COREPOINT LODGING PROVIDES UPDATE ON OPERATIONS AND MEASURES TO MITIGATE IMPACT OF COVID-19
April 09 2020 - 7:40AM
CorePoint Lodging Inc. (NYSE: CPLG) (“CorePoint” or the “Company”),
a pure play select-service hotel owner strategically focused on the
midscale and upper-midscale segments, provided an update today on
its operations and the aggressive cost containment measures to
mitigate the ongoing operational and financial impact from the
COVID-19 virus as well as an update on asset sales.
“We continue to work with our third-party manager
to place the health and safety of our hotels’ guests and employees
above all else in this period of unprecedented disruption and
uncertainty for the lodging industry,” noted Keith Cline, President
and Chief Executive Officer of CorePoint. “In mid-March, we began
taking aggressive steps at the corporate and hotel level to control
costs and preserve capital. As occupancy trends have
continued to deteriorate, our asset managers, together with our
third-party property manager, have accelerated these cost
mitigation initiatives, and the Board of Directors has approved
additional capital preservation measures.”
Liquidity, Capital Preservation and Cost
Mitigation Initiatives
Balance Sheet and Dividend
- The Company’s current cash balance is approximately $210
million, excluding lender escrows of approximately $19 million. Out
of an abundance of caution, as previously disclosed and included in
the above amount, the Company proactively made a $110 million draw
from its $150 million revolving credit facility, representing
substantially all of its current availability under the facility,
to further enhance its cash liquidity position.
- CorePoint’s previously declared first quarter dividend of $0.20
per share of common stock will be paid on April 15, 2020 to
stockholders of record as of March 31, 2020. The Company expects to
suspend its common stock dividend for the balance of 2020,
resulting in the preservation of approximately $11 million of cash
per quarter, or approximately $45 million on an annualized basis.
CorePoint’s Board of Directors will reassess at the end of the year
the common dividend amount, if any, that will be declared and paid
for 2020.
Property-Level and
Corporate-Level
- Due to low occupancy caused by the lack of hotel demand from
the impact of COVID-19 and requirements from state and local
government and public health authorities, CorePoint, along with its
third-party manager, has temporarily suspended operations at 26 of
the Company’s 248 hotels in order to minimize ongoing operating
expenditures and conserve cash. CorePoint anticipates it may
temporarily suspend operations at approximately 50 additional
hotels in the next few weeks. The remaining hotels are
currently expected to remain open at reduced operational capacity,
however the Company will continue to review each individual
property based on local circumstances.
- The Company’s asset management team has accelerated cost
containment initiatives it began implementing in mid-March with its
third-party manager to significantly reduce staffing levels,
eliminate all non-essential amenity offerings, minimize spending at
all hotels and close sections and/or floors at some hotels to
maximize efficiencies.
- CorePoint and its third-party manager are pursuing alternative
sources of hotel revenue, including from governmental authorities
and local organizations seeking temporary accommodations for groups
such as medical personnel, first responders and military personnel
as well as continuing to pursue corporate accounts related to
essential businesses.
- As previously disclosed, CorePoint is deferring all
non-essential capital investments and expenditures for 2020, with
the exception of life safety or critical operational needs,
resulting in an estimated reduction of total capital spending in
the range of approximately $25 million to $30 million.
- Related to board and executive compensation, CorePoint’s Board
of Directors will be paid their board fees for the remainder of
2020 in the form of deferred stock units and Mr. Cline has elected
to take a portion of his compensation for the remainder of 2020 in
the form of restricted stock. In addition, the Company
continues to implement cost containment measures with respect to
all other corporate spending.
Portfolio Strategy Update and
Dispositions
- Since March 12, 2020, CorePoint has completed the sale of six
additional non-core hotels for gross proceeds of approximately $26
million, of which approximately $10 million of the net proceeds
were used to repay CMBS debt.
