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 March 31, 2016.

HIGHLIGHTS

• RevPAR: 10.1% pro forma increase for the hotel portfolio over the same period in 2015.
• Adjusted Hotel EBITDA Margin: 360 basis point pro forma increase to 28.5% for the hotel portfolio over the same period in 2015.
• Adjusted Hotel EBITDA: $40.1 million.
• Adjusted Corporate EBITDA: $34.8 million.
• Adjusted FFO: $26.0 million or $0.44 per diluted common share.
• Financings: Subsequent to quarter end, prepaid without penalty its previous Hyatt Regency Boston loan.

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months ended March 31, 2016 and 2015 (in millions, except share and per share amounts):

      Three Months Ended March 31, 2016       2015 Total revenue $ 140.6 $ 109.3   Net income (loss) available to common shareholders $ 7.6 $ (0.9 ) Net income (loss) per diluted common share $ 0.13 $ (0.02 )   Adjusted Hotel EBITDA $ 40.1 $ 25.3   Adjusted Corporate EBITDA $ 34.8 $ 20.7   AFFO available to common shareholders $ 26.0 $ 14.3 AFFO per diluted common share $ 0.44 $ 0.26   Weighted-average number of diluted common shares outstanding 59,247,219 54,178,494  

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 March 31, 2016, the Trust owned 22 hotels. Since two of its hotels owned as of March 31, 2016 were acquired during 2015, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three months ended March 31, 2015.

Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three months ended March 31, 2016 and 2015 (in thousands, except for ADR and RevPAR):

      Three Months Ended March 31, 2016       2015(1)       Change Occupancy 78.8 % 72.0 % 680 bps ADR $ 216.28 $ 214.86 0.7% RevPAR $ 170.35 $ 154.78 10.1%   Adjusted Hotel EBITDA $ 40,051 $ 31,668 26.5% Adjusted Hotel EBITDA Margin 28.5 % 24.9 % 360 bps   __________ (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.

CAPITAL MARKETS ACTIVITY

The Trust has not sold any common shares under its continuous at-the-market (ATM) program or repurchased any common shares under its share repurchase program during 2016.

DIVIDENDS

On January 15, 2016, the Trust paid 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 December 31, 2015. On March 16, 2016, the Trust declared dividends in the amounts of $0.40 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of March 31, 2016. Both dividends were paid on April 15, 2016.

POST-QUARTER ACTIVITY

On April 6, 2016, the Trust prepaid without penalty its previous mortgage loan secured by the Hyatt Regency Boston, which had an outstanding principal balance at the time of $88.2 million, with a borrowing under its revolving credit facility. The Trust is currently in discussions with a lender on obtaining a commitment for a new mortgage loan to be secured by the Hyatt Regency Boston.

On April 14, 2016, the Trust sold the separate, five-room villa building and related land parcel at the Hyatt Centric Santa Barbara for $2.1 million. The Trust expects to recognize an approximate $0.6 million gain on sale of hotel in the second quarter 2016.

2016 OUTLOOK

The Trust is updating its 2016 outlook to incorporate its first quarter results and recent operating trends and fundamentals. The updated outlook assumes no acquisitions, dispositions, or financing transactions beyond the refinance of the Hyatt Regency Boston mortgage loan, which was prepaid without penalty on April 6, 2016, and the Courtyard Washington Capitol Hill/Navy Yard mortgage loan, which is prepayable without penalty on August 1, 2016 (in millions, except RevPAR and per share amounts):

     

Second Quarter 2016

Outlook Low       High CONSOLIDATED:   Net income available to common shareholders $ 24.5 $ 26.7 Net income per diluted common share $ 0.41 $ 0.45   Adjusted Corporate EBITDA $ 56.7 $ 59.2   AFFO available to common shareholders $ 42.6 $ 44.9 AFFO per diluted common share $ 0.72 $ 0.76   Corporate cash general and administrative expense $ 2.6 $ 2.8 Corporate non-cash general and administrative expense $ 2.4 $ 2.4   Weighted-average number of diluted common shares outstanding 59.2 59.2   22-HOTEL PORTFOLIO:   RevPAR $ 212.00 $ 216.00 Pro forma RevPAR increase over 2015(1) 4.0 % 6.0 % Adjusted Hotel EBITDA $ 61.7 $ 64.4 Adjusted Hotel EBITDA Margin 36.4 % 37.1 % Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1) 0 bps 70 bps   _____________ (1)   The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust.              

