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, 2014.

HIGHLIGHTS

• RevPAR: 7.5% pro forma increase for the 17-hotel portfolio and 4.9% pro forma increase for the 20-hotel portfolio over the same period in 2013.
• Adjusted Hotel EBITDA Margin: 70 basis point pro forma increase to 31.0% for the 17-hotel portfolio and 20 basis point pro forma increase to 30.5% for the 20-hotel portfolio over the same period in 2013.
• Adjusted Hotel EBITDA: $37.7 million.
• Adjusted Corporate EBITDA: $33.7 million.
• Adjusted FFO: $24.0 million or $0.44 per diluted common share.
• Acquisitions: Acquired the 337-room JW Marriott San Francisco Union Square for a purchase price of $147.2 million. Subsequent to quarter end, entered into a definitive agreement to acquire the 393-room James Royal Palm located in Miami Beach, Florida for a purchase price of $278.0 million.
• Dividends: Increased first quarter 2015 dividend by 17% to $0.35 per common share (3.8% annualized yield based on the closing price of the Trust’s common shares on February 18, 2015).

“We are very excited to announce our entrance into the highly desirable Miami South Beach market with the pending acquisition of The James Royal Palm,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “The Royal Palm, which recently underwent a comprehensive renovation, has an irreplaceable oceanfront location at the intersection of Collins Avenue and 15th Street.” Mr. Francis continued, “We believe the hotel has significant upside potential in both revenue and profitability and we are happy to partner with both HEI Hotels & Resorts, as the new hotel manager, and Starwood Hotels & Resorts, as the franchisor, on this project.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months and year ended December 31, 2014 and 2013 (in millions, except share and per share amounts):

            Three Months Ended December 31,

          Year Ended December 31,          

2014(1)       2013(1) 2014(2)       2013(3) Total revenue $ 123.5 $ 111.6 $ 478.0 $ 420.2   Net income available to common shareholders $ 6.4 $ 9.1 $ 51.3 $ 35.6 Net income per diluted common share $ 0.12 $ 0.18 $ 1.00 $ 0.75   Adjusted Hotel EBITDA $ 37.7 $ 34.4 $ 154.0 $ 134.9   Adjusted Corporate EBITDA $ 33.7 $ 31.2 $ 138.4 $ 121.8   AFFO available to common shareholders $ 24.0 $ 21.6 $ 100.4 $ 84.2 AFFO per diluted common share $ 0.44 $ 0.44 $ 1.97 $ 1.78   Weighted-average number of diluted common shares outstanding 54,262,749 48,884,102 50,890,861 47,295,089   ___________ (1)   Includes results of operations of 20 hotels for the full period. (2) Includes results of operations of 19 hotels for the full period and two hotels for part of the period. (3) Includes results of operations of 15 hotels for the full period and five hotels for part of the period.  

HOTEL OPERATING RESULTS

As of December 31, 2014, the Trust owned 20 hotels. Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared using the following key operating metrics: occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin. The Trust uses the term "pro forma" to refer to metrics that include, or comparisons of metrics that are based on, the operating results of hotels under previous ownership for either a portion of or the entire period. Since one of our hotels owned as of December 31, 2014 was acquired during 2014 and five of our hotels owned as of December 31, 2014 were acquired at various times during 2013, the key operating metrics reflect the pro forma operating results for those hotels for all, or a certain period, of the years ended December 31, 2014 and 2013.

