Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended March 31, 2014.
HIGHLIGHTS
- RevPAR: 12.0% pro forma increase for the 17-hotel portfolio and 7.1% pro forma increase for the 20-hotel portfolio over the same period in 2013.
- Adjusted Hotel EBITDA Margin: 320 basis point pro forma increase for the 17-hotel portfolio and 220 basis point pro forma increase for the 20-hotel portfolio over the same period in 2013.
- Adjusted Hotel EBITDA: $21.9 million.
- Adjusted Corporate EBITDA: $18.0 million.
- Adjusted FFO: $12.2 million or $0.25 per diluted common share.
- Dividends: Increased first quarter 2014 dividend by 15.4% to $0.30 per common share (4.5% annualized yield based on the closing price of the Trust’s common shares on April 29, 2014).
“We are off to a great start in 2014 with strong performance by our hotel portfolio during the first quarter. Our 17-hotel portfolio outperformed our expectations with a 12.0% pro forma increase in RevPAR and 320 basis points of pro forma margin expansion as a result of our concentration in strong markets and asset management initiatives. We are also pleased with the improvements we are seeing at the hotels acquired in 2013, driven by enhanced revenue management and operational changes we have instituted which have significantly improved margins,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer.
Mr. Francis continued, “We are also pleased to report that substantially all of the guestrooms at our W Chicago – Lakeshore have now been renovated and the lobby, restaurant and bar are expected to be completed in the next several weeks, all within our expected time frame and budgeted costs. Initial feedback from guests has been extremely positive and we couldn’t be more excited about the future prospects of the W Chicago – Lakeshore and the spectacular new product.”
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three months ended March 31, 2014 and 2013 (in millions, except share and per share amounts):
Three months ended March 31, | ||||||||||||
2014(1) | 2013(2) | |||||||||||
| Total revenue | $ | 94.8 | $ | 70.6 | ||||||||
| Net loss available to common shareholders | $ | (0.2 | ) | $ | (4.9 | ) | ||||||
| Net loss per diluted common share | $ | (0.01 | ) | $ | (0.11 | ) | ||||||
| Adjusted Hotel EBITDA | $ | 21.9 | $ | 15.6 | ||||||||
| Adjusted Corporate EBITDA | $ | 18.0 | $ | 12.2 | ||||||||
| AFFO available to common shareholders | $ | 12.2 | $ | 6.8 | ||||||||
| AFFO per diluted common share | $ | 0.25 | $ | 0.15 | ||||||||
Weighted-average number of common shares outstanding - basic and diluted | 48,961,556 | 44,493,165 | ||||||||||
| ________________________________ | ||
| (1) | Includes results of operations of 20 hotels for the full period. | |
| (2) | Includes results of operations of 15 hotels for the full period and two hotels for part of the period. | |
HOTEL OPERATING RESULTS
Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared. The Trust uses the term “pro forma” to refer to metrics that include, or comparison of metrics that are based on, the hotel operating results of previous ownership for either a portion of or the entire period. Since five of the Trust’s hotels owned as of March 31, 2014 were acquired at various times during 2013, the key operating metrics for the 17-hotel portfolio and the 20-hotel portfolio reflect the pro forma operating results of those five hotels for the first quarter 2013. Included in the following table are comparisons of occupancy, average daily rate (ADR), room revenue per available room (RevPAR), Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin, the key operating metrics that management uses to assess the performance of its hotels for the three months ended March 31, 2014 and 2013 (in thousands, except ADR and RevPAR):
| Three months ended March 31, | ||||||||||||||
| 2014 | 2013(1) | Change | ||||||||||||
17-Hotel Portfolio(2) | ||||||||||||||
| Occupancy | 78.6% | 74.3% | 430 bps | |||||||||||
| ADR | $ | 179.26 | $ | 169.36 | 5.8% | |||||||||
| RevPAR | $ | 140.90 | $ | 125.79 | 12.0% | |||||||||
| Adjusted Hotel EBITDA | $ | 20,948 | $ | 16,294 | 28.6% | |||||||||
| Adjusted Hotel EBITDA Margin | 25.1% | 21.9% | 320 bps | |||||||||||
20-Hotel Portfolio | ||||||||||||||
| Occupancy | 74.4% | 72.7% | 170 bps | |||||||||||
| ADR | $ | 178.51 | $ | 170.51 | 4.7% | |||||||||
| RevPAR | $ | 132.80 | $ | 123.96 | 7.1% | |||||||||
| Adjusted Hotel EBITDA | $ | 21,940 | $ | 18,492 | 18.6% | |||||||||
| Adjusted Hotel EBITDA Margin | 23.1% | 20.9% | 220 bps | |||||||||||
| ___________________________ | ||
| (1) | Includes results of operations for certain hotels prior to their acquisition by the Trust. | |
| (2) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
Hotel EBITDA, Adjusted Hotel EBITDA, Adjusted Hotel EBITDA Margin, Corporate EBITDA, Adjusted Corporate EBITDA, FFO, FFO available to common shareholders and AFFO available to common shareholders are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. See the discussion included in this press release for information regarding these non-GAAP financial measures.
