us to make repayments earlier
than the stated maturity date. In some cases, we are allowed to make early
repayment at par after a cutoff date and in other cases we are allowed to make
prepayments only at a premium to face value. These prepayment rights may afford
us the opportunity to mitigate the risk of refinancing at maturity at higher
rates by refinancing prior to maturity.
Our line of credit bears interest at floating rates and has a maturity in 2002.
As June 30, 1999, there was zero outstanding and $300 million was available for
drawing under our revolving credit facility. Our revolving credit facility is
available to finance our acquisition commitments and for general business
purposes. As of June 30, 1999, our acquisition commitments totaled approximately
$30,826 (excluding closing costs). Assuming these commitments were funded with
borrowings under our revolving credit facility, and assuming interest rates
increased 1/2 percentage point, our annualized interest cost would increase by
approximately $154. Repayments under the revolving credit facility may be made
at any time without penalty. Our exposure to fluctuations in interest rates may
in the future increase if we incur floating rate to fund future acquisitions or
otherwise.
14
<PAGE>
CERTAIN IMPORTANT FACTORS
This quarterly report on Form 10-Q contains statements which constitute forward
looking statements within the meaning of the Securities Exchange Act of 1934, as
amended. Those statements appear in a number of places in this Form 10-Q and
include statements regarding our intent, belief or expectations, actions by our
Trustees or officers with respect to the declaration or payment of
distributions, the effect of Year 2000 issues, our policies and plans regarding
investments, financings or other matters, our qualification and continued
qualification as a real estate investment trust or trends affecting us or our
hotels' financial condition or results of operations. Readers are cautioned that
forward looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those contained in the forward looking statement as a result of various factors.
These factors include, without limitation, changes in financing terms, our
ability or inability to complete acquisitions and financing transactions,
results of operations of our hotels, and general changes in economic conditions
not presently expected. The accompanying information contained in this Form 10-Q
including the information under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations," identifies other
important factors that could cause these differences.
THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, DATED AUGUST 21,
1995 A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"),
IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE
STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS
TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE TRUST. ALL PERSONS
DEALING WITH THE TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE TRUST
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
PART II Other Information
Item 2. Changes in Securities
On May 18, 1999, pursuant to our incentive share award plan, our three
independent trustees each received a grant of 300 (total 900) common
shares of beneficial interest, par value $0.01 per share, valued at
$26.9375 per share, the closing price of the common shares on the New
York Stock Exchange on May 18, 1999. On July 23, 1999, pursuant to our
incentive share award plan, our officers and certain key employees of
our advisor, REIT Management & Research Inc., received grants
aggregating 8,000 common shares valued at $27.00 per share, the closing
price of the common shares on the New York Stock Exchange on July 23,
1999. The grants were made pursuant to the exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended.
Item 4. Submission of Matters to a Vote of Security Holders
At our regular annual meeting of shareholders held on May 18, 1999,
Messrs. John L. Harrington and Barry M. Portnoy were re-elected
trustees (41,205,561 voted for and votes with respect to 229,920 shares
withheld for Mr. Harrington and 41,206,859 voted for and votes with
respect to 228,622 shares withheld for Mr. Portnoy). The term of
Messrs. Harrington and Portnoy will extend until our annual meeting of
shareholders in 2002. Messrs. William J. Sheehan, Gerard M. Martin and
Arthur G. Koumantzelis continue to serve as trustees with terms
expiring in 2000, 2000 and 2001, respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Form of 9 1/2% Series A Cumulative Redeemable Preferred Share
Certificate
27. Financial Data Schedule.
15
<PAGE>
(b) Reports on Form 8-K
(i) Current Report on Form 8-K, dated April 7, 1999, (a) reporting
the issuance of 3,000,000 9 1/2% Series A Cumulative
Redeemable Preferred Shares of beneficial interest (the
"Series A Preferred Shares"), (b) reporting unaudited
consolidated pro forma financial statements and other data and
(c) filing as exhibits (1) an underwriting agreement relating
to 3,450,000 Series A Preferred Shares, (2) a form of articles
supplementary relating to the Series A Preferred Shares, (3) a
form of temporary Series A Preferred Share certificate, (4) an
opinion of counsel regarding tax matters, (5) a computation of
a pro forma ratio of earnings to fixed charges and (6) a
computation of a pro forma ratio of earnings to combined fixed
charges and preferred dividends (Items 5 and 7).
(ii) Current Report on Form 8-K, dated April 30, 1999, (a)
reporting unaudited condensed consolidated financial
statements as of and for the quarter ended March 31, 1999, (b)
reporting unaudited pro forma consolidated financial
statements and other data and (c) filing as exhibits (1) an
underwriting agreement, dated April 7, 1999, by and among
Hospitality Properties Trust and the several underwriters
named therein relating to 3,450,000 Series A Preferred Shares,
(2) articles supplementary relating to the Series A Preferred
Shares and (3) a consent of independent public accounts (Items
5 and 7).
(iii) Current Report on Form 8-K, dated May 5, 1999, (a) reporting
unaudited consolidated pro forma financial statements and
other data and (b) filing as exhibits (1) an underwriting
agreement, dated as of May 5, 1999, by and among Hospitality
Properties Trust and the several underwriters named therein
relating to 10,000,000 common shares of beneficial interest
and (2) an opinion of counsel regarding tax matters (Item 7).
