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):
August 5, 2016
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 August 5, 2016, DiamondRock Hospitality Company (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2016. A copy of that press release is furnished 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 August 5, 2016. | |
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: August 5, 2016 | By: | /s/ William J. Tennis | ||||
William J. Tennis | ||||||
Executive Vice President, General Counsel and Corporate Secretary | ||||||
COMPANY CONTACT
Sean Mahoney
(240) 744-1150
FOR IMMEDIATE RELEASE
DIAMONDROCK HOSPITALITY COMPANY REPORTS SECOND QUARTER 2016 RESULTS
BETHESDA, Maryland, Friday, August 5, 2016 – DiamondRock Hospitality Company (the “Company”) (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 26 premium hotels in the United States, today announced results of operations for the quarter ended June 30, 2016.
Second Quarter 2016 Highlights
• | Net Income: Net income was $44.2 million and earnings per diluted share was $0.22. |
• | Comparable RevPAR: RevPAR was $197.52, a 0.8% increase from the comparable period of 2015. |
• | Comparable Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 35.85%, an increase of 11 basis points from the comparable period of 2015. |
• | Adjusted EBITDA: Adjusted EBITDA was $84.1 million, an increase of 3.7% from 2015. |
• | Adjusted FFO: Adjusted FFO was $63.1 million and Adjusted FFO per diluted share was $0.31. |
• | Credit Facility: The Company amended its senior unsecured revolving credit facility, increasing the capacity to $300 million, decreasing pricing and extending the maturity date to May 2020. |
• | Term Loan: The Company closed on a new five-year $100 million senior unsecured term loan. |
• | Courtyard Fifth Avenue Loan Repayment: The Company repaid the $48.1 million mortgage loan secured by the Courtyard Fifth Avenue. |
• | Hotel Dispositions: The Company sold the Orlando Airport Marriott for proceeds of approximately $67 million and the Hilton Minneapolis for proceeds of approximately $143 million. |
• | Dividends: The Company declared a dividend of $0.125 per share during the second quarter, which was paid on July 12, 2016. |
Recent Developments
• | Hotel Disposition: The Company sold the Hilton Garden Inn Chelsea/New York City for proceeds of approximately $65 million on July 7, 2016. |
Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "The Company has successfully executed on our strategic priority of increasing liquidity and financial flexibility, with $400 million in financing activity and approximately $275 million in hotel dispositions in recent months. We expect to end the year with over $200 million in corporate cash, no outstanding borrowings on our credit facility and a net debt to Adjusted EBITDA ratio of 2.7 times. We are well positioned to deploy capital opportunistically in response to future market dislocations, including through share repurchases. During the second quarter, our team and operators were highly effective in identifying cost efficiencies that resulted in an impressive Hotel Adjusted
EBITDA margin of 36 percent. The continued benefit of these same initiatives enables the Company to maintain Adjusted EBITDA and Adjusted FFO guidance despite our more cautious outlook for revenue growth on weaker business travel trends.”
Operating Results
Please see “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”and a reconciliation of these measures to net income. Comparable operating results include our 2015 acquisitions for all periods presented and exclude our 2016 dispositions for all periods presented. See “Reconciliation of Comparable Operating Results” attached to this press release for a reconciliation to historical amounts.
For the quarter ended June 30, 2016, the Company reported the following:
Second Quarter | ||||||||||
2016 | 2015 | Change | ||||||||
Comparable Operating Results (1) (2) | ||||||||||
ADR | $231.31 | $232.75 | -0.6 | % | ||||||
Occupancy | 85.4 | % | 84.2 | % | 1.2 percentage points | |||||
RevPAR | $197.52 | $195.98 | 0.8 | % | ||||||
Revenues | $232.5 million | $229.6 million | 1.2 | % | ||||||
Hotel Adjusted EBITDA Margin | 35.85 | % | 35.74 | % | 11 basis points | |||||
Actual Operating Results | ||||||||||
Revenues | $256.7 million | $249.8 million | 2.8 | % | ||||||
Net income | $44.2 million | $24.8 million | $19.4 million | |||||||
Earnings per diluted share | $0.22 | $0.12 | $0.10 | |||||||
Adjusted EBITDA | $84.1 million | $81.1 million | $3.0 million | |||||||
Adjusted FFO | $63.1 million | $61.5 million | $1.6 million | |||||||
Adjusted FFO per diluted share | $0.31 | $0.31 | $0.00 | |||||||
(1) The amounts for all periods presented exclude the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.