In addition to assessing the operating performance of its 20-hotel portfolio for the three months and year ended December 31, 2014, management also assesses the operating performance of a 17-hotel portfolio, which excludes the W Chicago – Lakeshore, the Le Meridien New Orleans, and the Hyatt Herald Square New York, as these hotels were undergoing comprehensive renovations during 2014. Included in the following table are comparisons of the key operating metrics for the 17-hotel portfolio and the 20-hotel portfolio for the three months and year ended December 31, 2014 and 2013 (in thousands, except for ADR and RevPAR):

            Three Months Ended December 31, Year Ended December 31, 2014        

2013(1)

      Change

2014(1)

     

2013(1)

      Change

17-Hotel Portfolio(2)

Occupancy 77.8 % 78.3 % (50) bps 83.4 % 81.8 % 160 bps ADR $ 222.07 $ 205.30 8.2 % $ 218.72 $ 203.61 7.4 % RevPAR $ 172.68 $ 160.68 7.5 % $ 182.35 $ 166.59 9.5 %   Adjusted Hotel EBITDA $ 33,073 $ 30,704 7.7 % $ 144,955 $ 126,087 15.0 % Adjusted Hotel EBITDA Margin 31.0 % 30.3 % 70 bps 32.9 % 30.9 % 200 bps  

20-Hotel Portfolio

Occupancy 75.5 % 77.2 % (170) bps 79.9 % 80.4 % (50) bps ADR $ 219.65 $ 204.82 7.2 % $ 216.21 $ 202.81 6.6 % RevPAR $ 165.95 $ 158.13 4.9 % $ 172.80 $ 163.12 5.9 %   Adjusted Hotel EBITDA $ 37,695 $ 36,373 3.6 % $ 160,258 $ 146,639 9.3 % Adjusted Hotel EBITDA Margin 30.5 % 30.3 % 20 bps 31.8 % 30.5 % 130 bps   __________ (1)   Includes results of operations for certain hotels prior to their acquisition by the Trust. (2) Excludes the W Chicago – Lakeshore, the Le Meridien New Orleans, and the Hyatt Herald Square New York, as these hotels were 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.

ACQUISITIONS

On October 1, 2014, the Trust acquired the 337-room JW Marriott San Francisco Union Square located in San Francisco, California for $154.1 million, including an acquired FF&E reserve and working capital. The Trust assumed the existing management agreement with Marriott International, Inc., as well as the existing ground lease covering the property, which expires in January 2083.

On February 19, 2015, the Trust announced that it had entered into a definitive agreement to acquire the 393-room James Royal Palm located in Miami Beach, Florida for a purchase price of $278.0 million. The Trust expects the hotel will be managed by HEI Hotels & Resorts and be affiliated with Starwood Hotels and Resorts' new Collection brand. The Trust expects the acquisition to close in the first quarter 2015, subject to customary closing conditions, but can give no assurance that the acquisition will be consummated during that time period, or at all.

MAJOR REPOSITIONINGS

The comprehensive renovation at the former 410-room W New Orleans to reposition the hotel as the Le Meridien New Orleans, which commenced in the second quarter of 2014, was completed in the fourth quarter of 2014 with a total expected cost of approximately $26.0 million.

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 New York, which commenced in the third quarter of 2014, was completed in the fourth quarter of 2014 with a total expected cost of approximately $6.5 million.

CAPITAL MARKETS ACTIVITY

The Trust has not sold any common shares under its continuous at-the-market (ATM) program during 2014 and through the date of this release.

DIVIDENDS

On October 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 September 30, 2014. On December 12, 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 December 31, 2014. Both dividends were paid on January 15, 2014.

On January 26, 2015, the Trust declared dividends in the amounts of $0.35 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of March 31, 2015. The dividends will be paid on April 15, 2015.

2015 OUTLOOK

The Trust reaffirms its previously provided full year 2015 outlook and is incorporating its first quarter 2015 outlook as follows (in millions, except RevPAR and per share amounts):

            First Quarter Full Year 2015 Outlook 2015 Outlook Low       High Low       High CONSOLIDATED:   Net income (loss) available to common shareholders $ (1.9 ) $ (1.2 ) $ 62.9 $ 68.2 Net income (loss) per diluted common share $ (0.03 ) $ (0.02 ) $ 1.16 $ 1.25   Adjusted Corporate EBITDA $ 18.4 $ 19.3 $ 158.0 $ 163.8   AFFO available to common shareholders $ 12.2 $ 12.9 $ 119.9 $ 125.2 AFFO per diluted common share $ 0.22 $ 0.24 $ 2.20 $ 2.30   Corporate cash general and administrative expense $ 2.6 $ 2.7 $ 9.4 $ 10.2 Corporate non-cash general and administrative expense $ 1.8 $ 1.8 $ 7.6 $ 7.6   Weighted-average number of diluted common shares outstanding 54.4 54.4 54.5 54.5   HOTEL PORTFOLIO:   RevPAR $ 143.00 $ 145.00 $ 186.00 $ 189.00 Pro forma RevPAR increase over 2014(1) 3.0 %

