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):
November 8, 2013
DiamondRock Hospitality Company
(Exact name of registrant as specified in 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)
(240) 744-1150
(Registrant’s telephone number, including area code)
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):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
The information in this Current Report on Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
ITEM 2.02. Results of Operations and Financial Condition.
On November 8, 2013, DiamondRock Hospitality Company (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2013 (the “Press Release”). The text of the Press Release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are included with this report:
Exhibit No. | Description | |
99.1 | Press release dated November 8, 2013. | |
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: November 8, 2013 | By: | /s/ William J. Tennis | ||||
William J. Tennis | ||||||
Executive Vice President, General Counsel and Corporate Secretary | ||||||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press release dated November 8, 2013. | |
Exhibit 99.1
COMPANY CONTACT
Sean Mahoney
(240) 744-1150
FOR IMMEDIATE RELEASE
FRIDAY, NOVEMBER 8, 2013
DIAMONDROCK HOSPITALITY COMPANY REPORTS THIRD QUARTER 2013 RESULTS
Reaffirms Full Year 2013 Guidance
Announces Completion of The Lexington Hotel Renovation
Announces Agreement to Sell Torrance Marriott South Bay
BETHESDA, Maryland, Friday, November 8, 2013 – DiamondRock Hospitality Company (the “Company”) (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 27 premium hotels in the United States, today announced results of operations for the third quarter ended September 30, 2013.
Highlights
• | Comparable RevPAR: The Company's RevPAR increased 5.0% compared to the third quarter 2012 as adjusted to a calendar quarter basis, excluding the Lexington Hotel New York City. |
• | RevPAR: The Company’s RevPAR was $141.03, an increase of 1.1% from 2012. Excluding the Lexington Hotel New York City, the Company’s RevPAR increased 4.8% from 2012. |
• | Hotel Adjusted EBITDA Margin: The Company’s Hotel Adjusted EBITDA margin was 25.89%, a decrease of 204 basis points from 2012. Excluding the Lexington Hotel New York City, the Company’s Hotel Adjusted EBITDA margin was 27.05%, a decrease of 32 basis points from 2012. |
• | Hotel Refinancing: The Company entered into a new $63.0 million non-recourse mortgage loan secured by the Salt Lake City Marriott with a term of seven years and a fixed interest rate of 4.25%. In conjunction with the financing, the Company prepaid the existing $27.3 million mortgage loan secured by the hotel. |
• | Non-Core Hotel Disposition: The Company entered into an agreement to sell the 487-room Torrance Marriott South Bay for a contractual sales price of $74 million. The sale is expected to close during the fourth quarter of 2013. |
• | Lexington Hotel: The Lexington Hotel New York City joined Marriott's Autograph Collection in mid-August 2013. The comprehensive renovation of the hotel is now complete. Since conversion, the hotel has has increased average daily rates approximately $40 from the comparable period of 2012. |
• | Adjusted EBITDA: The Company’s Adjusted EBITDA was $51.0 million, which was impacted by approximately $5.0 million of renovation disruption. |
• | Adjusted FFO: The Company’s Adjusted FFO was $35.9 million and Adjusted FFO per diluted share was $0.18. |
• | Dividends: The Company declared a quarterly dividend of $0.085 per share during the third quarter. |
• | Guidance: The Company is reaffirming its full year 2013 guidance of Adjusted EBITDA of $195 million to $205 million and Adjusted FFO per share of $0.70 to $0.74. The guidance includes $17 million of displaced EBITDA from renovation disruption. |
Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, “We are pleased with our third quarter operating results, with Comparable RevPAR growth of 5.0%. Importantly, we continue to execute on our strategic initiatives. Our renovation program passed a major milestone with the completion of the rebranding and repositioning of the Lexington Hotel. The hotel looks fantastic and we are glad to mark the end of the major disruption from our renovation program. On our non-core disposition initiative, we announced today the agreement to sell the Torrance Marriott at a 14x EBITDA multiple. Our efforts this year continue to position the Company for a strong 2014, bolstered by strong group pace and renovation tailwinds.”
Operating Results
Please see “Certain Definitions” and “Non-GAAP Financial Measures” attached to this press release for an explanation of the terms “EBITDA,” “Adjusted EBITDA,” “Hotel Adjusted EBITDA Margin,” “FFO” and “Adjusted FFO.” “Comparable RevPAR” compares 2013 RevPAR to 2012 Pro Forma RevPAR on a calendar quarter basis.
The year-over-year comparability of the Company's third quarter results is significantly impacted by the change in its reporting calendar. For the Company's Marriott managed hotels, the 2013 third quarter includes 20 fewer days than the pro forma 2012 third quarter, which results in the 2013 third quarter including approximately 10% fewer available room nights as compared to the pro forma 2012 third quarter.
For the quarter ended September 30, 2013 (92 days), the Company reported the following:
Third Quarter | ||||||||||
2013 | 2012 Pro Forma1 | Change | ||||||||
ADR | $177.42 | $172.61 | 2.8 | % | ||||||
Occupancy | 79.5 | % | 80.9 | % | (140) basis points | |||||
RevPAR | $141.03 | $139.56 | 1.1 | % | ||||||
Total Revenue | $210.6 million | $228.4 million | (7.8 | )% | ||||||
Hotel Adjusted EBITDA Margin | 25.89 | % | 27.93 | % | (204) basis points | |||||
Adjusted EBITDA | $51.0 million | $57.2 million | (10.8 | )% | ||||||
Adjusted FFO | $35.9 million | $39.7 million | (9.7 | )% | ||||||
Adjusted FFO per diluted share | $0.18 | $0.21 | ($0.03 | ) | ||||||
Net Income (Loss) | $8.6 million | ($48.7 million) | $57.3 million | |||||||
Earnings (Loss) per diluted share | $0.04 | ($0.26 | ) | $0.30 | ||||||
Diluted Weighted Average Shares | 195.9 million | 187.0 million | 8.9 million shares | |||||||
1 Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 (112 days) and all other hotels from July 1, 2012 to September 30, 2012, (b) assume all of the Company’s hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012.
The Company’s operating results for the quarter ended September 30, 2013 were significantly impacted by the renovation at the Lexington Hotel, which displaced approximately 29,000 room nights during the quarter and resulted in approximately $5 million of Hotel Adjusted EBITDA disruption. The renovation was completed in October and total renovation disruption from this project was $14.5 million, approximately $2.0 million higher than previously estimated.
2
The following are selected operating results for the Company, excluding the Lexington Hotel:
Third Quarter | |||||||||
2013 | 2012 Pro Forma1 | Change | |||||||
ADR | $175.30 | $170.07 | 3.1 | % | |||||
Occupancy | 81.3 | % | 80.0 | % | 130 basis points | ||||
RevPAR | $142.51 | $136.03 | 4.8 | % | |||||
Total Revenue | $201.6 million | $214.5 million | (6.0 | )% | |||||
Hotel Adjusted EBITDA | $54.5 million | $58.7 million | (7.1 | )% | |||||
Hotel Adjusted EBITDA Margin | 27.05 | % | 27.37 | % | (32) basis points | ||||
1 Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 (112 days) and all other hotels from July 1, 2012 to September 30, 2012, (b) assume all of the Company’s hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012.
For the nine months ended September 30, 2013, the Company reported the following:
Nine Months Ended September 30, | ||||||||||
2013 | 2012 Pro Forma1 | Change | ||||||||
ADR | $177.62 | $172.91 | 2.7 | % | ||||||
Occupancy | 76.5 | % | 77.9 | % | (140) basis points | |||||
RevPAR | $135.84 | $134.69 | 0.9 | % | ||||||
Total Revenue | $616.1 million | $606.2 million | 1.6 | % | ||||||
Hotel Adjusted EBITDA Margin | 25.79 | % | 27.06 | % | (127) basis points | |||||
Adjusted EBITDA | $147.6 million | $148.9 million | (0.8 | )% | ||||||
Adjusted FFO | $105.8 million | $111.6 million | (5.2 | )% | ||||||
Adjusted FFO per diluted share | $0.54 | $0.64 | ($0.10 | ) | ||||||
Net Income (Loss) | $19.5 million | ($22.8 million) | $42.3 million | |||||||
Earnings (Loss) per diluted share | $0.10 | ($0.13 | ) | $0.23 | ||||||
Diluted Weighted Average Shares | 195.7 million | 174.2 million | 21.5 million shares | |||||||
1 Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012, (b) assume all of the Company’s hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012.
The Company’s operating results for the nine months ended September 30, 2013 were significantly impacted by the displacement of approximately 84,000 room nights at its three New York City hotels under renovation, the Lexington Hotel, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue. The renovations of the two Courtyards were completed during the second quarter of 2013 and the renovation of the Lexington Hotel was completed in October 2013. The following are selected operating results for the Company excluding these three hotels:
Nine Months Ended September 30, | |||||||||
2013 | 2012 Pro Forma1 | Change | |||||||
ADR | $172.26 | $166.17 | 3.7 | % | |||||
Occupancy | 77.9 | % | 76.3 | % | 160 basis points | ||||
RevPAR | $134.21 | $126.79 | 5.9 | % | |||||
Total Revenue | $563.7 million | $535.4 million | 5.3 | % | |||||
Hotel Adjusted EBITDA | $153.0 million | $141.7 million | 8.0 | % | |||||
Hotel Adjusted EBITDA Margin | 27.14 | % | 26.46 | % | 68 basis points | ||||
3
1 Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012, (b) assume all of the Company’s hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012.
Capital Expenditures
As previously announced, the Company is investing approximately $140 million for capital improvements at its hotels in 2013 and early 2014. As of September 30, 2013, the Company has spent approximately $75.3 million on these capital improvements. The Company currently expects renovation disruption of approximately $17 million of Hotel Adjusted EBITDA during the year ended December 31, 2013, which is reflected in its outlook for 2013. The Company does not expect meaningful disruption during 2014. The following is an update on the most significant capital projects.
Lexington Hotel New York: The Company has completed its comprehensive renovation of the Lexington Hotel, with all 725 guestrooms currently available for sale. The hotel joined Marriott's Autograph Collection during August 2013 and the hotel has increased average daily rates approximately $40 from the comparable period in 2012. Hotel Adjusted EBITDA disruption was approximately $5 million during the third quarter and $14 million year to date. This disruption is approximately $2 million higher than previously expected due to incremental displacement that occurred during the closing stages of the renovation. The Company estimates the full year 2013 renovation disruption from the project to be approximately $14.5 million, including $0.5 million during the fourth quarter.
