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Chesapeake Lodging Trust Reports Second Quarter Results

2015-07-30 16:16 ET - News Release


Company Website: http://www.chesapeakelodgingtrust.com
ANNAPOLIS, Md. -- (Business Wire)

Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended June 30, 2015.

HIGHLIGHTS

  • RevPAR: 7.0% pro forma increase for the 22-hotel portfolio over the same period in 2014.
  • Adjusted Hotel EBITDA Margin: 140 basis point pro forma increase to 36.4% for the 22-hotel portfolio over the same period in 2014.
  • Adjusted Hotel EBITDA: $59.4 million.
  • Adjusted Corporate EBITDA: $54.9 million.
  • Adjusted FFO: $39.8 million or $0.68 per diluted common share.
  • Acquisition: Acquired the 182-room Ace Hotel and Theater Downtown Los Angeles for a purchase price of $103.0 million.
  • Dividend: Increased third quarter 2015 dividend by 14% to $0.40 per common share (5.1% annualized yield based on the closing price of the Trust’s common shares on July 29, 2015).

“We are pleased with our second quarter results, which exceeded the high end of our outlook range and were driven by both strong revenue growth and margin improvement for our hotel portfolio,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer.

Mr. Francis continued, “Our hotel portfolio today is in excellent shape and poised to outperform the industry the remainder of the year and into 2016 with the guestroom renovation projects undertaken this year now complete and coupled with the comprehensive repositionings completed in 2014. We also continue to be pleased with the initial results at our two recent acquisitions, the Royal Palm and the Ace Hotel and Theater, which further give us confidence to increase our quarterly common share dividend by 14%.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three and six months ended June 30, 2015 and 2014 (in millions, except share and per share amounts):

                       
Three months ended June 30, Six months ended June 30,
2015 2014 2015 2014
Total revenue $ 162.1 $ 128.9 $ 271.4 $ 223.6
 
Net income available to common shareholders $ 21.6 $ 18.8 $ 20.8 $ 18.6
Net income per diluted common share $ 0.36 $ 0.38 $ 0.36 $ 0.37
 
Adjusted Hotel EBITDA $ 59.4 $ 47.1 $ 84.7 $ 69.0
 
Adjusted Corporate EBITDA $ 54.9 $ 43.2 $ 75.6 $ 61.2
 
AFFO available to common shareholders $ 39.8 $ 31.2 $ 54.2 $ 43.5
AFFO per diluted common share $ 0.68 $ 0.64 $ 0.95 $ 0.89
 
Weighted-average number of diluted common shares outstanding 58,956,483 48,977,876 56,783,872 48,969,761
 

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared using the following key operating metrics: occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin. The Trust uses the term "pro forma" to refer to metrics that include, or comparisons of metrics that are based on, the operating results of hotels under previous ownership for either a portion of or the entire period. As of June 30, 2015, the Trust owned 22 hotels. Since two of its hotels owned as of June 30, 2015 were acquired during 2015 and another one was acquired in October 2014, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three and six months ended June 30, 2015 and 2014.

Included in the following table are comparisons of the key operating metrics for the 22-hotel portfolio for the three and six months ended June 30, 2015 and 2014 (in thousands, except for ADR and RevPAR):

           
Three months ended June 30, Six months ended June 30,

2015(1)

     

2014(1)

      Change

2015(1)

     

2014(1)

      Change
Pro forma Occupancy 86.0 % 84.5 % 150 bps 79.1 % 79.5 % (40) bps
Pro forma ADR $ 237.11 $ 225.64 5.1% $ 227.03 $ 213.48 6.3%
Pro forma RevPAR $ 203.99 $ 190.65 7.0% $ 179.52 $ 169.74 5.8%
 
Pro forma Adjusted Hotel EBITDA $ 59,875 $ 54,391 10.1% $ 91,543 $ 84,456 8.4%
Pro forma Adjusted Hotel EBITDA Margin 36.4 % 35.0 % 140 bps 31.4 % 30.5 % 90 bps
 

__________

(1) Includes results of operations for certain hotels prior to their acquisition by the Trust.

