Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate
investment trust (REIT), reported today its financial results for
the quarter ended June 30, 2014.
HIGHLIGHTS
- RevPAR: 7.0% pro forma increase for
the 17-hotel portfolio and 3.4% pro forma increase for the 20-hotel
portfolio over the same period in 2013.
- Adjusted Hotel
EBITDA Margin: 250 basis point pro forma increase
for the 17-hotel portfolio and 170 basis point pro forma increase
for the 20-hotel portfolio over the same period in 2013.
- Adjusted Hotel
EBITDA: $47.1 million.
- Adjusted
Corporate EBITDA: $43.2 million.
- Adjusted
FFO: $31.2 million or $0.64 per diluted common
share.
- Financing: Subsequent to quarter
end, refinanced an existing $60.0 million loan, replacing it with a
$90.0 million, 10-year loan at 4.30%.
"We are pleased with the performance of our hotel portfolio in
the second quarter. Our 17-hotel portfolio achieved an occupancy
level of over 87% which allowed our hotel managers to increase
daily rates resulting in RevPAR growth at the top end of our
guidance range. With the ADR-driven RevPAR growth for the quarter
and our continued focus on reducing or limiting increases in
expenses, we were able to expand hotel EBITDA margins by 250 basis
points, well exceeding our guidance range for the quarter," said
James L. Francis, Chesapeake Lodging Trust’s President and Chief
Executive Officer.
Mr. Francis continued, "We are very proud of the renovated
product at our W Chicago – Lakeshore, which we completed in the
second quarter on-time and within budget. We have commenced the
comprehensive renovations and rebrandings of the former W New
Orleans and the former Holiday Inn New York City Midtown – 31st
Street, which are scheduled to be completed in the Fall. We expect
these three newly renovated hotels will provide outsized growth and
add significant value to our overall hotel portfolio."
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results
for the three and six months ended June 30, 2014 and 2013 (in
millions, except share and per share amounts):
Three months ended June
30, Six months ended June 30, 2014(1) 2013(2)
2014(1) 2013(3) Total revenue $ 128.9 $ 115.6
$ 223.6 $ 186.2 Net income available to common shareholders
$ 18.8 $ 14.6 $ 18.6 $ 9.7 Net income per diluted common share $
0.38 $ 0.30 $ 0.37 $ 0.21 Adjusted Hotel EBITDA $ 47.1 $
42.1 $ 69.0 $ 57.7 Adjusted Corporate EBITDA $ 43.2 $ 38.5 $
61.2 $ 50.7 AFFO available to common shareholders $ 31.2 $
26.6 $ 43.5 $ 33.5 AFFO per diluted common share $ 0.64 $ 0.56 $
0.89 $ 0.72
Weighted-average number of common shares
outstanding - basic and diluted
48,977,876 47,862,652 48,969,761 46,187,216 ___________
(1)
Includes results of operations of 20
hotels for the full period.
(2)
Includes results of operations of 17
hotels for the full period and three 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.
HOTEL OPERATING RESULTS
Management assesses the operating performance of its hotels
irrespective of the hotel owner during the periods compared. The
Trust uses the term “pro forma” to refer to metrics that include,
or comparisons of metrics that are based on, the operating results
of hotels under previous ownership for either a portion of or the
entire period. Since five of the Trust’s hotels owned as of June
30, 2014 were acquired at various times during 2013, the key
operating metrics for the 17-hotel portfolio and 20-hotel portfolio
reflect the pro forma operating results of three of those hotels
for the three months ended June 30, 2013 and five of those hotels
for the six months ended June 30, 2013. Included in the following
table are comparisons of occupancy, average daily rate (ADR), room
revenue per available room (RevPAR), Adjusted Hotel EBITDA, and
Adjusted Hotel EBITDA Margin, the key operating metrics that
management uses to assess the performance of its hotels, for the
three and six months ended June 30, 2014 and 2013 (in thousands,
except ADR and RevPAR):
Three months ended June
30, Six months ended June 30, 2014
2013(1)
Change 2014
2013(1)
Change
17-Hotel
Portfolio(2)
Occupancy 87.2 % 86.5 % 70 bps 82.9 % 80.5 % 240 bps ADR $ 215.52 $
203.08 6.1 % $ 198.44 $ 187.82 5.7 % RevPAR $ 188.00 $ 175.69 7.0 %
$ 164.58 $ 151.21 8.8 % Adjusted Hotel EBITDA $ 41,499 $
36,544 13.6 % $ 62,447 $ 52,838 18.2 % Adjusted Hotel EBITDA Margin
37.5 % 35.0 % 250 bps 32.2 % 29.5 % 270 bps
20-Hotel
Portfolio
Occupancy 84.6 % 85.6 % (100) bps 79.5 % 79.2 % 30 bps ADR $ 215.10
$ 205.64 4.6 % $ 198.08 $ 189.79 4.4 % RevPAR $ 181.92 $ 175.93 3.4
% $ 157.49 $ 150.37 4.7 % Adjusted Hotel EBITDA $ 47,104 $
43,977 7.1 % $ 69,044 $ 62,469 10.5 % Adjusted Hotel EBITDA Margin
36.6 % 34.9 % 170 bps 30.9 % 29.1 % 180 bps __________
(1)
Includes results of operations for certain
hotels prior to their acquisition by the Trust.