The Company has other renovation projects planned for late in 2013 and early 2014, which are not expected to cause material disruption. A description of the most significant projects is as follows:
• | Westin Washington D.C.: A comprehensive $17 million renovation commenced in October 2013 and is expected to be completed in early 2014. |
• | Westin San Diego: A comprehensive $14.5 million renovation commenced in October 2013 and is expected to be completed in early 2014. |
• | Hilton Minneapolis: A $13 million renovation of the guest rooms, guest bathrooms and corridors is expected to commence in November 2013 and be completed in early 2014. |
• | Hilton Boston Downtown: A $7 million renovation of the guest rooms, corridors, public areas, and meeting space commenced in October 2013 and is expected to be completed in early 2014. |
• | Hilton Burlington: A $6 million renovation of the lobby, corridors, guest rooms and outdoor space is expected to commence in November 2013 and be completed in early 2014. |
Salt Lake City Marriott Refinancing
The Company entered into a new $63 million mortgage loan secured by the Salt Lake City Marriott in October 2013. The new loan has a term of seven years and bears interest at a fixed rate of 4.25%. As part of the refinancing, the Company prepaid the $27.3 million mortgage loan previously secured by the hotel, which had a fixed interest rate of 5.5 % and a maturity date of January 2015. The cost of prepaying the loan though defeasance was approximately $1.5 million, which will be added back to Adjusted EBITDA and Adjusted FFO. The Company used the proceeds from the new loan to repay the prior loan and to create additional investment capacity for the acquisition of the Hilton Garden Inn Times Square South in mid-2014.
Sale of Torrance Marriott South Bay
The Company entered into an agreement to sell a non-core hotel, the 487-room Torrance Marriott South Bay, to an unaffiliated third party for proceeds of approximately $76 million, including credit for the hotel's replacement reserve. The sale is expected to close during the fourth quarter of 2013. The proceeds from the sale will be used to create investment capacity for the acquisition of the Hilton Garden Inn Times Square South in mid-2014. The Torrance Marriott South Bay generated $5.4 million of Hotel Adjusted EBITDA during the trailing four quarters ending September 30, 2013.
4
Balance Sheet
As of September 30, 2013, the Company had $43.4 million of unrestricted cash on hand and approximately $1.1 billion of total debt, which consists solely of property-specific mortgage debt. The Company has no outstanding borrowings on its $200 million senior unsecured credit facility.
Following the refinancing of the Salt Lake City Marriott, which occurred subsequent to the end of the third quarter, and the sale of the Torrance Marriott, the Company expects to have approximately $145 million of unrestricted cash on hand at December 31, 2013.
Dividends
The Company’s Board of Directors declared a quarterly dividend of $0.085 per share to stockholders of record as of September 30, 2013. The dividend was paid on October 10, 2013.
Outlook and Guidance
The Company is providing annual guidance for 2013, but does not undertake to update it for any developments in its business. Achievement of the anticipated results is subject to the risks disclosed in the Company’s filings with the U.S. Securities and Exchange Commission. The Company’s 2013 RevPAR guidance assumes all of the Company’s 27 hotels were owned since January 1, 2012.
The Company is reaffirming its 2013 guidance to reflect the following:
• | Increase of full year renovation disruption to $17 million as a result of incremental displacement at the Lexington Hotel |
• | Stronger group performance at the Westin Boston Waterfront and the Chicago Marriott Downtown |
• | Impact of the Federal Government shutdown on the Company's Washington DC market hotels during the fourth quarter |
• | Sale of Torrance Marriott South Bay at the end of the fourth quarter 2013 |
The Company expects the full year 2013 results to be as follows:
Metric | Pre-Renovation Guidance | Renovation Disruption | 2013 Guidance |
Pro Forma RevPAR Growth | 4 percent to 6 percent | 3 percent | 1 percent to 3 percent |
Adjusted EBITDA | $212 million to $222 million | $17 million | $195 million to $205 million |
Adjusted FFO | $151 million to $158 million | $13 million | $138 million to $145 million |
Adjusted FFO per share (based on 196 million shares) | $0.77 to $0.81 | $0.07 | $0.70 to $0.74 |
Earnings Call
The Company will host a conference call to discuss its third quarter results on Friday, November 8, 2013, at 10:00 a.m. Eastern Time (ET). To participate in the live call, investors are invited to dial 877-415-3180 (for domestic callers) or 857-244-7323 (for international callers). The participant passcode is 37412479. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company’s website at www.drhc.com or www.earnings.com. A replay of the webcast will also be archived on the website for thirty days.
Reporting Calendar Change
5
Effective January 1, 2013, the Company reports its quarterly results of operations on a calendar cycle. Historically, the Company reported its quarterly results of operations based on the fiscal calendar used by Marriott International. Since the Company is not changing its fiscal year, its 2012 financial information will not be restated in its quarterly filings with the U.S. Securities and Exchange Commission. The following table highlights the periods presented in the Company’s 2012 and 2013 reporting calendars.
Quarter | 2012 Calendar (as previously reported) | 2013 Calendar | ||
1st | Marriott | January 1 – March 23 | All | January 1 – March 31 |
Non-Marriott | January 1 – February 29 | |||
2nd | Marriott | March 24 – June 15 | All | April 1 – June 30 |
Non-Marriott | March 1 – May 31 | |||
3rd | Marriott | June 16 – September 7 | All | July 1 – September 30 |
Non-Marriott | June 1 – August 31 | |||
4th | Marriott | September 8 – December 31 | All | October 1 – December 31 |
Non-Marriott | September 1 – December 31 | |||
The Company cannot fully restate its 2012 operating results because Marriott did not provide 2012 operating results on a daily basis. Hotel operating results incorporated into the Company’s financial statements are prepared by its hotel managers. The unavailability of 2012 operating results on a calendar quarter basis for all of the Company’s hotels prevented the restatement of the Company’s 2012 quarterly financial statements. Instead, in comparing 2013 quarterly results to 2012 results, the Company will (i) use the non-Marriott 2012 results on a calendar quarter basis and (ii) amend the previously reported Marriott 2012 quarterly results as follows:
• | The first quarter of 2012 includes Marriott operating results from January 1 to March 23. |
• | The second quarter of 2012 includes Marriott operating results from March 24 to June 15. |
• | The third quarter of 2012 includes Marriott operating results from June 16 to October 5. |
• | The fourth quarter of 2012 includes the Marriott operating results from October 6 to December 31. |
Therefore, the 2013 calendar quarters will have 8 additional days in the first quarter, 7 additional days in the second quarter, 20 fewer days in the third quarter and 5 additional days in the fourth quarter.
The following table reallocates selected 2012 quarterly pro forma operating information as described above into the 2013 reporting calendar.
Quarter 1, 2012 | Quarter 2, 2012 | Quarter 3, 2012 | Quarter 4, 2012 | |
RevPAR | $117.09 | $146.48 | $139.56 | $133.36 |
Revenues (in thousands) | $167,026 | $210,809 | $228,371 | $196,005 |
Hotel Adjusted EBITDA (in thousands) | $35,685 | $64,564 | $63,776 | $54,085 |
% of Full Year | 16.4% | 29.6% | 29.2% | 24.8% |
Hotel Adjusted EBITDA Margin | 21.36% | 30.63% | 27.93% | 27.59% |
Available Rooms | 1,004,405 | 1,010,443 | 1,184,252 | 1,034,027 |
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 27 premium quality hotels with over 11,600 rooms. The Company has strategically positioned its hotels to generally be operated under the leading global brands such as Hilton, Marriott, and Westin. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company’s website at www.drhc.com.