(2) The 2015 amounts include pre-acquisition operating results for the Sheraton Suites Key West from April 1, 2015 to June 29, 2015 in order to reflect the period in 2015 comparable to our ownership period in 2016. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.
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For the six months ended June 30, 2016, the Company reported the following:
Year to Date | ||||||||||
2016 | 2015 | Change | ||||||||
Comparable Operating Results (1)(2) | ||||||||||
ADR | $224.26 | $222.90 | 0.6 | % | ||||||
Occupancy | 79.3 | % | 80.3 | % | -1.0 percentage points | |||||
RevPAR | $177.81 | $179.05 | -0.7 | % | ||||||
Revenues | $424.5 million | $424.9 million | -0.1 | % | ||||||
Hotel Adjusted EBITDA Margin | 31.88 | % | 31.64 | % | 24 basis points | |||||
Actual Operating Results | ||||||||||
Revenues | $469.7 million | $458.7 million | 2.4 | % | ||||||
Net income | $61.0 million | $35.5 million | $25.5 million | |||||||
Earnings per diluted share | $0.30 | $0.18 | $0.12 | |||||||
Adjusted EBITDA | $134.5 million | $129.6 million | $4.9 million | |||||||
Adjusted FFO | $105.9 million | $99.2 million | $6.7 million | |||||||
Adjusted FFO per diluted share | $0.52 | $0.49 | $0.03 | |||||||
(1) The amounts for all periods presented exclude the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.
(2) The 2015 amounts include pre-acquisition operating results for the Shorebreak Hotel from January 1, 2015 to February 5, 2015 and Sheraton Suites Key West from January 1, 2015 to June 29, 2015 in order to reflect the period in 2015 comparable to our ownership period in 2016. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.
Hotel Dispositions
As previously announced, the Company has sold three hotels in 2016 for total consideration of approximately $275 million.
• | Orlando Airport Marriott: On June 8, 2016, the Company sold the 485-room Orlando Airport Marriott for total consideration of approximately $67 million, which included payment for the hotel's replacement reserve, and recognized a pre-tax gain of $3.4 million. |
• | Hilton Minneapolis: On June 30, 2016, the Company sold the 821-room Hilton Minneapolis for total consideration of approximately $143 million and recognized a gain of pre-tax $4.7 million. |
• | Hilton Garden Inn Chelsea / New York City: On July 7, 2016, the Company sold the 169-room Hilton Garden Inn Chelsea July 7, 2016 for $65 million. The Company expects to record a gain on the sale of the hotel. |
Financing Activity
On May 3, 2016, the Company amended its senior unsecured revolving credit facility to increase the capacity to $300 million, decrease pricing and extend the maturity date to May 2020. The new facility also includes an accordion feature to expand up to $600 million, subject to lender consent. The interest rate on the new facility is based on a pricing grid ranging from 150 to 225 basis points over LIBOR, based on the Company’s leverage ratio. The interest rate is currently 150 basis points over LIBOR. The Company also lowered the unused facility fees and modified certain financial covenants.
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On May 3, 2016, the Company also entered into a new five-year $100 million senior unsecured term loan. The interest rate on the term loan is based on a pricing grid ranging from 145 to 220 basis points over LIBOR, based on the Company’s leverage ratio. The interest rate is currently 145 basis points over LIBOR. The proceeds were used to repay $55 million of borrowings outstanding on its senior unsecured credit facility as well as the repayment of the $48.1 mortgage loan secured by the Courtyard Manhattan Fifth Avenue.