MAJOR REPOSITIONINGS
The comprehensive renovation at the 520-room W Chicago – Lakeshore, which commenced in the third quarter of 2013, is expected to be substantially completed in May 2014 and within the Trust’s budgeted cost of $38.0 million.
The Trust continues to expect that the comprehensive renovation at the 410-room W New Orleans to reposition the hotel to the Le Meridien brand will cost approximately $29.0 million, commence in May 2014, and be completed in the fourth quarter of 2014.
On February 5, 2014, the Trust announced that it had entered into a franchise agreement with a Hyatt affiliate to convert the 122-room Holiday Inn New York City Midtown – 31st Street to the Hyatt Herald Square. Conversion of the hotel is expected to occur following the completion of a comprehensive renovation, which the Trust continues to expect will cost approximately $6.0 million. The hotel will be closed throughout the renovation, which is expected to commence and be completed in the third quarter of 2014.
CAPITAL MARKETS
The Trust did not sell any common shares under the continuous at-the-market (ATM) program during the first quarter of 2014 and through the date of this release.
DIVIDENDS
On January 15, 2014, the Trust paid dividends in the amounts of $0.26 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of December 31, 2013. On February 20, 2014, the Trust declared dividends in the amounts of $0.30 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of March 31, 2014. Both dividends were paid on April 15, 2014.
2014 OUTLOOK
The Trust is increasing its 2014 outlook to incorporate its first quarter results and recent operating trends and fundamentals. The updated outlook assumes no additional acquisitions, dispositions, or financing transactions (in millions, except RevPAR and per share amounts):
Second Quarter 2014 | Outlook | |||||||||
| Low | High | |||||||||
| CONSOLIDATED: | ||||||||||
| Net income available to common shareholders | $ | 15.7 | $ | 17.2 | ||||||
| Net income per diluted common share | $ | 0.32 | $ | 0.35 | ||||||
| Adjusted Corporate EBITDA | $ | 40.9 | $ | 42.6 | ||||||
| AFFO available to common shareholders | $ | 29.0 | $ | 30.5 | ||||||
| AFFO per diluted common share | $ | 0.59 | $ | 0.62 | ||||||
| Corporate general and administrative expense | $ | 3.7 | $ | 3.8 | ||||||
| Weighted-average number of diluted common shares outstanding | 49.0 | 49.0 | ||||||||
| HOTEL PORTFOLIO: | ||||||||||
17-Hotel Portfolio(1) | ||||||||||
| RevPAR | $ | 184.00 | $ | 188.00 | ||||||
| Pro forma RevPAR increase over 2013(2) | 5.0% | 7.0% | ||||||||
| Adjusted Hotel EBITDA | $ | 38.8 | $ | 40.3 | ||||||
| Adjusted Hotel EBITDA Margin | 36.0% | 36.7% | ||||||||
| Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) | 100 bps | 175 bps | ||||||||
20-Hotel Portfolio | ||||||||||
| RevPAR | $ | 179.00 | $ | 183.00 | ||||||
| Pro forma RevPAR increase over 2013(2) | 2.0% | 4.0% | ||||||||
| Adjusted Hotel EBITDA | $ | 44.6 | $ | 46.4 | ||||||
| Adjusted Hotel EBITDA Margin | 35.2% | 35.9% | ||||||||
| Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) | 25 bps | 100 bps | ||||||||
| __________________________ | ||
| (1) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
| (2) | The comparable 2013 period includes results of operations for certain hotels prior to their acquisition by the Trust. | |
Full Year 2014 | Updated Outlook | Previous Outlook | ||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||
| CONSOLIDATED: | ||||||||||||||||||||
| Net income available to common shareholders | $ | 39.7 | $ | 44.5 | $ | 38.9 | $ | 43.7 | ||||||||||||
| Net income per diluted common share | $ | 0.81 | $ | 0.91 | $ | 0.79 | $ | 0.89 | ||||||||||||
| Adjusted Corporate EBITDA | $ | 132.7 | $ | 138.0 | $ | 131.2 | $ | 136.5 | ||||||||||||