6
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “expect,” “intend,” “project,” “forecast,” “plan” and other similar terms and phrases, including references to assumptions and forecasts of future results. 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: national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company’s hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company’s indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; risks associated with the development of a hotel by a third-party developer; and other risk factors contained in the Company’s filings with the Securities and Exchange Commission. Although the Company 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 the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
7
DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
As of September 30, 2013 and December 31, 2012
(in thousands, except share and per share amounts)
September 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Property and equipment, at cost | $ | 3,207,378 | $ | 3,131,175 | |||
Less: accumulated depreciation | (599,343 | ) | (519,721 | ) | |||
2,608,035 | 2,611,454 | ||||||
Deferred financing costs, net | 7,947 | 9,724 | |||||
Restricted cash | 86,556 | 76,131 | |||||
Due from hotel managers | 80,690 | 68,532 | |||||
Note receivable | 49,356 | 53,792 | |||||
Favorable lease assets, net | 40,194 | 40,972 | |||||
Prepaid and other assets (1) | 81,000 | 73,814 | |||||
Cash and cash equivalents | 43,448 | 9,623 | |||||
Total assets | $ | 2,997,226 | $ | 2,944,042 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Mortgage debt | $ | 1,060,299 | $ | 968,731 | |||
Senior unsecured credit facility | — | 20,000 | |||||
Total debt | 1,060,299 | 988,731 | |||||
Deferred income related to key money, net | 23,900 | 24,362 | |||||
Unfavorable contract liabilities, net | 78,633 | 80,043 | |||||
Due to hotel managers | 55,785 | 51,003 | |||||
Dividends declared and unpaid | 17,006 | 15,911 | |||||
Accounts payable and accrued expenses (2) | 94,845 | 88,879 | |||||
Total other liabilities | 270,169 | 260,198 | |||||
Stockholders’ Equity: | |||||||
Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value; 400,000,000 shares authorized; 195,470,791 and 195,145,707 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively | 1,955 | 1,951 | |||||
Additional paid-in capital | 1,978,505 | 1,976,200 | |||||
Accumulated deficit | (313,702 | ) | (283,038 | ) | |||
Total stockholders’ equity | 1,666,758 | 1,695,113 | |||||
Total liabilities and stockholders’ equity | $ | 2,997,226 | $ | 2,944,042 | |||
(1) | Includes $39.4 million of deferred tax assets, $26.9 million for the Hilton Garden Inn Times Square purchase deposit, $7.8 million of prepaid expenses and $6.9 million of other assets as of September 30, 2013. |
(2) | Includes $57.5 million of deferred ground rent, $11.4 million of deferred tax liabilities, $11.0 million of accrued property taxes, $3.9 million of accrued capital expenditures and $11.0 million of other accrued liabilities as of September 30, 2013. |
8
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Quarters Ended September 30, 2013 and September 7, 2012 and
the Periods from January 1, 2013 to September 30, 2013 and January 1, 2012 to September 7, 2012
(in thousands, except per share amounts)
(unaudited)
Fiscal Quarter Ended | Period From | ||||||||||||||
January 1, 2013 to September 30, 2013 | January 1, 2012 to September 7, 2012 | ||||||||||||||
September 30, 2013 | September 7, 2012 | ||||||||||||||
Revenues: | |||||||||||||||
Rooms | $ | 150,146 | $ | 132,578 | $ | 428,981 | $ | 338,043 | |||||||
Food and beverage | 47,522 | 40,791 | 149,743 | 117,415 | |||||||||||
Other | 12,975 | 10,504 | 37,407 | 27,787 | |||||||||||
Total revenues | 210,643 | 183,873 | 616,131 | 483,245 | |||||||||||
Operating Expenses: | |||||||||||||||
Rooms | 40,521 | 35,428 | 116,091 | 92,386 | |||||||||||
Food and beverage | 34,591 | 30,008 | 106,475 | 85,731 | |||||||||||
Management fees | 7,178 | 5,744 | 19,410 | 15,313 | |||||||||||
Other hotel expenses | 75,176 | 64,098 | 219,302 | 171,131 | |||||||||||
Depreciation and amortization | 26,254 | 22,612 | 80,280 | 62,802 | |||||||||||
Impairment of favorable lease asset | — | 30,376 | — | 30,844 | |||||||||||
Hotel acquisition costs | 23 | 8,314 | 46 | 10,345 | |||||||||||
Corporate expenses | 4,932 | 6,227 | 18,055 | 15,711 | |||||||||||
Total operating expenses | 188,675 | 202,807 | 559,659 | 484,263 | |||||||||||
Operating profit (loss) | 21,968 | (18,934 | ) | 56,472 | (1,018 | ) | |||||||||
Other Expenses (Income): | |||||||||||||||
Interest income | (1,660 | ) | (60 | ) | (4,604 | ) | (278 | ) | |||||||
Interest expense | 14,471 | 12,732 | 42,511 | 36,710 | |||||||||||
Gain on early extinguishment of debt | — | — | — | (144 | ) | ||||||||||
Total other expenses, net | 12,811 | 12,672 | 37,907 | 36,288 | |||||||||||
Income (loss) from continuing operations before income taxes | 9,157 | (31,606 | ) | 18,565 | (37,306 | ) | |||||||||
Income tax (expense) benefit | (593 | ) | 916 | 944 | 4,992 | ||||||||||
Income (loss) from continuing operations | 8,564 | (30,690 | ) | 19,509 | (32,314 | ) | |||||||||
Loss from discontinued operations, net of income taxes | — | (14,089 | ) | — | (905 | ) | |||||||||
Net income (loss) | 8,564 | (44,779 | ) | 19,509 | (33,219 | ) | |||||||||
Earnings (loss) earnings per share: | |||||||||||||||
Continuing operations | $ | 0.04 | $ | (0.16 | ) | $ | 0.10 | $ | (0.19 | ) | |||||
Discontinued operations | 0.00 | (0.08 | ) | 0.00 | (0.00 | ) | |||||||||
Basic and diluted earnings (loss) per share | $ | 0.04 | $ | (0.24 | ) | $ | 0.10 | $ | (0.19 | ) | |||||
9
Non-GAAP Financial Measures
We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. EBITDA, Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.
EBITDA and FFO
EBITDA represents net income excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from our operating results. In addition, covenants included in our indebtedness use EBITDA as a measure of financial compliance. We also use EBITDA as one measure in determining the value of hotel acquisitions and dispositions.
The Company computes FFO in accordance with standards established by NAREIT, which defines FFO as net income determined in accordance with GAAP, excluding gains or losses from sales of properties and impairment losses, plus depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets. The Company also uses FFO as one measure in assessing its results.
Adjustments to EBITDA and FFO
We adjust EBITDA and FFO when evaluating our performance because we believe that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor's complete understanding of our operating performance. We adjust EBITDA and FFO for the following items:
• | Non-Cash Ground Rent: We exclude the non-cash expense incurred from the straight line recognition of rent from our ground lease obligations and the non-cash amortization of our favorable lease assets. |
• | Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of the favorable management contract assets recorded in conjunction with our acquisitions of the Westin Washington D.C. City Center, Westin San Diego, and Hilton Burlington and the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with our acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York. The amortization of the favorable and unfavorable contracts does not reflect the underlying operating performance of our hotels. |
• | Cumulative Effect of a Change in Accounting Principle: Infrequently, the Financial Accounting Standards Board (FASB) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these one-time adjustments because they do not reflect its actual performance for that period. |
• | Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses recorded on the early extinguishment of debt because we believe they do not accurately reflect the underlying performance of the Company. |
• | Acquisition Costs: We exclude acquisition transaction costs expensed during the period because we believe they do not reflect the underlying performance of the Company. |
