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 December 31, 2013.

HIGHLIGHTS

• Pro Forma RevPAR: 4.8% increase for comparable 19-hotel portfolio over the same period in 2012 (7.1% increase excluding the W Chicago – Lakeshore).
• Pro Forma Adjusted Hotel EBITDA Margin: 110 basis point increase for comparable 19-hotel portfolio over the same period in 2012.
• Dividends: Increased first quarter 2014 dividend by 15.4% to $0.30 per common share (4.6% annualized yield based on the closing price of the Trust’s common shares on February 19, 2014).

“We are encouraged by the strong performance of our hotel portfolio during the fourth quarter despite the impact of the government shutdown that occurred in October,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “We saw lodging demand re-accelerate towards the end of 2013 and we continue to see positive trends in hotel fundamentals as we begin 2014, giving us confidence to increase our quarterly dividend by 15%.”

Mr. Francis continued, “Our comprehensive renovation at the W Chicago – Lakeshore is progressing well and we continue to expect that it will be completed in the second quarter and within the budgeted cost. We are also very excited about the upcoming conversions of our hotel on 31st Street in midtown Manhattan to the Hyatt brand and our W New Orleans to the Le Meridien brand. We believe these projects will create tremendous value for our shareholders and provide outsized growth for our hotel portfolio starting later this year.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months and year ended December 31, 2013 (in millions, except share and per share amounts):

                  Three months ended Year ended December 31, December 31, 2013(1)       2012(2) 2013(3) 2012(4)   Total revenue $ 111.6 $ 85.1 $ 420.2 $ 278.3   Net income available to common shareholders $ 9.1 $ 7.5 $ 35.6 $ 22.8 Net income per diluted common share $ 0.18 $ 0.19 $ 0.75 $ 0.66   FFO available to common shareholders $ 21.5 $ 15.9 $ 79.7 $ 51.5 FFO per diluted common share $ 0.44 $ 0.40 $ 1.69 $ 1.51   AFFO available to common shareholders $ 21.6 $ 16.0 $ 84.2 $ 54.8 AFFO per diluted common share $ 0.44 $ 0.41 $ 1.78 $ 1.61   Corporate EBITDA $ 31.1 $ 23.8 $ 117.3 $ 77.6   Adjusted Corporate EBITDA $ 31.2 $ 24.0 $ 121.8 $ 80.9  

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

48,884,102 39,391,677 47,295,089 34,048,752    

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(1) Includes results of operations of 20 hotels for the full period. (2) Includes results of operations of 14 hotels for the full period and one hotel 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 four 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 December 31, 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 months and year ended December 31, 2013 (in thousands, except pro forma ADR and pro forma RevPAR):

                              Three months ended Year ended December 31, December 31, 2013       2012 Change 2013 2012 Change   Pro forma occupancy 76.3% 75.0% 130 bps 79.8% 78.4% 140 bps Pro forma ADR $ 192.47 $ 186.76 3.1% $ 193.28 $ 187.07 3.3% Pro forma RevPAR $ 146.78 $ 140.04 4.8% $ 154.15 $ 146.64 5.1%   Pro forma Adjusted Hotel EBITDA $ 31,905 $ 30,023 6.3% $ 132,313 $ 120,190 10.1% Pro forma Adjusted Hotel EBITDA Margin 29.9% 28.8% 110 bps 30.5% 29.0% 150 bps  

Pro forma RevPAR increase for the fourth quarter 2013 was negatively impacted by displacement from a comprehensive renovation at the 520-room W Chicago – Lakeshore. Excluding the W Chicago – Lakeshore, pro forma RevPAR increase for the fourth quarter of 2013 was 7.1%.

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.

MAJOR REPOSITIONINGS

The comprehensive renovation at the 520-room W Chicago – Lakeshore, which commenced in the third quarter of 2013, is progressing in accordance with our budgeted cost of $38.0 million and scheduled completion in the second quarter of 2014.

