CHSP Chesapeake Lodging Trust

Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended September 30, 2013.

HIGHLIGHTS

• Pro Forma RevPAR: 4.2% increase for comparable 19-hotel portfolio over the same period in 2012 (5.2% increase excluding the W Chicago – Lakeshore).
• Pro Forma Adjusted Hotel EBITDA Margin: 170 basis point increase for comparable 19-hotel portfolio over the same period in 2012.
• Financings: Refinanced an existing $130.0 million loan, replacing it with a $92.5 million, seven-year loan at 3.50% and a $93.0 million, 10-year loan at 4.25%.
• Dividends: Increased third quarter 2013 dividend by 8.3% to $0.26 per common share (4.5% annualized yield based on the closing price of the Trust’s common shares on November 5, 2013).

“We are very pleased with the strong performance of our hotel portfolio during the third quarter,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “Our portfolio exceeded the high end of our outlook with RevPAR growth of 4.2% and hotel margin expansion of 170 basis points.”

Mr. Francis continued, “We are also excited to have started our comprehensive renovation at our W Chicago – Lakeshore in the third quarter, which was earlier than previously anticipated. The renovation, expected to be completed in the second quarter of 2014, will result in an outstanding product and we believe will create significant value for our shareholders. Excluding the W Chicago – Lakeshore, our pro forma RevPAR for the third quarter increased 5.2%.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three and nine months ended September 30, 2013 (in millions, except share and per share amounts):

            Three months ended Nine months ended September 30, September 30, 2013(1)       2012(2) 2013(3)       2012(4)   Total revenue $ 122.4 $ 75.9 $ 308.6 $ 193.2   Net income available to common shareholders $ 16.8 $ 7.0 $ 26.5 $ 15.3 Net income per diluted common share $ 0.35 $ 0.21 $ 0.56 $ 0.47   FFO available to common shareholders $ 29.0 $ 14.2 $ 58.3 $ 35.6 FFO per diluted common share $ 0.61 $ 0.43 $ 1.25 $ 1.10   AFFO available to common shareholders $ 29.1 $ 16.8 $ 62.6 $ 38.7 AFFO per diluted common share $ 0.61 $ 0.51 $ 1.34 $ 1.20   Corporate EBITDA $ 39.8 $ 22.3 $ 86.2 $ 53.8   Adjusted Corporate EBITDA $ 39.9 $ 24.8 $ 90.6 $ 56.9  

Weighted-average number of common shares outstanding - basic and diluted

47,885,696 32,971,594 46,759,598 32,254,777  

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(1)     Includes results of operations of 20 hotels for the full period. (2) Includes results of operations of 12 hotels for the full period and two hotels for part of the period. (3) Includes results of operations of 15 hotels for the full period and five hotels for part of the period. (4) Includes results of operations of 11 hotels for the full period and three 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. Included in the following table are comparisons, on a pro forma basis, 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. The key operating metrics include the hotel operating results of 19 of the Trust’s 20 hotels owned as of September 30, 2013. The key operating metrics do not include operating results for the Hyatt Place New York Midtown South, as the hotel does not have comparable prior year operating results given it was newly developed in 2013. The following is a summary of the key operating metrics for the three and nine months ended September 30, 2013 (in thousands, except pro forma ADR and pro forma RevPAR):

                        Three months ended Nine months ended September 30, September 30, 2013       2012 Change 2013       2012 Change   Pro forma occupancy 84.9 % 84.7 % 20 bps 80.9 % 79.6 % 130 bps Pro forma ADR $ 203.58 $ 195.80 4.0 % $ 193.53 $ 187.17 3.4 % Pro forma RevPAR $ 172.76 $ 165.83 4.2 % $ 156.64 $ 148.94 5.2 %   Pro forma Adjusted Hotel EBITDA $ 40,732 $ 37,555 8.5 % $ 100,408 $ 90,167 11.4 % Pro forma Adjusted Hotel EBITDA Margin 34.5 % 32.8 % 170 bps 30.7 % 29.0 % 170 bps  

Funds from operations (FFO), FFO available to common shareholders, Adjusted FFO (AFFO) available to common shareholders, net income before interest, income taxes, and depreciation and amortization (Corporate EBITDA), Adjusted Corporate EBITDA, Hotel EBITDA, Adjusted Hotel EBITDA and Adjusted Hotel EBITDA Margin 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.