• | Allerton Loan: In 2012, due to the uncertainty of the timing of the bankruptcy resolution, we excluded both cash interest payments received and the legal costs incurred as a result of the bankruptcy proceedings from our calculation of Adjusted EBITDA and Adjusted FFO. Due to the settlement of the bankruptcy proceedings and amended and restated loan, we commenced recognizing interest income in 2013, which includes the amortization of the difference between the carrying basis of the old loan and face value of the new loan. Cash payments received during 2010 and 2011 that were included in |
10
Adjusted EBITDA and Adjusted FFO and reduced the carrying basis of the loan will be now be deducted from Adjusted EBITDA and Adjusted FFO on a straight-line basis over the anticipated five-year term of the new loan.
• | Other Non-Cash and /or Unusual Items: From time to time we incur costs or realize gains that we do not believe reflect the underlying performance of the Company. Such items include, but are not limited to, pre-opening costs, contract termination fees and severance costs. In 2012, we excluded the franchise termination fee paid to Radisson and, in 2013, we excluded the severance costs associated with the retirement of our Chief Operating Officer. |
In addition, to derive Adjusted EBITDA we exclude gains or losses on sales of properties and impairment losses because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our hotels. Additionally, the gains or losses on sales of properties and impairment losses represent either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.
In addition, to derive Adjusted FFO we exclude any fair value adjustments to debt instruments. Specifically, we exclude the impact of the non-cash amortization of the debt premium recorded in conjunction with the acquisition of the JW Marriott Denver at Cherry Creek and fair market value adjustments to the Company's interest rate cap agreement.
The following tables are reconciliations of our U.S. GAAP net income to EBITDA and Adjusted EBITDA (in thousands):
Third Quarter | Year To Date | ||||||||||||||||||||||
Pro Forma | Pro Forma | ||||||||||||||||||||||
2013 | 2012 (1) | 2012 (2) | 2013 | 2012 (3) | 2012 (2) | ||||||||||||||||||
Net income (loss) | $ | 8,564 | $ | (48,717 | ) | $ | (44,779 | ) | $ | 19,509 | $ | (22,762 | ) | $ | (33,219 | ) | |||||||
Interest expense (4) | 14,471 | 16,659 | 12,732 | 42,511 | 40,637 | 39,007 | |||||||||||||||||
Income tax expense (benefit) (5) | 593 | 889 | (1,063 | ) | (944 | ) | (2,851 | ) | (4,803 | ) | |||||||||||||
Real estate related depreciation and amortization (6) | 26,254 | 31,807 | 23,060 | 80,280 | 80,803 | 64,149 | |||||||||||||||||
EBITDA | 49,882 | 638 | (10,050 | ) | 141,356 | 95,827 | 65,134 | ||||||||||||||||
Non-cash ground rent | 1,700 | 2,005 | 1,515 | 5,111 | 5,199 | 4,621 | |||||||||||||||||
Non-cash amortization of favorable and unfavorable contract liabilities | (354 | ) | (459 | ) | (432 | ) | (1,063 | ) | (1,093 | ) | (1,296 | ) | |||||||||||
Loss (gain) on sale of hotel properties | — | 476 | 476 | — | (9,541 | ) | (9,541 | ) | |||||||||||||||
Gain on early extinguishment of debt | — | — | — | — | (144 | ) | (144 | ) | |||||||||||||||
Acquisition costs | 23 | 8,318 | 8,314 | 46 | 10,349 | 10,345 | |||||||||||||||||
Reversal of previously recognized Allerton income | (291 | ) | — | — | (872 | ) | — | — | |||||||||||||||
Allerton loan legal fees | — | 1,106 | 1,106 | — | 2,017 | 2,017 | |||||||||||||||||
Franchise termination fee | — | — | — | — | 750 | 750 | |||||||||||||||||
Impairment losses (7) | — | 45,066 | 45,066 | — | 45,534 | 45,534 | |||||||||||||||||
Severance costs | — | — | — | 3,065 | — | — | |||||||||||||||||
Adjusted EBITDA | $ | 50,960 | $ | 57,150 | $ | 45,995 | $ | 147,643 | $ | 148,898 | $ | 117,420 | |||||||||||
(1) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 and all other hotels from July 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
(2) | As reported in the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 15, 2012. |
(3) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
(4) | Includes $2.3 million of interest expense reported in discontinued operations for the 2012 year-to-date period (as reported). |
(5) | Includes $0.1 million of income tax expense reported in discontinued operations for the third quarter of 2012 (as reported) and $0.2 million of income tax expense reported in discontinued operations for the 2012 year-to-date period (as reported). |
(6) | Includes $0.4 million of depreciation expense reported in discontinued operations for the third quarter of 2012 (as reported) and $1.3 million of depreciation expense reported in discontinued operations for the 2012 year-to-date period (as reported). |
(7) | Includes impairment losses of $14.7 million reported in discontinued operations in both the third quarter of 2012 (as reported) and the 2012 year-to-date period (as reported). |
11
Full Year Guidance | |||||||||||||||
Pre-Renovation 2013 | 2013 | ||||||||||||||
Low End | High End | Low End | High End | ||||||||||||
Net income (1) | $ | 37,098 | $ | 45,098 | $ | 24,098 | $ | 32,098 | |||||||
Interest expense | 57,500 | 57,500 | 57,500 | 57,500 | |||||||||||
Income tax expense (benefit) | 3,100 | 6,100 | (900 | ) | 2,100 | ||||||||||
Real estate related depreciation and amortization | 107,000 | 106,000 | 107,000 | 106,000 | |||||||||||
EBITDA | 204,698 | 214,698 | 187,698 | 197,698 | |||||||||||
Non-cash ground rent | 6,400 | 6,400 | 6,400 | 6,400 | |||||||||||
Non-cash amortization of favorable and unfavorable contracts, net | (1,400 | ) | (1,400 | ) | (1,400 | ) | (1,400 | ) | |||||||
Loss on early extinguishment of debt | 1,500 | 1,500 | 1,500 | 1,500 | |||||||||||
Reversal of previously recognized Allerton income | (1,163 | ) | (1,163 | ) | (1,163 | ) | (1,163 | ) | |||||||
Write-off of key money | (1,100 | ) | (1,100 | ) | (1,100 | ) | (1,100 | ) | |||||||
Severance costs | 3,065 | 3,065 | 3,065 | 3,065 | |||||||||||
Adjusted EBITDA | $ | 212,000 | $ | 222,000 | $ | 195,000 | $ | 205,000 | |||||||
(1) | Net income includes approximately $6.1 million of interest income related to the Allerton loan. |
The following tables are reconciliations of our U.S. GAAP net income to FFO and Adjusted FFO (in thousands):
Third Quarter | Year To Date | ||||||||||||||||||||||
Pro Forma | Pro Forma | ||||||||||||||||||||||
2013 | 2012 (1) | 2012 (2) | 2013 | 2012 (3) | 2012 (2) | ||||||||||||||||||
Net income (loss) | $ | 8,564 | $ | (48,717 | ) | $ | (44,779 | ) | $ | 19,509 | $ | (22,762 | ) | $ | (33,219 | ) | |||||||
Real estate related depreciation and amortization (4) | 26,254 | 31,807 | 23,060 | 80,280 | 80,803 | 64,149 | |||||||||||||||||
Impairment losses (5) | — | 45,066 | 45,066 | — | 45,534 | 45,534 | |||||||||||||||||
Loss (gain) on sale of hotel properties | — | 476 | 476 | — | (9,541 | ) | (9,541 | ) | |||||||||||||||
FFO | 34,818 | 28,632 | 23,823 | 99,789 | 94,034 | 66,923 | |||||||||||||||||
Non-cash ground rent | 1,700 | 2,005 | 1,515 | 5,111 | 5,199 | 4,621 | |||||||||||||||||
Non-cash amortization of unfavorable contract liabilities | (354 | ) | (459 | ) | (432 | ) | (1,063 | ) | (1,093 | ) | (1,296 | ) | |||||||||||
Gain on early extinguishment of debt | — | — | — | — | (144 | ) | (144 | ) | |||||||||||||||
Acquisition costs | 23 | 8,318 | 8,314 | 46 | 10,349 | 10,345 | |||||||||||||||||
Reversal of previously recognized Allerton income | (291 | ) | — | — | (872 | ) | — | — | |||||||||||||||
Allerton loan legal fees | — | 1,106 | 1,106 | — | 2,017 | 2,017 | |||||||||||||||||
Franchise termination fee | — | — | — | — | 750 | 750 | |||||||||||||||||
Severance costs | — | — | — | 3,065 | — | — | |||||||||||||||||
Fair value adjustments to debt instruments | (42 | ) | 98 | 98 | (233 | ) | 499 | 499 | |||||||||||||||
Adjusted FFO | $ | 35,854 | $ | 39,700 | $ | 34,424 | $ | 105,843 | $ | 111,611 | $ | 83,715 | |||||||||||
Adjusted FFO per share | $ | 0.18 | $ | 0.21 | $ | 0.18 | $ | 0.54 | $ | 0.64 | $ | 0.48 | |||||||||||
(1) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 and all other hotels from July 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