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 the second quarter of 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 expects 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 ACTIVITY

During the fourth quarter 2013, the Trust issued and sold 854,800 common shares at an average price of $23.64 per share under its continuous at-the-market (ATM) program, generating net proceeds of $19.9 million after deducting sales commissions and offering costs.

DIVIDENDS

On October 15, 2013, 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 September 30, 2013. On December 16, 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 December 31, 2013. Both dividends were paid on January 15, 2014.

On February 20, 2014, the Trust declared dividends in the amounts of $0.30 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of March 31, 2014. The dividends will be paid on April 15, 2014.

2014 OUTLOOK

The Trust reaffirms its previously provided full year 2014 outlook and is incorporating its first quarter 2014 outlook as follows (in millions, except pro forma RevPAR and per share amounts):

                        First Quarter Full Year 2014 Outlook 2014 Outlook Low High Low High CONSOLIDATED:   Net income (loss) available to common shareholders $ (3.2 ) $ (2.3 ) $ 38.9 $ 43.7 Net income (loss) per diluted common share $ (0.07 ) $ (0.05 ) $ 0.79 $ 0.89   Adjusted Corporate EBITDA $ 15.7 $ 16.8 $ 131.2 $ 136.5   AFFO available to common shareholders $ 9.8 $ 10.7 $ 93.1 $ 97.9 AFFO per diluted common share $ 0.20 $ 0.22 $ 1.90 $ 2.00   Corporate general and administrative expense $ 3.6 $ 3.7 $ 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 $ 135.00 $ 137.00 $ 167.00 $ 170.00 Pro forma RevPAR increase over 2013(2) 7.0 % 9.0 % 5.0 % 7.0 % Adjusted Hotel EBITDA $ 18.7 $ 19.6 $ 128.0 $ 133.0 Adjusted Hotel EBITDA Margin 23.4 % 24.2 % 32.5 % 33.2 % Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) 150 bps 225 bps 75 bps 150 bps  

20-Hotel Portfolio

RevPAR $ 128.00 $ 131.00 $ 162.00 $ 165.00 Pro forma RevPAR increase over 2013(2) 3.5 % 5.5 % 3.5 % 5.5 % Adjusted Hotel EBITDA $ 19.3 $ 20.5 $ 145.2 $ 151.2 Adjusted Hotel EBITDA Margin 21.1 % 21.9 % 31.4 % 32.1 % Pro forma Adjusted Hotel EBITDA Margin increase over 2013(2) 25 bps 100 bps 25 bps 100 bps    

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(1)   Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels will be undergoing comprehensive renovations during 2014. (2) The comparable 2013 period includes operating results for certain hotels prior to their acquisition by the Trust in 2013.  

The Trust’s 2014 outlook assumes no additional acquisitions, dispositions, or financing transactions. See the accompanying financial tables for quarterly pro forma hotel operating results for the 17-hotel and 20-hotel portfolios for 2013.

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 Thursday, February 20, 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 57822334. 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 February 27, 2014. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 57822334. 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 February 20, 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)     December 31, 2013 2012     ASSETS Property and equipment, net $ 1,422,439 $ 1,107,722 Intangible assets, net 38,781 39,382 Cash and cash equivalents 28,713 33,194 Restricted cash 34,235 23,460 Accounts receivable, net 13,011 8,384 Prepaid expenses and other assets 10,478 14,056 Deferred financing costs, net   6,501     6,630   Total assets $ 1,554,158   $ 1,232,828       LIABILITIES AND SHAREHOLDERS' EQUITY Long-term debt $ 531,771 $ 405,208 Accounts payable and accrued expenses 45,982 34,868 Other liabilities   29,848     25,944   Total liabilities   607,601     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; 49,574,005 shares and 39,763,930 shares issued and outstanding, respectively