Capital Expenditures
The Company spent approximately $54.1 million on capital improvements during the six months ended June 30, 2016, primarily related to the second phase of the Chicago Marriott Downtown renovation, the first phase of the renovation of The Gwen and the Worthington Renaissance guest room renovation. As a result of the three dispositions and fewer planned renovations by the end of 2016, the Company is lowering its anticipated capital expenditures to $135 million. Previously, the Company expected to spend approximately $150 million on capital improvements at its hotels in 2016. Significant projects in 2016 include:
• | The Gwen, a Luxury Collection Hotel: The Company rebranded the Conrad Chicago to Starwood's Luxury Collection on September 1, 2015. The renovation work associated with the brand conversion will be completed in two phases. The first phase, consisting of the lobby, rooftop bar and other public spaces, was completed in May 2016. The second phase of the renovation, consisting of the guest rooms, is expected to be completed during the seasonally slow winter season beginning in late 2016. |
• | Chicago Marriott Downtown: The second and largest phase of the multi-year renovation was completed early in the second quarter. This phase included the upgrade of approximately 460 rooms and a new state-of-the-art fitness center. The remaining guest rooms will be renovated during the seasonally slow winter months over the next two years. |
• | The Lodge at Sonoma: The Company expects to renovate the guest rooms at the hotel during the seasonally slow period during late 2016 and early 2017. |
• | Charleston Renaissance: The Company expects to renovate the guest rooms at the hotel commencing in the fourth quarter of 2016. |
• | Worthington Renaissance: The Company has commenced the guest room renovation at the hotel and expects to complete the project by the end of 2016. |
Balance Sheet
As of June 30, 2016, the Company had $166.5 million of unrestricted cash on hand and approximately $0.9 billion of total debt, which consisted of property-specific mortgage debt and $100.0 million of borrowings on its term loan. The Company expects to end the year with over $200 million in unrestricted cash, approximately $0.9 billion of total debt and no outstanding borrowings on its senior unsecured credit facility
Share Repurchase Program
The Company's Board of Directors authorized a $150 million share repurchase program during 2015. Repurchases under this program will be made in open market or privately negotiated transactions from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The Company has not repurchased any shares of its common stock since the program started.
Dividends
The Company’s Board of Directors declared a quarterly dividend of $0.125 per share to stockholders of record as of June 30, 2016. The dividend was paid on July 12, 2016.
Outlook and Guidance
The Company is providing annual guidance for 2016, 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
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U.S. Securities and Exchange Commission. Comparable RevPAR assumes that all of the Company's 26 hotels were owned since January 1, 2015.
The Company is updating its full year 2016 Adjusted EBITDA and Adjusted FFO guidance to reflect the dispositions of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. The Company now expects modestly lower travel demand for the remainder of 2016, particularly in the transient segment. Based on this outlook, the Company now expects flat to 1 percent of RevPAR growth for the full year 2016. This level of portfolio RevPAR growth, combined with the continuing implementation of cost containment measures, is expected to generate Adjusted EBITDA and Adjusted FFO in the prior guidance range.
Previous Guidance | Reduction for Dispositions | Current Guidance | ||||
Metric | Low End | High End | Low End | High End | ||
Comparable RevPAR Growth | 2 percent | 4 percent | 0 percent | 1 percent | ||
Adjusted EBITDA | $265 million | $278 million | $15 million | $250 million | $263 million | |
Adjusted FFO | $211 million | $221 million | $12 million | $199 million | $209 million | |
Adjusted FFO per share (based on 201.8 million shares) | $1.04 per share | $1.09 per share | $0.05 per share | $0.99 per share | $1.04 per share | |
The Company expects approximately 24.5% to 25.5% of its full year 2016 Adjusted EBITDA to be earned during the third quarter of 2016.
If any of the foregoing estimates and assumptions prove to be inaccurate, actual results, including the guidance, may vary from the amounts shown above.
Selected Quarterly Comparable Operating Information
The following table is presented to provide investors with selected quarterly comparable operating information for 2015 and 2016 year-to-date. The operating information is for the Company's 26 hotels currently owned and assumes each of the hotels were owned since January 1, 2015.
Quarter 1, 2015 | Quarter 2, 2015 | Quarter 3, 2015 | Quarter 4, 2015 | Full Year 2015 | |||||||||||
ADR | $ | 211.89 | $ | 232.75 | $ | 223.34 | $ | 227.67 | $ | 224.17 | |||||
Occupancy | 76.4 | % | 84.2 | % | 83.4 | % | 77.0 | % | 80.3 | % | |||||
RevPAR | $ | 161.88 | $ | 195.98 | $ | 186.31 | $ | 175.30 | $ | 179.94 | |||||
Revenues (in thousands) | $ | 195,263 | $ | 229,647 | $ | 214,144 | $ | 208,741 | $ | 847,795 | |||||
Hotel Adjusted EBITDA (in thousands) | $ | 52,351 | $ | 82,072 | $ | 68,300 | $ | 65,624 | $ | 268,347 | |||||
% of full Year | 19.5 | % | 30.6 | % | 25.5 | % | 24.4 | % | 100.0 | % | |||||
Hotel Adjusted EBITDA Margin | 26.81 | % | 35.74 | % | 31.89 | % | 31.44 | % | 31.65 | % | |||||
Available Rooms | 845,504 | 857,479 | 867,904 | 867,468 | 3,438,355 | ||||||||||
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Quarter 1, 2016 | Quarter 2, 2016 | YTD 2016 | |||||||||
ADR | $ | 216.03 | $ | 231.31 | $ | 224.26 | |||||
Occupancy | 73.2 | % | 85.4 | % | 79.3 | % | |||||
RevPAR | $ | 158.08 | $ | 197.52 | $ | 177.81 | |||||
Revenues (in thousands) | $ | 192,034 | $ | 232,500 | $ | 424,534 | |||||
Hotel Adjusted EBITDA (in thousands) | $ | 51,968 | $ | 83,362 | $ | 135,330 | |||||
Hotel Adjusted EBITDA Margin | 27.06 | % | 35.85 | % | 31.88 | % | |||||
Available Rooms | 858,039 | 858,767 | 1,716,806 | ||||||||
Earnings Call
The Company will host a conference call to discuss its second quarter results on Friday, August 5, 2016, at 9:00 a.m. Eastern Time (ET). To participate in the live call, investors are invited to dial 888-310-1786 (for domestic callers) or 330-863-3357 (for international callers). The participant passcode is 44940565. 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 one week.