| AFFO available to common shareholders | $ | 94.6 | $ | 99.4 | $ | 93.1 | $ | 97.9 | ||||||||||||
| AFFO per diluted common share | $ | 1.93 | $ | 2.03 | $ | 1.90 | $ | 2.00 | ||||||||||||
| Corporate general and administrative expense | $ | 14.5 | $ | 15.2 | $ | 14.0 | $ | 14.7 | ||||||||||||
| Weighted-average number of diluted common shares outstanding | 49.0 | 49.0 | 49.0 | 49.0 | ||||||||||||||||
| HOTEL PORTFOLIO: | ||||||||||||||||||||
17-Hotel Portfolio(1) | ||||||||||||||||||||
| RevPAR | $ | 168.00 | $ | 171.00 | $ | 167.00 | $ | 170.00 | ||||||||||||
| Pro forma RevPAR increase over 2013(2) | 5.5% | 7.5% | 5.0% | 7.0% | ||||||||||||||||
| Adjusted Hotel EBITDA | $ | 129.8 | $ | 134.8 | $ | 128.0 | $ | 133.0 | ||||||||||||
| Adjusted Hotel EBITDA Margin | 32.7% | 33.4% | 32.5% | 33.2% | ||||||||||||||||
| Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) | 100 bps | 175 bps | 75 bps | 150 bps | ||||||||||||||||
20-Hotel Portfolio | ||||||||||||||||||||
| RevPAR | $ | 163.00 | $ | 166.00 | $ | 162.00 | $ | 165.00 | ||||||||||||
| Pro forma RevPAR increase over 2013(2) | 4.0% | 6.0% | 3.5% | 5.5% | ||||||||||||||||
| Adjusted Hotel EBITDA | $ | 147.2 | $ | 153.2 | $ | 145.2 | $ | 151.2 | ||||||||||||
| Adjusted Hotel EBITDA Margin | 31.7% | 32.4% | 31.4% | 32.1% | ||||||||||||||||
| Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) | 50 bps | 125 bps | 25 bps | 100 bps | ||||||||||||||||
__________________________ | ||
| (1) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
| (2) | The comparable 2013 period includes results of operations for certain hotels prior to their acquisition by the Trust. | |
NON-GAAP FINANCIAL MEASURES
The Trust reports the following eight non-GAAP financial measures that it believes are useful to investors as key measures of its operating performance: (1) Hotel EBITDA, (2) Adjusted Hotel EBITDA, (3) Adjusted Hotel EBITDA Margin, (4) Corporate EBITDA, (5) Adjusted Corporate EBITDA, (6) FFO, (7) FFO available to common shareholders and (8) AFFO available to common shareholders. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are included in the accompanying financial tables.
Hotel EBITDA – Hotel EBITDA is defined as total revenues less total hotel operating expenses. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust’s hotel operating performance.
Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for non-cash amortization of intangible assets and liabilities, including ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Hotel EBITDA provides investors with another useful financial measure to evaluate the Trust’s hotel operating performance.
Adjusted Hotel EBITDA Margin – Adjusted Hotel EBITDA Margin is defined as Adjusted Hotel EBITDA as a percentage of total revenues. The Trust believes that Adjusted Hotel EBITDA Margin provides investors another useful financial measure to evaluate the Trust’s hotel operating performance.
Corporate EBITDA – Corporate EBITDA is defined as net income before interest, income taxes, and depreciation and amortization. The Trust believes that Corporate EBITDA provides investors a useful financial measure to evaluate the Trust’s operating performance, excluding the impact of the Trust’s capital structure (primarily interest expense) and the Trust’s asset base (primarily depreciation and amortization).
Adjusted Corporate EBITDA – The Trust further adjusts Corporate EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.
FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust’s operating performance.
FFO available to common shareholders – The Trust reduces FFO for preferred share dividends and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust’s operating performance after taking into account the interests of holders of the Trust’s preferred shares and unvested time-based awards.
AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT’s definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.
CONFERENCE CALL
The Trust will host a conference call on Wednesday, April 30, 2014 at 5:30 p.m. Eastern Time to discuss its financial results. Interested individuals are invited to listen to the call by dialing (877) 683-0303 (U.S./Canadian callers) or (706) 643-5037 (International callers). The conference call ID is 21752926. A simultaneous webcast of the call will be available on the Trust’s website at www.chesapeakelodgingtrust.com. It is recommended that participants call or log on 10 minutes ahead of the scheduled start time to ensure proper connection.
A replay of the conference call will be available two hours after the live call until midnight on May 7, 2014. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 21752926. A webcast replay and transcript of the conference call will be archived and available on the Trust’s website for 12 months.
ABOUT CHESAPEAKE LODGING TRUST
Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 20 hotels with an aggregate of 5,932 rooms in eight states and the District of Columbia. Additional information can be found on the Trust’s website at www.chesapeakelodgingtrust.com.
Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts, such as the Trust’s expectations regarding the future Hotel EBITDA and Adjusted Hotel EBITDA of its existing hotels and the Trust’s 2014 outlook, and the Trust’s expectation of its ability and the cost and timing of completing various renovations at its existing hotels. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the Trust’s ability to complete renovations timely and within expected costs; the Trust’s ability to continue to satisfy complex rules in order for it to remain a REIT for federal income tax purposes; and other risks and uncertainties associated with the Trust’s business described in its filings with the SEC. Although the Trust believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of April 30, 2014, and the Trust undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Trust’s expectations, except as required by law.
| CHESAPEAKE LODGING TRUST | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (in thousands, except share data) | ||||||||||||
| March 31, 2014 | December 31, 2013 | |||||||||||
| (unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Property and equipment, net | $ | 1,431,589 | $ | 1,422,439 | ||||||||
| Intangible assets, net | 38,631 | 38,781 | ||||||||||
| Cash and cash equivalents | 34,684 | 28,713 | ||||||||||
| Restricted cash | 33,841 | 34,235 | ||||||||||
| Accounts receivable, net | 18,061 | 13,011 | ||||||||||
| Prepaid expenses and other assets | 13,899 | 10,478 | ||||||||||
| Deferred financing costs, net | 5,782 | 6,501 | ||||||||||
| Total assets | $ | 1,576,487 | $ | 1,554,158 | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Long-term debt | $ | 564,239 | $ | 531,771 | ||||||||
| Accounts payable and accrued expenses | 48,307 | 45,982 | ||||||||||
| Other liabilities | 31,714 | 29,848 | ||||||||||
| Total liabilities | 644,260 | 607,601 | ||||||||||
| Commitments and contingencies | ||||||||||||
Preferred shares, $.01 par value; 100,000,000 shares authorized; Series A Cumulative Redeemable Preferred Shares; 5,000,000 shares issued and outstanding ($127,422 liquidation preference) | 50 | 50 | ||||||||||
Common shares, $.01 par value; 400,000,000 shares authorized; 50,033,997 shares and 49,574,005 shares issued and outstanding, respectively | 501 | 496 | ||||||||||
| Additional paid-in capital | 992,308 | 991,417 | ||||||||||
| Cumulative dividends in excess of net income | (60,593 | ) | (45,339 | ) | ||||||||
| Accumulated other comprehensive loss | (39 | ) | (67 | ) | ||||||||
| Total shareholders' equity | 932,227 | 946,557 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,576,487 | $ | 1,554,158 | ||||||||
| SUPPLEMENTAL CREDIT INFORMATION: | ||||||||||||