496 398 Additional paid-in capital 991,417 799,278 Cumulative dividends in excess of net income (45,339 ) (32,089 ) Accumulated other comprehensive loss   (67 )   (829 ) Total shareholders' equity   946,557     766,808     Total liabilities and shareholders' equity $ 1,554,158   $ 1,232,828                             CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data)       Three Months Ended December 31, Year Ended December 31, 2013 2012 2013 2012 (unaudited) REVENUE Rooms $ 82,397 $ 61,871 $ 316,434 $ 210,265 Food and beverage 24,704 19,374 86,884 57,673 Other   4,462     3,855     16,859     10,338   Total revenue   111,563     85,100     420,177     278,276     EXPENSES Hotel operating expenses: Rooms 19,664 14,862 73,711 48,159 Food and beverage 17,798 13,928 65,090 41,678 Other direct 2,002 1,944 8,042 5,137 Indirect   37,635     27,628     138,120     90,868   Total hotel operating expenses 77,099 58,362 284,963 185,842 Depreciation and amortization 12,457 8,509 44,469 28,931 Air rights contract amortization 130 130 520 520 Corporate general and administrative 3,204 2,691 13,125 11,297 Hotel acquisition costs   27     77     4,222     2,994   Total operating expenses   92,917     69,769     347,299     229,584     Operating income 18,646 15,331 72,878 48,692   Interest income - 103 247 199 Interest expense (6,794 ) (5,361 ) (25,780 ) (20,976 ) Loss on early extinguishment of debt   -     -     (372 )   -     Income before income taxes 11,852 10,073 46,973 27,915   Income tax expense   (324 )   (186 )   (1,655 )   (738 )   Net income 11,528 9,887 45,318 27,177   Preferred share dividends   (2,422 )   (2,422 )   (9,688 )   (4,413 )   Net income available to common shareholders $ 9,106   $ 7,465   $ 35,630   $ 22,764     Net income per common share - basic and diluted $ 0.18 $ 0.19 $ 0.75 $ 0.66  

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

48,884,102 39,391,677 47,295,089 34,048,752               CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)       Year Ended December 31, 2013 2012   Cash flows from operating activities: Net income $ 45,318 $ 27,177

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

Depreciation and amortization 44,469 28,931 Air rights contract amortization 520 520 Deferred financing costs amortization 2,837 2,081 Loss on early extinguishment of debt 372 - Share-based compensation 4,612 3,165 Other (295 ) (523 ) Changes in assets and liabilities: Accounts receivable, net (2,543 ) (197 ) Prepaid expenses and other assets (3,305 ) 18 Accounts payable and accrued expenses 7,203 6,552 Other liabilities   774     13   Net cash provided by operating activities   99,962     67,737     Cash flows from investing activities: Acquisition of hotels, net of cash acquired (331,058 ) (231,051 ) Deposit on hotel acquisition - (700 ) Receipt of deposit on hotel acquisition 700 - Improvements and additions to hotels (28,235 ) (23,847 ) Repayment of (investment in) hotel construction loan 7,810 (7,810 ) Change in restricted cash   (10,775 )   (7,051 ) Net cash used in investing activities   (361,558 )   (270,459 )   Cash flows from financing activities: Proceeds from sale of common shares, net of underwriting fees 189,862 132,756 Proceeds from sale of preferred shares, net of underwriting fees - 121,062 Payment of offering costs related to sale of common and preferred shares (468 ) (647 ) Borrowings under revolving credit facility 105,000 198,000 Repayments under revolving credit facility (155,000 ) (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 (5,726 ) (2,317 ) Payment of deferred financing costs (3,080 ) (3,445 ) Payment of dividends to common shareholders (44,516 ) (29,290 ) Payment of dividends to preferred shareholders (9,688 ) (2,368 ) Repurchase of common shares   (1,769 )   (795 ) Net cash provided by financing activities   257,115     214,956   Net increase (decrease) in cash (4,481 ) 12,234 Cash and cash equivalents, beginning of period   33,194     20,960   Cash and cash equivalents, end of period $ 28,713   $ 33,194      

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 months and year ended December 31, 2013 and 2012:

            Three Months Ended December 31, Year Ended December 31, 2013       2012 2013       2012   Net income $ 11,528 $ 9,887 $ 45,318 $ 27,177 Add: Depreciation and amortization   12,457     8,509     44,469     28,931   FFO 23,985 18,396 89,787 56,108   Less: Preferred share dividends (2,422 ) (2,422 ) (9,688 ) (4,413 ) Dividends declared on unvested time-based awards (85 ) (75 ) (361 ) (177 ) Undistributed earnings allocated to unvested time- based awards   -     -     -     -   FFO available to common shareholders 21,478 15,899 79,738 51,518   Add: Hotel acquisition costs 27 77 4,222 2,994 Non-cash amortization(1)   56     61     223     242   AFFO available to common shareholders $ 21,561   $ 16,037   $ 84,183   $ 54,754     FFO per common share - basic and diluted $ 0.44 $ 0.40 $ 1.69 $ 1.51   AFFO per common share - basic and diluted $ 0.44 $ 0.41 $ 1.78 $ 1.61

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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 months and year ended December 31, 2013 and 2012:

            Three Months Ended December 31, Year Ended December 31, 2013       2012 2013       2012   Net income $ 11,528 $ 9,887 $ 45,318 $ 27,177 Add: Depreciation and amortization 12,457 8,509 44,469 28,931 Interest expense 6,794 5,361 25,780 20,976 Loss on early extinguishment of debt - - 372 - Income tax expense 324 186 1,655 738 Less: Interest income   -   (103 )   (247 )   (199 ) Corporate EBITDA 31,103 23,840 117,347 77,623   Add: Hotel acquisition costs 27 77 4,222 2,994 Non-cash amortization(1)   56   61     223     242   Adjusted Corporate EBITDA $ 31,186 $ 23,978   $ 121,792   $ 80,859  

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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 months and year ended December 31, 2013 and 2012:                         Three Months Ended December 31, Year Ended December 31, 2013 2012 2013 2012   Total revenue $ 106,657 $ 104,175 $ 434,087 $ 414,694 Less: Total hotel operating expenses   74,677     74,083     301,477     294,226   Hotel EBITDA 31,980

 

30,092 132,610 120,468  

Less: Non-cash amortization(1)

  (75 )   (69 )   (297 )   (278 ) Adjusted Hotel EBITDA $ 31,905   $ 30,023   $ 132,313   $ 120,190     Adjusted Hotel EBITDA Margin 29.9 % 28.8 % 30.5 % 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 17-hotel portfolio and the 20-hotel portfolio for the three months ending March 31, 2014:

        Three Months Ending March 31, 2014 17-Hotel Portfolio       20-Hotel Portfolio Low       High Low       High   Total revenue $ 79,800 $ 81,100 $ 91,300 $ 93,700 Less: Total hotel operating expenses   61,020     61,420     71,920     73,120   Hotel EBITDA 18,780 19,680 19,380 20,580   Less:Non-cash amortization(1)   (80 )   (80 )   (80 )   (80 ) Adjusted Hotel EBITDA $ 18,700   $ 19,600   $ 19,300   $ 20,500  

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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 (loss) to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending March 31, 2014:

      Three Months Ending March 31, 2014 Low       High   Net income (loss) $ (640 ) $ 260 Add: Depreciation and amortization 12,890 12,890 Interest expense 6,720 6,720 Less: Interest income - - Income tax benefit   (3,300 )   (3,100 ) Corporate EBITDA 15,670 16,770   Add: Hotel acquisition costs - - Non-cash amortization(1)   50     50   Adjusted Corporate EBITDA $ 15,720   $ 16,820  

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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 forecasted net income (loss) to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ending March 31, 2014:

      Three Months Ending March 31, 2014 Low   High   Net income (loss) $ (640 ) $ 260 Add: Depreciation and amortization   12,890     12,890   FFO 12,250 13,150   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 9,700 10,600   Add: Hotel acquisition costs - - Non-cash amortization(1)   50     50   AFFO available to common shareholders $ 9,750   $ 10,650     FFO per common share - basic and diluted $ 0.20 $ 0.22   AFFO per common share - basic and diluted $ 0.20 $ 0.22   Weighted-average number of diluted common shares outstanding 48,962 48,962