FINANCING ACTIVITY

On July 11, 2013, the Trust completed the refinancing of its $130.0 million term loan secured by the Le Meridien San Francisco and the W Chicago – City Center, which was scheduled to mature on July 8, 2014. The term loan was refinanced with two individual fixed-rate mortgage loans with an aggregate principal amount of $185.5 million. The first new loan is a $92.5 million, seven-year, fixed-rate mortgage loan secured by the Le Meridien San Francisco. The loan carries a fixed interest rate of 3.50% per annum, with principal and interest payments based on a 25-year principal amortization. The second new loan is a $93.0 million, 10-year, fixed-rate mortgage loan secured by the W Chicago – City Center. The loan carries a fixed interest rate of 4.25% per annum, with principal and interest payments based on a 25-year principal amortization. The weighted-average fixed interest rate on the two new mortgage loans with an aggregate principal amount of $185.5 million is 3.88%, which compares favorably to the 4.65% interest rate then in effect on the previous $130.0 million term loan.

CAPITAL MARKETS ACTIVITY

On September 6, 2013, the Trust put in place a continuous at-the-market (ATM) program under which it may issue and sell up to $100.0 million in the aggregate of its common shares. During the third quarter, the Trust issued and sold 157,258 common shares at an average price of $24.23 per share, generating net proceeds of $3.7 million after deducting sales commissions and offering costs. Subsequent to quarter end and through November 6, 2013, the Trust issued and sold 854,800 common shares at an average price of $23.64 per share, generating net proceeds of $20.0 million after deducting sales commissions and offering costs.

DIVIDENDS

On July 15, 2013, the Trust paid dividends in the amounts of $0.24 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of June 28, 2013. On August 5, 2013, the Trust declared dividends in the amounts of $0.26 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of September 30, 2013. Both dividends were paid on October 15, 2013.

2013 OUTLOOK

The Trust is updating its 2013 outlook to incorporate its third quarter results and recent operating trends and fundamentals. The revised outlook assumes no additional financing transactions or acquisitions beyond what is described above (in millions, except per share amounts):

                       

Fourth Quarter 2013

Guidance Low High Pro forma RevPAR increase over 2012(1) 3.0 % 5.0 % Adjusted Hotel EBITDA $ 32.2 $ 34.0 AFFO per diluted share $ 0.40 $ 0.43    

Full Year 2013

Updated Guidance Previous Guidance Low High Low High Pro forma RevPAR increase over 2012(1) 4.75 % 5.25 % 5.0 % 6.0 % Adjusted Hotel EBITDA $ 132.8 $ 134.5 $ 132.8 $ 136.0 AFFO per diluted share $ 1.74 $ 1.77 $ 1.74 $ 1.80   _______________________________ (1) For the comparable 19-hotel portfolio.  

“We are adjusting our full year outlook as a result of the negative impact from the government shutdown and greater than expected disruption from the renovation at the 520-room W Chicago – Lakeshore. We view these headwinds as short-term in nature and expect our growth to accelerate in 2014 as the U.S. economy continues to strengthen and hotel fundamentals in our markets remain favorable,” said Mr. Francis.

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) FFO, (2) FFO available to common shareholders, (3) AFFO available to common shareholders, (4) Corporate EBITDA, (5) Adjusted Corporate EBITDA, (6) Hotel EBITDA, (7) Adjusted Hotel EBITDA and (8) Adjusted Hotel EBITDA Margin. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are included in the accompanying financial tables.

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.

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.

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.

