PHILADELPHIA, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Hersha Hospitality Trust (NYSE: HT), owner of high-quality upscale and lifestyle hotels in urban gateway markets and resort destinations, today announced results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Results

Net loss applicable to common shareholders was approximately ($49.2 million), or ($1.27) per diluted common share, in the third quarter 2020, compared to net loss applicable to common shareholders of approximately ($5.4 million), or ($0.15) per diluted common share, in the third quarter 2019. The decrease in third quarter 2020 net income and net income per diluted common share is due to the unprecedented impact on the travel industry from the COVID-19 pandemic.

AFFO in the third quarter 2020 decreased to ($20.1 million), compared to $22.7 million in the third quarter 2019. AFFO per diluted common share and OP Unit in the third quarter 2020 was ($0.46). An explanation of certain non-GAAP financial measures used in this press release, including, among others, AFFO, as well as reconciliations of those non-GAAP financial measures, to GAAP net income, is included at the end of this press release.

Mr. Jay H. Shah, Hersha’s Chief Executive Officer, stated, “Despite precarious COVID-19 conditions, week by week we saw an uptick in travel to our markets, specifically at our drive-to resort assets, aided by leisure customers continuing their planned summer vacations. Visitation to these assets remained relatively strong through September, countering the notion that we would see a significant contraction in leisure travel after Labor Day. This was highlighted by our California coastal assets, The Sanctuary Beach Resort near Monterey and The Hotel Milo in Santa Barbara, which both produced occupancies exceeding 70% in September. The perception in safety of travel is continuing to move up for transient travelers as showcased by sequential improvement in TSA security checkpoint data, which recently reached levels not seen since mid-March. We remain encouraged by the continued improvement in performance of our portfolio as we position our assets for the 2021 recovery.”

Mr. Shah continued, “Since we last spoke 90 days ago, we completed our hotel reopening plan and now have 37 of our 39 wholly-owned hotels fully operational with the two remaining closed hotels under contract for sale. Despite the initial remobilization cost to reopen hotels, we were able to decrease our cash burn rate at the portfolio- and corporate-level through the balance of the quarter. In the third-quarter we reduced our corporate level cash burn by 32% compared to the second-quarter. Staying nimble with our operating models in collaboration with our independent franchise operator enabled our safe reopening while operating our hotels cost-effectively. This strategy, coupled with our team’s ability to capture unique revenue opportunities, has resulted in our lower cash burn rates and breakeven levels. As we approach the end of this extraordinary year, we remain confident in our portfolio - high-quality, recently renovated, transient hotels that are highly leveraged to the recovery and located in the most valuable real estate markets in the country.”

Third Quarter 2020 Operating Results

The Company had 28 comparable hotels fully open and operational throughout the third-quarter, which generated 36.8% occupancy and an average daily rate of $165.36. The Sanctuary Beach Resort was our best performing asset during the third quarter, ending the period with an average daily rate of $570.17 and occupancy of 81.1% which resulted in 15.7% RevPAR growth. Our open New York City hotels, which constitutes the 5 boroughs, generated 40.0% occupancy during the third-quarter, highlighted by our select-service offerings in the JFK sub-market and our Nu Hotel in Brooklyn which ended the quarter with 54.3% occupancy.

As of November 1, 2020, 37 of the Company’s 39 wholly owned hotels are fully operational. The two remaining closed hotels, The Duane Street Hotel and The Blue Moon Hotel, are both under contract for sale.

Asset Sales

The Company’s 4 previously announced contracted dispositions are expected to close in early 2021 for total net proceeds of $70 million. In addition, the Company has entered into an agreement to sell the 192-room Sheraton Wilmington South for a price of $19.5 million. The sale price represents a 27.2x multiple and a 2.1% capitalization rate on the hotel's 2019 Hotel EBITDA and net operating income, respectively.

The Sheraton Wilmington does not have any property-level debt and will result in net proceeds of $19.5 million. The Company has received a hard deposit on the transaction which is expected to close in early December and is subject to customary closing conditions.

The Company currently has an additional 5 hotels on the market for sale.

Cash Burn and Breakeven Levels

Monthly cash burn rates have materially improved throughout the pandemic as property-level and corporate-level cash burns realized a 71% and 44% decline, respectively, in September versus initial estimates in April. The Company’s total property-level cash loss during September was $1.7 million with corporate-level cash loss actualizing at $5.9 million. Total property-level cash loss during the third-quarter was $5.7 million and total corporate-level cash loss was $18.2 million, approximately 11% better than forecasted at the beginning of the quarter. Based upon performance over the past two quarters and aggressive cost control measures, the Company’s forecasted property-level breakeven is expected to occur at 35-40% occupancy with RevPAR losses approximating 65%. At the corporate level, the Company’s breakeven occupancy is expected to be 55-60% with RevPAR losses approximating 45%.

Financing

The Company completed the third quarter 2020 with approximately $20.2 million of cash & cash equivalents and deposits. As of November 1, 2020, the Company had drawn $126 million of its $250 million Senior Revolving Line of Credit. As of September 30, 2020, 84.0% of the Company’s consolidated debt was fixed rate debt or hedged through interest rate swaps and caps. The Company’s total consolidated debt had a weighted average interest rate of approximately 3.61% and a weighted average life-to-maturity of approximately 3.0 years.

Business Interruption Insurance

The Company has settled its business interruption insurance claim related to the extensive damage from Hurricane Irma at the Cadillac Hotel & Beach Club and Parrot Key Hotel & Villas in September 2017. The forecasted range of recoveries is between $7 million and $8 million and the Company expects it will receive these proceeds by the end of the year.

Full-Year 2020 Outlook

Due to the uncertainty surrounding the lodging industry stemming from the COVID-19 pandemic, the Company has suspended its full-year 2020 guidance.

About Hersha Hospitality Trust

Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale and lifestyle hotels in urban gateway markets and resort destinations. The Company's 49 hotels totaling 7,774 rooms are located in New York, Washington, DC, Boston, Philadelphia, South Florida and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker “HT.”