16
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOSPITALITY PROPERTIES TRUST
/S/ Thomas M. O'Brien
Thomas M. O'Brien
Treasurer and Chief Financial Officer
(authorized officer and principal financial officer)
Dated: August 11, 1999
17
EXHIBIT 4
[FRONT OF CERTIFICATE]
[Graphic which shows three men and one woman standing on a map of the
United States surrounded by graphic representations of various hotels.]
HOSPITALITY PROPERTIES TRUST
A MARYLAND REAL ESTATE INVESTMENT TRUST
[Box with horizontal lines [Box with horizontal lines
which contains: which contains:
Number PA ______ ] Shares _______ ]
9 1/2% SERIES A CUMULATIVE 9 1/2% SERIES A CUMULATIVE
REDEEMABLE PREFERRED SHARES REDEEMABLE PREFERRED SHARES
THIS CERTIFICATE IS TRANSFERABLE CUSIP 44106M 30 0
IN BOSTON OR IN NEW YORK CITY SEE REVERSE FOR IMPORTANT
NOTICE ON TRANSFER RESTRICTIONS
AND OTHER INFORMATION
THIS CERTIFIES THAT
IS THE REGISTERED
HOLDER OF
FULLY PAID AND NONASSESSABLE 9 1/2% SERIES A CUMULATIVE REDEEMABLE PREFERRED
SHARES OF BENEFICIAL INTEREST, WITHOUT PAR VALUE, IN
[Superimposed over the following paragraph are the words "PREFERRED SHARES"]
Hospitality Properties Trust (the "Trust"), a Maryland real estate investment
trust established by Declaration of Trust made as of May 12, 1995, as amended
from time to time, a copy of which, together with all amendments thereto (the
"Declaration") is on file with the State Department of Assessments and Taxation
of Maryland. The provisions of the Declaration and the Bylaws of the Trust, and
all amendments thereto, are hereby incorporated in and made a part of this
certificate as fully as if set forth herein in their entirety, to all of which
provisions the holder and every transferee or assignee hereof by accepting or
holding the same agrees to be bound. See reverse for existence of Trustees'
authority to determine preferences and other rights of subsequent series of
shares, and of restriction on transfer provisions governing the shares evidenced
by this certificate. This certificate and the shares evidenced hereby are
negotiable and transferable on the books of the Trust by the registered holder
hereof in person or by its duly authorized agent upon surrender of this
certificate properly endorsed or assigned to the same extent as a stock
certificate and the shares of a Maryland corporation. This certificate is not
valid until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Trust and the facsimile signatures of its
duly authorized officers.
Dated:
Countersigned and Registered
STATE STREET BANK AND TRUST COMPANY
(BOSTON)
Transfer Agent and Registrar
By
Authorized Signature
[Seal of the Trust]
[Signature of Thomas M. O'Brien] [Signature of John G. Murray]
Treasurer President
THE DECLARATION OF TRUST PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST, COLLECTIVELY, AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND NO TRUSTEE, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, IN CONNECTION WITH THIS INSTRUMENT. ALL PERSONS DEALING WITH THE
TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR PAYMENT OF ANY
SUM OR PERFORMANCE OF ANY OBLIGATION.
[The borders of the front of the Certificate contain a graphic design]
<PAGE>
[REVERSE OF CERTIFICATE]
HOSPITALITY PROPERTIES TRUST
IMPORTANT NOTICE
THE TRUST WILL FURNISH TO ANY SHAREHOLDER, ON REQUEST AND WITHOUT CHARGE, A FULL
STATEMENT OF THE INFORMATION REQUIRED BY SECTION 8-203(d) OF THE CORPORATIONS
AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH RESPECT TO THE
DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND OTHER DISTRIBUTIONS,
QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE SHARES OF EACH
CLASS OF BENEFICIAL INTEREST WHICH THE TRUST HAS AUTHORITY TO ISSUE AND, IF THE
TRUST IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, (i) THE
DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH
SERIES TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF TRUSTEES TO SET
SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. THE FOREGOING SUMMARY DOES NOT
PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE DECLARATION OF TRUST OF THE TRUST, A COPY OF WHICH WILL BE SENT
WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS. SUCH REQUEST MUST BE MADE TO
THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE OR TO THE TRANSFER AGENT.
IF NECESSARY TO EFFECT COMPLIANCE BY THE TRUST WITH REQUIREMENTS OF THE INTERNAL
REVENUE CODE RELATING TO REAL ESTATE INVESTMENT TRUSTS, OWNERSHIP OF THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE RESTRICTED BY THE TRUST AND/OR THE
TRANSFER THEREOF MAY BE PROHIBITED ALL UPON THE TERMS AND CONDITIONS SET FORTH
IN THE DECLARATION OF TRUST. THE TRUST WILL FURNISH A COPY OF SUCH TERMS AND
CONDITIONS TO THE REGISTERED HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT
CHARGE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT-______Custodian______
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act_________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list
For value received _______________________________________________
hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF NEW OWNER
[Box]___________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Shares of Beneficial Interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_______________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated _______________________
(Sign here)________________________________
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE,
IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR
ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: ______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 94,692
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,225,410
<DEPRECIATION> 148,621
<TOTAL-ASSETS> 2,212,207
<CURRENT-LIABILITIES> 14,740
<BONDS> 414,766
0
72,438
<COMMON> 564
<OTHER-SE> 1,466,685
<TOTAL-LIABILITY-AND-EQUITY> 2,212,207
<SALES> 0
<TOTAL-REVENUES> 112,264
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42,064
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,694
<INCOME-PRETAX> 48,962
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,962
<EPS-BASIC> 1.01
<EPS-DILUTED> 1.01
</TABLE>