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 26 premium quality hotels with over 9,400 rooms. The Company has strategically positioned its hotels to be operated both under leading global brands such as Hilton, Marriott, and Westin and boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company’s website at www.drhc.com.
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; 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.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
June 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Property and equipment, net | $ | 2,641,298 | $ | 2,882,176 | |||
Assets held for sale | 62,035 | — | |||||
Restricted cash | 45,644 | 59,339 | |||||
Due from hotel managers | 90,839 | 86,698 | |||||
Favorable lease assets, net | 18,138 | 23,955 | |||||
Prepaid and other assets (1) | 52,494 | 46,758 | |||||
Cash and cash equivalents | 166,548 | 213,584 | |||||
Total assets | $ | 3,076,996 | $ | 3,312,510 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Mortgage debt, net of unamortized debt issuance costs | $ | 825,995 | $ | 1,169,749 | |||
Term loan, net of unamortized debt issuance costs | 99,299 | — | |||||
Senior unsecured credit facility | — | — | |||||
Total debt | 925,294 | 1,169,749 | |||||
Deferred income related to key money, net | 21,485 | 23,568 | |||||
Unfavorable contract liabilities, net | 73,601 | 74,657 | |||||
Deferred ground rent | 77,572 | 70,153 | |||||
Due to hotel managers | 59,579 | 65,350 | |||||
Dividends declared and unpaid | 25,583 | 25,599 | |||||
Liabilities of assets held for sale | 1,137 | — | |||||
Accounts payable and accrued expenses (2) | 54,981 | 58,829 | |||||
Total other liabilities | 313,938 | 318,156 | |||||
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; 200,888,710 and 200,741,777 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 2,009 | 2,007 | |||||
Additional paid-in capital | 2,059,760 | 2,056,878 | |||||
Accumulated deficit | (224,005 | ) | (234,280 | ) | |||
Total stockholders’ equity | 1,837,764 | 1,824,605 | |||||
Total liabilities and stockholders’ equity | $ | 3,076,996 | $ | 3,312,510 | |||
(1) Includes $34.0 million of deferred tax assets, $9.7 million and $7.6 million of prepaid expenses, and $8.8 million and $5.2 million of other assets as of June 30, 2016 and December 31, 2015, respectively.