4.0

% 7.5 % 9.5 % Adjusted Hotel EBITDA $ 22.8 $ 23.8 $ 175.0 $ 181.5 Adjusted Hotel EBITDA Margin 21.8 % 22.3 % 32.5 % 33.0 % Pro forma Adjusted Hotel EBITDA Margin increase (decrease) over 2014(1) (100) bps (50) bps 75 bps 125 bps   _____________ (1)   The comparable 2014 period includes results of operations for one hotel prior to its acquisition by the Trust.  

The Trust’s 2015 outlook contemplates the expected revenue and Hotel EBITDA displacement from guestroom renovations taking place during the first quarter at the 502-room Hyatt Regency Boston, the 360-room Le Meridien San Francisco and the 313-room Hyatt Fisherman’s Wharf. The Trust estimates that the negative impact on RevPAR growth for the first quarter and full year 2015 will be approximately 650 basis points and 150 basis points, respectively, and the negative impact on Adjusted Hotel EBITDA Margin growth for the first quarter and full year 2015 will be approximately 200 basis points and 25 basis points, respectively, resulting in Hotel EBITDA displacement of approximately $3.25 million for the first quarter and full year 2015.

The Trust’s 2015 outlook also includes a 17% increase in estimated real estate tax expense as a result of actual and expected real estate reassessments at certain of its hotels for 2015. The Trust estimates that the negative impact on Adjusted Hotel EBITDA Margin growth for 2015 will be approximately 70 basis points.

The Trust’s 2015 outlook does not assume the pending acquisition of The James Royal Palm and related acquisition financing or any additional acquisitions, dispositions, or financing transactions. See the accompanying financial tables for quarterly pro forma hotel operating results for the 20-hotel portfolio for 2014.

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, and gains (losses) from sales of real estate, which is a non-recurring item. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges of depreciable real estate, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust’s operating performance.

FFO available to common shareholders – The Trust reduces FFO for preferred share dividends and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust’s operating performance after taking into account the interests of holders of the Trust’s preferred shares and unvested time-based awards.

AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT’s definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

CONFERENCE CALL

The Trust will host a conference call on Thursday, February 19, 2015 at 5:00 p.m. Eastern Time to discuss its financial results. Interested individuals are invited to listen to the call by dialing (877) 683-0303 (U.S./Canadian callers) or (706) 643-5037 (International callers). The conference call ID is 73149662. 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 26, 2015. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 73149662. 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 6,116 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, the Trust's 2015 outlook, and the time for completing, if at all, the pending acquisition described. 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 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 19, 2015, and the Trust undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Trust’s expectations, except as required by law.

  CHESAPEAKE LODGING TRUST CONSOLIDATED BALANCE SHEETS (in thousands, except share data)         December 31, 2014       2013   ASSETS Property and equipment, net $ 1,580,427 $ 1,422,439 Intangible assets, net 36,992 38,781 Cash and cash equivalents 29,326 28,713 Restricted cash 43,387 34,235 Accounts receivable, net 13,102 13,011 Prepaid expenses and other assets 10,637 10,478 Deferred financing costs, net 6,064   6,501   Total assets $ 1,719,935   $ 1,554,158     LIABILITIES AND SHAREHOLDERS’ EQUITY Long-term debt $ 551,723 $ 531,771 Accounts payable and accrued expenses 53,442 45,982 Other liabilities 32,788   29,848   Total liabilities 637,953   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;