(2) | As reported in the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 15, 2012. |
(3) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
12
(4) | Includes $0.4 million of depreciation expense reported in discontinued operations for the third quarter of 2012 (as reported) and $1.3 million of depreciation expense reported in discontinued operations for the 2012 year-to-date period (as reported). |
(5) | Includes impairment losses of $14.7 million reported in discontinued operations in both the third quarter of 2012 (as reported) and the 2012 year-to-date period (as reported). |
Full Year Guidance | |||||||||||||||
Pre-Renovation 2013 | 2013 | ||||||||||||||
Low End | High End | Low End | High End | ||||||||||||
Net income (1) | $ | 37,098 | $ | 45,098 | $ | 24,098 | $ | 32,098 | |||||||
Real estate related depreciation and amortization | 107,000 | 106,000 | 107,000 | 106,000 | |||||||||||
FFO | 144,098 | 151,098 | 131,098 | 138,098 | |||||||||||
Non-cash ground rent | 6,400 | 6,400 | 6,400 | 6,400 | |||||||||||
Non-cash amortization of favorable and unfavorable contracts, net | (1,400 | ) | (1,400 | ) | (1,400 | ) | (1,400 | ) | |||||||
Loss on early extinguishment of debt | 1,500 | 1,500 | 1,500 | 1,500 | |||||||||||
Reversal of previously recognized Allerton income | (1,163 | ) | (1,163 | ) | (1,163 | ) | (1,163 | ) | |||||||
Write-off of key money | (1,100 | ) | (1,100 | ) | (1,100 | ) | (1,100 | ) | |||||||
Fair value adjustments to debt instruments | (400 | ) | (400 | ) | (400 | ) | (400 | ) | |||||||
Severance costs | 3,065 | 3,065 | 3,065 | 3,065 | |||||||||||
Adjusted FFO | $ | 151,000 | $ | 158,000 | $ | 138,000 | $ | 145,000 | |||||||
Adjusted FFO per share | $ | 0.77 | $ | 0.81 | $ | 0.70 | $ | 0.74 | |||||||
(1) | Net income includes approximately $6.1 million of interest income related to the Allerton loan. |
Use and Limitations of Non-GAAP Financial Measures
Our management and Board of Directors use EBITDA, Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.
Certain Definitions
In this release, when we discuss “Hotel Adjusted EBITDA,” we exclude from Hotel EBITDA the non-cash expense incurred by the hotels due to the straight lining of the rent from our ground lease obligations, the non-cash amortization of our favorable lease assets and other contracts, the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with the acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York. Hotel EBITDA represents hotel net income excluding: (1) interest expense; (2) income taxes; and (3) depreciation and amortization. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues. Net debt is calculated as total debt outstanding less unrestricted cash.
13
DIAMONDROCK HOSPITALITY COMPANY
HOTEL OPERATING DATA
Schedule of Property Level Results
(in thousands)
(unaudited)
Third Quarter | Year To Date | ||||||||||||||||||||
Pro Forma | % | Pro Forma | % | ||||||||||||||||||
2013 | 2012 (1) | Change | 2013 | 2012 (2) | Change | ||||||||||||||||
Revenues: | |||||||||||||||||||||
Rooms | $ | 150,146 | $ | 165,272 | (9.2 | )% | $ | 428,981 | $ | 430,880 | (0.4 | )% | |||||||||
Food and beverage | 47,522 | 50,119 | (5.2 | )% | 149,743 | 140,737 | 6.4 | % | |||||||||||||
Other | 12,975 | 12,980 | — | % | 37,407 | 34,589 | 8.1 | % | |||||||||||||
Total revenues | 210,643 | 228,371 | (7.8 | )% | 616,131 | 606,206 | 1.6 | % | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Rooms departmental expenses | $ | 40,521 | $ | 43,490 | (6.8 | )% | $ | 116,091 | $ | 113,310 | 2.5 | % | |||||||||
Food and beverage departmental expenses | 34,591 | 36,427 | (5.0 | )% | 106,475 | 100,968 | 5.5 | % | |||||||||||||
Other direct departmental | 5,901 | 6,408 | (7.9 | )% | 17,579 | 16,778 | 4.8 | % | |||||||||||||
General and administrative | 17,019 | 17,707 | (3.9 | )% | 48,928 | 48,245 | 1.4 | % | |||||||||||||
Utilities | 7,973 | 8,181 | (2.5 | )% | 22,235 | 21,617 | 2.9 | % | |||||||||||||
Repairs and maintenance | 9,395 | 9,911 | (5.2 | )% | 28,184 | 26,973 | 4.5 | % | |||||||||||||
Sales and marketing | 17,648 | 19,297 | (8.5 | )% | 50,802 | 51,932 | (2.2 | )% | |||||||||||||
Base management fees | 5,098 | 5,781 | (11.8 | )% | 14,860 | 15,240 | (2.5 | )% | |||||||||||||
Incentive management fees | 2,080 | 1,971 | 5.5 | % | 4,550 | 3,723 | 22.2 | % | |||||||||||||
Property taxes | 10,430 | 9,769 | 6.8 | % | 31,322 | 28,236 | 10.9 | % | |||||||||||||
Ground rent | 3,758 | 4,078 | (7.8 | )% | 11,239 | 11,090 | 1.3 | % | |||||||||||||
Other fixed expenses | 3,050 | 3,121 | (2.3 | )% | 9,014 | 8,180 | 10.2 | % | |||||||||||||
Total hotel operating expenses | $ | 157,464 | $ | 166,141 | (5.2 | )% | $ | 461,279 | $ | 446,292 | 3.4 | % | |||||||||
Hotel EBITDA | 53,179 | 62,230 | (14.5 | )% | 154,852 | 159,914 | (3.2 | )% | |||||||||||||
Non-cash ground rent | 1,700 | 2,005 | (15.2 | )% | 5,111 | 5,199 | (1.7 | )% | |||||||||||||
Non-cash amortization of unfavorable contract liabilities | (354 | ) | (459 | ) | (22.9 | )% | (1,063 | ) | (1,093 | ) | (2.7 | )% | |||||||||
Hotel Adjusted EBITDA | $ | 54,525 | $ | 63,776 | (14.5 | )% | $ | 158,900 | $ | 164,020 | (3.1 | )% | |||||||||
(1) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 and all other hotels from July 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
(2) | Pro forma to (a) include the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012, (b) assume all of the Company’s 27 hotels were owned as of January 1, 2012, and (c) exclude the operating results of the hotels sold during 2012. |
14
Market Capitalization as of September 30, 2013 | ||||
(in thousands, except per share data) | ||||
Enterprise Value | ||||
Common equity capitalization (at September 30, 2013 closing price of $10.67/share) | $ | 2,092,469 | ||
Consolidated debt | 1,060,299 | |||
Cash and cash equivalents | (43,448) | |||
Total enterprise value | $ | 3,109,320 | ||
Share Reconciliation | ||||
Common shares outstanding | 195,471 | |||
Unvested restricted stock held by management and employees | 561 | |||
Share grants under deferred compensation plan held by directors | 76 | |||
Combined shares outstanding | 196,108 | |||
Debt Summary as of September 30, 2013 | ||||||||||
(dollars in thousands) | ||||||||||
Property | Interest Rate | Term | Outstanding Principal | Maturity | ||||||
Courtyard Manhattan / Midtown East | 8.810% | Fixed | $ | 41,635 | October 2014 | |||||
Salt Lake City Marriott Downtown | 5.500% | Fixed | 27,401 | January 2015 | ||||||
Courtyard Manhattan / Fifth Avenue | 6.480% | Fixed | 49,742 | June 2016 | ||||||
Los Angeles Airport Marriott | 5.300% | Fixed | 82,600 | July 2015 | ||||||
Frenchman’s Reef Marriott | 5.440% | Fixed | 57,933 | August 2015 | ||||||
Renaissance Worthington | 5.400% | Fixed | 54,035 | July 2015 | ||||||
Orlando Airport Marriott | 5.680% | Fixed | 56,986 | January 2016 | ||||||
Chicago Marriott Downtown | 5.975% | Fixed | 209,208 | April 2016 | ||||||
Hilton Minneapolis | 5.464% | Fixed | 95,557 | May 2021 | ||||||
JW Marriott Denver at Cherry Creek | 6.470% | Fixed | 40,056 | July 2015 | ||||||
Lexington Hotel New York | LIBOR + 3.00 | Variable | 170,368 | March 2015 | ||||||
Westin Washington D.C. City Center | 3.990% | Fixed | 72,858 | January 2023 | ||||||
The Lodge at Sonoma | 3.960% | Fixed | 30,784 | April 2023 | ||||||
Westin San Diego | 3.940% | Fixed | 70,503 | April 2023 | ||||||
Debt premium (1) | 633 | |||||||||
Total mortgage debt | $ | 1,060,299 | ||||||||
Senior unsecured credit facility | LIBOR + 1.90 | Variable | - | January 2017 | ||||||
Total debt | $ | 1,060,299 | ||||||||
(1) | Non-cash GAAP adjustment recorded upon the assumption of the mortgage loan secured by the JW Marriott Denver Cherry Creek in 2011. |
15
Pro Forma Operating Statistics – Third Quarter (1) | |||||||||||||||||||||||||||||||
ADR | Occupancy | RevPAR | Hotel Adjusted EBITDA Margin | ||||||||||||||||||||||||||||
3Q 2013 | 3Q 2012 | B/(W) | 3Q 2013 | 3Q 2012 | B/(W) | 3Q 2013 | 3Q 2012 | B/(W) | 3Q 2013 | 3Q 2012 | B/(W) | ||||||||||||||||||||
Atlanta Alpharetta | $ | 146.73 | $ | 138.21 | 6.2 | % | 73.6 | % | 63.5 | % | 10.1 | % | $ | 108.01 | $ | 87.78 | 23.0 | % | 28.62 | % | 23.70 | % | 492 bps | ||||||||
