In order to reduce its existing indebtedness and redeem the
outstanding preferred shares
Hospitality Properties Trust (
HPT
)
, a real estate investment trust (REIT), recently announced the
pricing of an underwritten public offering of unsecured senior
notes worth $500 million. The unsecured senior notes, which are
scheduled to mature on August 15, 2022, bear an interest rate of
5.00%.
Citigroup Global Markets Inc. of
Citigroup Inc. (
C
)
, RBC Capital Markets, LLC of
Royal Bank of Canada
(
RY
)
, Merrill Lynch, Pierce, Fenner & Smith Incorporated of
Bank of America Corporation
(
BAC
)
and Wells Fargo Securities, LLC of
Wells Fargo & Company
(
WFC
)
acted as joint book-running managers for the offering. On the other
hand, Jefferies & Company, Inc. of
Jefferies Group, Inc. (
JEF
)
, Morgan Stanley & Co. LLC of
Morgan Stanley
(
MS
)
and UBS Securities LLC of
UBS AG
(
UBS
)
acted as joint lead managers.
The company expects to use the net proceeds to fully prepay its
outstanding senior notes worth $287 million, with 6.75% interest
rate and maturity date of February 15, 2013. Hospitality Properties
intends to use the remaining amount to buy back some of its
outstanding 7% Series C Cumulative Redeemable Preferred Shares and
for general corporate purposes. The settlement of the offering is
expected to take place on August 16, 2012.
Hospitality Properties recently reported second-quarter 2012
normalized FFO (Funds from Operations) of 75 cents, missing the
Zacks Consensus Estimate of 82 cents. As of June 30, 2012, the
company had cash and cash equivalents of $24.8 million and total
debt of $2.2 million.
Hospitality Properties presently owns 290 hotels and 185 travel
centers across the U.S., Ontario, Canada and Puerto Rico. The
company does not operate the properties on its own. Instead, it has
long-term lease agreements with unaffiliated hospitality management
companies which run the properties on its behalf.
We presently have a long-term Neutral recommendation and Zacks
#3 Rank (a short-term Hold rating) for Hospitality Properties.
Note: FFO, a widely accepted and reported measure of the
performance of REITs, is derived by adding depreciation,
amortization and other non-cash expenses to net income.
BANK OF AMER CP (BAC): Free Stock Analysis
Report
CITIGROUP INC (C): Free Stock Analysis Report
HOSPITALITY PRP (HPT): Free Stock Analysis
Report
JEFFERIES GP-NW (JEF): Free Stock Analysis
Report
MORGAN STANLEY (MS): Free Stock Analysis Report
ROYAL BANK CDA (RY): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
Report
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