| Fixed charge coverage ratio(1) | 2.60 | 2.67 | ||||||||||
| Leverage ratio(1) | 34.9 | % | 33.5 | % | ||||||||
__________________________ |
| (1) Calculated as defined under the Trust's revolving credit facility. |
| CHESAPEAKE LODGING TRUST | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (in thousands, except share and per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2014 | 2013 | |||||||||||
| REVENUE | ||||||||||||
| Rooms | $ | 70,839 | $ | 51,544 | ||||||||
| Food and beverage | 20,268 | 15,912 | ||||||||||
| Other | 3,667 | 3,145 | ||||||||||
| Total revenue | 94,774 | 70,601 | ||||||||||
| EXPENSES | ||||||||||||
| Hotel operating expenses: | ||||||||||||
| Rooms | 18,619 | 14,019 | ||||||||||
| Food and beverage | 16,210 | 12,592 | ||||||||||
| Other direct | 1,781 | 1,771 | ||||||||||
| Indirect | 36,149 | 26,580 | ||||||||||
Total hotel operating expenses | 72,759 | 54,962 | ||||||||||
| Depreciation and amortization | 12,498 | 8,839 | ||||||||||
| Air rights contract amortization | 130 | 130 | ||||||||||
| Corporate general and administrative | 3,920 | 3,342 | ||||||||||
| Hotel acquisition costs | - | 2,899 | ||||||||||
| Total operating expenses | 89,307 | 70,172 | ||||||||||
| Operating income | 5,467 | 429 | ||||||||||
| Interest income | - | 218 | ||||||||||
| Interest expense | (6,686 | ) | (5,441 | ) | ||||||||
| Loss before income taxes | (1,219 | ) | (4,794 | ) | ||||||||
| Income tax benefit | 3,397 | 2,284 | ||||||||||
| Net income (loss) | 2,178 | (2,510 | ) | |||||||||
| Preferred share dividends | (2,422 | ) | (2,422 | ) | ||||||||
| Net loss available to common shareholders | $ | (244 | ) | $ | (4,932 | ) | ||||||
| Net loss per common share - basic and diluted | $ | (0.01 | ) | $ | (0.11 | ) | ||||||
| Weighted-average number of common shares outstanding - basic and diluted | 48,961,556 | 44,493,165 | ||||||||||
| CHESAPEAKE LODGING TRUST | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2014 | 2013 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | 2,178 | $ | (2,510 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 12,498 | 8,839 | ||||||||||
| Air rights contract amortization | 130 | 130 | ||||||||||
| Deferred financing costs amortization | 719 | 619 | ||||||||||
| Share-based compensation | 1,326 | 1,133 | ||||||||||
| Other | (141 | ) | (131 | ) | ||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable, net | (5,050 | ) | (4,710 | ) | ||||||||
| Prepaid expenses and other assets | (3,421 | ) | (2,697 | ) | ||||||||
| Accounts payable and accrued expenses | 2,135 | 3,021 | ||||||||||
| Other liabilities | (7 | ) | (6 | ) | ||||||||
| Net cash provided by operating activities | 10,367 | 3,688 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Acquisition of hotels, net of cash acquired | - | (101,941 | ) | |||||||||
| Receipt of deposit on hotel acquisition | - | 700 | ||||||||||
| Improvements and additions to hotels | (21,648 | ) | (4,572 | ) | ||||||||
| Repayment of hotel construction loan | - | 7,810 | ||||||||||
| Change in restricted cash | 394 | (1,057 | ) | |||||||||
| Net cash used in investing activities | (21,254 | ) | (99,060 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from sale of common shares, net of underwriting fees | - | 166,083 | ||||||||||
| Payment of offering costs related to sale of common shares | - | (169 | ) | |||||||||
| Borrowings under revolving credit facility | 35,000 | 5,000 | ||||||||||
| Repayments under revolving credit facility | - | (55,000 | ) | |||||||||
| Proceeds from issuance of mortgage debt | - | 67,000 | ||||||||||
| Scheduled principal payments on mortgage debt | (2,479 | ) | (800 | ) | ||||||||
| Payment of deferred financing costs | - | (1,048 | ) | |||||||||
| Deposit on loan application | - | (390 | ) | |||||||||
| Payment of dividends to common shareholders | (12,811 | ) | (8,748 | ) | ||||||||
| Payment of dividends to preferred shareholders | (2,422 | ) | (2,422 | ) | ||||||||