(2)
Excludes the W Chicago – Lakeshore, the
Hotel New Orleans Downtown (formerly the W New Orleans), and the
Hyatt Herald Square (formerly the Holiday Inn New York City Midtown
– 31st Street), as these hotels have undergone or are undergoing
comprehensive renovations during 2014.
Hotel EBITDA, Adjusted Hotel EBITDA, Adjusted Hotel EBITDA
Margin, Corporate EBITDA, Adjusted Corporate EBITDA, FFO, FFO
available to common shareholders and AFFO available to common
shareholders are non-GAAP financial measures within the meaning of
the rules of the Securities and Exchange Commission. See the
discussion included in this press release for information regarding
these non-GAAP financial measures.
MAJOR REPOSITIONINGS
The comprehensive renovation at the 520-room W Chicago –
Lakeshore, which commenced in the third quarter of 2013, was
completed in the second quarter of 2014 with a total expected cost
of approximately $38.0 million.
The comprehensive renovation at the former 410-room W New
Orleans to reposition the hotel commenced in the second quarter of
2014. In July 2014, the Trust and its hotel manager, Starwood
Hotels & Resorts Worldwide, Inc., agreed to remove the W brand
from the hotel for the duration of the renovation and rename it the
Hotel New Orleans Downtown. The Trust continues to expect the
renovation will cost approximately $29.0 million and be completed
in the fourth quarter of 2014, at which time the hotel will be
re-branded as the Le Meridien New Orleans.
The comprehensive renovation at the former 122-room Holiday Inn
New York City Midtown – 31st Street to reposition the hotel as the
Hyatt Herald Square commenced in the third quarter of 2014 with the
closure of the hotel on August 1, 2014. The Trust expects the
renovation to be completed and the hotel to re-open by October 1,
2014 and that the renovation will cost approximately $6.5
million.
CAPITAL MARKETS
The Trust did not sell any common shares under the continuous
at-the-market (ATM) program during the second quarter of 2014 and
through the date of this release.
DIVIDENDS
On April 15, 2014, the Trust paid 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.
On May 16, 2014, the Trust declared dividends in the amounts of
$0.30 per share payable to its common shareholders and $0.484375
per share payable to its preferred shareholders, both of record as
of June 30, 2014. Both dividends were paid on July 15, 2014.
FINANCING ACTIVITY
On July 3, 2014, the Trust completed the refinancing of its
$60.0 million term loan secured by the Hyatt Herald Square
(formerly the Holiday Inn New York City Midtown – 31st Street) and
the Hyatt Place New York Midtown South. The term loan was
refinanced with a new 10-year, $90.0 million, fixed-rate mortgage
loan secured by the two hotels mentioned previously. The loan
carries a fixed interest rate of 4.30% per annum and requires
interest-only payments for the first two years and principal and
interest payments thereafter based on a 30-year principal
amortization. Excess proceeds from the refinancing were used to
repay outstanding borrowings under the Trust’s revolving credit
facility.