(2) Includes $21.2 million of deferred tax liabilities, $12.0 million and $13.3 million of accrued property taxes, $6.2 million and $11.6 million of accrued capital expenditures, and $15.6 million and $12.7 million of other accrued liabilities as of June 30, 2016 and December 31, 2015, respectively.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Rooms | $ | 186,113 | $ | 181,563 | $ | 335,556 | $ | 326,199 | |||||||
Food and beverage | 57,407 | 56,073 | 107,781 | 108,406 | |||||||||||
Other | 13,144 | 12,165 | 26,361 | 24,084 | |||||||||||
Total revenues | 256,664 | 249,801 | 469,698 | 458,689 | |||||||||||
Operating Expenses: | |||||||||||||||
Rooms | 43,257 | 41,993 | 81,971 | 80,457 | |||||||||||
Food and beverage | 35,265 | 35,355 | 68,615 | 70,901 | |||||||||||
Management fees | 8,772 | 8,903 | 15,381 | 15,103 | |||||||||||
Other hotel expenses | 79,524 | 77,546 | 158,453 | 154,052 | |||||||||||
Depreciation and amortization | 25,005 | 25,574 | 50,126 | 49,911 | |||||||||||
Hotel acquisition costs | — | 260 | — | 492 | |||||||||||
Corporate expenses | 6,736 | 6,331 | 12,736 | 11,741 | |||||||||||
Impairment losses | — | 9,675 | — | 10,461 | |||||||||||
Total operating expenses, net | 198,559 | 205,637 | 387,282 | 393,118 | |||||||||||
Operating profit | 58,105 | 44,164 | 82,416 | 65,571 | |||||||||||
Interest and other income, net | (68 | ) | (227 | ) | (118 | ) | (354 | ) | |||||||
Interest expense | 11,074 | 12,838 | 22,738 | 26,056 | |||||||||||
Gain on sales of hotel properties | (8,121 | ) | — | (8,121 | ) | — | |||||||||
Total other expenses, net | 2,885 | 12,611 | 14,499 | 25,702 | |||||||||||
Income before income taxes | 55,220 | 31,553 | 67,917 | 39,869 | |||||||||||
Income tax expense | (11,045 | ) | (6,731 | ) | (6,964 | ) | (4,405 | ) | |||||||
Net income | $ | 44,175 | $ | 24,822 | $ | 60,953 | $ | 35,464 | |||||||
Earnings per share: | |||||||||||||||
Basic earnings per share | $ | 0.22 | $ | 0.12 | $ | 0.30 | $ | 0.18 | |||||||
Diluted earnings per share | $ | 0.22 | $ | 0.12 | $ | 0.30 | $ | 0.18 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 201,273,767 | 200,830,064 | 201,133,321 | 200,738,301 | |||||||||||
Diluted | 201,827,384 | 201,142,747 | 201,768,451 | 201,115,115 | |||||||||||
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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, Hotel EBITDA, Hotel 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, Hotel EBITDA, Hotel 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.
Use and Limitations of Non-GAAP Financial Measures
Our management and Board of Directors use EBITDA, Adjusted EBITDA, Hotel EBITDA, Hotel 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.
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 debt agreements 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 operating results.
Adjustments to EBITDA and FFO
We adjust EBITDA and FFO when evaluating our performance because we believe that the exclusion of certain additional 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. We exclude these non-cash items because they do not reflect the underlying operating performance of our hotels. |
• | Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of favorable and unfavorable contract assets recorded in conjunction with certain acquisitions because the non-cash amortization does not reflect the underlying operating performance of our hotels. |
9
• | 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 adjustments because they do not reflect the underlying performance of the Company 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 theses gains or losses do not accurately reflect the underlying performance of the Company. |
• | Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these costs do not reflect the underlying performance of the Company or our hotels. |
• | Severance Costs: We exclude corporate severance costs and severance costs at out hotels related to lease terminations because we believe these costs do not reflect the underlying performance of the Company or our hotels. |
• | Hotel Manager Transition Costs: We exclude the transition costs associated with a change in hotel manager because we believe these costs do not reflect the underlying performance of our hotels. During the three and six months ended June 30, 2015, we excluded the transition costs associated with the change of hotel managers in connection with the acquisitions of the Westin Fort Lauderdale and the Shorebreak Hotel. |
• | Other Items: From time to time we incur costs or realize gains that we do not believe reflect the underlying performance of the Company or our hotels. Such items may include, but are not limited to, hotel pre-opening costs, lease preparation costs, contract termination fees, gains or losses from legal settlements, bargain purchase gains and gains from insurance proceeds. |
In addition, to derive Adjusted EBITDA we exclude gains or losses on dispositions and impairment losses because we believe that including them in EBITDA does not reflect the ongoing performance of our hotels. Additionally, the gains or losses on dispositions 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.