Bethesda Marriott Suites | $ | 149.13 | $ | 160.44 | (7.0 | )% | 57.6 | % | 68.5 | % | (10.9 | )% | $ | 85.83 | $ | 109.89 | (21.9 | )% | 13.37 | % | 25.91 | % | -1254 bps | ||||||||
Boston Westin | $ | 196.29 | $ | 191.12 | 2.7 | % | 83.2 | % | 85.9 | % | (2.7 | )% | $ | 163.22 | $ | 164.20 | (0.6 | )% | 25.01 | % | 25.93 | % | -92 bps | ||||||||
Hilton Boston Downtown | $ | 242.44 | $ | 230.73 | 5.1 | % | 91.5 | % | 86.2 | % | 5.3 | % | $ | 221.73 | $ | 198.97 | 11.4 | % | 36.90 | % | 40.12 | % | -322 bps | ||||||||
Hilton Burlington | $ | 187.29 | $ | 187.73 | (0.2 | )% | 90.1 | % | 87.2 | % | 2.9 | % | $ | 168.70 | $ | 163.74 | 3.0 | % | 48.08 | % | 46.20 | % | 188 bps | ||||||||
Renaissance Charleston | $ | 176.17 | $ | 172.77 | 2.0 | % | 89.7 | % | 85.3 | % | 4.4 | % | $ | 157.97 | $ | 147.35 | 7.2 | % | 29.81 | % | 33.03 | % | -322 bps | ||||||||
Hilton Garden Inn Chelsea | $ | 239.38 | $ | 221.00 | 8.3 | % | 95.8 | % | 97.8 | % | (2.0 | )% | $ | 229.28 | $ | 216.21 | 6.0 | % | 46.26 | % | 43.18 | % | 308 bps | ||||||||
Chicago Marriott | $ | 209.24 | $ | 206.46 | 1.3 | % | 83.9 | % | 83.2 | % | 0.7 | % | $ | 175.45 | $ | 171.76 | 2.1 | % | 27.25 | % | 26.75 | % | 50 bps | ||||||||
Chicago Conrad | $ | 225.00 | $ | 218.84 | 2.8 | % | 87.2 | % | 90.5 | % | (3.3 | )% | $ | 196.28 | $ | 198.10 | (0.9 | )% | 37.25 | % | 37.36 | % | -11 bps | ||||||||
Courtyard Denver Downtown | $ | 170.92 | $ | 166.08 | 2.9 | % | 88.7 | % | 87.9 | % | 0.8 | % | $ | 151.55 | $ | 145.93 | 3.9 | % | 47.11 | % | 47.08 | % | 3 bps | ||||||||
Courtyard Fifth Avenue | $ | 275.20 | $ | 273.71 | 0.5 | % | 94.3 | % | 96.1 | % | (1.8 | )% | $ | 259.56 | $ | 263.08 | (1.3 | )% | 28.50 | % | 33.80 | % | -530 bps | ||||||||
Courtyard Midtown East | $ | 277.65 | $ | 269.30 | 3.1 | % | 89.0 | % | 90.6 | % | (1.6 | )% | $ | 247.14 | $ | 244.11 | 1.2 | % | 35.64 | % | 35.82 | % | -18 bps | ||||||||
Frenchman's Reef | $ | 186.76 | $ | 176.38 | 5.9 | % | 75.3 | % | 74.9 | % | 0.4 | % | $ | 140.70 | $ | 132.20 | 6.4 | % | 4.85 | % | 6.14 | % | -129 bps | ||||||||
JW Marriott Denver Cherry Creek | $ | 248.79 | $ | 233.00 | 6.8 | % | 84.5 | % | 80.5 | % | 4.0 | % | $ | 210.14 | $ | 187.48 | 12.1 | % | 33.39 | % | 32.98 | % | 41 bps | ||||||||
Los Angeles Airport | $ | 113.31 | $ | 108.86 | 4.1 | % | 92.1 | % | 88.7 | % | 3.4 | % | $ | 104.33 | $ | 96.60 | 8.0 | % | 19.32 | % | 17.05 | % | 227 bps | ||||||||
Hilton Minneapolis | $ | 152.49 | $ | 150.57 | 1.3 | % | 80.5 | % | 80.2 | % | 0.3 | % | $ | 122.79 | $ | 120.70 | 1.7 | % | 30.23 | % | 32.12 | % | -189 bps | ||||||||
Oak Brook Hills | $ | 125.36 | $ | 130.24 | (3.7 | )% | 77.0 | % | 67.9 | % | 9.1 | % | $ | 96.55 | $ | 88.40 | 9.2 | % | 23.89 | % | 19.57 | % | 432 bps | ||||||||
Orlando Airport Marriott | $ | 92.97 | $ | 95.10 | (2.2 | )% | 63.2 | % | 63.2 | % | — | % | $ | 58.79 | $ | 60.11 | (2.2 | )% | 8.28 | % | 13.39 | % | -511 bps | ||||||||
Hotel Rex | $ | 210.75 | $ | 191.62 | 10.0 | % | 89.2 | % | 90.7 | % | (1.5 | )% | $ | 187.94 | $ | 173.72 | 8.2 | % | 36.90 | % | 42.07 | % | -517 bps | ||||||||
Salt Lake City Marriott | $ | 140.63 | $ | 139.32 | 0.9 | % | 66.8 | % | 67.5 | % | (0.7 | )% | $ | 94.00 | $ | 93.99 | — | % | 31.05 | % | 30.38 | % | 67 bps | ||||||||
The Lodge at Sonoma | $ | 300.32 | $ | 272.65 | 10.1 | % | 84.6 | % | 84.6 | % | — | % | $ | 254.15 | $ | 230.78 | 10.1 | % | 33.85 | % | 31.81 | % | 204 bps | ||||||||
Torrance Marriott South Bay | $ | 115.02 | $ | 111.30 | 3.3 | % | 91.2 | % | 86.3 | % | 4.9 | % | $ | 104.88 | $ | 96.02 | 9.2 | % | 25.64 | % | 27.17 | % | -153 bps | ||||||||
Vail Marriott | $ | 159.09 | $ | 148.81 | 6.9 | % | 70.5 | % | 73.3 | % | (2.8 | )% | $ | 112.20 | $ | 109.07 | 2.9 | % | 12.37 | % | 22.35 | % | -998 bps | ||||||||
Lexington Hotel New York | $ | 228.06 | $ | 208.89 | 9.2 | % | 51.9 | % | 95.6 | % | (43.7 | )% | $ | 118.47 | $ | 199.77 | (40.7 | )% | (0.22 | )% | 36.50 | % | -3672 bps | ||||||||
Westin San Diego | $ | 155.68 | $ | 141.57 | 10.0 | % | 89.5 | % | 89.5 | % | — | % | $ | 139.38 | $ | 126.70 | 10.0 | % | 30.86 | % | 30.42 | % | 44 bps | ||||||||
Westin Washington D.C. City Center | $ | 162.25 | $ | 168.38 | (3.6 | )% | 77.9 | % | 77.7 | % | 0.2 | % | $ | 126.35 | $ | 130.88 | (3.5 | )% | 25.16 | % | 30.01 | % | -485 bps | ||||||||
Renaissance Worthington | $ | 164.34 | $ | 161.05 | 2.0 | % | 64.9 | % | 61.1 | % | 3.8 | % | $ | 106.70 | $ | 98.35 | 8.5 | % | 26.12 | % | 21.94 | % | 418 bps | ||||||||
Total | $ | 177.42 | $ | 172.61 | 2.8 | % | 79.5 | % | 80.9 | % | (1.4 | )% | $ | 141.03 | $ | 139.56 | 1.1 | % | 25.89 | % | 27.93 | % | -204 bps | ||||||||
Total Excluding Lexington Hotel | $ | 175.30 | $ | 170.07 | 3.1 | % | 81.3 | % | 80.0 | % | 1.3 | % | $ | 142.51 | $ | 136.03 | 4.8 | % | 27.05 | % | 27.37 | % | -32 bps | ||||||||
(1) | The pro forma operating data includes the operating results for each of the Company’s hotels assuming they were owned since January 1, 2012. 3Q 2012 includes the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 (112 days) and all other hotels from July 1, 2012 to September 30, 2012. |
16
Pro Forma Operating Statistics – Year to Date (1) | |||||||||||||||||||||||||||||||
ADR | Occupancy | RevPAR | Hotel Adjusted EBITDA Margin | ||||||||||||||||||||||||||||
YTD 2013 | YTD 2012 | B/(W) | YTD 2013 | YTD 2012 | B/(W) | YTD 2013 | YTD 2012 | B/(W) | YTD 2013 | YTD 2012 | B/(W) | ||||||||||||||||||||
Atlanta Alpharetta | $ | 148.05 | $ | 139.79 | 5.9 | % | 75.5 | % | 66.4 | % | 9.1 | % | $ | 111.73 | $ | 92.78 | 20.4 | % | 33.88 | % | 30.52 | % | 336 bps | ||||||||
Bethesda Marriott Suites | $ | 164.37 | $ | 165.60 | (0.7 | )% | 60.2 | % | 66.1 | % | (5.9 | )% | $ | 98.88 | $ | 109.45 | (9.7 | )% | 22.84 | % | 26.67 | % | -383 bps | ||||||||
Boston Westin | $ | 199.77 | $ | 197.67 | 1.1 | % | 77.9 | % | 76.7 | % | 1.2 | % | $ | 155.57 | $ | 151.69 | 2.6 | % | 24.08 | % | 22.76 | % | 132 bps | ||||||||
Hilton Boston Downtown | $ | 221.07 | $ | 218.43 | 1.2 | % | 83.3 | % | 80.3 | % | 3.0 | % | $ | 184.25 | $ | 175.44 | 5.0 | % | 33.01 | % | 38.51 | % | -550 bps | ||||||||
Hilton Burlington | $ | 161.32 | $ | 159.79 | 1.0 | % | 75.3 | % | 74.7 | % | 0.6 | % | $ | 121.53 | $ | 119.34 | 1.8 | % | 41.21 | % | 38.38 | % | 283 bps | ||||||||
Renaissance Charleston | $ | 190.07 | $ | 183.28 | 3.7 | % | 87.7 | % | 85.5 | % | 2.2 | % | $ | 166.76 | $ | 156.77 | 6.4 | % | 34.36 | % | 35.24 | % | -88 bps | ||||||||
Hilton Garden Inn Chelsea | $ | 223.23 | $ | 202.42 | 10.3 | % | 96.6 | % | 95.3 | % | 1.3 | % | $ | 215.62 | $ | 192.90 | 11.8 | % | 44.19 | % | 41.00 | % | 319 bps | ||||||||
Chicago Marriott | $ | 205.34 | $ | 199.28 | 3.0 | % | 76.6 | % | 73.9 | % | 2.7 | % | $ | 157.32 | $ | 147.17 | 6.9 | % | 23.37 | % | 22.45 | % | 92 bps | ||||||||
Chicago Conrad | $ | 215.81 | $ | 206.97 | 4.3 | % | 82.8 | % | 80.9 | % | 1.9 | % | $ | 178.75 | $ | 167.42 | 6.8 | % | 31.38 | % | 29.33 | % | 205 bps | ||||||||
Courtyard Denver Downtown | $ | 168.83 | $ | 158.84 | 6.3 | % | 84.9 | % | 85.6 | % | (0.7 | )% | $ | 143.40 | $ | 135.98 | 5.5 | % | 45.33 | % | 45.69 | % | -36 bps | ||||||||
Courtyard Fifth Avenue | $ | 266.73 | $ | 260.17 | 2.5 | % | 77.3 | % | 90.2 | % | (12.9 | )% | $ | 206.12 | $ | 234.64 | (12.2 | )% | 18.03 | % | 27.59 | % | -956 bps | ||||||||
Courtyard Midtown East | $ | 263.70 | $ | 257.14 | 2.6 | % | 80.2 | % | 85.8 | % | (5.6 | )% | $ | 211.53 | $ | 220.69 | (4.2 | )% | 27.49 | % | 32.31 | % | -482 bps | ||||||||
Frenchman's Reef | $ | 243.33 | $ | 233.28 | 4.3 | % | 84.1 | % | 80.6 | % | 3.5 | % | $ | 204.57 | $ | 188.04 | 8.8 | % | 21.22 | % | 21.41 | % | -19 bps | ||||||||
JW Marriott Denver Cherry Creek | $ | 240.79 | $ | 226.64 | 6.2 | % | 81.0 | % | 76.0 | % | 5.0 | % | $ | 195.05 | $ | 172.22 | 13.3 | % | 30.47 | % | 29.97 | % | 50 bps | ||||||||
Los Angeles Airport | $ | 113.56 | $ | 109.53 | 3.7 | % | 87.8 | % | 87.9 | % | (0.1 | )% | $ | 99.73 | $ | 96.27 | 3.6 | % | 21.21 | % | 19.33 | % | 188 bps | ||||||||
Hilton Minneapolis | $ | 145.04 | $ | 141.08 | 2.8 | % | 75.0 | % | 74.2 | % | 0.8 | % | $ | 108.79 | $ | 104.69 | 3.9 | % | 28.12 | % | 27.10 | % | 102 bps | ||||||||