2014 OUTLOOK
The Trust is updating its 2014 outlook to incorporate its second
quarter results, recent operating trends and fundamentals, and the
refinancing of the $60.0 million term loan. The updated outlook
assumes no additional acquisitions, dispositions, or financing
transactions (in millions, except RevPAR and per share
amounts):
Third Quarter
2014
Outlook Low High
CONSOLIDATED:
Net income available to common shareholders $ 15.5 $ 17.0 Net
income per diluted common share $ 0.32 $ 0.35 Adjusted
Corporate EBITDA $ 40.5 $ 42.2 AFFO available to common
shareholders $ 29.9 $ 31.4 AFFO per diluted common share $ 0.61 $
0.64 Corporate general and administrative expense $ 3.5 $
3.6 Weighted-average number of diluted common shares outstanding
49.0 49.0
HOTEL PORTFOLIO:
17-Hotel
Portfolio(1)
RevPAR $ 193.00 $ 197.00 RevPAR increase over 2013 6.5 % 8.5 %
Adjusted Hotel EBITDA $ 40.4 $ 42.0 Adjusted Hotel EBITDA Margin
36.9 % 37.7 % Adjusted Hotel EBITDA Margin increase over 2013 75
bps 150 bps
20-Hotel
Portfolio
RevPAR $ 180.00 $ 184.00 RevPAR increase over 2013 3.0 % 5.0 %
Adjusted Hotel EBITDA $ 44.0 $ 45.8 Adjusted Hotel EBITDA Margin
35.0 % 35.7 % Adjusted Hotel EBITDA Margin increase over 2013 0 bps
75 bps _____________
(1)
Excludes the W Chicago – Lakeshore, the
Hotel New Orleans Downtown (formerly the W New Orleans), and the
Hyatt Herald Square (formerly the Holiday Inn New York City Midtown
– 31st Street), as these hotels have undergone or are undergoing
comprehensive renovations during 2014.
Full Year
2014
Updated Outlook Previous Outlook Low High Low
High
CONSOLIDATED: Net income
available to common shareholders $ 40.6 $ 44.5 $ 39.7 $ 44.5 Net
income per diluted common share $ 0.83 $ 0.91 $ 0.81 $ 0.91
Adjusted Corporate EBITDA $ 134.0 $ 138.2 $ 132.7 $ 138.0
AFFO available to common shareholders $ 95.3 $ 99.3 $ 94.6 $ 99.4
AFFO per diluted common share $ 1.95 $ 2.03 $ 1.93 $ 2.03
Corporate general and administrative expense $ 14.8 $ 15.3 $ 14.5 $
15.2 Weighted-average number of diluted common shares
outstanding 49.0 49.0 49.0 49.0
HOTEL PORTFOLIO:
17-Hotel
Portfolio(1)
RevPAR $ 169.00 $ 172.00 $ 168.00 $ 171.00 Pro forma RevPAR
increase over 2013(2) 6.5 % 8.0 % 5.5 % 7.5 % Adjusted Hotel EBITDA
$ 131.9 $ 135.6 $ 129.8 $ 134.8 Adjusted Hotel EBITDA Margin 33.1 %
33.6 % 32.7 % 33.4 % Pro forma Adjusted Hotel EBITDA Margin
increase over 2013(2) 140 bps 190 bps 100 bps 175 bps
20-Hotel
Portfolio
RevPAR $ 163.00 $ 166.00 $ 163.00 $ 166.00 Pro forma RevPAR
increase over 2013(2) 4.0 % 6.0 % 4.0 % 6.0 % Adjusted Hotel EBITDA
$ 148.8 $ 153.5 $ 147.2 $ 153.2 Adjusted Hotel EBITDA Margin 32.1 %
32.5 % 31.7 % 32.4 % Pro forma Adjusted Hotel EBITDA Margin
increase over 2013(2) 90 bps 140 bps 50 bps 125 bps ___________ (1)
Excludes the W Chicago – Lakeshore, the Hotel New Orleans
Downtown (formerly the W New Orleans), and the Hyatt Herald Square
(formerly the Holiday Inn New York City Midtown – 31st Street), as
these hotels have undergone or are undergoing comprehensive
renovations during 2014. (2) The comparable 2013 period includes
results of operations for certain hotels prior to their acquisition
by the Trust.
NON-GAAP FINANCIAL MEASURES
The Trust reports the following eight non-GAAP financial
measures that it believes are useful to investors as key measures
of its operating performance: (1) Hotel EBITDA,
(2) Adjusted Hotel EBITDA, (3) Adjusted Hotel EBITDA
Margin, (4) Corporate EBITDA, (5) Adjusted Corporate
EBITDA, (6) FFO, (7) FFO available to common shareholders
and (8) AFFO available to common shareholders. Reconciliations
of these non-GAAP financial measures to the most comparable GAAP
measure are included in the accompanying financial tables.