CONFERENCE CALL

The Trust will host a conference call on Wednesday, November 6, 2013 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 76851005. 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 November 13, 2013. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 76851005. 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 2013 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: the Trust’s ability to complete acquisitions; 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 November 6, 2013, 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)     September 30, December 31, 2013 2012 (unaudited)   ASSETS Property and equipment, net $ 1,426,171 $ 1,107,722 Intangible assets, net 38,931 39,382 Cash and cash equivalents 40,756 33,194 Restricted cash 31,526 23,460 Accounts receivable, net 20,096 8,384 Prepaid expenses and other assets 8,368 14,056 Deferred financing costs, net   7,231     6,630   Total assets $ 1,573,079   $ 1,232,828       LIABILITIES AND SHAREHOLDERS' EQUITY Long-term debt $ 564,229 $ 405,208 Accounts payable and accrued expenses 49,199 34,868 Other liabilities   29,760     25,944   Total liabilities   643,188     466,020     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; 48,747,147 shares and 39,763,930 shares issued and outstanding, respectively

487 398 Additional paid-in capital 970,998 799,278 Cumulative dividends in excess of net income (41,556 ) (32,089 ) Accumulated other comprehensive loss   (88 )   (829 ) Total shareholders' equity   929,891     766,808     Total liabilities and shareholders' equity $ 1,573,079   $ 1,232,828                             CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited)     Three Months Ended September 30, Nine Months Ended September 30,   2013     2012         2013     2012     REVENUE Rooms $ 95,547 $ 58,632 $ 234,037 $ 148,394 Food and beverage 21,955 14,488 62,180 38,299 Other   4,941     2,740         12,397     6,483   Total revenue   122,443     75,860         308,614     193,176     EXPENSES Hotel operating expenses: Rooms 20,861 12,620 54,047 33,297 Food and beverage 17,558 10,368 47,292 27,750 Other direct 2,333 1,357 6,040 3,193 Indirect   38,780     23,640         100,485     63,240   Total hotel operating expenses 79,532 47,985 207,864 127,480 Depreciation and amortization 12,335 7,215 32,012 20,422 Air rights contract amortization 130 130 390 390 Corporate general and administrative 2,936 3,010 9,921 8,606 Hotel acquisition costs   59     2,474         4,195     2,917   Total operating expenses   94,992     60,814         254,382     159,815     Operating income 27,451 15,046 54,232 33,361   Interest income 4 74 247 96 Interest expense (7,199 ) (5,425 ) (18,986 ) (15,615 ) Loss on early extinguishment of debt   (372 )   -         (372 )   -     Income before income taxes 19,884 9,695 35,121 17,842   Income tax expense   (641 )   (662 )       (1,331 )   (552 )   Net income 19,243 9,033 33,790 17,290   Preferred share dividends   (2,422 )   (1,991 )       (7,266 )   (1,991 )   Net income available to common shareholders $ 16,821   $ 7,042       $ 26,524   $ 15,299     Net income per common share - basic and diluted $ 0.35 $ 0.21 $ 0.56 $ 0.47  

Weighted-average number of common shares outstanding - basic and diluted

47,885,696 32,971,594 46,759,598 32,254,777               CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)     Nine Months Ended September 30, 2013 2012   Cash flows from operating activities: Net income $ 33,790 $ 17,290

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

Depreciation and amortization 32,012 20,422 Air rights contract amortization 390 390 Deferred financing costs amortization 2,102 1,488 Loss on early extinguishment of debt 372 - Share-based compensation 3,458 2,348 Other (155 ) (392 ) Changes in assets and liabilities: Accounts receivable, net (9,628 ) (7,177 ) Prepaid expenses and other assets (1,194 ) (345 ) Accounts payable and accrued expenses 10,467 10,057 Other liabilities   782     19   Net cash provided by operating activities   72,396     44,100     Cash flows from investing activities: Acquisition of hotels, net of cash acquired (331,058 ) (184,702 ) Deposit on hotel acquisition - (2,000 ) Receipt of deposit on hotel acquisition 700 - Improvements and additions to hotels (19,510 ) (17,530 ) Repayment of (investment in) hotel construction loan 7,810 (6,478 ) Change in restricted cash   (8,066 )   (5,160 ) Net cash used in investing activities   (350,124 )   (215,870 )   Cash flows from financing activities: Proceeds from sale of common shares, net of underwriting fees 169,855 132,756 Proceeds from sale of preferred shares, net of underwriting fees - 121,062 Payment of offering costs related to sale of common and preferred shares (406 ) (637 ) Borrowings under revolving credit facility 105,000 148,000 Repayments under revolving credit facility (125,000 ) (293,000 ) Proceeds from issuance of mortgage debt 312,500 95,000 Principal prepayment on mortgage debt (130,000 ) - Scheduled principal payments on mortgage debt (3,321 ) (1,545 ) Payment of deferred financing costs (3,075 ) (1,838 ) Payment of dividends to common shareholders (31,899 ) (20,529 ) Payment of dividends to preferred shareholders (7,266 ) - Repurchase of common shares   (1,098 )   (621 ) Net cash provided by financing activities   285,290     178,648   Net increase in cash 7,562 6,878 Cash and cash equivalents, beginning of period   33,194     20,960   Cash and cash equivalents, end of period $ 40,756   $ 27,838       CHESAPEAKE LODGING TRUST RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) (unaudited)  

