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): July 30, 2015
________________________________________________________________________
CHESAPEAKE LODGING TRUST
(Exact name of registrant as specified in its charter)
________________________________________________________________________
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Maryland | | 001-34572 | | 27-0372343 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
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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.)
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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):
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| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| 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 July 30, 2015, Chesapeake Lodging Trust issued a press release announcing its financial results for the quarter ended June 30, 2015. 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.
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Exhibit No. | Exhibit Description |
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99.1 | Press release dated July 30, 2015. |
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.
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Date: July 30, 2015 | | | | CHESAPEAKE LODGING TRUST |
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| | | | By: | | /s/ Graham J. Wootten |
| | | | | | Graham J. Wootten |
| | | | | | Senior Vice President and Chief Accounting Officer |
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| | Exhibit 99.1 |
| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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CHESAPEAKE LODGING TRUST REPORTS SECOND QUARTER RESULTS
ANNAPOLIS, MD, July 30, 2015 – Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended June 30, 2015.
HIGHLIGHTS
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• | RevPAR: 7.0% pro forma increase for the 22-hotel portfolio over the same period in 2014. |
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• | Adjusted Hotel EBITDA Margin: 140 basis point pro forma increase to 36.4% for the 22-hotel portfolio over the same period in 2014. |
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• | Adjusted Hotel EBITDA: $59.4 million. |
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• | Adjusted Corporate EBITDA: $54.9 million. |
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• | Adjusted FFO: $39.8 million or $0.68 per diluted common share. |
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• | Acquisition: Acquired the 182-room Ace Hotel and Theater Downtown Los Angeles for a purchase price of $103.0 million. |
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• | Dividend: Increased third quarter 2015 dividend by 14% to $0.40 per common share (5.1% annualized yield based on the closing price of the Trust’s common shares on July 29, 2015). |
“We are pleased with our second quarter results, which exceeded the high end of our outlook range and were driven by both strong revenue growth and margin improvement for our hotel portfolio,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer.
Mr. Francis continued, “Our hotel portfolio today is in excellent shape and poised to outperform the industry the remainder of the year and into 2016 with the guestroom renovation projects undertaken this year now complete and coupled with the comprehensive repositionings completed in 2014. We also continue to be pleased with the initial results at our two recent acquisitions, the Royal Palm and the Ace Hotel and Theater, which further give us confidence to increase our quarterly common share dividend by 14%.”
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three and six months ended June 30, 2015 and 2014 (in millions, except share and per share amounts):
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| | Three months ended June 30, | | Six months ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Total revenue | | $ | 162.1 |
| | $ | 128.9 |
| | $ | 271.4 |
| | $ | 223.6 |
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Net income available to common shareholders | | $ | 21.6 |
| | $ | 18.8 |
| | $ | 20.8 |
| | $ | 18.6 |
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Net income per diluted common share | | $ | 0.36 |
| | $ | 0.38 |
| | $ | 0.36 |
| | $ | 0.37 |
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Adjusted Hotel EBITDA | | $ | 59.4 |
| | $ | 47.1 |
| | $ | 84.7 |
| | $ | 69.0 |
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Adjusted Corporate EBITDA | | $ | 54.9 |
| | $ | 43.2 |
| | $ | 75.6 |
| | $ | 61.2 |
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AFFO available to common shareholders | | $ | 39.8 |
| | $ | 31.2 |
| | $ | 54.2 |
| | $ | 43.5 |
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AFFO per diluted common share | | $ | 0.68 |
| | $ | 0.64 |
| | $ | 0.95 |
| | $ | 0.89 |
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Weighted-average number of diluted common shares outstanding | | 58,956,483 |
| | 48,977,876 |
| | 56,783,872 |
| | 48,969,761 |
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HOTEL OPERATING RESULTS
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. As of June 30, 2015, the Trust owned 22 hotels. Since two of its hotels owned as of June 30, 2015 were acquired during 2015 and another one was acquired in October 2014, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three and six months ended June 30, 2015 and 2014.