 

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.

ACQUISITION ACTIVITY

On April 30, 2015, the Trust acquired the 182-room Ace Hotel and Theater Downtown Los Angeles located in Los Angeles, California for $101.7 million, including acquired working capital. The Trust entered into a management agreement with Ace Hotel Group to continue managing the hotel.

CAPITAL MARKETS ACTIVITY

The Trust has not sold any common shares under its continuous at-the-market (ATM) program during 2015.

DIVIDENDS

On April 15, 2015, the Trust paid dividends in the amounts of $0.35 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of March 31, 2015. On May 20, 2015, the Trust declared dividends in the amounts of $0.35 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of June 30, 2015. Both dividends were paid on July 15, 2015.

On July 30, 2015, the Trust declared dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2015. The dividends will be paid on October 15, 2015.

2015 OUTLOOK

The Trust is updating its 2015 outlook to incorporate its second 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):

           

Third Quarter 2015

Outlook
Low High
CONSOLIDATED:
 
Net income available to common shareholders $ 25.3 $ 27.4
Net income per diluted common share $ 0.43 $ 0.46
 
Adjusted Corporate EBITDA $ 54.7 $ 57.0
 
AFFO available to common shareholders $ 43.2 $ 45.2
AFFO per diluted common share $ 0.73 $ 0.77
 
Corporate cash general and administrative expense $ 2.2 $ 2.4
Corporate non-cash general and administrative expense $ 2.0 $ 2.0
 
Weighted-average number of diluted common shares outstanding 59.0 59.0
 
22-HOTEL PORTFOLIO:
 
RevPAR $ 207.00 $ 211.00
Pro forma RevPAR increase over 2014(1) 6.5 % 8.5 %
Adjusted Hotel EBITDA $ 58.9 $ 61.4
Adjusted Hotel EBITDA Margin 35.8 % 36.6 %
Pro forma Adjusted Hotel EBITDA Margin increase over 2014(1) 175 bps 250 bps
 

_____________

(1) The comparable 2014 period includes results of operations for certain hotels prior to their acquisition by the Trust.

 
                       

Full Year 2015

Updated Outlook Previous Outlook
Low High Low High
CONSOLIDATED:
 
Net income available to common shareholders $ 61.7 $ 66.9 $ 63.2 $ 68.9
Net income per diluted common share $ 1.07 $ 1.15 $ 1.09 $ 1.19
 
Adjusted Corporate EBITDA $ 175.9 $ 181.6 $ 174.9 $ 181.2
 
AFFO available to common shareholders $ 131.2 $ 136.4 $ 130.3 $ 136.0
AFFO per diluted common share $ 2.27 $ 2.35 $ 2.25 $ 2.35
 
Corporate cash general and administrative expense $ 9.8 $ 10.3 $ 9.8 $ 10.3
Corporate non-cash general and administrative expense $ 7.6 $ 7.6 $ 7.6 $ 7.6
 
Weighted-average number of diluted common shares outstanding 57.9 57.9 58.0 58.0
 
22-HOTEL PORTFOLIO:
 
Pro forma RevPAR $ 187.00 $ 191.00 $ 187.00 $ 191.00
Pro forma RevPAR increase over 2014(1) 6.5 % 8.5 % 6.5 % 8.5 %
Pro forma Adjusted Hotel EBITDA $ 200.2 $ 206.4 $ 199.3 $ 206.0
Pro forma Adjusted Hotel EBITDA Margin 32.8 % 33.3 % 32.7 % 33.2 %
Pro forma Adjusted Hotel EBITDA Margin increase over 2014(1) 140 bps 190 bps 125 bps 175 bps
 

___________

(1) The comparable 2014 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 net income before interest, income taxes, depreciation and amortization, air rights amortization, corporate general and administrative, and hotel acquisition costs. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust’s hotel operating performance, excluding the impact of the Trust’s capital structure (primarily interest), the Trust’s asset base (primarily depreciation and amortization), and the Trust’s corporate-level expenses (corporate general and administrative and hotel acquisition costs).

