Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________

FORM 8-K

________________________________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 4, 2014

________________________________________________________________________

CHESAPEAKE LODGING TRUST

(Exact name of registrant as specified in its charter)

________________________________________________________________________



Maryland	001-34572	27-0372343
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)



1997 Annapolis Exchange Parkway, Suite 410 Annapolis, MD		21401
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (410) 972-4140

Not Applicable

(Former name or former address, if changed since last report.)

________________________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On August 4, 2014, Chesapeake Lodging Trust issued a press release announcing its financial results for the quarter ended June 30, 2014. A copy of the press release is filed as Exhibit 99.1 to this report and is incorporated by reference herein.

The information contained in this Form 8-K is furnished under “Item 2.02 Results of Operations and Financial Condition” in accordance with SEC Release 33-8216. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.



Exhibit No.		Exhibit Description

99.1		Press release dated August 4, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




Date: August 4, 2014	CHESAPEAKE LODGING TRUST

	By:	/s/ Graham J. Wootten
		Graham J. Wootten
		Senior Vice President and Chief Accounting Officer




		Exhibit 99.1
		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

CHESAPEAKE LODGING TRUST REPORTS SECOND QUARTER RESULTS

ANNAPOLIS, MD, August 4, 2014 – 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."





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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):





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142



	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.





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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.





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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.





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142



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.





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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.





		PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

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.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

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.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

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.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

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.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

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