Included in the following table are comparisons of the key operating metrics for the 22-hotel portfolio for the three and six months ended June 30, 2015 and 2014 (in thousands, except for ADR and RevPAR):
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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| | Three months ended June 30, | | Six months ended June 30, |
| | 2015(1) | | 2014(1) | | Change | | 2015(1) | | 2014(1) | | Change |
Pro forma Occupancy | | 86.0 | % | | 84.5 | % | | 150 bps | | 79.1 | % | | 79.5 | % | | (40) bps |
Pro forma ADR | | $ | 237.11 |
| | $ | 225.64 |
| | 5.1% | | $ | 227.03 |
| | $ | 213.48 |
| | 6.3% |
Pro forma RevPAR | | $ | 203.99 |
| | $ | 190.65 |
| | 7.0% | | $ | 179.52 |
| | $ | 169.74 |
| | 5.8% |
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Pro forma Adjusted Hotel EBITDA | | $ | 59,875 |
| | $ | 54,391 |
| | 10.1% | | $ | 91,543 |
| | $ | 84,456 |
| | 8.4% |
Pro forma Adjusted Hotel EBITDA Margin | | 36.4 | % | | 35.0 | % | | 140 bps | | 31.4 | % | | 30.5 | % | | 90 bps |
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(1) | Includes results of operations for certain hotels prior to their acquisition by the Trust. |
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.
ACQUISITION ACTIVITY
On April 30, 2015, the Trust acquired the 182-room Ace Hotel and Theater Downtown Los Angeles located in Los Angeles, California for $101.7 million, including acquired working capital. The Trust entered into a management agreement with Ace Hotel Group to continue managing the hotel.
CAPITAL MARKETS ACTIVITY
The Trust has not sold any common shares under its continuous at-the-market (ATM) program during 2015.
DIVIDENDS
On April 15, 2015, the Trust paid 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. On May 20, 2015, the Trust declared dividends in the amounts of $0.35 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of June 30, 2015. Both dividends were paid on July 15, 2015.
On July 30, 2015, the Trust declared dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2015. The dividends will be paid on October 15, 2015.
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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2015 OUTLOOK
The Trust is updating its 2015 outlook to incorporate its second quarter results and recent operating trends and fundamentals. The updated outlook assumes no additional acquisitions, dispositions, or financing transactions (in millions, except RevPAR and per share amounts):
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Third Quarter 2015 | | Outlook |
| | Low | | High |
CONSOLIDATED: | | | | |
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Net income available to common shareholders | | $ | 25.3 |
| | $ | 27.4 |
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Net income per diluted common share | | $ | 0.43 |
| | $ | 0.46 |
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Adjusted Corporate EBITDA | | $ | 54.7 |
| | $ | 57.0 |
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AFFO available to common shareholders | | $ | 43.2 |
| | $ | 45.2 |
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AFFO per diluted common share | | $ | 0.73 |
| | $ | 0.77 |
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Corporate cash general and administrative expense | | $ | 2.2 |
| | $ | 2.4 |
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Corporate non-cash general and administrative expense | | $ | 2.0 |
| | $ | 2.0 |
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Weighted-average number of diluted common shares outstanding | | 59.0 |
| | 59.0 |
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22-HOTEL PORTFOLIO: | | | | |
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RevPAR | | $ | 207.00 |
| | $ | 211.00 |
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Pro forma RevPAR increase over 2014(1) | | 6.5 | % | | 8.5 | % |
Adjusted Hotel EBITDA | | $ | 58.9 |
| | $ | 61.4 |
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Adjusted Hotel EBITDA Margin | | 35.8 | % | | 36.6 | % |
Pro forma Adjusted Hotel EBITDA Margin increase over 2014(1) | | 175 bps |
| | 250 bps |