| Repurchase of common shares | (430 | ) | (1,088 | ) | ||||||||
| Net cash provided by financing activities | 16,858 | 168,418 | ||||||||||
| Net increase in cash | 5,971 | 73,046 | ||||||||||
| Cash and cash equivalents, beginning of period | 28,713 | 33,194 | ||||||||||
| Cash and cash equivalents, end of period | $ | 34,684 | $ | 106,240 | ||||||||
| CHESAPEAKE LODGING TRUST |
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
| (in thousands, except per share data) |
| (unaudited) |
The following table calculates Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the 17-hotel portfolio and the 20-hotel portfolio for the three months ended March 31, 2014 and 2013: |
| Three Months Ended March 31, | ||||||||||||||||||||||||
17-Hotel Portfolio(1) | 20-Hotel Portfolio | |||||||||||||||||||||||
| 2014 | 2013(2) | 2014 | 2013(2) | |||||||||||||||||||||
| Total revenue | $ | 83,409 | $ | 74,295 | $ | 94,774 | $ | 88,510 | ||||||||||||||||
| Less: Total hotel operating expenses | 62,386 | 57,933 | 72,759 | 69,950 | ||||||||||||||||||||
| Hotel EBITDA | 21,023 | 16,362 | 22,015 | 18,560 | ||||||||||||||||||||
| Less: Non-cash amortization(3) | (75 | ) | (68 | ) | (75 | ) | (68 | ) | ||||||||||||||||
| Adjusted Hotel EBITDA | $ | 20,948 | $ | 16,294 | $ | 21,940 | $ | 18,492 | ||||||||||||||||
| Adjusted Hotel EBITDA Margin | 25.1 | % | 21.9 | % | 23.1 | % | 20.9 | % | ||||||||||||||||
__________________________ | ||
| (1) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
| (2) | Includes results of operations for certain hotels prior to their acquisition by the Trust. | |
| (3) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. | |
The following table calculates Hotel EBITDA and Adjusted Hotel EBITDA contributed by the Trust's hotel portfolio for the three months ended March 31, 2014 and 2013: | ||
| Three Months Ended March 31, | ||||||||||||
| 2014 | 2013 | |||||||||||
| Total revenue | $ | 94,774 | $ | 70,601 | ||||||||
| Less: Total hotel operating expenses | 72,759 | 54,962 | ||||||||||
| Hotel EBITDA | 22,015 | 15,639 | ||||||||||
| Less: Non-cash amortization(1) | (75 | ) | (68 | ) | ||||||||
| Adjusted Hotel EBITDA | $ | 21,940 | $ | 15,571 | ||||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. | |
| The following table reconciles net income (loss) to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ended March 31, 2014 and 2013: | ||
| Three Months Ended March 31, | |||||||||||||
| 2014 | 2013 | ||||||||||||
| Net income (loss) | $ | 2,178 | $ | (2,510 | ) | ||||||||
| Add: | Depreciation and amortization | 12,498 | 8,839 | ||||||||||
| Interest expense | 6,686 | 5,441 | |||||||||||
| Less: | Interest income | - | (218 | ) | |||||||||
| Income tax benefit | (3,397 | ) | (2,284 | ) | |||||||||
| Corporate EBITDA | 17,965 | 9,268 | |||||||||||
| Add: | Hotel acquisition costs | - | 2,899 | ||||||||||
| Non-cash amortization(1) | 55 | 62 | |||||||||||
| Adjusted Corporate EBITDA | $ | 18,020 | $ | 12,229 | |||||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
The following table reconciles net income (loss) to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ended March 31, 2014 and 2013: |
| Three Months Ended March 31, | |||||||||||||
| 2014 | 2013 | ||||||||||||
| Net income (loss) | $ | 2,178 | $ | (2,510 | ) | ||||||||
| Add: | Depreciation and amortization | 12,498 | 8,839 | ||||||||||
| FFO | 14,676 | 6,329 | |||||||||||
| Less: | Preferred share dividends | (2,422 | ) | (2,422 | ) | ||||||||
| Dividends declared on unvested time-based awards | (129 | ) | (88 | ) | |||||||||
| Undistributed earnings allocated to unvested time-based awards | - | - | |||||||||||
| FFO available to common shareholders | 12,125 | 3,819 | |||||||||||
| Add: | Hotel acquisition costs | - | 2,899 | ||||||||||
| Non-cash amortization(1) | 55 | 62 | |||||||||||
| AFFO available to common shareholders | $ | 12,180 | $ | 6,780 | |||||||||
| FFO per common share - basic and diluted | $ | 0.25 | $ | 0.09 | |||||||||