Hotel EBITDA – Hotel EBITDA is defined as total revenues less
total hotel operating expenses. The Trust believes that Hotel
EBITDA provides investors a useful financial measure to evaluate
the Trust’s hotel operating performance.
Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA
for certain additional recurring and non-recurring items.
Specifically, the Trust adjusts for non-cash amortization of
intangible assets and liabilities, including ground lease assets
and unfavorable contract liabilities, deferred franchise costs, and
deferred key money, all of which are recurring items. The Trust
believes that Adjusted Hotel EBITDA provides investors with another
useful financial measure to evaluate the Trust’s hotel operating
performance.
Adjusted Hotel EBITDA Margin – Adjusted Hotel EBITDA Margin is
defined as Adjusted Hotel EBITDA as a percentage of total revenues.
The Trust believes that Adjusted Hotel EBITDA Margin provides
investors another useful financial measure to evaluate the Trust’s
hotel operating performance.
Corporate EBITDA – Corporate EBITDA is defined as net income
before interest, income taxes, and depreciation and amortization.
The Trust believes that Corporate EBITDA provides investors a
useful financial measure to evaluate the Trust’s operating
performance, excluding the impact of the Trust’s capital structure
(primarily interest expense) and the Trust’s asset base (primarily
depreciation and amortization).
Adjusted Corporate EBITDA – The Trust further adjusts Corporate
EBITDA for certain additional recurring and non-recurring items.
Specifically, the Trust adjusts for hotel acquisition costs and
non-cash amortization of intangible assets and liabilities,
including air rights contracts, ground lease assets and unfavorable
contract liabilities, deferred franchise costs, and deferred key
money, all of which are recurring items. The Trust believes that
Adjusted Corporate EBITDA provides investors with another financial
measure of its operating performance that provides for greater
comparability of its core operating results between periods.
FFO – The Trust calculates FFO in accordance with standards
established by the National Association of Real Estate Investment
Trusts (NAREIT), which defines FFO as net income (calculated in
accordance with GAAP), excluding depreciation and amortization,
impairment charges, gains (losses) from sales of real estate, the
cumulative effect of changes in accounting principles, and
adjustments for unconsolidated partnerships and joint ventures.
Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably
over time. Since real estate values instead have historically risen
or fallen with market conditions, most industry investors consider
presentations of operating results for real estate companies that
use historical cost accounting to be insufficient by themselves. By
excluding the effect of depreciation and amortization and gains
(losses) from sales of real estate, both of which are based on
historical cost accounting and which may be of lesser significance
in evaluating current performance, the Trust believes that FFO
provides investors a useful financial measure to evaluate the
Trust’s operating performance.
FFO available to common shareholders – The Trust reduces FFO for
preferred share dividends and dividends declared on and earnings
allocated to unvested time-based awards (consistent with
adjustments required by GAAP in reporting net income available to
common shareholders and related per share amounts). FFO available
to common shareholders provides investors another financial measure
to evaluate the Trust’s operating performance after taking into
account the interests of holders of the Trust’s preferred shares
and unvested time-based awards.
AFFO available to common shareholders – The Trust further
adjusts FFO available to common shareholders for certain additional
recurring and non-recurring items that are not in NAREIT’s
definition of FFO. Specifically, the Trust adjusts for hotel
acquisition costs and non-cash amortization of intangible assets
and liabilities, including air rights contracts, ground lease
assets and unfavorable contract liabilities, deferred franchise
costs, and deferred key money, all of which are recurring items.
The Trust believes that AFFO available to common shareholders
provides investors with another financial measure of its operating
performance that provides for greater comparability of its core
operating results between periods.