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(1) | The comparable 2014 period includes results of operations for certain hotels prior to their acquisition by the Trust. |
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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Full Year 2015 | | Updated Outlook | | Previous Outlook |
| | Low | | High | | Low | | High |
CONSOLIDATED: | | | | | | | | |
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Net income available to common shareholders | | $ | 61.7 |
| | $ | 66.9 |
| | $ | 63.2 |
| | $ | 68.9 |
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Net income per diluted common share | | $ | 1.07 |
| | $ | 1.15 |
| | $ | 1.09 |
| | $ | 1.19 |
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Adjusted Corporate EBITDA | | $ | 175.9 |
| | $ | 181.6 |
| | $ | 174.9 |
| | $ | 181.2 |
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AFFO available to common shareholders | | $ | 131.2 |
| | $ | 136.4 |
| | $ | 130.3 |
| | $ | 136.0 |
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AFFO per diluted common share | | $ | 2.27 |
| | $ | 2.35 |
| | $ | 2.25 |
| | $ | 2.35 |
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Corporate cash general and administrative expense | | $ | 9.8 |
| | $ | 10.3 |
| | $ | 9.8 |
| | $ | 10.3 |
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Corporate non-cash general and administrative expense | | $ | 7.6 |
| | $ | 7.6 |
| | $ | 7.6 |
| | $ | 7.6 |
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Weighted-average number of diluted common shares outstanding | | 57.9 |
| | 57.9 |
| | 58.0 |
| | 58.0 |
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22-HOTEL PORTFOLIO: | | | | | | | | |
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Pro forma RevPAR | | $ | 187.00 |
| | $ | 191.00 |
| | $ | 187.00 |
| | $ | 191.00 |
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Pro forma RevPAR increase over 2014(1) | | 6.5 | % | | 8.5 | % | | 6.5 | % | | 8.5 | % |
Pro forma Adjusted Hotel EBITDA | | $ | 200.2 |
| | $ | 206.4 |
| | $ | 199.3 |
| | $ | 206.0 |
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Pro forma Adjusted Hotel EBITDA Margin | | 32.8 | % | | 33.3 | % | | 32.7 | % | | 33.2 | % |
Pro forma Adjusted Hotel EBITDA Margin increase over 2014(1) | | 140 bps |
| | 190 bps |
| | 125 bps |
| | 175 bps |
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(1) | The comparable 2014 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 net income before interest, income taxes, depreciation and amortization, air rights amortization, corporate general and administrative, and hotel acquisition costs. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust’s hotel operating performance, excluding the impact of the Trust’s capital structure (primarily interest), the Trust’s asset base (primarily depreciation and amortization), and the Trust’s corporate-level expenses (corporate general and administrative and hotel acquisition costs).
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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, excluding the effect of these non-cash items.
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
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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, July 30, 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 78949780. 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 6, 2015. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 78949780. A webcast replay and transcript of the conference call will be archived and available on the Trust’s website for 12 months.
INSTITUTIONAL INVESTOR AND SECURITY ANALYST CONFERENCE
The Trust will host property tours of its San Francisco hotels on Monday, September 28, 2015 and hold its Institutional Investor and Security Analyst Conference on Tuesday, September 29, 2015 in San Francisco, California. The investor conference will be held on Tuesday, September 29, 2015 from 12:30 p.m. – 2:00 p.m. Pacific Time.
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 22 hotels with an aggregate of 6,694 rooms in nine states and the District of Columbia. Additional information can be found on the Trust’s website at www.chesapeakelodgingtrust.com.