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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 17-hotel portfolio and the 20-hotel portfolio for the year ending December 31, 2014:

 

      Year Ending December 31, 2014 17-Hotel Portfolio       20-Hotel Portfolio Low       High Low       High   Total revenue $ 394,400 $ 400,600 $ 462,400 $ 470,300 Less: Total hotel operating expenses   266,100     267,300     316,900     318,800   Hotel EBITDA 128,300 133,300 145,500 151,500   Less:Non-cash amortization(1)   (300 )   (300 )   (300 )   (300 ) Adjusted Hotel EBITDA $ 128,000   $ 133,000   $ 145,200   $ 151,200  

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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 Corporate EBITDA and Adjusted Corporate EBITDA for the year ending December 31, 2014:               Year Ending December 31, 2014 Low High   Net income $ 49,060 $ 53,860 Add: Depreciation and amortization 53,970 53,970 Interest expense 27,210 27,210 Income tax expense 750 1,250 Less: Interest income   (10 )   (10 ) Corporate EBITDA 130,980 136,280   Add: Hotel acquisition costs - - Non-cash amortization(1)   220     220   Adjusted Corporate EBITDA $ 131,200   $ 136,500  

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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 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 $ 49,060 $ 53,860 Add: Depreciation and amortization   53,970     53,970   FFO 103,030 107,830   Less: Preferred share dividends (9,690 ) (9,690 ) Dividends declared on unvested time-based awards (490 ) (490 ) Undistributed earnings allocated to unvested time-based awards   -     -   FFO available to common shareholders 92,850 97,650   Add: Hotel acquisition costs - - Non-cash amortization(1)   220     220   AFFO available to common shareholders $ 93,070   $ 97,870     FFO per common share - basic and diluted $ 1.89 $ 1.99   AFFO per common share - basic and diluted $ 1.90 $ 2.00   Weighted-average number of diluted common shares outstanding 49,002 49,002  

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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

SUPPLEMENTAL PRO FORMA HOTEL OPERATING RESULTS (in thousands, except pro forma ADR and pro forma RevPAR) (unaudited)               The following table includes the Trust's pro forma 2013 hotel operating results:     Three Months Ended Year Ended March 31, 2013 June 30, 2013 September 30, 2013 December 31, 2013 December 31, 2013

17-Hotel Portfolio(1)

Pro forma occupancy 74.3% 86.5% 87.1% 77.9% 81.5% Pro forma ADR $ 169.36 $ 203.08 $ 208.14 $ 195.47 $ 195.18 Pro forma RevPAR $ 125.79 $ 175.69 $ 181.23 $ 152.24 $ 159.09   Pro forma total revenue $ 74,295 $ 104,528 $ 103,923 $ 93,070 $ 375,816 Less: Pro forma total hotel operating expenses   58,001   67,984   66,338   64,350   256,673 Pro forma Hotel EBITDA $ 16,294 $ 36,544 $ 37,585 $ 28,720 $ 119,143  

20-Hotel Portfolio

Pro forma occupancy 72.7% 85.6% 85.2% 76.9% 80.1% Pro forma ADR $ 170.51 $ 205.64 $ 205.73 $ 196.61 $ 195.74 Pro forma RevPAR $ 123.96 $ 175.93 $ 175.22 $ 151.11 $ 156.86   Pro forma total revenue $ 88,510 $ 125,906 $ 122,443 $ 111,562 $ 448,421 Less: Pro forma total hotel operating expenses   70,018   81,929   79,606   77,174   308,727 Pro forma Hotel EBITDA $ 18,492 $ 43,977 $ 42,837 $ 34,388 $ 139,694  

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(1)  

Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels will be undergoing comprehensive renovations during 2014.

                            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