The following tables are reconciliations of our GAAP net income to EBITDA and Adjusted EBITDA (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 44,175 | $ | 24,822 | $ | 60,953 | $ | 35,464 | |||||||
Interest expense | 11,074 | 12,838 | 22,738 | 26,056 | |||||||||||
Income tax expense | 11,045 | 6,731 | 6,964 | 4,405 | |||||||||||
Real estate related depreciation and amortization | 25,005 | 25,574 | 50,126 | 49,911 | |||||||||||
EBITDA | 91,299 | 69,965 | 140,781 | 115,836 | |||||||||||
Non-cash ground rent | 1,328 | 1,479 | 2,662 | 2,987 | |||||||||||
Non-cash amortization of favorable and unfavorable contract liabilities, net | (478 | ) | (374 | ) | (956 | ) | (727 | ) | |||||||
Impairment losses | — | 9,675 | — | 10,461 | |||||||||||
Gain on sale of hotel properties | (8,121 | ) | — | (8,121 | ) | — | |||||||||
Severance costs (1) | 119 | — | 119 | — | |||||||||||
Hotel acquisition costs | — | 260 | — | 492 | |||||||||||
Hotel manager transition costs (2) | — | 66 | — | 534 | |||||||||||
Adjusted EBITDA | $ | 84,147 | $ | 81,071 | $ | 134,485 | $ | 129,583 | |||||||
(1) | Classified as corporate expenses on the consolidated statements of operations. |
(2) | Classified as other hotel expenses on the consolidated statements of operations. |
10
Full Year 2016 Guidance | |||||||
Low End | High End | ||||||
Net income | $ | 106,881 | $ | 117,881 | |||
Interest expense | 43,000 | 42,500 | |||||
Income tax expense | 9,500 | 13,000 | |||||
Real estate related depreciation and amortization | 98,000 | 97,000 | |||||
EBITDA | 257,381 | 270,381 | |||||
Non-cash ground rent | 4,800 | 4,800 | |||||
Non-cash amortization of favorable and unfavorable contracts, net | (1,800 | ) | (1,800 | ) | |||
Gain on sale of hotel properties | (10,500 | ) | (10,500 | ) | |||
Severance costs | 119 | 119 | |||||
Adjusted EBITDA | $ | 250,000 | $ | 263,000 | |||
The following tables are reconciliations of our GAAP net income to FFO and Adjusted FFO (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 44,175 | $ | 24,822 | $ | 60,953 | $ | 35,464 | |||||||
Real estate related depreciation and amortization | 25,005 | 25,574 | 50,126 | 49,911 | |||||||||||
Gain on sales of hotel properties, net of income tax | (7,010 | ) | — | (7,010 | ) | — | |||||||||
Impairment losses | — | 9,675 | — | 10,461 | |||||||||||
FFO | 62,170 | 60,071 | 104,069 | 95,836 | |||||||||||
Non-cash ground rent | 1,328 | 1,479 | 2,662 | 2,987 | |||||||||||
Non-cash amortization of favorable and unfavorable contract liabilities, net | (478 | ) | (374 | ) | (956 | ) | (727 | ) | |||||||
Hotel acquisition costs | — | 260 | — | 492 | |||||||||||
Hotel manager transition costs (2) | — | 66 | — | 534 | |||||||||||
Severance costs (1) | 119 | — | 119 | — | |||||||||||
Fair value adjustments to debt instruments | 4 | (14 | ) | 18 | 66 | ||||||||||
Adjusted FFO | $ | 63,143 | $ | 61,488 | $ | 105,912 | $ | 99,188 | |||||||
Adjusted FFO per diluted share | $ | 0.31 | $ | 0.31 | $ | 0.52 | $ | 0.49 | |||||||
(1) | Classified as corporate expenses on the consolidated statements of operations. |
(2) | Classified as other hotel expenses on the consolidated statements of operations. |
11
Full Year 2016 Guidance | |||||||
Low End | High End | ||||||
Net income | $ | 106,881 | $ | 117,881 | |||
Real estate related depreciation and amortization | 98,000 | 97,000 | |||||
Gain on sales of hotel properties, net of income tax | (9,000 | ) | (9,000 | ) | |||
FFO | 195,881 | 205,881 | |||||
Non-cash ground rent | 4,800 | 4,800 | |||||
Non-cash amortization of favorable and unfavorable contract liabilities, net | (1,800 | ) | (1,800 | ) | |||
Severance costs | 119 | 119 | |||||
Adjusted FFO | $ | 199,000 | $ | 209,000 | |||
Adjusted FFO per diluted share | $ | 0.99 | $ | 1.04 | |||
Hotel EBITDA and Hotel Adjusted EBITDA
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 and unfavorable contracts, and certain other items as described above. 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.