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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 third quarter and full year 2015 outlook. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: U.S. economic conditions generally and the real estate market and the lodging industry specifically; management and performance of the Trust's hotels; supply and demand for hotel rooms in the Trust's markets; the Trust's competition; 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 July 30, 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)
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| | June 30, 2015 | | December 31, 2014 |
| | (unaudited) | | |
ASSETS | | | | |
Property and equipment, net | | $ | 1,951,880 |
| | $ | 1,580,427 |
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Intangible assets, net | | 36,703 |
| | 36,992 |
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Cash and cash equivalents | | 47,914 |
| | 29,326 |
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Restricted cash | | 38,546 |
| | 43,387 |
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Accounts receivable, net | | 28,233 |
| | 13,102 |
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Prepaid expenses and other assets | | 19,913 |
| | 10,637 |
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Deferred financing costs, net | | 7,427 |
| | 6,064 |
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Total assets | | $ | 2,130,616 |
| | $ | 1,719,935 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
Long-term debt | | $ | 806,514 |
| | $ | 551,723 |
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Accounts payable and accrued expenses | | 64,440 |
| | 53,442 |
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Other liabilities | | 43,562 |
| | 32,788 |
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Total liabilities | | 914,516 |
| | 637,953 |
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Commitments and contingencies | | | | |
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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 |
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Common shares, $.01 par value; 400,000,000 shares authorized; 59,664,367 shares and 54,818,064 shares issued and outstanding, respectively | | 597 |
| | 548 |
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Additional paid-in capital | | 1,294,103 |
| | 1,138,391 |
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Cumulative dividends in excess of net income | | (78,015 | ) | | (57,007 | ) |
Accumulated other comprehensive loss | | (635 | ) | | — |
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Total shareholders’ equity | | 1,216,100 |
| | 1,081,982 |
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Total liabilities and shareholders’ equity | | $ | 2,130,616 |
| | $ | 1,719,935 |
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SUPPLEMENTAL CREDIT INFORMATION: | | | | |
Fixed charge coverage ratio(1) | | 2.82 |
| | 2.65 |
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Leverage ratio(1) | | 34.6 | % | | 31.1 | % |
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(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)
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| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
REVENUE | | | | | | | | |
Rooms | | $ | 122,966 |
| | $ | 98,118 |
| | $ | 204,560 |
| | $ | 168,957 |
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Food and beverage | | 33,014 |
| | 26,063 |
| | 56,412 |
| | 46,331 |
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Other | | 6,165 |
| | 4,684 |