- Year to date, CorePoint has completed the sale of 23 hotels for
gross proceeds of approximately $100 million. Of this amount,
approximately $50 million of the net proceeds has been used to
repay CMBS debt. With the recent asset sale closings, the
Company has reduced its debt outstanding on its CMBS loan today to
approximately $870 million. The interest rate on the CMBS
loan is LIBOR + 2.75%.
- The Company is unable to forecast at this time whether there
will be any impact from COVID-19 on the timing of, or gross
proceeds from, future anticipated asset sales. The Company
intends to provide any further updates on the status and timing of
both its phase one and phase two non-core dispositions, including
those hotels currently under contract, when it reports operational
and financial results for the first quarter of 2020.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements may include, but are not
limited to, statements related to the Company’s expectations
regarding the impact of the COVID-19 pandemic and the impact of any
measures taken to mitigate the impact of the pandemic. Such
forward-looking statements often contain words such as “assume,”
“will,” “anticipate,” “believe,” “predict,” “project,” “potential,”
“contemplate,” “plan,” “forecast,” “estimate,” “expect,” “intend,”
“is targeting,” “may,” “should,” “would,” “could,” “goal,” “seek,”
“hope,” “aim,” “continue” and other similar words or expressions or
the negative thereof or other variations thereon. Forward-looking
statements are made based upon management’s current expectations
and beliefs and are not guarantees of future performance. Such
forward-looking statements involve numerous assumptions, risks and
uncertainties that may cause actual results to differ materially
from those expressed or implied in any such statements. Our actual
business, financial condition or results of operations may differ
materially from those suggested by forward-looking statements as a
result of risks and uncertainties which include, among others:
business, financial and operating risks inherent to the lodging
industry; macroeconomic and other factors beyond our control,
including without limitation the effects of pandemics or outbreaks
of contagious disease; the geographic concentration of our hotels;
our inability to compete effectively; our concentration in the La
Quinta brand; our dependence on the performance of LQ Management
L.L.C. and other third-party hotel managers and franchisors;
covenants in our hotel management and franchise agreements that
limit or restrict the sale of our hotels; risks posed by our
disposition activities as well as our acquisition, redevelopment,
repositioning, renovation and re-branding activities; risks
resulting from significant investments in real estate; cyber
threats and the risk of data breaches or disruptions of technology
information systems; the growth of internet reservation channels;
disruptions to the functioning or transition of the reservation
systems, accounting systems or other technology programs for our
hotels, and other technology programs and system upgrades; risks
related to our spin-off from La Quinta and the merger of La
Quinta’s management and franchise business with Wyndham; and our
substantial indebtedness. Additional risks and uncertainties
include, among others, those risks and uncertainties described
under “Risk Factors” in our Annual Report on Form 10-K for the year
ended December 31, 2019, as such factors may be updated or
superseded from time to time in our periodic filings with the
Securities and Exchange Commission. You are urged to carefully
consider all such factors and we note that the COVID-19 pandemic
may have the effect of heightening many of the risks and
uncertainties described. Although it is believed that the
expectations reflected in such forward-looking statements are
reasonable and are expressed in good faith, such expectations may
not prove to be correct and persons reading this communication are
therefore cautioned not to place undue reliance on these
forward-looking statements, which speak only to expectations as of
the date of this communication. We undertake no obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments or otherwise,
except as required by law. If we make any future public statements
or disclosures which modify or impact any of the forward-looking
statements contained in or accompanying this press release, such
statements or disclosures will be deemed to modify or supersede
such statements in this press release.
About CorePoint
CorePoint Lodging Inc. (NYSE: CPLG) is a pure-play
publicly traded U.S. lodging REIT strategically focused on the
ownership of midscale and upper-midscale select-service
hotels. CorePoint owns a geographically diverse portfolio in
attractive locations primarily in or near employment centers,
airports, and major travel thoroughfares. The portfolio consists of
La Quinta branded hotels. For more information, please visit
CorePoint’s website at www.corepoint.com.
Contact:
Becky RoseberrySVP -
Finance214-501-5535investorrelations@corepoint.com
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