CONFERENCE CALL
The Trust will host a conference call on Monday, August 4, 2014
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 75660019. 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 11, 2014. To access
the replay, dial (855) 859-2056 (U.S./Canadian callers) or
(404) 537-3406 (International callers). The conference call ID
is 75660019. 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 August 4, 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)
June 30, 2014 December 31, 2013
(unaudited) ASSETS Property and equipment, net $ 1,440,848 $
1,422,439 Intangible assets, net 38,480 38,781 Cash and cash
equivalents 40,047 28,713 Restricted cash 36,313 34,235 Accounts
receivable, net 21,123 13,011 Prepaid expenses and other assets
15,362 10,478 Deferred financing costs, net 5,178 6,501
Total assets $ 1,597,351 $ 1,554,158
LIABILITIES AND SHAREHOLDERS’ EQUITY Long-term debt $ 576,776 $
531,771 Accounts payable and accrued expenses 51,440 45,982 Other
liabilities 31,564 29,848 Total liabilities 659,780
607,601 Commitments and contingencies
Preferred shares, $.01 par value;
100,000,000 shares authorized; Series A Cumulative Redeemable
Preferred Shares; 5,000,000 shares issued and outstanding ($127,422
liquidation preference)
50 50
Common shares, $.01 par value; 400,000,000
shares authorized; 50,048,154 shares and 49,574,005 shares issued
and outstanding, respectively
501 496 Additional paid-in capital 993,801 991,417 Cumulative
dividends in excess of net income (56,781 ) (45,339 ) Accumulated
other comprehensive loss — (67 ) Total shareholders’ equity
937,571 946,557 Total liabilities and shareholders’
equity $ 1,597,351 $ 1,554,158
SUPPLEMENTAL CREDIT INFORMATION: Fixed charge coverage ratio(1)
2.59 2.67 Leverage ratio(1) 35.9 % 33.5 % ______________ (1)
Calculated as defined under the Trust’s revolving credit facility.
CHESAPEAKE LODGING TRUST CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except share and per
share data) (unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
REVENUE Rooms $ 98,118 $ 86,946 $ 168,957 $ 138,490 Food and
beverage 26,063 24,313 46,331 40,225 Other 4,684 4,311
8,351 7,456 Total revenue 128,865
115,570 223,639 186,171 EXPENSES Hotel
operating expenses: Rooms 21,326 19,167 39,945 33,186 Food and
beverage 18,730 17,142 34,940 29,734 Other direct 1,998 1,936 3,779
3,707 Indirect 39,633 35,125 75,782 61,705
Total hotel operating expenses 81,687 73,370 154,446 128,332
Depreciation and amortization 12,524 10,838 25,022 19,677 Air
rights contract amortization 130 130 260 260 Corporate general and
administrative 3,891 3,643 7,811 6,985 Hotel acquisition costs —
1,237 — 4,136 Total operating expenses
98,232 89,218 187,539 159,390
Operating income 30,633 26,352 36,100 26,781 Interest income
— 25 — 243 Interest expense (6,828 ) (6,346 ) (13,514 ) (11,787 )
Income before income taxes 23,805 20,031 22,586 15,237
Income tax benefit (expense) (2,556 ) (2,974 ) 841
(690 ) Net income 21,249 17,057 23,427 14,547
Preferred share dividends (2,422 ) (2,422 ) (4,844 ) (4,844 ) Net
income available to common shareholders $ 18,827 $ 14,635
$ 18,583 $ 9,703 Net income per common
share - basic and diluted $ 0.38 $ 0.30 $ 0.37 $ 0.21
Weighted-average number of common shares
outstanding - basic and diluted
48,977,876 47,862,652 48,969,761 46,187,216
CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) (unaudited)
Six Months Ended June 30, 2014 2013
Cash flows from operating activities: Net income $ 23,427 $ 14,547
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,022 19,677 Air rights contract
amortization 260 260 Deferred financing costs amortization 1,446
1,372 Share-based compensation 2,819 2,277 Other (282 ) (275 )
Changes in assets and liabilities: Accounts receivable, net (8,112
) (12,458 ) Prepaid expenses and other assets (2,769 ) (1,658 )
Accounts payable and accrued expenses 5,078 11,323 Other
liabilities (14 ) 788 Net cash provided by operating
activities 46,875 35,853 Cash flows from
investing activities: Acquisition of hotels, net of cash acquired —
(331,058 ) Receipt of deposit on hotel acquisition — 700
Improvements and additions to hotels (43,431 ) (9,979 ) Repayment
of hotel construction loan — 7,810 Change in restricted cash (2,078
) (3,872 ) Net cash used in investing activities (45,509 ) (336,399
) Cash flows from financing activities: Proceeds from sale
of common shares, net of underwriting fees — 166,083 Payment of
offering costs related to sale of common shares — (215 ) Borrowings
under revolving credit facility 50,000 105,000 Repayments under
revolving credit facility — (55,000 ) Proceeds from issuance of
mortgage debt — 127,000 Scheduled principal payments on mortgage