54,818,064 shares and 49,574,005 shares issued and outstanding, respectively

548 496 Additional paid-in capital 1,138,391 991,417 Cumulative dividends in excess of net income (57,007 ) (45,339 ) Accumulated other comprehensive loss —  

(67

)

Total shareholders’ equity 1,081,982  

946,557

 

Total liabilities and shareholders’ equity $ 1,719,935   $ 1,554,158       SUPPLEMENTAL CREDIT INFORMATION: Fixed charge coverage ratio(1) 2.65 2.67 Leverage ratio(1) 31.1 % 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)     Three Months Ended December 31, Year Ended December 31, 2014       2013 2014       2013 (unaudited)       REVENUE       Rooms $ 93,297 $ 82,397 $ 364,727 $ 316,434 Food and beverage 25,093 24,704 94,307 86,884 Other 5,111   4,462   18,946   16,859   Total revenue 123,501   111,563   477,980   420,177     EXPENSES Hotel operating expenses: Rooms 22,515 19,664 84,445 73,711 Food and beverage 19,016 17,798 71,816 65,090 Other direct 2,019 2,002 8,032 8,042 Indirect 42,166   37,635   160,589   138,120   Total hotel operating expenses 85,716 77,099 324,882 284,963 Depreciation and amortization 14,079 12,457 51,567 44,469 Air rights contract amortization 130 130 520 520 Corporate general and administrative 4,052 3,204 15,557 13,125 Hotel acquisition costs 3,562   27   3,622   4,222   Total operating expenses 107,539   92,917   396,148   347,299     Operating income 15,962 18,646 81,832 72,878   Interest income — — 8 247 Interest expense (6,880 ) (6,794 ) (27,357 ) (25,780 ) Gain on sale of hotel — — 7,006 — Loss on early extinguishment of debt —   —   —   (372 )   Income before income taxes 9,082 11,852 61,489 46,973   Income tax expense (243 ) (324 ) (535 ) (1,655 )   Net income 8,839 11,528 60,954 45,318   Preferred share dividends (2,422 ) (2,422 ) (9,688 ) (9,688 ) Net income available to common shareholders $ 6,417   $ 9,106   $ 51,266   $ 35,630     Net income per common share: Basic $ 0.12 $ 0.18 $ 1.01 $ 0.75 Diluted $ 0.12 $ 0.18 $ 1.00 $ 0.75  

Weighted-average number of common shares outstanding:

Basic 53,821,483 48,884,102 50,488,007 47,295,089 Diluted 54,262,749 48,884,102 50,890,861 47,295,089           CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)     Year Ended December 31, 2014       2013   Cash flows from operating activities: Net income $ 60,954 $ 45,318

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

Depreciation and amortization 51,567 44,469 Air rights contract amortization 520 520 Deferred financing costs amortization 2,448 2,837 Gain on sale of hotel (7,006 ) — Loss on early extinguishment of debt — 372 Share-based compensation 5,803 4,612 Other 625 (295 ) Changes in assets and liabilities: Accounts receivable, net 1,277 (2,543 ) Prepaid expenses and other assets (290 ) (3,305 ) Accounts payable and accrued expenses 3,766 7,203 Other liabilities (30 ) 774   Net cash provided by operating activities 119,634   99,962     Cash flows from investing activities: Acquisition of hotels, net of cash acquired (152,292 ) (331,058 ) Disposition of hotel, net of cash sold 31,822 — Receipt of deposit on hotel acquisition — 700 Improvements and additions to hotels (87,182 ) (28,235 ) Repayment of hotel construction loan — 7,810 Change in restricted cash (2,164 ) (10,775 ) Net cash used in investing activities (209,816 ) (361,558 )   Cash flows from financing activities: Proceeds from sale of common shares, net of underwriting fees 144,320 189,862 Payment of offering costs related to sale of common shares (392 ) (468 ) Borrowings under revolving credit facility 100,000 105,000 Repayments under revolving credit facility (100,000 ) (155,000 ) Proceeds from issuance of mortgage debt 90,000 312,500 Principal prepayment on mortgage debt — (130,000 ) Scheduled principal payments on mortgage debt (69,837 ) (5,726 ) Payment of deferred financing costs (2,011 ) (3,080 ) Payment of dividends to common shareholders (58,892 ) (44,516 ) Payment of dividends to preferred shareholders (9,688 ) (9,688 ) Repurchase of common shares (2,705 ) (1,769 ) Net cash provided by financing activities 90,795   257,115   Net increase (decrease) in cash 613 (4,481 ) Cash and cash equivalents, beginning of period 28,713   33,194   Cash and cash equivalents, end of period $ 29,326   $ 28,713        