| | 10,463 |
| | 8,351 |
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Total revenue | | 162,145 |
| | 128,865 |
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| 271,435 |
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| 223,639 |
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EXPENSES | | | | | | | | |
Hotel operating expenses: | | | | | | | | |
Rooms | | 26,144 |
| | 21,326 |
| | 47,244 |
| | 39,945 |
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Food and beverage | | 23,495 |
| | 18,730 |
| | 41,961 |
| | 34,940 |
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Other direct | | 1,906 |
| | 1,998 |
| | 3,239 |
| | 3,779 |
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Indirect | | 51,024 |
| | 39,633 |
| | 94,029 |
| | 75,782 |
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Total hotel operating expenses | | 102,569 |
| | 81,687 |
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| 186,473 |
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| 154,446 |
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Depreciation and amortization | | 17,929 |
| | 12,524 |
| | 32,856 |
| | 25,022 |
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Air rights contract amortization | | 130 |
| | 130 |
| | 260 |
| | 260 |
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Corporate general and administrative | | 4,498 |
| | 3,891 |
| | 9,075 |
| | 7,811 |
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Hotel acquisition costs | | 466 |
| | — |
| | 835 |
| | — |
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Total operating expenses | | 125,592 |
| | 98,232 |
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| 229,499 |
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| 187,539 |
|
| | | | | | | | |
Operating income | | 36,553 |
| | 30,633 |
|
| 41,936 |
|
| 36,100 |
|
| | | | | | | | |
Interest expense | | (8,168 | ) | | (6,828 | ) | | (15,347 | ) | | (13,514 | ) |
| | | | | | | | |
Income before income taxes | | 28,385 |
| | 23,805 |
|
| 26,589 |
|
| 22,586 |
|
| | | | | | | | |
Income tax benefit (expense) | | (4,340 | ) | | (2,556 | ) | | (992 | ) | | 841 |
|
| | | | | | | | |
Net income | | 24,045 |
| | 21,249 |
|
| 25,597 |
|
| 23,427 |
|
| | | | | | | | |
Preferred share dividends | | (2,422 | ) | | (2,422 | ) | | (4,844 | ) | | (4,844 | ) |
Net income available to common shareholders | | $ | 21,623 |
| | $ | 18,827 |
|
| $ | 20,753 |
|
| $ | 18,583 |
|
| | | | | | | | |
Net income per common share: | | | | | | | | |
Basic | | $ | 0.37 |
| | $ | 0.38 |
| | $ | 0.36 |
| | $ | 0.37 |
|
Diluted | | $ | 0.36 |
| | $ | 0.38 |
| | $ | 0.36 |
| | $ | 0.37 |
|
| | | | | | | | |
Weighted-average number of common shares outstanding: | | | | | | | | |
Basic | | 58,544,392 |
| | 48,977,876 |
| | 56,373,504 |
| | 48,969,761 |
|
Diluted | | 58,956,483 |
| | 48,977,876 |
| | 56,783,872 |
| | 48,969,761 |
|
CHESAPEAKE LODGING TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
| | | | | | | | |
| | Six Months Ended June 30, |
| | 2015 | | 2014 |
Cash flows from operating activities: | | | | |
Net income | | $ | 25,597 |
| | $ | 23,427 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 32,856 |
| | 25,022 |
|
Air rights contract amortization | | 260 |
| | 260 |
|
Deferred financing costs amortization | | 939 |
| | 1,446 |
|
Share-based compensation | | 3,743 |
| | 2,819 |
|
Other | | (392 | ) | | (282 | ) |
Changes in assets and liabilities: | | | | |
Accounts receivable, net | | (13,309 | ) | | (8,112 | ) |
Prepaid expenses and other assets | | (6,584 | ) | | (2,769 | ) |
Accounts payable and accrued expenses | | 6,403 |