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, excluding the effect of these non-cash items.

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, and gains (losses) from sales of real estate, which is a non-recurring item. 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 of depreciable real estate, 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 Thursday, July 30, 2015 at 5:00 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 78949780. 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 August 6, 2015. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 78949780. A webcast replay and transcript of the conference call will be archived and available on the Trust’s website for 12 months.

INSTITUTIONAL INVESTOR AND SECURITY ANALYST CONFERENCE

The Trust will host property tours of its San Francisco hotels on Monday, September 28, 2015 and hold its Institutional Investor and Security Analyst Conference on Tuesday, September 29, 2015 in San Francisco, California. The investor conference will be held on Tuesday, September 29, 2015 from 12:30 p.m. – 2:00 p.m. Pacific Time.

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 22 hotels with an aggregate of 6,694 rooms in nine 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 third quarter and full year 2015 outlook. 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: U.S. economic conditions generally and the real estate market and the lodging industry specifically; management and performance of the Trust's hotels; supply and demand for hotel rooms in the Trust's markets; the Trust's competition; 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 July 30, 2015, 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)

 
 
      June 30, 2015       December 31, 2014
(unaudited)
ASSETS
Property and equipment, net $ 1,951,880 $ 1,580,427
Intangible assets, net 36,703 36,992
Cash and cash equivalents 47,914 29,326
Restricted cash 38,546 43,387
Accounts receivable, net 28,233 13,102
Prepaid expenses and other assets 19,913 10,637
Deferred financing costs, net   7,427     6,064  
Total assets $ 2,130,616   $ 1,719,935  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt $ 806,514 $ 551,723
Accounts payable and accrued expenses 64,440 53,442
Other liabilities   43,562     32,788  
Total liabilities   914,516     637,953  
 
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;

59,664,367 shares and 54,818,064 shares issued and outstanding, respectively

597 548
Additional paid-in capital 1,294,103 1,138,391
Cumulative dividends in excess of net income (78,015 ) (57,007 )
Accumulated other comprehensive loss   (635 )    
Total shareholders’ equity   1,216,100     1,081,982  
Total liabilities and shareholders’ equity $ 2,130,616   $ 1,719,935  
 
 
SUPPLEMENTAL CREDIT INFORMATION:
Fixed charge coverage ratio(1) 2.82 2.65
Leverage ratio(1) 34.6 % 31.1 %
 

______________

(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 June 30,       Six Months Ended June 30,
2015       2014 2015       2014
REVENUE
Rooms $ 122,966 $ 98,118 $ 204,560 $ 168,957
Food and beverage 33,014 26,063 56,412 46,331
Other   6,165     4,684     10,463     8,351  
Total revenue   162,145     128,865     271,435     223,639  
 
EXPENSES
Hotel operating expenses:
Rooms 26,144 21,326 47,244 39,945
Food and beverage 23,495 18,730 41,961 34,940
Other direct 1,906 1,998 3,239 3,779
Indirect   51,024     39,633     94,029     75,782  
Total hotel operating expenses 102,569 81,687 186,473 154,446
Depreciation and amortization 17,929 12,524 32,856 25,022
Air rights contract amortization 130 130 260 260
Corporate general and administrative 4,498 3,891 9,075 7,811
Hotel acquisition costs   466         835      
Total operating expenses   125,592     98,232     229,499     187,539  
 
Operating income 36,553 30,633 41,936 36,100
 
Interest expense   (8,168 )   (6,828 )   (15,347 )   (13,514 )
 
Income before income taxes 28,385 23,805 26,589 22,586
 
Income tax benefit (expense)   (4,340 )   (2,556 )   (992 )   841  
 
Net income 24,045 21,249 25,597 23,427
 
Preferred share dividends   (2,422 )   (2,422 )   (4,844 )   (4,844 )
Net income available to common shareholders $ 21,623   $ 18,827   $ 20,753   $ 18,583  
 