The following table reconciles net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three and nine months ended September 30, 2013 and 2012:

                  Three Months Ended September 30, Nine Months Ended September 30, 2013       2012 2013       2012   Net income $ 19,243 $ 9,033 $ 33,790 $ 17,290

Add: Depreciation and amortization

  12,335     7,215     32,012     20,422   FFO 31,578 16,248 65,802 37,712  

Less: Preferred share dividends

(2,422 ) (1,991 ) (7,266 ) (1,991 ) Dividends declared on unvested time-based awards (98 ) (34 ) (276 ) (102 )

Undistributed earnings allocated to unvested time-based awards

  (33 )   -     -     -   FFO available to common shareholders 29,025 14,223 58,260 35,619  

Add: Hotel acquisition costs

59 2,474 4,195 2,917 Non-cash amortization(1)   55     60     167     181   AFFO available to common shareholders $ 29,139   $ 16,757   $ 62,622   $ 38,717     FFO per common share - basic and diluted $ 0.61 $ 0.43 $ 1.25 $ 1.10   AFFO per common share - basic and diluted $ 0.61 $ 0.51 $ 1.34 $ 1.20  

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(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 to Corporate EBITDA and Adjusted Corporate EBITDA for the three and nine months ended September 30, 2013 and 2012:

                                          Three Months Ended September 30,   Nine Months Ended September 30, 2013       2012 2013       2012             Net income $ 19,243 $ 9,033 $ 33,790 $ 17,290

Add: Depreciation and amortization

12,335 7,215 32,012 20,422 Interest expense 7,199 5,425 18,986 15,615 Loss on early extinguishment of debt 372 - 372 - Income tax expense 641 662 1,331 552

Less: Interest income

 

(4

)

 

(74

)

 

(247

)

    (96 ) Corporate EBITDA 39,786 22,261 86,244 53,783  

Add: Hotel acquisition costs

59 2,474 4,195 2,917 Non-cash amortization(1)   55     60     167       181   Adjusted Corporate EBITDA $ 39,900   $ 24,795   $ 90,606     $ 56,881    

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(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 pro forma Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the Trust's comparable 19-hotel portfolio for the three and nine months ended September 30, 2013 and 2012:

                                                              Three Months Ended September 30, Nine Months Ended September 30, 2013 2012 2013 2012   Total revenue $ 118,115 $ 114,670 $ 327,430 $ 310,519 Less: Total hotel operating expenses   77,309     77,046     226,800     220,143   Hotel EBITDA 40,806

 

37,624 100,630 90,376  

Less: Non-cash amortization(1)

  (74 )   (69 )   (222 )   (209 ) Adjusted Hotel EBITDA $ 40,732   $ 37,555   $ 100,408   $ 90,167     Adjusted Hotel EBITDA Margin 34.5 % 32.8 % 30.7 % 29.0 %  

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(1)   Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.   The following table calculates forecasted Hotel EBITDA and Adjusted Hotel EBITDA for the three months ending December 31, 2013:                                                                                 Three Months Ending December 31, 2013 Low High   Total revenue $ 108,640 $ 111,140 Less: Total hotel operating expenses   76,340     77,090   Hotel EBITDA 32,300 34,050  

Less: Non-cash amortization(1)

  (80 )   (80 ) Adjusted Hotel EBITDA $ 32,220   $ 33,970  

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(1)   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 FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ending December 31, 2013:

                                                Three Months Ending December 31, 2013 Low High   Net income $ 9,530 $ 10,780 Add:Depreciation and amortization   12,650     12,650   FFO 22,180 23,430  

Less: Preferred share dividends

(2,420 ) (2,420 ) Dividends declared on unvested time-based awards (80 ) (80 ) Undistributed earnings allocated to unvested time-based awards   -     -   FFO available to common shareholders 19,680 20,930  

Add: Hotel acquisition costs

10 10 Non-cash amortization(1)   50     50   AFFO available to common shareholders $ 19,740   $ 20,990     FFO per common share - basic and diluted $ 0.40 $ 0.43   AFFO per common share - basic and diluted $ 0.40 $ 0.43   Weighted-average number of diluted common shares outstanding 48,886 48,886  

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(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 year ending December 31, 2013:                                                                                     Year Ending December 31, 2013 Low       High   Total revenue $ 417,250 $ 419,750 Less: Total hotel operating expenses   284,200     284,950   Hotel EBITDA 133,050 134,800  

Less: Non-cash amortization(1)

  (300 )   (300 ) Adjusted Hotel EBITDA $ 132,750   $ 134,500    

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(1)   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 FFO, FFO available to common shareholders, and AFFO available to common shareholders for the year ending December 31, 2013:                                                   Year Ending December 31, 2013 Low       High   Net income $ 43,330 $ 44,580 Add:Depreciation and amortization   44,660     44,660   FFO 87,990 89,240  

Less: Preferred share dividends

(9,690 ) (9,690 ) Dividends declared on unvested time-based awards (360 ) (360 ) Undistributed earnings allocated to unvested time-based awards   -     -   FFO available to common shareholders 77,940 79,190   Add:Hotel acquisition costs 4,200 4,200 Non-cash amortization(1)   220     220   AFFO available to common shareholders $ 82,360   $ 83,610     FFO per common share - basic and diluted $ 1.65 $ 1.67   AFFO per common share - basic and diluted $ 1.74 $ 1.77   Weighted-average number of diluted common shares outstanding 47,296 47,296  

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(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         Purchase Price Hotel Location Rooms (in millions) Acquisition Date   1 Hyatt Regency Boston Boston, MA 502 $ 112.00 March 18, 2010 2 Hilton Checkers Los Angeles Los Angeles, CA 193 46.00 June 1, 2010 3 Courtyard Anaheim at Disneyland Resort Anaheim, CA 153 25.00 July 30, 2010 4 Boston Marriott Newton Newton, MA 430 77.25 July 30, 2010 5 Le Meridien San Francisco San Francisco, CA 360 143.00 December 15, 2010 6 Homewood Suites Seattle Convention Center Seattle, WA 195 53.00 May 2, 2011 7 W Chicago - City Center Chicago, IL 403 128.80 May 10, 2011 8 Hotel Indigo San Diego Gaslamp Quarter San Diego, CA 210 55.50 June 17, 2011 9 Courtyard Washington Capitol Hill/Navy Yard Washington, DC 204 68.00 June 30, 2011 10 Hotel Adagio San Francisco, Autograph Collection San Francisco, CA 171 42.25 July 8, 2011 11 Denver Marriott City Center Denver, CO 613 119.00 October 3, 2011 12 Holiday Inn New York City Midtown - 31st Street New York, NY 122 52.20 December 22, 2011 13 W Chicago - Lakeshore Chicago, IL 520 126.00 August 21, 2012 14 Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429 62.00 September 7, 2012 15 The Hotel Minneapolis, Autograph Collection Minneapolis, MN 222 46.00 October 30, 2012 16 Hyatt Place New York Midtown South New York, NY 185 76.25 March 14, 2013 17 W New Orleans - French Quarter New Orleans, LA 97 25.50 March 28, 2013 18 W New Orleans New Orleans, LA 410 65.00 April 25, 2013 19 Hyatt Fisherman's Wharf San Francisco, CA 313 103.50 May 31, 2013 20 Hyatt Santa Barbara Santa Barbara, CA 200 61.00 June 27, 2013     5,932 $ 1,487.25  

Chesapeake Lodging TrustDouglas W. Vicari, 410-972-4142