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): March 14, 2011
DiamondRock Hospitality Company
(Exact name of registrant as specified in its charter)
| Maryland | 001-32514 | 20-1180098 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 3 Bethesda Metro Center, Suite 1500 Bethesda, MD |
20814 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (240) 744-1150
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 7.01. Regulation FD Disclosure
A copy of a slide presentation that DiamondRock Hospitality Company (“DiamondRock”) intends to use at an investor conference is attached to this Current Report on Form 8-K (“Current Report”) as Exhibit 99.1 and is incorporated by reference herein. Additionally, DiamondRock has posted the slide presentation in the investor relations/presentations section of its website at www.drhc.com.
The information in this Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibit, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.
ITEM 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
See Index to Exhibits attached hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DIAMONDROCK HOSPITALITY COMPANY | ||
Date: March 14, 2011
|
By: /s/ William J. Tennis | |
| William J. Tennis Executive Vice President, General Counsel and Corporate Secretary |
EXHIBIT INDEX
| Exhibit No. | Description | |
99.1
|
Investor Presentation March 2011 |
Exhibit 99.1
| Investor PresentationMarch 2011 |
| DiamondRock at a Glance 2 Excludes Frenchman's Reef and Morning Star Marriott Resort due to renovations.Excludes the Allerton Hotel senior debt and the NYC Times Square development.Market and brand concentrations based on forecasted 2011 hotel adjusted EBITDA. The charts do no reflect the Allerton Hotel senior debt and NYC Times Square development. Full Year 2011 Guidance:Comparable RevPAR Growth(1): 6% - 8%Adjusted EBITDA: $156 - $160 millionAdjusted FFO: $100 - $103 millionAdjusted FFO/share: $0.60 - $0.62 Key Stats at 3/11/11:Hotels(2): 23Rooms: 10,742Share Price: $11.08Shares Outstanding: 167.0 mmMarket Capitalization: $1,850mmEnterprise Value: $2,416 mmNet Debt/EBITDA: 3.6x Market Concentration (% of EBITDA)(3) Brand Concentration (% of EBITDA)(3) (CHART) (CHART) |
| DiamondRock Portfolio 3 |
| Investment Highlights 4 AcquisitionsExecuted 4 opportunistic acquisitions in 2010 for $325M2011 NYC Times Square development - 250 to 400 roomsProven management team (completed 25 deals - many off market)Unique Marriott sourcing relationship (facilitated 8 transactions)Investment capacityLodging FundamentalsOnly year 2 of robust multi-year lodging recoveryConcentrated in strong growth markets (NYC, LA, Chicago, Boston, etc.)ROI opportunities (20% + IRR from Frenchmans' repositioning)Proven Track Record of Delivering Shareholder ValueSecond highest total shareholder return among lodging REIT over last 5 years(1)Top growth portfolio during the prior up cycle (2005 - 2007)Capital StructureDurable balance sheetCapital structure mitigates business risk Compared to the following peer set: LHO, HST, SHO, FCH, AHT, and BEE. |
| Acquisitions 5 Transactions Market is Fully Functional $13 billion in transactions are expected this year; 20% increase from 2010(1)Increased activity due to recovery in fundamentals, muted supply growth, and functioning financial marketsPublic REITs have cost of capital advantage Source: JLL Hotels(1) Year over year comparison does not include the 2010 sale of Extended Stay Hotels. |
| Acquisition Pipeline 6 Increased Volume and Quality of Investment OpportunitiesTransaction volume expected to increase 20% in 2011(1)Motivated sellers from looming debt maturitiesSignificant Investment CapacityCurrent available cash balance over $200 millionUndrawn $200 million credit facility13 hotels unencumbered by debtOff-Market TransactionsMarriott "first look" relationship - facilitated Charleston Renaissance acquisition in 2010Industry relationships - facilitated Allerton senior loan acquisition in 2010Investment Opportunities: Strategic FocusResearch-based targeting of 20 of the top 30 MSAsValue added opportunities: repositioning or rebrandingGlobal branded full service urban hotels and destination resortsUrban select service hotels only in top MSAs Source: Jones Lang LaSalle |
| Lodging Fundamentals 7 Source: Green Street Advisors Industry in Early Stages of a Multi-Year Recovery in Lodging FundamentalsLodging cycles historically last 7 years; 2011 is only year 2Operators pushing rate more aggressively earlier in this cycleSupply constrained for years to come as construction financing is scarce & properties generally trade at discount-to-replacement cost |
| Portfolio Growth DRH Portfolio Poised for High GrowthDRH's portfolio produced most dynamic RevPAR and margin growth during the growth phase of the lodging cycleDRH led the peer set in both RevPAR and EBITDA Margin growth in 4 of the last 6 yearsThe portfolio entered the downturn well capitalized and is in great shape to lead the industry in growth during this up cycle 8 (CHART) (CHART) |
| Frenchman's Reef Repositioning 9 DiamondRock's Plan:$45 million projectProjected IRR > 20%Marriott contributionReinvent pool Destination spa Upgraded guestroomsSelf generation of energyIncreased energy efficiencyOverall enhancement of guest experience(CHART) Improved margins from operational and energy efficiencies |
| 10 Appendix |