Net income per common share:
Basic $ 0.37 $ 0.38 $ 0.36 $ 0.37
Diluted $ 0.36 $ 0.38 $ 0.36 $ 0.37
 
Weighted-average number of common shares outstanding:
Basic 58,544,392 48,977,876 56,373,504 48,969,761
Diluted 58,956,483 48,977,876 56,783,872 48,969,761
 
 

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 
 
      Six Months Ended June 30,
2015       2014
Cash flows from operating activities:
Net income $ 25,597 $ 23,427

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 32,856 25,022
Air rights contract amortization 260 260
Deferred financing costs amortization 939 1,446
Share-based compensation 3,743 2,819
Other (392 ) (282 )
Changes in assets and liabilities:
Accounts receivable, net (13,309 ) (8,112 )
Prepaid expenses and other assets (6,584 ) (2,769 )
Accounts payable and accrued expenses 6,403 5,078
Other liabilities   5,981     (14 )
Net cash provided by operating activities   55,494     46,875  
 
Cash flows from investing activities:
Acquisition of hotels, net of cash acquired (255,249 )
Improvements and additions to hotels (24,361 ) (43,431 )
Change in restricted cash   4,841     (2,078 )
Net cash used in investing activities   (274,769 )   (45,509 )
 
Cash flows from financing activities:
Proceeds from sale of common shares, net of underwriting fees 153,962
Payment of offering costs related to sale of common shares (254 )
Borrowings under revolving credit facility 310,000 50,000
Repayments under revolving credit facility (175,000 )
Scheduled principal payments on mortgage debt (5,103 ) (4,889 )
Payment of deferred financing costs (2,302 ) (123 )
Deposits on loan applications (2,115 )
Payment of dividends to common shareholders (36,906 ) (27,631 )
Payment of dividends to preferred shareholders (4,844 ) (4,844 )
Repurchase of common shares   (1,690 )   (430 )
Net cash provided by financing activities   237,863     9,968  
Net increase in cash 18,588 11,334
Cash and cash equivalents, beginning of period   29,326     28,713  
Cash and cash equivalents, end of period $ 47,914   $ 40,047  
 
 

CHESAPEAKE LODGING TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)

 

The following table reconciles net income to Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three and six months ended June 30, 2015 and 2014:

                       
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Net income $ 24,045 $ 21,249 $ 25,597 $ 23,427

Add:

Interest expense

8,168 6,828 15,347 13,514
Income tax expense (benefit) 4,340 2,556 992 (841 )
Depreciation and amortization 17,929 12,524 32,856 25,022
Air rights contract amortization 130 130 260 260
Corporate general and administrative 4,498 3,891 9,075 7,811
Hotel acquisition costs   466         835      
Hotel EBITDA 59,576 47,178 84,962 69,193
 

Less:

Non-cash amortization(1)

  (180 )   (74 )   (261 )   (149 )
Adjusted Hotel EBITDA 59,396 47,104 84,701 69,044
 

Add:

Prior owner Hotel EBITDA(2)

479 7,928 6,842 16,755

Less:

Hotel EBITDA of hotel sold(3)

      (641 )       (1,343 )
Pro forma Adjusted Hotel EBITDA $ 59,875   $ 54,391   $ 91,543   $ 84,456  
 
Total revenue $ 162,145 $ 128,865 $ 271,435 $ 223,639

Add:

Prior owner total revenue(2)

2,242 28,198 20,286 56,531

Less:

Total revenue of hotel sold(3)

      (1,614 )       (3,363 )
Pro forma total revenue $ 164,387   $ 155,449   $ 291,721   $ 276,807  
 
Pro forma Adjusted Hotel EBITDA Margin 36.4 % 35.0 % 31.4 % 30.5 %
 
_____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
(2) Reflects results of operations for certain hotels prior to our acquisition.
(3) Reflects results of operations for the Courtyard Anaheim at Disneyland Resort which was sold on September 30, 2014.
 