| AFFO per common share - basic and diluted | $ | 0.25 | $ | 0.15 | |||||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
The following table calculates forecasted Hotel EBITDA and Adjusted Hotel EBITDA for the 17-hotel portfolio and the 20-hotel portfolio for the three months ending June 30, 2014: | ||
| Three Months Ending June 30, 2014 | ||||||||||||||||||||||||
| 17-Hotel Portfolio(1) | 20-Hotel Portfolio | |||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||
| Total revenue | $ | 107,900 | $ | 109,800 | $ | 126,800 | $ | 129,100 | ||||||||||||||||
| Less: Total hotel operating expenses | 69,020 | 69,420 | 82,120 | 82,620 | ||||||||||||||||||||
| Hotel EBITDA | 38,880 | 40,380 | 44,680 | 46,480 | ||||||||||||||||||||
| Less: Non-cash amortization(2) | (80 | ) | (80 | ) | (80 | ) | (80 | ) | ||||||||||||||||
| Adjusted Hotel EBITDA | $ | 38,800 | $ | 40,300 | $ | 44,600 | $ | 46,400 | ||||||||||||||||
__________________________ | ||
| (1) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
| (2) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. | |
| The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending June 30, 2014: | ||
| Three Months Ending June 30, 2014 | |||||||||||
| Low | High | ||||||||||
| Net income | $ | 18,260 | $ | 19,760 | |||||||
| Add: | Depreciation and amortization | 13,250 | 13,250 | ||||||||
| Interest expense | 6,840 | 6,840 | |||||||||
| Income tax expense | 2,500 | 2,700 | |||||||||
| Less: | Interest income | - | - | ||||||||
| Corporate EBITDA | 40,850 | 42,550 | |||||||||
| Add: | Hotel acquisition costs | - | - | ||||||||
| Non-cash amortization(1) | 50 | 50 | |||||||||
| Adjusted Corporate EBITDA | $ | 40,900 | $ | 42,600 | |||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
The following table reconciles forecasted net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ending June 30, 2014: |
| Three Months Ending June 30, 2014 | |||||||||||||
| Low | High | ||||||||||||
| Net income | $ | 18,260 | $ | 19,760 | |||||||||
| Add: | Depreciation and amortization | 13,250 | 13,250 | ||||||||||
| FFO | 31,510 | 33,010 | |||||||||||
| Less: | Preferred share dividends | (2,420 | ) | (2,420 | ) | ||||||||
| Dividends declared on unvested time-based awards | (130 | ) | (130 | ) | |||||||||
| Undistributed earnings allocated to unvested time-based awards | - | - | |||||||||||
| FFO available to common shareholders | 28,960 | 30,460 | |||||||||||
| Add: | Hotel acquisition costs | - | - | ||||||||||
| Non-cash amortization(1) | 50 | 50 | |||||||||||
| AFFO available to common shareholders | $ | 29,010 | $ | 30,510 | |||||||||
| FFO per common share - basic and diluted | $ | 0.59 | $ | 0.62 | |||||||||
| AFFO per common share - basic and diluted | $ | 0.59 | $ | 0.62 | |||||||||
| Weighted-average number of diluted common shares outstanding | 48,962 | 48,962 | |||||||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
The following table calculates forecasted Hotel EBITDA and Adjusted Hotel EBITDA for the 17-hotel portfolio and the 20-hotel portfolio for the year ending December 31, 2014: | ||
| Year Ending December 31, 2014 | ||||||||||||||||||||||||
| 17-Hotel Portfolio(1) | 20-Hotel Portfolio | |||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||
| Total revenue | $ | 396,900 | $ | 403,000 | $ | 465,000 | $ | 472,800 | ||||||||||||||||
| Less: Total hotel operating expenses | 266,800 | 267,900 | 317,500 | 319,300 | ||||||||||||||||||||
| Hotel EBITDA | 130,100 | 135,100 | 147,500 | 153,500 | ||||||||||||||||||||
| Less: Non-cash amortization(2) | (300 | ) | (300 | ) | (300 | ) | (300 | ) | ||||||||||||||||
| Adjusted Hotel EBITDA | $ | 129,800 | $ | 134,800 | $ | 147,200 | $ | 153,200 | ||||||||||||||||
__________________________ | ||
| (1) | Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels are undergoing comprehensive renovations during 2014. | |
| (2) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. | |