The following table is a reconciliation of our GAAP net income to Hotel EBITDA and Hotel Adjusted EBITDA (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 44,175 | $ | 24,822 | $ | 60,953 | $ | 35,464 | |||||||
Interest expense | 11,074 | 12,838 | 22,738 | 26,056 | |||||||||||
Income tax expense | 11,045 | 6,731 | 6,964 | 4,405 | |||||||||||
Real estate related depreciation and amortization | 25,005 | 25,574 | 50,126 | 49,911 | |||||||||||
EBITDA | 91,299 | 69,965 | 140,781 | 115,836 | |||||||||||
Corporate expenses | 6,736 | 6,331 | 12,736 | 11,741 | |||||||||||
Interest and other income, net | (68 | ) | (227 | ) | (118 | ) | (354 | ) | |||||||
Hotel acquisition costs | — | 260 | — | 492 | |||||||||||
Gain on sale of hotel properties | (8,121 | ) | — | (8,121 | ) | — | |||||||||
Impairment losses | — | 9,675 | — | 10,461 | |||||||||||
Hotel EBITDA | 89,846 | 86,004 | 145,278 | 138,176 | |||||||||||
Non-cash ground rent | 1,328 | 1,479 | 2,662 | 2,987 | |||||||||||
Non-cash amortization of favorable and unfavorable contract liabilities, net | (478 | ) | (374 | ) | (956 | ) | (727 | ) | |||||||
Hotel manager transition costs | — | 66 | — | 534 | |||||||||||
Hotel Adjusted EBITDA | $ | 90,696 | $ | 87,175 | $ | 146,984 | $ | 140,970 | |||||||
12
Reconciliation of Comparable Operating Results
The following presents the revenues, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin together with comparable prior year results, which excludes the results for our 2016 dispositions and includes the pre-acquisition results for our 2015 acquisitions (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 256,664 | $ | 249,801 | $ | 469,698 | $ | 458,689 | |||||||
Hotel revenues from prior ownership (1) | — | 4,455 | — | 11,537 | |||||||||||
Hotel revenues from sold hotels (2) | (24,164 | ) | (24,610 | ) | (45,164 | ) | (45,315 | ) | |||||||
Comparable Revenues | $ | 232,500 | $ | 229,646 | $ | 424,534 | $ | 424,911 | |||||||
Hotel Adjusted EBITDA | $ | 90,696 | $ | 87,175 | $ | 146,984 | $ | 140,970 | |||||||
Hotel Adjusted EBITDA from prior ownership (1) | — | 1,822 | — | 4,779 | |||||||||||
Hotel Adjusted EBITDA from sold hotels (2) | (7,334 | ) | (6,925 | ) | (11,654 | ) | (11,326 | ) | |||||||
Comparable Hotel Adjusted EBITDA | $ | 83,362 | $ | 82,072 | $ | 135,330 | $ | 134,423 | |||||||
Hotel Adjusted EBITDA Margin | 35.34 | % | 34.90 | % | 31.29 | % | 30.73 | % | |||||||
Comparable Hotel Adjusted EBITDA Margin | 35.85 | % | 35.74 | % | 31.88 | % | 31.64 | % | |||||||
(1) | Amounts represent the pre-acquisition operating results of the Shorebreak Hotel for the period from January 1, 2015 to February 5, 2015 and the Sheraton Suites Key West for the period from January 1, 2015 to June 29, 2015. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors. |
(2) | Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. |
Comparable Hotel Operating Expenses
The following tables set forth hotel operating expenses for the three and six months ended June 30, 2016 and 2015 for each of the hotels that we owned as of June 30, 2016. Our GAAP hotel operating expenses for the three and six months ended June 30, 2016 consisted of the line items set forth below (dollars in thousands) under the column titled “As Reported.” The amounts reported in this column include amounts that are not comparable period-over-period. In order to reflect the period in 2015 comparable to our ownership period in 2016, the amounts in the column titled “Adjustments for Acquisitions and Dispositions” represent the pre-acquisition operating results of the Shorebreak Hotel for the period from January 1, 2015 to February 5, 2015 and the Sheraton Suites Key West for the period from January 1, 2015 to June 29, 2015 and exclude the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea for the time periods presented. We provide this important supplemental information to our investors because this information provides a useful means for investors to measure our operating performance on a comparative basis. See the column titled “Comparable."
These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP in this release. 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 at our hotels 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. In particular, we note the pre-acquisition operating results set forth in the column titled “Adjustments for Acquisitions” were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by our independent auditors.