The following table reconciles net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three and six months ended June 30, 2015 and 2014:

                       
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Net income $ 24,045 $ 21,249 $ 25,597 $ 23,427

Add:

Interest expense

8,168 6,828 15,347 13,514
Income tax expense (benefit) 4,340 2,556 992 (841 )
Depreciation and amortization   17,929     12,524   32,856     25,022  
Corporate EBITDA 54,482 43,157 74,792 61,122
 

Add:

Hotel acquisition costs

466 835

Less:

Non-cash amortization(1)

  (50 )   56   (1 )   111  
Adjusted Corporate EBITDA $ 54,898   $ 43,213 $ 75,626   $ 61,233  
 
____________
(1)   Reflects 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 to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three and six months ended June 30, 2015 and 2014:

                       
Three Months Ended June 30,

Six Months Ended June 30,

2015 2014 2015 2014
Net income $ 24,045 $ 21,249 $ 25,597 $ 23,427

Add:

Depreciation and amortization

  17,929     12,524     32,856     25,022  
FFO 41,974 33,773 58,453 48,449
 

Less:

Preferred share dividends

(2,422 ) (2,422 ) (4,844 ) (4,844 )
Dividends declared on unvested time-based awards (136 ) (128 ) (273 ) (257 )
Undistributed earnings allocated to unvested time-based awards   (7 )   (35 )        
FFO available to common shareholders 39,409 31,188 53,336 43,348
 

Add:

Hotel acquisition costs

466 835

Less:

Non-cash amortization(1)

  (50 )   56     (1 )   111  
AFFO available to common shareholders $ 39,825   $ 31,244   $ 54,170   $ 43,459  
 
FFO per common share:
Basic $ 0.67 $ 0.64 $ 0.95 $ 0.89
Diluted $ 0.67 $ 0.64 $ 0.94 $ 0.89
 
AFFO per common share:
Basic $ 0.68 $ 0.64 $ 0.96 $ 0.89
Diluted $ 0.68 $ 0.64 $ 0.95 $ 0.89
 
___________
(1)   Reflects 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 Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three months ending September 30, 2015 and year ending December 31, 2015:

                       

Three Months Ending

September 30, 2015

Year Ending

December 31, 2015

Low High Low High
Net income $ 27,930 $ 29,980 $ 71,970 $ 77,120

Add:

Interest expense

8,320 8,320 31,950 31,950
Income tax expense 650 850 2,500 3,000
Depreciation and amortization 17,840 17,840 68,710 68,710
Air rights contract amortization 130 130 520 520
Corporate general and administrative 4,180 4,380 17,390 17,890
Hotel acquisition costs           830     830  
Hotel EBITDA 59,050 61,500 193,870 200,020
 

Less:

Non-cash amortization(1)

  (150 )   (150 )   (570 )   (570 )
Adjusted Hotel EBITDA 58,900 61,350 193,300 199,450
 

Add:

Prior owner Hotel EBITDA(2)

          6,900     6,900  
Pro forma Adjusted Hotel EBITDA $ 58,900   $ 61,350   $ 200,200   $ 206,350  
 
Total revenue $ 164,400 $ 167,700 $ 589,500 $ 598,900

Add:

Prior owner total revenue(2)

          20,300     20,300  
Pro forma total revenue $ 164,400   $ 167,700   $ 609,800   $ 619,200  
 
Pro forma Adjusted Hotel EBITDA Margin 35.8 % 36.6 % 32.8 % 33.3 %
 
_____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
(2) Reflects results of operations for certain hotels prior to our acquisition.
 