debt (4,889 ) (1,701 ) Payment of deferred financing costs (123 )
(1,769 ) Deposits on loan applications (2,115 ) (3,032 ) Payment of
dividends to common shareholders (27,631 ) (20,322 ) Payment of
dividends to preferred shareholders (4,844 ) (4,844 ) Repurchase of
common shares (430 ) (1,088 ) Net cash provided by financing
activities 9,968 310,112 Net increase in cash 11,334
9,566 Cash and cash equivalents, beginning of period 28,713
33,194 Cash and cash equivalents, end of period $ 40,047
$ 42,760
CHESAPEAKE LODGING TRUST
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in thousands, except per share
data)
(unaudited)
The following table calculates Hotel
EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for
the 17-hotel portfolio and the 20-hotel portfolio for the three and
six months ended June 30, 2014 and 2013:
Three Months Ended June
30, Six Months Ended June 30, 2014 2013(1)
2014 2013(1)
17-Hotel
Portfolio(2)
Total revenue $ 110,729 $ 104,528 $ 194,138 $ 178,823 Less: Total
hotel operating expenses 69,156 67,904 131,542
125,837 Hotel EBITDA 41,573 36,624 62,596 52,986
Less: Non-cash amortization(3) (74 ) (80 ) (149 ) (148 ) Adjusted
Hotel EBITDA $ 41,499 $ 36,544 $ 62,447 $
52,838 Adjusted Hotel EBITDA Margin 37.5 % 35.0 %
32.2 % 29.5 %
20-Hotel
Portfolio
Total revenue $ 128,865 $ 125,906 $ 223,639 $ 214,416 Less: Total
hotel operating expenses 81,687 81,849 154,446
151,799 Hotel EBITDA 47,178 44,057 69,193 62,617
Less: Non-cash amortization(3) (74 ) (80 ) (149 ) (148 ) Adjusted
Hotel EBITDA $ 47,104 $ 43,977 $ 69,044 $
62,469 Adjusted Hotel EBITDA Margin 36.6 % 34.9 %
30.9 % 29.1 % _____________ (1) Includes results of
operations for certain hotels prior to their acquisition by the
Trust. (2) Excludes the W Chicago – Lakeshore, the Hotel New
Orleans Downtown (formerly the W New Orleans), and the Hyatt Herald
Square (formerly the Holiday Inn New York City Midtown – 31st
Street), as these hotels have undergone or are undergoing
comprehensive renovations during 2014. (3) Includes non-cash
amortization of ground lease asset, deferred franchise costs,
deferred key money, and unfavorable contract liability. The
following table calculates Hotel EBITDA and Adjusted Hotel EBITDA
contributed by the Trust’s hotel portfolio for the three and six
months ended June 30, 2014 and 2013:
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013 Total
revenue $ 128,865 $ 115,570 $ 223,639 $ 186,171 Less: Total hotel
operating expenses 81,687 73,370 154,446
128,332 Hotel EBITDA 47,178 42,200 69,193 57,839
Less: Non-cash amortization(1) (74 ) (80 ) (149 ) (148 ) Adjusted
Hotel EBITDA $ 47,104 $ 42,120 $ 69,044 $
57,691 _____________ (1) Includes non-cash
amortization of ground lease asset, deferred franchise costs,
deferred key money, and unfavorable contract liability. The
following table reconciles net income to Corporate EBITDA and
Adjusted Corporate EBITDA for the three and six months ended June
30, 2014 and 2013: Three
Months Ended June 30, Six Months Ended June 30, 2014
2013 2014 2013 Net income $ 21,249 $
17,057 $ 23,427 $ 14,547
Add:
Depreciation and amortization
12,524 10,838 25,022 19,677
Interest expense
6,828 6,346 13,514 11,787 Income tax expense (benefit) 2,556 2,974
(841 ) 690
Less:
Interest income
— (25 ) — (243 ) Corporate EBITDA 43,157 37,190
61,122 46,458
Add:
Hotel acquisition costs
— 1,237 — 4,136 Non-cash amortization(1) 56 50 111
112 Adjusted Corporate EBITDA $ 43,213 $
38,477 $ 61,233 $ 50,706 ____________ (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 FFO, FFO available to common shareholders,
and AFFO available to common shareholders for the three and six
months ended June 30, 2014 and 2013:
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013 Net
income $ 21,249 $ 17,057 $ 23,427 $ 14,547
Add:
Depreciation and amortization
12,524 10,838 25,022 19,677 FFO 33,773
27,895 48,449 34,224
Less:
Preferred share dividends
(2,422 ) (2,422 ) (4,844 ) (4,844 ) Dividends declared on unvested
time-based awards (128 ) (90 ) (257 ) (178 ) Undistributed earnings
allocated to unvested time-based awards (35 ) (23 ) — —
FFO available to common shareholders 31,188 25,360 43,348
29,202
Add:
Hotel acquisition costs
— 1,237 — 4,136 Non-cash amortization(1) 56 50 111
112 AFFO available to common shareholders $ 31,244
$ 26,647 $ 43,459 $ 33,450 FFO
per common share - basic and diluted $ 0.64 $ 0.53 $ 0.89 $ 0.63
AFFO per common share - basic and diluted $ 0.64 $ 0.56 $
0.89 $ 0.72 ____________ (1) Includes non-cash amortization
of ground lease asset, deferred franchise costs, deferred key
money, unfavorable contract liability, and air rights contract.