| The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the year ending December 31, 2014: | ||
| Year Ending December 31, 2014 | |||||||||||
| Low | High | ||||||||||
| Net income | $ | 49,920 | $ | 54,720 | |||||||
| Add: | Depreciation and amortization | 54,640 | 54,640 | ||||||||
| Interest expense | 27,020 | 27,020 | |||||||||
| Income tax expense | 900 | 1,400 | |||||||||
| Less: | Interest income | - | - | ||||||||
| Corporate EBITDA | 132,480 | 137,780 | |||||||||
| Add: | Hotel acquisition costs | - | - | ||||||||
| Non-cash amortization(1) | 220 | 220 | |||||||||
| Adjusted Corporate EBITDA | $ | 132,700 | $ | 138,000 | |||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
The following table reconciles forecasted net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the year ending December 31, 2014: |
| Year Ending December 31, 2014 | |||||||||||||
| Low | High | ||||||||||||
| Net income | $ | 49,920 | $ | 54,720 | |||||||||
| Add: | Depreciation and amortization | 54,640 | 54,640 | ||||||||||
| FFO | 104,560 | 109,360 | |||||||||||
| Less: | Preferred share dividends | (9,690 | ) | (9,690 | ) | ||||||||
| Dividends declared on unvested time-based awards | (500 | ) | (500 | ) | |||||||||
| Undistributed earnings allocated to unvested time-based awards | - | - | |||||||||||
| FFO available to common shareholders | 94,370 | 99,170 | |||||||||||
| Add: | Hotel acquisition costs | - | - | ||||||||||
| Non-cash amortization(1) | 220 | 220 | |||||||||||
| AFFO available to common shareholders | $ | 94,590 | $ | 99,390 | |||||||||
| FFO per common share - basic and diluted | $ | 1.93 | $ | 2.02 | |||||||||
| AFFO per common share - basic and diluted | $ | 1.93 | $ | 2.03 | |||||||||
| Weighted-average number of diluted common shares outstanding | 48,985 | 48,985 | |||||||||||
__________________________ | ||
| (1) | Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract. | |
| CHESAPEAKE LODGING TRUST | ||||||||||||||
| CURRENT HOTEL PORTFOLIO | ||||||||||||||
| Hotel | Location | Rooms | Acquisition Date | |||||||||||
| 1 | Hyatt Regency Boston | Boston, MA | 502 | March 18, 2010 | ||||||||||
| 2 | Hilton Checkers Los Angeles | Los Angeles, CA | 193 | June 1, 2010 | ||||||||||
| 3 | Courtyard Anaheim at Disneyland Resort | Anaheim, CA | 153 | July 30, 2010 | ||||||||||
| 4 | Boston Marriott Newton | Newton, MA | 430 | July 30, 2010 | ||||||||||
| 5 | Le Meridien San Francisco | San Francisco, CA | 360 | December 15, 2010 | ||||||||||
| 6 | Homewood Suites Seattle Convention Center | Seattle, WA | 195 | May 2, 2011 | ||||||||||
| 7 | W Chicago - City Center | Chicago, IL | 403 | May 10, 2011 | ||||||||||
| 8 | Hotel Indigo San Diego Gaslamp Quarter | San Diego, CA | 210 | June 17, 2011 | ||||||||||
| 9 | Courtyard Washington Capitol Hill/Navy Yard | Washington, DC | 204 | June 30, 2011 | ||||||||||
| 10 | Hotel Adagio San Francisco, Autograph Collection | San Francisco, CA | 171 | July 8, 2011 | ||||||||||
| 11 | Denver Marriott City Center | Denver, CO | 613 | October 3, 2011 | ||||||||||
| 12 | Holiday Inn New York City Midtown - 31st Street | New York, NY | 122 | December 22, 2011 | ||||||||||
| 13 | W Chicago - Lakeshore | Chicago, IL | 520 | August 21, 2012 | ||||||||||
| 14 | Hyatt Regency Mission Bay Spa and Marina | San Diego, CA | 429 | September 7, 2012 | ||||||||||
| 15 | The Hotel Minneapolis, Autograph Collection | Minneapolis, MN | 222 | October 30, 2012 | ||||||||||
| 16 | Hyatt Place New York Midtown South | New York, NY | 185 | March 14, 2013 | ||||||||||
| 17 | W New Orleans - French Quarter | New Orleans, LA | 97 | March 28, 2013 | ||||||||||
| 18 | W New Orleans | New Orleans, LA | 410 | April 25, 2013 | ||||||||||
| 19 | Hyatt Fisherman's Wharf | San Francisco, CA | 313 | May 31, 2013 | ||||||||||
| 20 | Hyatt Santa Barbara | Santa Barbara, CA | 200 | June 27, 2013 | ||||||||||
| 5,932 | ||||||||||||||
Contacts:
Douglas W. Vicari, 410-972-4142