Full Year 2016

Updated Outlook Previous Outlook Low       High Low       High CONSOLIDATED:   Net income available to common shareholders $ 74.3 $ 80.1 $ 72.9 $ 78.6 Net income per diluted common share $ 1.26 $ 1.36 $ 1.24 $ 1.34   Adjusted Corporate EBITDA $ 193.6 $ 200.1 $ 193.6 $ 200.1   AFFO available to common shareholders $ 148.5 $ 154.3 $ 147.1 $ 152.8 AFFO per diluted common share $ 2.52 $ 2.62 $ 2.50 $ 2.60   Corporate cash general and administrative expense $ 10.0 $ 10.8 $ 10.0 $ 10.8 Corporate non-cash general and administrative expense $ 9.4 $ 9.4 $ 9.4 $ 9.4   Weighted-average number of diluted common shares outstanding 58.9 58.9 58.9 58.9   22-HOTEL PORTFOLIO:   RevPAR $ 195.00 $ 199.00 $ 195.00 $ 199.00 Pro forma RevPAR increase over 2015(1) 5.0 % 7.0 % 5.0 % 7.0 % Adjusted Hotel EBITDA $ 213.0 $ 220.3 $ 213.0 $ 220.3 Adjusted Hotel EBITDA Margin 33.7 % 34.2 % 33.7 % 34.2 % Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1) 100 bps 150 bps 100 bps 150 bps   ___________ (1)   The comparable 2015 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).

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, and gain (losses) from sales of real estate, which is a non-recurring item. 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 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, April 28, 2016 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 75010701. 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 May 5, 2016. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 75010701. 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 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.

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 second quarter and full year 2016 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; the effects of any acquisitions, dispositions or financing transactions the Trust may undertake; 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 April 28, 2016, 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)               March 31, 2016 December 31, 2015 (unaudited)   ASSETS Property and equipment, net $ 1,912,310 $ 1,926,944 Intangible assets, net 36,269 36,414 Cash and cash equivalents 46,955 50,544 Restricted cash 43,129 40,361 Accounts receivable, net 21,587 15,603 Prepaid expenses and other assets 23,662   17,900   Total assets $ 2,083,912   $ 2,087,766     LIABILITIES AND SHAREHOLDERS’ EQUITY Long-term debt $ 777,512 $ 769,748 Accounts payable and accrued expenses 65,409 62,683 Other liabilities 45,794   45,778   Total liabilities 888,715   878,209     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;

60,083,747 shares and 59,659,522 shares issued and outstanding, respectively

601 597 Additional paid-in capital 1,300,053 1,297,877 Cumulative dividends in excess of net income (105,060 ) (88,675 ) Accumulated other comprehensive loss (447 ) (292 ) Total shareholders’ equity 1,195,197   1,209,557   Total liabilities and shareholders’ equity $ 2,083,912   $ 2,087,766       SUPPLEMENTAL CREDIT INFORMATION: Fixed charge coverage ratio(1) 3.23 3.04 Leverage ratio(1) 31.9 % 32.6 %   ______________ (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 March 31, 2016       2015 REVENUE Rooms $ 103,772 $ 81,594 Food and beverage 30,555 23,398 Other 6,284   4,298   Total revenue 140,611   109,290     EXPENSES Hotel operating expenses: Rooms 25,501 21,100 Food and beverage 22,766 18,466 Other direct 1,558 1,333 Indirect 50,580   43,005   Total hotel operating expenses 100,405 83,904 Depreciation and amortization 18,484 14,927 Air rights contract amortization 130 130 Corporate general and administrative 5,266 4,577 Hotel acquisition costs —   369   Total operating expenses 124,285   103,907     Operating income 16,326 5,383   Interest expense (8,210 ) (7,179 )   Income (loss) before income taxes 8,116 (1,796 )   Income tax benefit 1,954   3,348     Net income 10,070 1,552   Preferred share dividends (2,422 ) (2,422 ) Net income (loss) available to common shareholders $ 7,648   $ (870 )   Net income (loss) per common share–basic and diluted $ 0.13 $ (0.02 )   Weighted-average number of common shares outstanding: Basic 58,681,525 54,178,494 Diluted 59,247,219 54,178,494         CHESAPEAKE LODGING TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)     Three Months Ended March 31, 2016       2015   Cash flows from operating activities: Net income $ 10,070 $ 1,552