| | 5,078 |
|
Other liabilities | | 5,981 |
| | (14 | ) |
Net cash provided by operating activities | | 55,494 |
| | 46,875 |
|
| | | | |
Cash flows from investing activities: | | | | |
Acquisition of hotels, net of cash acquired | | (255,249 | ) | | — |
|
Improvements and additions to hotels | | (24,361 | ) | | (43,431 | ) |
Change in restricted cash | | 4,841 |
| | (2,078 | ) |
Net cash used in investing activities | | (274,769 | ) | | (45,509 | ) |
| | | | |
Cash flows from financing activities: | | | | |
Proceeds from sale of common shares, net of underwriting fees | | 153,962 |
| | — |
|
Payment of offering costs related to sale of common shares | | (254 | ) | | — |
|
Borrowings under revolving credit facility | | 310,000 |
| | 50,000 |
|
Repayments under revolving credit facility | | (175,000 | ) | | — |
|
Scheduled principal payments on mortgage debt | | (5,103 | ) | | (4,889 | ) |
Payment of deferred financing costs | | (2,302 | ) | | (123 | ) |
Deposits on loan applications | | — |
| | (2,115 | ) |
Payment of dividends to common shareholders | | (36,906 | ) | | (27,631 | ) |
Payment of dividends to preferred shareholders | | (4,844 | ) | | (4,844 | ) |
Repurchase of common shares | | (1,690 | ) | | (430 | ) |
Net cash provided by financing activities | | 237,863 |
| | 9,968 |
|
Net increase in cash | | 18,588 |
| | 11,334 |
|
Cash and cash equivalents, beginning of period | | 29,326 |
| | 28,713 |
|
Cash and cash equivalents, end of period | | $ | 47,914 |
| | $ | 40,047 |
|
CHESAPEAKE LODGING TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
The following table reconciles net income to Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three and six months ended June 30, 2015 and 2014:
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Net income | | $ | 24,045 |
| | $ | 21,249 |
| | $ | 25,597 |
| | $ | 23,427 |
|
Add: Interest expense | | 8,168 |
| | 6,828 |
| | 15,347 |
| | 13,514 |
|
Income tax expense (benefit) | | 4,340 |
| | 2,556 |
| | 992 |
| | (841 | ) |
Depreciation and amortization | | 17,929 |
| | 12,524 |
| | 32,856 |
| | 25,022 |
|
Air rights contract amortization | | 130 |
| | 130 |
| | 260 |
| | 260 |
|
Corporate general and administrative | | 4,498 |
| | 3,891 |
| | 9,075 |
| | 7,811 |
|
Hotel acquisition costs | | 466 |
| | — |
| | 835 |
| | — |
|
Hotel EBITDA | | 59,576 |
| | 47,178 |
| | 84,962 |
| | 69,193 |
|
| | | | | | | | |
Less: Non-cash amortization(1) | | (180 | ) | | (74 | ) | | (261 | ) | | (149 | ) |
Adjusted Hotel EBITDA | | 59,396 |
| | 47,104 |
| | 84,701 |
| | 69,044 |
|
| | | | | | | | |
Add: Prior owner Hotel EBITDA(2) | | 479 |
| | 7,928 |
| | 6,842 |
| | 16,755 |
|
Less: Hotel EBITDA of hotel sold(3) | | — |
| | (641 | ) | | — |
| | (1,343 | ) |
Pro forma Adjusted Hotel EBITDA | | $ | 59,875 |
| | $ | 54,391 |
| | $ | 91,543 |
| | $ | 84,456 |
|
| | | | | | | | |
Total revenue | | $ | 162,145 |
| | $ | 128,865 |
| | $ | 271,435 |
| | $ | 223,639 |
|
Add: Prior owner total revenue(2) | | 2,242 |
| | 28,198 |
| | 20,286 |
| | 56,531 |
|
Less: Total revenue of hotel sold(3) | | — |
| | (1,614 | ) | | — |
| | (3,363 | ) |
Pro forma total revenue | | $ | 164,387 |
| | $ | 155,449 |
| | $ | 291,721 |
| | $ | 276,807 |
|
| | | | | | | | |
Pro forma Adjusted Hotel EBITDA Margin | | 36.4 | % | | 35.0 | % | | 31.4 | % | | 30.5 | % |
_____________
| |
(1) | Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. |
| |
(2) | Reflects results of operations for certain hotels prior to our acquisition. |
| |
(3) | Reflects results of operations for the Courtyard Anaheim at Disneyland Resort which was sold on September 30, 2014. |