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 months and year ended December 31, 2014 and 2013:         Three Months Ended December 31,       Year Ended December 31, 2014       2013(1) 2014(1)       2013(1)

17-Hotel Portfolio(2)

Total revenue $ 106,539 $ 101,412 $ 441,231 $ 407,598 Less: Total hotel operating expenses 73,385   70,632   297,161   281,209   Hotel EBITDA 33,154 30,780 144,070 126,389   Less: Non-cash amortization(3) (81 ) (76 ) 885   (302 ) Adjusted Hotel EBITDA $ 33,073   $ 30,704   $ 144,955   $ 126,087     Adjusted Hotel EBITDA Margin 31.0 % 30.3 % 32.9 % 30.9 %  

20-Hotel Portfolio

Total revenue $ 123,501 $ 119,904 $ 504,107 $ 480,204 Less: Total hotel operating expenses 85,725   83,455   344,734   333,263   Hotel EBITDA 37,776 36,449 159,373 146,941   Less: Non-cash amortization(3) (81 ) (76 ) 885   (302 ) Adjusted Hotel EBITDA $ 37,695   $ 36,373   $ 160,258   $ 146,639     Adjusted Hotel EBITDA Margin 30.5 % 30.3 % 31.8 % 30.5 %   _____________ (1)   Includes results of operations for certain hotels prior to their acquisition by the Trust. (2) Excludes the W Chicago – Lakeshore, the Le Meridien New Orleans, and the Hyatt Herald Square New York, as these hotels were 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 months and year ended December 31, 2014 and 2013:

            Three Months Ended December 31, Year Ended December 31, 2014       2013 2014       2013 Total revenue $ 123,501 $ 111,563 $ 477,980 $ 420,177 Less: Total hotel operating expenses 85,716   77,099   324,882   284,963   Hotel EBITDA 37,785 34,464 153,098 135,214   Less: Non-cash amortization(1) (81 ) (75 ) 889   (297 ) Adjusted Hotel EBITDA $ 37,704   $ 34,389   $ 153,987   $ 134,917   ______________ (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 months and year ended December 31, 2014 and 2013:

            Three Months Ended December 31, Year Ended December 31, 2014       2013 2014       2013 Net income $ 8,839 $ 11,528 $ 60,954 $ 45,318

Add:

 Depreciation and amortization

14,079 12,457 51,567 44,469

 Interest expense

6,880 6,794 27,357 25,780

 Loss on early extinguishment of debt

— — — 372

 Income tax expense

243 324 535 1,655

Less:

 Interest income

—   —   (8 ) (247 ) Corporate EBITDA 30,041 31,103 140,405 117,347  

Add:

 Hotel acquisition costs

3,562 27 3,622 4,222

 Non-cash amortization(1)

49 56 1,408 223

Less:

 Gain on sale of hotel

—   —   (7,006 ) —   Adjusted Corporate EBITDA $ 33,652   $ 31,186   $ 138,429   $ 121,792   ______________ (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 months and year ended December 31, 2014 and 2013:

      Three Months Ended December 31,       Year Ended December 31, 2014       2013 2014       2013 Net income $ 8,839 $ 11,528 $ 60,954 $ 45,318

Add:

 Depreciation and amortization

14,079 12,457 51,567 44,469

Less:

 Gain on sale of hotel

—   —   (7,006 ) —   FFO 22,918 23,985 105,515 89,787  

Less:

 Preferred share dividends

(2,422 ) (2,422 ) (9,688 ) (9,688 )

 Dividends declared on unvested time-based awards

(114 ) (85 ) (499 ) (361 )

 Undistributed earnings allocated to unvested time-based awards

—   —   —   —   FFO available to common shareholders 20,382 21,478 95,328 79,738  

Add:

 Hotel acquisition costs

3,562 27 3,622 4,222

 Non-cash amortization(1)

49   56   1,408   223   AFFO available to common shareholders $ 23,993   $ 21,561   $ 100,358   $ 84,183     FFO per common share: Basic $ 0.38 $ 0.44 $ 1.89 $ 1.69 Diluted $ 0.38 $ 0.44 $ 1.87 $ 1.69   AFFO per common share: Basic $ 0.45 $ 0.44 $ 1.99 $ 1.78 Diluted $ 0.44 $ 0.44 $ 1.97 $ 1.78 ______________ (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 three months ending March 31, 2015:

      Three Months Ending March 31, 2015 Low       High Total revenue $ 104,400 $ 106,580 Less: Total hotel operating expenses 81,520   82,700   Hotel EBITDA 22,880 23,880   Less: Non-cash amortization(1) (80 ) (80 ) Adjusted Hotel EBITDA $ 22,800   $ 23,800   ______________ (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 three months ending March 31, 2015:

      Three Months Ending March 31, 2015 Low       High Net income $ 690 $ 1,390

Add:

 Depreciation and amortization

14,000 14,000

 Interest expense

6,740 6,740

Less:

 Interest income

— —

 Income tax benefit

(3,080 ) (2,880 ) Corporate EBITDA 18,350 19,250  

Add:

 Hotel acquisition costs

— —

 Non-cash amortization(1)

50   50   Adjusted Corporate EBITDA $ 18,400   $ 19,300   ______________ (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 March 31, 2015:

      Three Months Ending March 31, 2015 Low       High Net income $ 690 $ 1,390

Add:

 Depreciation and amortization

14,000   14,000   FFO 14,690 15,390  

Less:

 Preferred share dividends

(2,420 ) (2,420 )

 Dividends declared on unvested time-based awards

(140 ) (140 )

 Undistributed earnings allocated to unvested time-based awards

—   —   FFO available to common shareholders 12,130 12,830  

Add:

 Hotel acquisition costs

— —

 Non-cash amortization(1)

50   50   AFFO available to common shareholders $ 12,180   $ 12,880     FFO per common share: Basic $ 0.22 $ 0.24 Diluted $ 0.22 $ 0.24   AFFO per common share: Basic $ 0.23 $ 0.24 Diluted $ 0.22 $ 0.24   Weighted-average number of common shares outstanding: Basic 53,959 53,959 Diluted 54,434 54,434 ______________ (1)   Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.    

The following table calculates forecasted Hotel EBITDA and Adjusted Hotel EBITDA for the year ending December 31, 2015:

      Year Ending December 31, 2015   Low       High Total revenue $ 537,800 $ 549,300 Less: Total hotel operating expenses 362,480   367,480   Hotel EBITDA 175,320 181,820   Add: Non-cash amortization(1) (320 ) (320 ) Adjusted Hotel EBITDA $ 175,000   $ 181,500   ______________ (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, 2015:

      Year Ending December 31, 2015 Low       High Net income $ 73,140 $ 78,390

Add:

 Depreciation and amortization

56,810 56,810

 Interest expense

27,100 27,100

 Income tax expense

750 1,250

Less:

 Interest income

—   — Corporate EBITDA 157,800 163,550  

Add:

 Hotel acquisition costs

— —

 Non-cash amortization(1)

200   200 Adjusted Corporate EBITDA $ 158,000   $ 163,750 ______________ (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, 2015:

      Year Ending December 31, 2015 Low       High Net income $ 73,140 $ 78,390

Add:

 Depreciation and amortization

56,810   56,810   FFO 129,950 135,200  

Less:

 Preferred share dividends

(9,690 ) (9,690 )

 Dividends declared on unvested time-based awards

(530 ) (530 )

 Undistributed earnings allocated to unvested time-based awards

—   —   FFO available to common shareholders 119,730 124,980  

Add:

 Hotel acquisition costs

— —

 Non-cash amortization(1)

200   200   AFFO available to common shareholders $ 119,930   $ 125,180     FFO per common share: Basic $ 2.22 $ 2.31 Diluted $ 2.20 $ 2.29   AFFO per common share: Basic $ 2.22 $ 2.32 Diluted $ 2.20 $ 2.30   Weighted-average number of common shares outstanding: Basic 53,990 53,990 Diluted 54,465 54,465 ______________ (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 HOTEL OPERATING RESULTS

(in thousand, except ADR and RevPAR)

(unaudited)

 

The following table includes the Trust's 2014 hotel operating results for the 20-hotel portfolio:

        Three Months Ended       Year Ended

March 31,2014

      June 30, 2014      

September 30,2014

     

December 31,2014

December 31,2014

20-Hotel Portfolio(1)

Occupancy 74.5 % 85.3 % 84.3 % 75.5 % 79.9 % ADR $ 186.66 $ 221.64 $ 233.25 $ 219.65 $ 216.21 RevPAR $ 139.15 $ 188.96 $ 196.58 $ 165.95 $ 172.80   Total revenue $ 102,508 $ 137,651 $ 140,447 $ 123,501 $ 504,107 Less: Total hotel operating expenses 79,025   88,223   91,761   85,725   344,734   Hotel EBITDA 23,483 49,428 48,686 37,776 159,373   Less: Non-cash amortization(2) (76 ) (76 ) 1,118   (81 ) 885   Adjusted Hotel EBITDA $ 23,407   $ 49,352   $ 49,804   $ 37,695   $ 160,258   _____________

(1)

 

The hotel operating results for the three months ended March 31, 2014, June 30, 2014, and September 30, 2014, and for the year ended December 31, 2014, includes results of operations for one hotel prior to its acquisition by the Trust.

(2)

Includes non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.

     

CHESAPEAKE LODGING TRUST

CURRENT HOTEL PORTFOLIO

  Hotel       Location       Rooms       Acquisition Date 1       Hyatt Regency Boston Boston, MA 502 March 18, 2010 2 Hilton Checkers Los Angeles Los Angeles, CA 193 June 1, 2010 3 Boston Marriott Newton Newton, MA 430 July 30, 2010 4 Le Meridien San Francisco San Francisco, CA 360 December 15, 2010 5 Homewood Suites Seattle Convention Center Seattle, WA 195 May 2, 2011 6 W Chicago – City Center Chicago, IL 403 May 10, 2011 7 Hotel Indigo San Diego Gaslamp Quarter San Diego, CA 210 June 17, 2011 8 Courtyard Washington Capitol Hill/Navy Yard Washington, DC 204 June 30, 2011 9 Hotel Adagio San Francisco, Autograph Collection San Francisco, CA 171 July 8, 2011 10 Denver Marriott City Center Denver, CO 613 October 3, 2011 11 Hyatt Herald Square New York New York, NY 122 December 22, 2011 12 W Chicago – Lakeshore Chicago, IL 520 August 21, 2012 13 Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429 September 7, 2012 14 The Hotel Minneapolis, Autograph Collection Minneapolis, MN 222 October 30, 2012 15 Hyatt Place New York Midtown South New York, NY 185 March 14, 2013 16 W New Orleans – French Quarter New Orleans, LA 97 March 28, 2013 17 Le Meridien New Orleans New Orleans, LA 410 April 25, 2013 18 Hyatt Fisherman’s Wharf San Francisco, CA 313 May 31, 2013 19 Hyatt Santa Barbara Santa Barbara, CA 200 June 27, 2013 20 JW Marriott San Francisco Union Square San Francisco, CA 337 October 1, 2014 6,116  

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