Oak Brook Hills | $ | 122.79 | $ | 120.60 | 1.8 | % | 61.8 | % | 60.0 | % | 1.8 | % | $ | 75.83 | $ | 72.34 | 4.8 | % | 13.35 | % | 11.46 | % | 189 bps | ||||||||
Orlando Airport Marriott | $ | 100.94 | $ | 105.34 | (4.2 | )% | 75.1 | % | 72.8 | % | 2.3 | % | $ | 75.82 | $ | 76.69 | (1.1 | )% | 22.76 | % | 23.68 | % | -92 bps | ||||||||
Hotel Rex | $ | 189.84 | $ | 177.71 | 6.8 | % | 84.9 | % | 86.6 | % | (1.7 | )% | $ | 161.11 | $ | 153.90 | 4.7 | % | 32.16 | % | 36.79 | % | -463 bps | ||||||||
Salt Lake City Marriott | $ | 143.26 | $ | 136.95 | 4.6 | % | 69.9 | % | 68.2 | % | 1.7 | % | $ | 100.20 | $ | 93.46 | 7.2 | % | 33.79 | % | 31.02 | % | 277 bps | ||||||||
The Lodge at Sonoma | $ | 255.28 | $ | 237.74 | 7.4 | % | 75.8 | % | 72.8 | % | 3.0 | % | $ | 193.49 | $ | 173.05 | 11.8 | % | 25.71 | % | 21.56 | % | 415 bps | ||||||||
Torrance Marriott South Bay | $ | 117.06 | $ | 110.49 | 5.9 | % | 84.1 | % | 84.5 | % | (0.4 | )% | $ | 98.49 | $ | 93.31 | 5.6 | % | 25.49 | % | 26.13 | % | -64 bps | ||||||||
Vail Marriott | $ | 230.31 | $ | 219.25 | 5.0 | % | 71.8 | % | 68.1 | % | 3.7 | % | $ | 165.44 | $ | 149.42 | 10.7 | % | 30.28 | % | 29.96 | % | 32 bps | ||||||||
Lexington Hotel New York | $ | 200.80 | $ | 196.58 | 2.1 | % | 53.7 | % | 94.6 | % | (40.9 | )% | $ | 107.85 | $ | 185.89 | (42.0 | )% | (4.76 | )% | 32.45 | % | -3721 bps | ||||||||
Westin San Diego | $ | 154.40 | $ | 150.90 | 2.3 | % | 87.2 | % | 80.8 | % | 6.4 | % | $ | 134.63 | $ | 122.00 | 10.4 | % | 32.40 | % | 31.27 | % | 113 bps | ||||||||
Westin Washington D.C. City Center | $ | 189.21 | $ | 193.40 | (2.2 | )% | 78.0 | % | 75.0 | % | 3.0 | % | $ | 147.66 | $ | 145.04 | 1.8 | % | 32.22 | % | 35.63 | % | -341 bps | ||||||||
Renaissance Worthington | $ | 171.00 | $ | 157.94 | 8.3 | % | 65.1 | % | 70.4 | % | (5.3 | )% | $ | 111.34 | $ | 111.19 | 0.1 | % | 30.86 | % | 29.39 | % | 147 bps | ||||||||
Total | $ | 177.62 | $ | 172.91 | 2.7 | % | 76.5 | % | 77.9 | % | (1.4 | )% | $ | 135.84 | $ | 134.69 | 0.9 | % | 25.79 | % | 27.06 | % | -127 bps | ||||||||
Total Excluding NY Renovations (2) | $ | 172.26 | $ | 166.17 | 3.7 | % | 77.9 | % | 76.3 | % | 1.6 | % | $ | 134.21 | $ | 126.79 | 5.9 | % | 27.14 | % | 26.46 | % | 68 bps | ||||||||
(1) | The pro forma operating data includes the operating results for each of the Company’s hotels assuming they were owned since January 1, 2012. YTD 2012 includes the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012. |
(2) | Excludes three hotels in New York City under renovation during the nine months ended September 30, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue. |
17
Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Third Quarter 2013 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Non-Cash Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta | $ | 4,291 | $ | 823 | $ | 405 | $ | — | $ | — | $ | 1,228 | ||||||||
Bethesda Marriott Suites | $ | 3,014 | $ | (1,530 | ) | $ | 376 | $ | — | $ | 1,557 | $ | 403 | |||||||
Boston Westin | $ | 18,878 | $ | 2,595 | $ | 2,124 | $ | — | $ | 2 | $ | 4,721 | ||||||||
Hilton Boston Downtown | $ | 8,020 | $ | 1,476 | $ | 1,441 | $ | — | $ | 42 | $ | 2,959 | ||||||||
Hilton Burlington | $ | 4,960 | $ | 1,518 | $ | 844 | $ | — | $ | 23 | $ | 2,385 | ||||||||
Renaissance Charleston | $ | 2,905 | $ | 493 | $ | 405 | $ | — | $ | (32 | ) | $ | 866 | |||||||
Hilton Garden Inn Chelsea | $ | 3,595 | $ | 1,057 | $ | 606 | $ | — | $ | — | $ | 1,663 | ||||||||
Chicago Marriott | $ | 28,087 | $ | 1,511 | $ | 3,308 | $ | 3,232 | $ | (396 | ) | $ | 7,655 | |||||||
Chicago Conrad | $ | 7,511 | $ | 1,833 | $ | 965 | $ | — | $ | — | $ | 2,798 | ||||||||
Courtyard Denver Downtown | $ | 2,647 | $ | 981 | $ | 266 | $ | — | $ | — | $ | 1,247 | ||||||||
Courtyard Fifth Avenue | $ | 4,449 | $ | (71 | ) | $ | 433 | $ | 854 | $ | 52 | $ | 1,268 | |||||||
Courtyard Midtown East | $ | 7,495 | $ | 1,018 | $ | 675 | $ | 978 | $ | — | $ | 2,671 | ||||||||
Frenchman's Reef | $ | 11,257 | $ | (1,895 | ) | $ | 1,611 | $ | 830 | $ | — | $ | 546 | |||||||
JW Marriott Denver Cherry Creek | $ | 5,954 | $ | 881 | $ | 521 | $ | 586 | $ | — | $ | 1,988 | ||||||||
Los Angeles Airport | $ | 15,326 | $ | 574 | $ | 1,252 | $ | 1,135 | $ | — | $ | 2,961 | ||||||||
Minneapolis Hilton | $ | 13,656 | $ | 958 | $ | 1,944 | $ | 1,359 | $ | (133 | ) | $ | 4,128 | |||||||
Oak Brook Hills | $ | 8,146 | $ | 1,609 | $ | 229 | $ | — | $ | 108 | $ | 1,946 | ||||||||
Orlando Airport Marriott | $ | 3,927 | $ | (1,319 | ) | $ | 812 | $ | 832 | $ | — | $ | 325 | |||||||
Hotel Rex | $ | 1,824 | $ | 442 | $ | 231 | $ | — | $ | — | $ | 673 | ||||||||
Salt Lake City Marriott | $ | 6,538 | $ | 882 | $ | 756 | $ | 392 | $ | — | $ | 2,030 | ||||||||
The Lodge at Sonoma | $ | 6,535 | $ | 1,524 | $ | 370 | $ | 318 | $ | — | $ | 2,212 | ||||||||
Torrance Marriott South Bay | $ | 6,299 | $ | 1,024 | $ | 591 | $ | — | $ | — | $ | 1,615 | ||||||||
Vail Marriott | $ | 5,669 | $ | 89 | $ | 612 | $ | — | $ | — | $ | 701 | ||||||||
Lexington Hotel New York | $ | 9,014 | $ | (4,396 | ) | $ | 2,664 | $ | 1,682 | $ | 30 | $ | (20 | ) | ||||||
Westin San Diego | $ | 7,301 | $ | 420 | $ | 1,068 | $ | 718 | $ | 47 | $ | 2,253 | ||||||||
Westin Washington D.C. City Center | $ | 5,895 | $ | (401 | ) | $ | 1,055 | $ | 783 | $ | 46 | $ | 1,483 | |||||||
Renaissance Worthington | $ | 7,450 | $ | 498 | $ | 690 | $ | 756 | $ | 2 | $ | 1,946 | ||||||||
Total | $ | 210,643 | $ | 12,594 | $ | 26,254 | $ | 14,455 | $ | 1,348 | $ | 54,525 | ||||||||
Total Excluding Lexington Hotel | $ | 201,629 | $ | 16,990 | $ | 23,590 | $ | 12,773 | $ | 1,318 | $ | 54,545 | ||||||||
(1) | The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities. |
18
Pro Forma Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Third Quarter 2012 (1) | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Non-Cash Adjustments (2) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta | $ | 4,190 | $ | 614 | $ | 379 | $ | — | $ | — | $ | 993 | ||||||||
Bethesda Marriott Suites | $ | 4,608 | $ | (1,354 | ) | $ | 636 | $ | — | $ | 1,912 | $ | 1,194 | |||||||
Boston Westin | $ | 18,506 | $ | 2,190 | $ | 2,607 | $ | — | $ | 2 | $ | 4,799 | ||||||||
Hilton Boston Downtown | $ | 7,078 | $ | 1,489 | $ | 1,309 | $ | — | $ | 42 | $ | 2,840 | ||||||||
Hilton Burlington | $ | 4,781 | $ | 1,413 | $ | 773 | $ | — | $ | 23 | $ | 2,209 | ||||||||
Renaissance Charleston | $ | 3,309 | $ | 660 | $ | 472 | $ | — | $ | (39 | ) | $ | 1,093 | |||||||
Hilton Garden Inn Chelsea | $ | 3,467 | $ | 914 | $ | 583 | $ | — | $ | — | $ | 1,497 | ||||||||
Chicago Marriott | $ | 32,656 | $ | 1,008 | $ | 4,207 | $ | 4,007 | $ | (487 | ) | $ | 8,735 | |||||||
Chicago Conrad | $ | 7,631 | $ | 1,764 | $ | 1,087 | $ | — | $ | — | $ | 2,851 | ||||||||
Courtyard Denver Downtown | $ | 2,538 | $ | 878 | $ | 317 | $ | — | $ | — | $ | 1,195 | ||||||||
Courtyard Fifth Avenue | $ | 5,509 | $ | 182 | $ | 555 | $ | 1,061 | $ | 64 | $ | 1,862 | ||||||||
Courtyard Midtown East | $ | 8,852 | $ | 1,211 | $ | 743 | $ | 1,217 | $ | — | $ | 3,171 | ||||||||
Frenchman's Reef | $ | 10,832 | $ | (2,365 | ) | $ | 1,996 | $ | 1,034 | $ | — | $ | 665 | |||||||
JW Marriott Denver Cherry Creek | $ | 5,476 | $ | 468 | $ | 593 | $ | 745 | $ | — | $ | 1,806 | ||||||||
Los Angeles Airport | $ | 17,141 | $ | (265 | ) | $ | 1,796 | $ | 1,392 | $ | — | $ | 2,923 | |||||||
Minneapolis Hilton | $ | 13,619 | $ | 551 | $ | 2,362 | $ | 1,687 | $ | (225 | ) | $ | 4,375 | |||||||
Oak Brook Hills | $ | 8,769 | $ | 620 | $ | 971 | $ | — | $ | 125 | $ | 1,716 | ||||||||
Orlando Airport Marriott | $ | 4,936 | $ | (1,295 | ) | $ | 920 | $ | 1,036 | $ | — | $ | 661 | |||||||
Hotel Rex | $ | 1,678 | $ | 500 | $ | 206 | $ | — | $ | — | $ | 706 | ||||||||
Salt Lake City Marriott | $ | 7,435 | $ | 842 | $ | 906 | $ | 511 | $ | — | $ | 2,259 | ||||||||
The Lodge at Sonoma | $ | 7,239 | $ | 1,827 | $ | 476 | $ | — | $ | — | $ | 2,303 | ||||||||
Torrance Marriott South Bay | $ | 7,181 | $ | 973 | $ | 978 | $ | — | $ | — | $ | 1,951 | ||||||||
Vail Marriott | $ | 5,896 | $ | 578 | $ | 740 | $ | — | $ | — | $ | 1,318 | ||||||||
Lexington Hotel New York | $ | 13,840 | $ | (530 | ) | $ | 3,190 | $ | 2,358 | $ | 33 | $ | 5,051 | |||||||