The following table calculates forecasted Hotel EBITDA and
Adjusted Hotel EBITDA for the 17-hotel portfolio and the 20-hotel
portfolio for the three months ending September 30, 2014:
Three Months Ending September 30, 2014
17-Hotel Portfolio(1) 20-Hotel Portfolio Low
High Low High Total
revenue $ 109,400 $ 111,500 $ 125,700 $ 128,200 Less: Total hotel
operating expenses 68,920 69,420 81,620 82,320
Hotel EBITDA 40,480 42,080 44,080 45,880 Less:
Non-cash amortization(2) (80 ) (80 ) (80 ) (80 ) Adjusted Hotel
EBITDA $ 40,400 $ 42,000 $ 44,000 $ 45,800
_____________
(1)
Excludes the W Chicago – Lakeshore, the
Hotel New Orleans Downtown (formerly the W New Orleans), and the
Hyatt Herald Square (formerly the Holiday Inn New York City Midtown
– 31st Street), as these hotels have undergone or are undergoing
comprehensive renovations during 2014.
(2)
Includes non-cash amortization of ground
lease asset, deferred franchise costs, deferred key money, and
unfavorable contract liability.
The following table reconciles forecasted net income
to Corporate EBITDA and Adjusted Corporate EBITDA for the three
months ending September 30, 2014: Three
Months Ending September 30, 2014 Low High Net
income $ 18,050 $ 19,550
Add:
Depreciation and amortization
14,300 14,300 Interest expense 7,010 7,010 Income tax expense 1,050
1,250
Less:
Interest income
— — Corporate EBITDA 40,410 42,110
Add:
Hotel acquisition costs
— — Non-cash amortization(1) 50 50 Adjusted Corporate EBITDA
$ 40,460 $ 42,160 _____________
(1)
Includes non-cash amortization of ground
lease asset, deferred franchise costs, deferred key money,
unfavorable contract liability, and air rights contract.
The following table reconciles forecasted net income
to FFO, FFO available to common shareholders, and AFFO available to
common shareholders for the three months ending September 30, 2014:
Three Months Ending September 30, 2014
Low High Net income $ 18,050 $ 19,550
Add:
Depreciation and amortization
14,300 14,300 FFO 32,350 33,850
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 29,800 31,300
Add:
Hotel acquisition costs
— — Non-cash amortization(1) 50 50 AFFO available to
common shareholders $ 29,850 $ 31,350 FFO per
common share - basic and diluted $ 0.61 $ 0.64 AFFO per
common share - basic and diluted $ 0.61 $ 0.64
Weighted-average number of diluted common shares outstanding 48,987
48,987 _____________
(1)
Includes non-cash amortization of ground
lease asset, deferred franchise costs, deferred key money,
unfavorable contract liability, and air rights contract.