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, 2015 and 2014:
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Net income | | $ | 24,045 |
| | $ | 21,249 |
| | $ | 25,597 |
| | $ | 23,427 |
|
Add: Interest expense | | 8,168 |
| | 6,828 |
| | 15,347 |
| | 13,514 |
|
Income tax expense (benefit) | | 4,340 |
| | 2,556 |
| | 992 |
| | (841 | ) |
Depreciation and amortization | | 17,929 |
| | 12,524 |
| | 32,856 |
| | 25,022 |
|
Corporate EBITDA | | 54,482 |
| | 43,157 |
| | 74,792 |
| | 61,122 |
|
| | | | | | | | |
Add: Hotel acquisition costs | | 466 |
| | — |
| | 835 |
| | — |
|
Less: Non-cash amortization(1) | | (50 | ) | | 56 |
| | (1 | ) | | 111 |
|
Adjusted Corporate EBITDA | | $ | 54,898 |
| | $ | 43,213 |
| | $ | 75,626 |
| | $ | 61,233 |
|
____________
| |
(1) | Reflects 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, 2015 and 2014:
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
Net income | | $ | 24,045 |
| | $ | 21,249 |
| | $ | 25,597 |
| | $ | 23,427 |
|
Add: Depreciation and amortization | | 17,929 |
| | 12,524 |
| | 32,856 |
| | 25,022 |
|
FFO | | 41,974 |
| | 33,773 |
| | 58,453 |
| | 48,449 |
|
| | | | | | | | |
Less: Preferred share dividends | | (2,422 | ) | | (2,422 | ) | | (4,844 | ) | | (4,844 | ) |
Dividends declared on unvested time-based awards | | (136 | ) | | (128 | ) | | (273 | ) | | (257 | ) |
Undistributed earnings allocated to unvested time-based awards | | (7 | ) | | (35 | ) | | — |
| | — |
|
FFO available to common shareholders | | 39,409 |
| | 31,188 |
| | 53,336 |
| | 43,348 |
|
| | | | | | | | |
Add: Hotel acquisition costs | | 466 |
| | — |
| | 835 |
| | — |
|
Less: Non-cash amortization(1) | | (50 | ) | | 56 |
| | (1 | ) | | 111 |
|
AFFO available to common shareholders | | $ | 39,825 |
| | $ | 31,244 |
| | $ | 54,170 |
| | $ | 43,459 |
|
| | | | | | | | |
FFO per common share: | | | | | | | | |
Basic | | $ | 0.67 |
| | $ | 0.64 |
| | $ | 0.95 |
| | $ | 0.89 |
|
Diluted | | $ | 0.67 |
| | $ | 0.64 |
| | $ | 0.94 |
| | $ | 0.89 |
|
| | | | | | | | |
AFFO per common share: | | | | | | | | |
Basic | | $ | 0.68 |
| | $ | 0.64 |
| | $ | 0.96 |
| | $ | 0.89 |
|
Diluted | | $ | 0.68 |
| | $ | 0.64 |
| | $ | 0.95 |
| | $ | 0.89 |
|
___________
| |
(1) | Reflects 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 Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three months ending September 30, 2015 and year ending December 31, 2015:
|
| | | | | | | | | | | | | | | |
| Three Months Ending September 30, 2015 | | Year Ending December 31, 2015 |
| Low | | High | | Low | | High |
Net income | $ | 27,930 |
| | $ | 29,980 |
| | $ | 71,970 |
| | $ | 77,120 |
|
Add: Interest expense | 8,320 |
| | 8,320 |
| | 31,950 |
| | 31,950 |
|
Income tax expense | 650 |
| | 850 |
| | 2,500 |
| | 3,000 |
|
Depreciation and amortization | 17,840 |
| | 17,840 |
| | 68,710 |
| | 68,710 |
|
Air rights contract amortization | 130 |
| | 130 |
| | 520 |
| | 520 |
|
Corporate general and administrative | 4,180 |
| | 4,380 |
| | 17,390 |
| | 17,890 |
|
Hotel acquisition costs | — |
| | — |
| | 830 |
| | 830 |
|
Hotel EBITDA | 59,050 |
| | 61,500 |
| | 193,870 |
| | 200,020 |
|
| | | | | | | |
Less: Non-cash amortization(1) | (150 | ) | | (150 | ) | | (570 | ) | | (570 | ) |
Adjusted Hotel EBITDA | 58,900 |
| | 61,350 |
| | 193,300 |
| | 199,450 |
|
| | | | | | | |
Add: Prior owner Hotel EBITDA(2) | — |
| | — |
| | 6,900 |
| | 6,900 |
|
Pro forma Adjusted Hotel EBITDA | $ | 58,900 |
| | $ | 61,350 |
| | $ | 200,200 |
| | $ | 206,350 |
|
| | | | | | | |
Total revenue | $ | 164,400 |
| | $ | 167,700 |
| | $ | 589,500 |
| | $ | 598,900 |
|
Add: Prior owner total revenue(2) | — |