Westin San Diego | $ | 6,786 | $ | 1,044 | $ | 973 | $ | — | $ | 47 | $ | 2,064 | ||||||||
Westin Washington D.C. City Center | $ | 6,122 | $ | 649 | $ | 1,142 | $ | — | $ | 46 | $ | 1,837 | ||||||||
Renaissance Worthington | $ | 8,296 | $ | (15 | ) | $ | 889 | $ | 943 | $ | 3 | $ | 1,820 | |||||||
Total | $ | 228,371 | $ | 14,551 | $ | 31,806 | $ | 15,991 | $ | 1,546 | $ | 63,776 | ||||||||
Total Excluding Lexington Hotel | $ | 214,531 | $ | 15,081 | $ | 28,616 | $ | 13,633 | $ | 1,513 | $ | 58,725 | ||||||||
(1) | The pro forma operating data includes the operating results for each the Company’s hotels assuming they were owned as of January 1, 2012 and includes the operating results of the Company’s Marriott-managed hotels from June 16, 2012 to October 5, 2012 and all other hotels from July 1, 2012 to September 30, 2012. |
(2) | The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of our favorable lease assets and the non-cash amortization of our unfavorable contract liabilities. |
19
Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Year to Date 2013 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Non-Cash Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta | $ | 13,670 | $ | 3,413 | $ | 1,218 | $ | — | $ | — | $ | 4,631 | ||||||||
Bethesda Marriott Suites | $ | 10,249 | $ | (3,588 | ) | $ | 1,257 | $ | — | $ | 4,672 | $ | 2,341 | |||||||
Boston Westin | $ | 57,358 | $ | 7,431 | $ | 6,372 | $ | — | $ | 7 | $ | 13,810 | ||||||||
Hilton Boston Downtown | $ | 19,985 | $ | 2,163 | $ | 4,309 | $ | — | $ | 125 | $ | 6,597 | ||||||||
Hilton Burlington | $ | 10,887 | $ | 1,891 | $ | 2,527 | $ | — | $ | 68 | $ | 4,486 | ||||||||
Renaissance Charleston | $ | 9,203 | $ | 2,065 | $ | 1,192 | $ | — | $ | (95 | ) | $ | 3,162 | |||||||
Hilton Garden Inn Chelsea | $ | 10,201 | $ | 2,955 | $ | 1,553 | $ | — | $ | — | $ | 4,508 | ||||||||
Chicago Marriott | $ | 75,420 | $ | (665 | ) | $ | 9,864 | $ | 9,618 | $ | (1,192 | ) | $ | 17,625 | ||||||
Chicago Conrad | $ | 20,051 | $ | 3,491 | $ | 2,801 | $ | — | $ | — | $ | 6,292 | ||||||||
Courtyard Denver Downtown | $ | 7,445 | $ | 2,586 | $ | 789 | $ | — | $ | — | $ | 3,375 | ||||||||
Courtyard Fifth Avenue | $ | 10,488 | $ | (1,998 | ) | $ | 1,184 | $ | 2,544 | $ | 161 | $ | 1,891 | |||||||
Courtyard Midtown East | $ | 18,677 | $ | 328 | $ | 1,874 | $ | 2,932 | $ | — | $ | 5,134 | ||||||||
Frenchman's Reef | $ | 48,571 | $ | 2,970 | $ | 4,864 | $ | 2,473 | $ | — | $ | 10,307 | ||||||||
JW Marriott Denver Cherry Creek | $ | 16,545 | $ | 1,785 | $ | 1,487 | $ | 1,770 | $ | — | $ | 5,042 | ||||||||
Los Angeles Airport | $ | 44,658 | $ | 2,133 | $ | 3,972 | $ | 3,368 | $ | — | $ | 9,473 | ||||||||
Minneapolis Hilton | $ | 38,635 | $ | 1,396 | $ | 5,816 | $ | 4,050 | $ | (399 | ) | $ | 10,863 | |||||||
Oak Brook Hills | $ | 18,037 | $ | 1,330 | $ | 754 | $ | — | $ | 324 | $ | 2,408 | ||||||||
Orlando Airport Marriott | $ | 15,114 | $ | (1,368 | ) | $ | 2,332 | $ | 2,476 | $ | — | $ | 3,440 | |||||||
Hotel Rex | $ | 4,754 | $ | 836 | $ | 693 | $ | — | $ | — | $ | 1,529 | ||||||||
Salt Lake City Marriott | $ | 20,248 | $ | 3,433 | $ | 2,227 | $ | 1,182 | $ | — | $ | 6,842 | ||||||||
The Lodge at Sonoma | $ | 15,980 | $ | 2,336 | $ | 1,103 | $ | 670 | $ | — | $ | 4,109 | ||||||||
Torrance Marriott South Bay | $ | 17,910 | $ | 2,807 | $ | 1,759 | $ | — | $ | — | $ | 4,566 | ||||||||
Vail Marriott | $ | 22,328 | $ | 4,947 | $ | 1,813 | $ | — | $ | — | $ | 6,760 | ||||||||
Lexington Hotel New York | $ | 23,315 | $ | (15,255 | ) | $ | 9,010 | $ | 5,044 | $ | 92 | $ | (1,109 | ) | ||||||
Westin San Diego | $ | 22,186 | $ | 2,407 | $ | 3,185 | $ | 1,455 | $ | 141 | $ | 7,188 | ||||||||
Westin Washington D.C. City Center | $ | 20,227 | $ | (190 | ) | $ | 4,232 | $ | 2,338 | $ | 138 | $ | 6,518 | |||||||
Renaissance Worthington | $ | 23,989 | $ | 3,052 | $ | 2,093 | $ | 2,253 | $ | 6 | $ | 7,404 | ||||||||
Total | $ | 616,131 | $ | 32,691 | $ | 80,280 | $ | 42,173 | $ | 4,048 | $ | 158,900 | ||||||||
Total Excluding NY Renovations (2) | $ | 563,651 | $ | 49,616 | $ | 68,212 | $ | 31,653 | $ | 3,795 | $ | 152,984 | ||||||||
(1) | The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities. |
(2) | Excludes three hotels in New York City under renovation during the nine months ended September 30, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue. |
20
Pro Forma Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Year To Date 2012 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Non-Cash Adjustments (2) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta | $ | 11,676 | $ | 2,585 | $ | 978 | $ | — | $ | — | $ | 3,563 | ||||||||
Bethesda Marriott Suites | $ | 11,485 | $ | (3,333 | ) | $ | 1,594 | $ | — | $ | 4,802 | $ | 3,063 | |||||||
Boston Westin | $ | 54,386 | $ | 5,608 | $ | 6,762 | $ | — | $ | 6 | $ | 12,376 | ||||||||
Hilton Boston Downtown | $ | 18,970 | $ | 3,255 | $ | 3,926 | $ | — | $ | 125 | $ | 7,306 | ||||||||
Hilton Burlington | $ | 10,718 | $ | 1,727 | $ | 2,319 | $ | — | $ | 68 | $ | 4,114 | ||||||||
Renaissance Charleston | $ | 8,807 | $ | 2,033 | $ | 1,168 | $ | — | $ | (97 | ) | $ | 3,104 | |||||||
Hilton Garden Inn Chelsea | $ | 9,244 | $ | 2,333 | $ | 1,457 | $ | — | $ | — | $ | 3,790 | ||||||||
Chicago Marriott | $ | 72,282 | $ | (2,370 | ) | $ | 9,850 | $ | 9,962 | $ | (1,216 | ) | $ | 16,226 | ||||||
Chicago Conrad | $ | 18,822 | $ | 2,900 | $ | 2,621 | $ | — | $ | — | $ | 5,521 | ||||||||
Courtyard Denver Downtown | $ | 7,095 | $ | 2,278 | $ | 789 | $ | 175 | $ | — | $ | 3,242 | ||||||||
Courtyard Fifth Avenue | $ | 12,249 | $ | (827 | ) | $ | 1,410 | $ | 2,637 | $ | 159 | $ | 3,379 | |||||||
Courtyard Midtown East | $ | 20,033 | $ | 1,625 | $ | 1,837 | $ | 3,011 | $ | — | $ | 6,473 | ||||||||
Frenchman's Reef | $ | 42,775 | $ | 1,684 | $ | 4,886 | $ | 2,589 | $ | — | $ | 9,159 | ||||||||
JW Marriott Denver Cherry Creek | $ | 14,916 | $ | 1,192 | $ | 1,432 | $ | 1,847 | $ | — | $ | 4,471 | ||||||||
Los Angeles Airport | $ | 44,047 | $ | 576 | $ | 4,484 | $ | 3,453 | $ | — | $ | 8,513 | ||||||||
Minneapolis Hilton | $ | 36,906 | $ | 432 | $ | 5,851 | $ | 4,221 | $ | (502 | ) | $ | 10,002 | |||||||
Oak Brook Hills | $ | 17,676 | $ | (787 | ) | $ | 2,437 | $ | — | $ | 375 | $ | 2,025 | |||||||
Orlando Airport Marriott | $ | 15,407 | $ | (1,234 | ) | $ | 2,308 | $ | 2,574 | $ | — | $ | 3,648 | |||||||
Hotel Rex | $ | 4,490 | $ | 1,035 | $ | 617 | $ | — | $ | — | $ | 1,652 | ||||||||
Salt Lake City Marriott | $ | 18,906 | $ | 2,398 | $ | 2,186 | $ | 1,281 | $ | — | $ | 5,865 | ||||||||
The Lodge at Sonoma | $ | 14,561 | $ | 1,977 | $ | 1,163 | $ | — | $ | — | $ | 3,140 | ||||||||
Torrance Marriott South Bay | $ | 17,526 | $ | 2,129 | $ | 2,450 | $ | — | $ | — | $ | 4,579 | ||||||||
Vail Marriott | $ | 20,121 | $ | 4,219 | $ | 1,809 | $ | — | $ | — | $ | 6,028 | ||||||||
Lexington Hotel New York | $ | 38,568 | $ | (386 | ) | $ | 7,914 | $ | 4,887 | $ | 100 | $ | 12,515 | |||||||
Westin San Diego | $ | 20,096 | $ | 3,223 | $ | 2,920 | $ | — | $ | 142 | $ | 6,285 | ||||||||
Westin Washington D.C. City Center | $ | 19,960 | $ | 3,548 | $ | 3,427 | $ | — | $ | 137 | $ | 7,112 | ||||||||
Renaissance Worthington | $ | 24,484 | $ | 2,635 | $ | 2,207 | $ | 2,346 | $ | 9 | $ | 7,197 | ||||||||
Total | $ | 606,206 | $ | 40,455 | $ | 80,802 | $ | 38,983 | $ | 4,108 | $ | 164,020 | ||||||||
Total Excluding NY Renovations (3) | $ | 535,356 | $ | 40,043 | $ | 69,641 | $ | 28,448 | $ | 3,849 | $ | 141,653 | ||||||||
(1) | The pro forma operating data includes the operating results for each of the Company’s hotels assuming they were owned since January 1, 2012. YTD 2012 includes the operating results of the Company’s Marriott-managed hotels from January 1, 2012 to October 5, 2012 and all other hotels from January 1, 2012 to September 30, 2012. |
(2) | The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of our favorable lease assets and the non-cash amortization of our unfavorable contract liabilities. |
(3) | Excludes three hotels in New York City under renovation during the nine months ended September 30, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue. |
21