The following table calculates forecasted Hotel
EBITDA and Adjusted Hotel EBITDA for the 17-hotel portfolio and the
20-hotel portfolio for the year ending December 31, 2014:
Year Ending December 31, 2014 17-Hotel
Portfolio(1) 20-Hotel Portfolio Low
High Low High Total revenue $
398,500 $ 403,700 $ 464,100 $ 471,600 Less: Total hotel operating
expenses 266,300 267,800 315,050 317,800
Hotel EBITDA 132,200 135,900 149,050 153,800 Less:
Non-cash amortization(2) (300 ) (300 ) (300 ) (300 ) Adjusted Hotel
EBITDA $ 131,900 $ 135,600 $ 148,750 $ 153,500
_____________ (1) Excludes the W Chicago – Lakeshore,
the Hotel New Orleans Downtown (formerly the W New Orleans), and
the Hyatt Herald Square (formerly the Holiday Inn New York City
Midtown – 31st Street), as these hotels have undergone or are
undergoing comprehensive renovations during 2014. (2) Includes
non-cash amortization of ground lease asset, deferred franchise
costs, deferred key money, and unfavorable contract liability.
The following table reconciles forecasted net income to
Corporate EBITDA and Adjusted Corporate EBITDA for the year ending
December 31, 2014:
Year Ending December 31, 2014 Low
High Net income $ 50,760 $ 54,710
Add:
Depreciation and amortization
54,520 54,520 Interest expense 27,500 27,500 Income tax expense 950
1,250
Less:
Interest income
— — Corporate EBITDA 133,730 137,980
Add:
Hotel acquisition costs
— — Non-cash amortization(1) 220 220 Adjusted Corporate
EBITDA $ 133,950 $ 138,200 ____________ (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 $ 50,760 $ 54,710
Add:
Depreciation and amortization
54,520 54,520 FFO 105,280 109,230
Less:
Preferred share dividends
(9,690 ) (9,690 ) Dividends declared on unvested time-based awards
(500 ) (500 ) Undistributed earnings allocated to unvested
time-based awards — — FFO available to common
shareholders 95,090 99,040
Add:
Hotel acquisition costs
— — Non-cash amortization(1) 220 220 AFFO available
to common shareholders $ 95,310 $ 99,260 FFO
per common share - basic and diluted $ 1.94 $ 2.02 AFFO per
common share - basic and diluted $ 1.95 $ 2.03
Weighted-average number of diluted common shares outstanding 48,985
48,985 ____________ (1) Includes non-cash amortization of ground
lease asset, deferred franchise costs, deferred key money,
unfavorable contract liability, and air rights contract.
CHESAPEAKE LODGING TRUST CURRENT HOTEL PORTFOLIO
Hotel Location Rooms Acquisition Date 1
Hyatt Regency Boston Boston, MA 502 March 18, 2010 2 Hilton
Checkers Los Angeles Los Angeles, CA 193 June 1, 2010 3 Courtyard
Anaheim at Disneyland Resort Anaheim, CA 153 July 30, 2010 4 Boston
Marriott Newton Newton, MA 430 July 30, 2010 5 Le Meridien San
Francisco San Francisco, CA 360 December 15, 2010 6 Homewood Suites
Seattle Convention Center Seattle, WA 195 May 2, 2011 7 W Chicago –
City Center Chicago, IL 403 May 10, 2011 8 Hotel Indigo San Diego
Gaslamp Quarter San Diego, CA 210 June 17, 2011 9 Courtyard
Washington Capitol Hill/Navy Yard Washington, DC 204 June 30, 2011
10 Hotel Adagio San Francisco, Autograph Collection San Francisco,
CA 171 July 8, 2011 11 Denver Marriott City Center Denver, CO 613
October 3, 2011 12 Hyatt Herald Square (formerly the Holiday Inn
New York City Midtown – 31st Street) New York, NY 122 December 22,
2011 13 W Chicago – Lakeshore Chicago, IL 520 August 21, 2012 14
Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429
September 7, 2012 15 The Hotel Minneapolis, Autograph Collection
Minneapolis, MN 222 October 30, 2012 16 Hyatt Place New York
Midtown South New York, NY 185 March 14, 2013 17 W New Orleans –
French Quarter New Orleans, LA 97 March 28, 2013 18 Hotel New
Orleans Downtown (formerly the W New Orleans) New Orleans, LA 410
April 25, 2013 19 Hyatt Fisherman’s Wharf San Francisco, CA 313 May
31, 2013 20 Hyatt Santa Barbara Santa Barbara, CA 200 June 27, 2013
5,932
Chesapeake Lodging TrustDouglas W. Vicari, 410-972-4142
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