The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending September 30, 2015 and year ending December 31, 2015:

                       

Three Months Ending

September 30, 2015

Year Ending

December 31, 2015

Low High Low High
Net income $ 27,930 $ 29,980 $ 71,970 $ 77,120

Add:

Interest expense

8,320 8,320 31,950 31,950
Income tax expense 650 850 2,500 3,000
Depreciation and amortization   17,840     17,840     68,710     68,710  
Corporate EBITDA 54,740 56,990 175,130 180,780
 

Add:

Hotel acquisition costs

830 830

Less:

Non-cash amortization(1)

  (20 )   (20 )   (50 )   (50 )
Adjusted Corporate EBITDA $ 54,720   $ 56,970   $ 175,910   $ 181,560  
 
____________
(1)   Reflects 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 September 30, 2015 and year ending December 31, 2015:

                       

Three Months Ending

September 30, 2015

Year Ending

December 31, 2015

Low High Low High
Net income $ 27,930 $ 29,980 $ 71,970 $ 77,120

Add:

Depreciation and amortization

  17,840     17,840     68,710     68,710  
FFO 45,770 47,820 140,680 145,830
 

Less:

Preferred share dividends

(2,420 ) (2,420 ) (9,690 ) (9,690 )
Dividends declared on unvested time-based awards (150 ) (150 ) (560 ) (560 )
Undistributed earnings allocated to unvested time-based awards   (20 )   (20 )        
FFO available to common shareholders 43,180 45,230 130,430 135,580
 

Add:

Hotel acquisition costs

830 830

Less:

Non-cash amortization(1)

  (20 )   (20 )   (50 )   (50 )
AFFO available to common shareholders $ 43,160   $ 45,210   $ 131,210   $ 136,360  
 
FFO per common share:
Basic $ 0.74 $ 0.77 $ 2.27 $ 2.36
Diluted $ 0.73 $ 0.77 $ 2.25 $ 2.34
 
AFFO per common share:
Basic $ 0.74 $ 0.77 $ 2.28 $ 2.37
Diluted $ 0.73 $ 0.77 $ 2.27 $ 2.35
 
Weighted-average number of common shares outstanding:
Basic 58,553 58,553 57,474 57,474
Diluted 58,998 58,998 57,915 57,915
 
____________
(1)   Reflects 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 Boston Marriott Newton Newton, MA 430 July 30, 2010
4 Le Meridien San Francisco San Francisco, CA 360 December 15, 2010
5 Homewood Suites Seattle Convention Center Seattle, WA 195 May 2, 2011
6 W Chicago – City Center Chicago, IL 403 May 10, 2011
7 Hotel Indigo San Diego Gaslamp Quarter San Diego, CA 210 June 17, 2011
8 Courtyard Washington Capitol Hill/Navy Yard Washington, DC 204 June 30, 2011
9 Hotel Adagio San Francisco, Autograph Collection San Francisco, CA 171 July 8, 2011
10 Denver Marriott City Center Denver, CO 613 October 3, 2011
11 Hyatt Herald Square New York New York, NY 122 December 22, 2011
12 W Chicago – Lakeshore Chicago, IL 520 August 21, 2012
13 Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429 September 7, 2012
14 The Hotel Minneapolis, Autograph Collection Minneapolis, MN 222 October 30, 2012
15 Hyatt Place New York Midtown South New York, NY 185 March 14, 2013
16 W New Orleans – French Quarter New Orleans, LA 97 March 28, 2013
17 Le Meridien New Orleans New Orleans, LA 410 April 25, 2013
18 Hyatt Fisherman’s Wharf San Francisco, CA 316 May 31, 2013
19 Hyatt Santa Barbara Santa Barbara, CA 200 June 27, 2013
20 JW Marriott San Francisco Union Square San Francisco, CA 337 October 1, 2014
21 Royal Palm South Beach Miami, a Tribute Portfolio Resort Miami Beach, FL 393 March 9, 2015
22 Ace Hotel and Theater Downtown Los Angeles Los Angeles, CA 182 April 30, 2015
6,694
 

Contacts:

Chesapeake Lodging Trust
Douglas W. Vicari, 410-972-4142

Source: Chesapeake Lodging Trust

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