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 18,484 14,927 Air rights contract amortization 130 130 Deferred financing costs amortization 466 474 Share-based compensation 2,374 1,792 Other (221 ) (146 ) Changes in assets and liabilities: Accounts receivable, net (5,984 ) (3,711 ) Prepaid expenses and other assets (2,562 ) (5,973 ) Accounts payable and accrued expenses 2,323 (2,531 ) Other liabilities (11 ) (10 ) Net cash provided by operating activities 25,069   6,504     Cash flows from investing activities: Acquisition of hotel, net of cash acquired — (153,592 ) Deposit on hotel acquisition — (6,150 ) Improvements and additions to hotels (3,850 ) (12,917 ) Change in restricted cash (2,768 ) 2,631   Net cash used in investing activities (6,618 ) (170,028 )   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 — (184 ) Borrowings under revolving credit facility 25,000 190,000 Repayments under revolving credit facility (15,000 ) (155,000 ) Scheduled principal payments on mortgage debt (2,649 ) (2,584 ) Payment of deferred financing costs — (2,321 ) Deposit on loan application (3,200 ) — Payment of dividends to common shareholders (23,575 ) (16,281 ) Payment of dividends to preferred shareholders (2,422 ) (2,422 ) Repurchase of common shares (194 ) (1,690 ) Net cash provided by (used in) financing activities (22,040 ) 163,480   Net decrease in cash (3,589 ) (44 ) Cash and cash equivalents, beginning of period 50,544   29,326   Cash and cash equivalents, end of period $ 46,955   $ 29,282      

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and 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 months ended March 31, 2016 and 2015:         Three Months Ended March 31, 2016       2015 Net income $ 10,070 $ 1,552

Add:

Interest expense

8,210 7,179 Depreciation and amortization 18,484 14,927 Air rights contract amortization 130 130 Corporate general and administrative 5,266 4,577 Hotel acquisition costs — 369

Less:

Income tax benefit

(1,954 ) (3,348 ) Hotel EBITDA 40,206 25,386  

Less:

Non-cash amortization(1)

(155 ) (81 ) Adjusted Hotel EBITDA 40,051 25,305  

Add:

Prior owner Hotel EBITDA(2)

—   6,363   Pro forma Adjusted Hotel EBITDA $ 40,051   $ 31,668     Total revenue $ 140,611 $ 109,290

Add:

Prior owner total revenue(2)

—   18,044   Pro forma total revenue $ 140,611   $ 127,334     Pro forma Adjusted Hotel EBITDA Margin 28.5 % 24.9 %   _____________ (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 net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ended March 31, 2016 and 2015:

        Three Months Ended March 31, 2016       2015

Net income

$ 10,070 $ 1,552

Add:

Interest expense

8,210 7,179 Depreciation and amortization 18,484 14,927

Less:

Income tax benefit

(1,954 ) (3,348 ) Corporate EBITDA 34,810 20,310  

Add:

Hotel acquisition costs

— 369

Less:

Non-cash amortization(1)

(25 ) 49   Adjusted Corporate EBITDA $ 34,785   $ 20,728     ____________ (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 months ended March 31, 2016 and 2015:

        Three Months Ended March 31, 2016       2015 Net income $ 10,070 $ 1,552

Add:

Depreciation and amortization

18,484   14,927   FFO 28,554 16,479  

Less:

Preferred share dividends

(2,422 ) (2,422 ) Dividends declared on unvested time-based awards (144 ) (137 ) Undistributed earnings allocated to unvested time-based awards —   —   FFO available to common shareholders 25,988 13,920  

Add:

Hotel acquisition costs

— 369 Non-cash amortization(1) (25 ) 49   AFFO available to common shareholders $ 25,963   $ 14,338     FFO per common share–basic and diluted $ 0.44 $ 0.26   AFFO per common share–basic and diluted $ 0.44 $ 0.26   ____________ (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 Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the three months ending June 30, 2016 and year ending December 31, 2016:

             

Three Months EndingJune 30, 2016

Year EndingDecember 31, 2016

Low       High Low       High Net income $ 27,060 $ 29,310 $ 84,560 $ 90,310

Add:

Interest expense

7,880 7,880 32,310 32,310 Income tax expense 3,650 3,850 2,500 3,250 Depreciation and amortization 18,720 18,720 74,860 74,860 Air rights contract amortization 130 130 520 520 Corporate general and administrative 4,970   5,170   19,420   20,170   Hotel EBITDA 62,410 65,060 214,170 221,420  

Less:

Non-cash amortization(1)

(160 ) (160 ) (620 ) (620 ) Gain on sale of hotel (550 ) (550 ) (550 ) (550 ) Adjusted Hotel EBITDA $ 61,700   $ 64,350   $ 213,000   $ 220,250     Total revenue $ 169,400 $ 173,400 $ 631,500 $ 643,500   Adjusted Hotel EBITDA Margin 36.4 % 37.1 % 33.7 % 34.2 %   _____________ (1)   Reflects 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 June 30, 2016 and year ending December 31, 2016:

             

Three Months EndingJune 30, 2016

Year EndingDecember 31, 2016

Low       High Low       High Net income $ 27,060 $ 29,310 $ 84,560 $ 90,310

Add:

Interest expense

7,880 7,880 32,310 32,310 Income tax expense 3,650 3,850 2,500 3,250 Depreciation and amortization 18,720   18,720   74,860   74,860   Corporate EBITDA 57,310 59,760 194,230 200,730  

Less:

Non-cash amortization(1)

(30 ) (30 ) (100 ) (100 ) Gain on sale of hotel (550 ) (550 ) (550 ) (550 ) Adjusted Corporate EBITDA $ 56,730   $ 59,180   $ 193,580   $ 200,080     ____________ (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 June 30, 2016 and year ending December 31, 2016:

             

Three Months EndingJune 30, 2016

Year EndingDecember 31, 2016

Low       High Low       High Net income $ 27,060 $ 29,310 $ 84,560 $ 90,310

Add:

Depreciation and amortization

18,720 18,720 74,860 74,860

Less:

Gain on sale of hotel

(550 ) (550 ) (550 ) (550 ) FFO 45,230 47,480 158,870 164,620  

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 (10 ) (10 ) —   —   FFO available to common shareholders 42,650 44,900 148,620 154,370  

Less:

Non-cash amortization(1)

(30 ) (30 ) (100 ) (100 ) AFFO available to common shareholders $ 42,620   $ 44,870   $ 148,520   $ 154,270     FFO per common share: Basic $ 0.73 $ 0.76 $ 2.53 $ 2.63 Diluted $ 0.72 $ 0.76 $ 2.52 $ 2.62   AFFO per common share: Basic $ 0.73 $ 0.76 $ 2.53 $ 2.63 Diluted $ 0.72 $ 0.76 $ 2.52 $ 2.62   Weighted-average number of common shares outstanding: Basic 58,722 58,722 58,765 58,765 Diluted 59,248 59,248 58,860 58,860   ____________ (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 Centric Fisherman’s Wharf San Francisco, CA 316 May 31, 2013 19 Hyatt Centric 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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Chesapeake Lodging TrustDouglas W. Vicari, 410-972-4142