| | — |
| | 20,300 |
| | 20,300 |
|
Pro forma total revenue | $ | 164,400 |
| | $ | 167,700 |
| | $ | 609,800 |
| | $ | 619,200 |
|
| | | | | | | |
Pro forma Adjusted Hotel EBITDA Margin | 35.8 | % | | 36.6 | % | | 32.8 | % | | 33.3 | % |
_____________
| |
(1) | Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability. |
| |
(2) | Reflects results of operations for certain hotels prior to our acquisition. |
The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending September 30, 2015 and year ending December 31, 2015:
|
| | | | | | | | | | | | | | | |
| Three Months Ending September 30, 2015 | | Year Ending December 31, 2015 |
| Low | | High | | Low | | High |
Net income | $ | 27,930 |
| | $ | 29,980 |
| | $ | 71,970 |
| | $ | 77,120 |
|
Add: Interest expense | 8,320 |
| | 8,320 |
| | 31,950 |
| | 31,950 |
|
Income tax expense | 650 |
| | 850 |
| | 2,500 |
| | 3,000 |
|
Depreciation and amortization | 17,840 |
| | 17,840 |
| | 68,710 |
| | 68,710 |
|
Corporate EBITDA | 54,740 |
| | 56,990 |
| | 175,130 |
| | 180,780 |
|
| | | | | | | |
Add: Hotel acquisition costs | — |
| | — |
| | 830 |
| | 830 |
|
Less: Non-cash amortization(1) | (20 | ) | | (20 | ) | | (50 | ) | | (50 | ) |
Adjusted Corporate EBITDA | $ | 54,720 |
| | $ | 56,970 |
| | $ | 175,910 |
| | $ | 181,560 |
|
CHESAPEAKE LODGING TRUST
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
____________
| |
(1) | Reflects 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, 2015 and year ending December 31, 2015:
|
| | | | | | | | | | | | | | | |
| Three Months Ending September 30, 2015 | | Year Ending December 31, 2015 |
| Low | | High | | Low | | High |
Net income | $ | 27,930 |
| | $ | 29,980 |
| | $ | 71,970 |
| | $ | 77,120 |
|
Add: Depreciation and amortization | 17,840 |
| | 17,840 |
| | 68,710 |
| | 68,710 |
|
FFO | 45,770 |
| | 47,820 |
| | 140,680 |
| | 145,830 |
|
| | | | | | | |
Less: Preferred share dividends | (2,420 | ) | | (2,420 | ) | | (9,690 | ) | | (9,690 | ) |
Dividends declared on unvested time-based awards | (150 | ) | | (150 | ) | | (560 | ) | | (560 | ) |
Undistributed earnings allocated to unvested time-based awards | (20 | ) | | (20 | ) | | — |
| | — |
|
FFO available to common shareholders | 43,180 |
| | 45,230 |
| | 130,430 |
| | 135,580 |
|
| | | | | | | |
Add: Hotel acquisition costs | — |
| | — |
| | 830 |
| | 830 |
|
Less: Non-cash amortization(1) | (20 | ) | | (20 | ) | | (50 | ) | | (50 | ) |
AFFO available to common shareholders | $ | 43,160 |
| | $ | 45,210 |
| | $ | 131,210 |
| | $ | 136,360 |
|
| | | | | | | |
FFO per common share: | | | | | | | |
Basic | $ | 0.74 |
| | $ | 0.77 |
| | $ | 2.27 |
| | $ | 2.36 |
|
Diluted | $ | 0.73 |
| | $ | 0.77 |
| | $ | 2.25 |
| | $ | 2.34 |
|
| | | | | | | |
AFFO per common share: | | | | | | | |
Basic | $ | 0.74 |
| | $ | 0.77 |
| | $ | 2.28 |
| | $ | 2.37 |
|
Diluted | $ | 0.73 |
| | $ | 0.77 |
| | $ | 2.27 |
| | $ | 2.35 |
|
| | | | | | | |
Weighted-average number of common shares outstanding: | | | | | | | |
Basic | 58,553 |
| | 58,553 |
| | 57,474 |
| | 57,474 |
|
Diluted | 58,998 |
| | 58,998 |
| | 57,915 |
| | 57,915 |
|
____________
| |
(1) | Reflects 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 | | 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 | | 316 | | 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 |
21 | | Royal Palm South Beach Miami, a Tribute Portfolio Resort | | Miami Beach, FL | | 393 | | March 9, 2015 |
22 | | Ace Hotel and Theater Downtown Los Angeles | | Los Angeles, CA | | 182 | | April 30, 2015 |
| | | | | | 6,694 | | |
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