| Compelling Valuation: $445,000 per key Off-Market Transaction: Facilitated by management relationships to pre-empt full marketingIrreplaceable Location: Arguably the #1 development parcel in NYC for a new select service hotel (42nd Street & Broadway)Branding: Seeking approval from a top global hotel operator to franchise a well known select service brandHotel: Minimum of 250 guest rooms - up to 400 guest rooms pending permits, approvals, and consents Fixed Price Contract: DRH not bearing development risk (including cost overruns)Right of First Negotiation: Provides contractual right to potentially purchase the adjacent Knickerbocker Hotel 2011 Acquisition: NYC Times Square Development 11 |
| Leisure Demand1) Times Square2) Bryant ParkBusiness Demand3) Times Square Tower - 1.2 million square feet4) 4 Times Square (Conde Nast Building) - 1.6 million square feet5) Bank of America Tower - 2.1 million square feet6) Verizon Building - 1.2 million square feet 2011 Acquisition: NYC Times Square Development 1 2 3 4 5 12 6 |
| 2010 Acquisition Highlights 137 Allerton Hotel ChicagoDistressed Debt, Off-Market Transaction: Acquired senior loan at $10M discountCompelling Valuation: Investment at only $140k/keyRepositioning Opportunity: Global brand repositioning opportunity Future: Foreclosure resolution expected in 2011Hilton MinneapolisStrong Yield: 8.1% yield on 2011 budgeted NOIProven Growth Market: Outpaced industry's average RevPAR growth and that of markets like DC and Philly from 1987 through 2009Market Leader and Best Group Hotel in MinneapolisSolid Future Growth: 2011 group booking pace up a strong 11% 13 |
| 2010 Acquisition Highlights 147 Renaissance CharlestonStrong Yield: 8.4% yield on 2011 budgeted NOIOff-Market Acquisition: Sourced through Marriott relationshipStrong Growth Prospects: Major new demand generators (e.g., Boeing 787 Dreamliner assembly plant; introduction of service by Southwest Airlines)High Barrier To Entry Market: Local law prohibits new hotel development in the Historic District (over 50 keys)Hilton Garden Inn Chelsea New York CityStrong Yield: 8.5% yield on 2011 budgeted NOIVibrant Hotel Market: High quality asset in the top- ranking MSABusiness Model: Full service hotel rate and select service operating margin 14 |
| Best In Class Capital Structure Durable Balance SheetNo corporate debtOnly non-recourse property mortgage debtNo debt maturities until late 2014Investment CapacityUndrawn $200 million credit facilityOver $200 million cash balance13 unencumbered hotels 15 Leverage Statistics(2):Net Debt / EV: 23% Net Debt / EBITDA: 3.6xFixed Charge Coverage (3): 2.5x Average Interest Rate: 5.7% Average Maturity: 4.6 years Per mid point of DRH's full year 2011 EBITDA guidance of $156 to $160 million.Metrics based on the mid point of DRH's full year 2011 guidance.Calculated according to the methodology outlined in our corporate credit facility. |
| Best in Class Capital Structure: Mitigates Risk 16 Courtyard Midtown East (Oct. 2014)EBITDA: $8.3mm; Debt: $42.6mm at 8.81% Salt Lake City Marriott (Jan. 2015)EBITDA: $5.0mm; Debt: $31.7mm at 5.50% Los Angeles Airport Marriott (July 2015)EBITDA: $7.6mm; Debt: $82.6mm at 5.30% Worthington Renaissance (July 2015)EBITDA: $8.5mm; Debt: $56.3mm at 5.40% Frenchman's Reef Marriott (Aug. 2015)EBITDA: $9.5mm, Debt: $60.6mm at 5.44% Orlando Airport Marriott (Jan. 2016)EBITDA: $4.0mm; Debt: $59.0mm at 5.68% Chicago Marriott Downtown (April 2016)EBITDA: $21.2mm; Debt: $217.0mm at 5.975% Courtyard Fifth Avenue (June 2016)EBITDA: $4.5mm; Debt: $51.0mm at 6.48% Austin Renaissance (Dec. 2016)EBITDA: $8.6mm; Debt: $83.0mm at 5.507% Atlanta Waverly Renaissance (Dec. 2016)EBITDA: $8.5mm; Debt: $97.0mm at 5.503% Atlanta Alpharetta MarriottEBITDA: $3.4mm Atlanta North WestinEBITDA: $2.1mm Bethesda Marriott SuitesEBITDA: $3.8mm Boston Westin WaterfrontEBITDA: $15.1mm Conrad ChicagoEBITDA: $7.0mm Griffin Gate MarriottEBITDA: $7.4mm Hilton Garden Inn Chelsea New York CityEBITDA: $5.2mm Hilton MinneapolisEBITDA: $13.1mm Oak Brook Hills MarriottEBITDA: $2.1mm Renaissance CharlestonEBITDA: $3.3mm Sonoma RenaissanceEBITDA: $2.6mm Torrance MarriottEBITDA: $4.1mm Vail MarriottEBITDA: $6.2mm Trailing 4 Quarter Hotel Adjusted EBITDA of $75.4m 10 Hotels 13 Hotels $781mm fixed rate non- recourse property specific mortgage debt(1)Trailing 4 Quarter Hotel Adjusted EBITDA of $85.7m Note: Debt balances and EBITDA figures are trailing four quarters as of December 31, 2010, pro forma to include the Hilton Minneapolis, Renaissance Charleston, Hilton Garden Inn Chelsea.(1) Frenchman's Reef's loan is non-recourse to the Company with the exception of a $2.5 million corporate guaranty of the completion of certain capital projects. |
| Safe Harbor Certain statements made during this presentation are forward- looking and are subject to risks and uncertainties. Many of these risks and uncertainties are discussed in the prospectus supplement and in the Company's filings with the Securities and Exchange Commission, all of which you should carefully review. The forward- looking statements made are based on our beliefs, assumptions and expectations of future performance, taking into account all information currently available to us. Actual results could differ materially from the forward-looking statements made during this presentation. When we use the words "believe," "expect," "anticipate," "plan," "will," "intend" or other similar expressions, we are identifying forward-looking statements. The forward-looking statements made during this presentation are subject to the safe harbor of the Private Securities Litigation Reform Act of 1995. 17 |