13
As Reported | Adjustments for Acquisitions/Dispositions | Comparable | |||||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | 2016 | 2015 | % Change | ||||||||||||||||||||||
Rooms departmental expenses | $ | 43,257 | $ | 41,993 | 3.0 | % | $ | (3,876 | ) | $ | (3,242 | ) | $ | 39,381 | $ | 38,751 | 1.6 | % | |||||||||||
Food and beverage departmental expenses | 35,265 | 35,355 | (0.3 | )% | (4,084 | ) | (3,836 | ) | 31,181 | 31,519 | (1.1 | )% | |||||||||||||||||
Other direct departmental | 3,056 | 4,202 | (27.3 | )% | (60 | ) | (149 | ) | 2,996 | 4,053 | (26.1 | )% | |||||||||||||||||
General and administrative | 20,598 | 18,574 | 10.9 | % | (2,059 | ) | (1,779 | ) | 18,539 | 16,795 | 10.4 | % | |||||||||||||||||
Utilities | 6,483 | 6,541 | (0.9 | )% | (619 | ) | (526 | ) | 5,864 | 6,015 | (2.5 | )% | |||||||||||||||||
Repairs and maintenance | 9,175 | 8,913 | 2.9 | % | (837 | ) | (673 | ) | 8,338 | 8,240 | 1.2 | % | |||||||||||||||||
Sales and marketing | 16,931 | 16,881 | 0.3 | % | (1,901 | ) | (1,988 | ) | 15,030 | 14,893 | 0.9 | % | |||||||||||||||||
Franchise fees | 5,749 | 5,228 | 10.0 | % | (344 | ) | 26 | 5,405 | 5,254 | 2.9 | % | ||||||||||||||||||
Base management fees | 6,296 | 6,300 | (0.1 | )% | (678 | ) | (570 | ) | 5,618 | 5,730 | (2.0 | )% | |||||||||||||||||
Incentive management fees | 2,476 | 2,603 | (4.9 | )% | 6 | — | 2,482 | 2,603 | (4.6 | )% | |||||||||||||||||||
Property taxes | 10,656 | 10,661 | — | % | (555 | ) | (456 | ) | 10,101 | 10,205 | (1.0 | )% | |||||||||||||||||
Ground rent | 3,726 | 3,811 | (2.2 | )% | (1,411 | ) | (1,498 | ) | 2,315 | 2,313 | 0.1 | % | |||||||||||||||||
Hotel manager transition costs | — | 66 | (100.0 | )% | — | — | — | 66 | (100.0 | )% | |||||||||||||||||||
Other fixed expenses | 3,150 | 2,669 | 18.0 | % | (173 | ) | (214 | ) | 2,977 | 2,455 | 21.3 | % | |||||||||||||||||
Total hotel operating expenses | $ | 166,818 | $ | 163,797 | 1.8 | % | $ | (16,591 | ) | $ | (14,905 | ) | $150,227 | $ | 148,892 | 0.9 | % | ||||||||||||
As Reported | Adjustments for Acquisitions/Dispositions | Comparable | |||||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | 2016 | 2015 | % Change | ||||||||||||||||||||||
Rooms departmental expenses | $ | 81,971 | $ | 80,457 | 1.9 | % | $ | (7,401 | ) | $ | (5,687 | ) | $ | 74,570 | $ | 74,770 | (0.3 | )% | |||||||||||
Food and beverage departmental expenses | 68,615 | 70,901 | (3.2 | )% | (8,239 | ) | (7,229 | ) | 60,376 | 63,672 | (5.2 | )% | |||||||||||||||||
Other direct departmental | 6,156 | 8,569 | (28.2 | )% | (117 | ) | (224 | ) | 6,039 | 8,345 | (27.6 | )% | |||||||||||||||||
General and administrative | 40,294 | 36,087 | 11.7 | % | (4,171 | ) | (3,117 | ) | 36,123 | 32,970 | 9.6 | % | |||||||||||||||||
Utilities | 13,295 | 13,711 | (3.0 | )% | (1,270 | ) | (911 | ) | 12,025 | 12,800 | (6.1 | )% | |||||||||||||||||
Repairs and maintenance | 18,491 | 17,991 | 2.8 | % | (1,720 | ) | (1,297 | ) | 16,771 | 16,694 | 0.5 | % | |||||||||||||||||
Sales and marketing | 32,615 | 31,982 | 2.0 | % | (3,782 | ) | (3,667 | ) | 28,833 | 28,315 | 1.8 | % | |||||||||||||||||
Franchise fees | 11,037 | 9,977 | 10.6 | % | (573 | ) | 318 | 10,464 | 10,295 | 1.6 | % | ||||||||||||||||||
Base management fees | 11,612 | 11,399 | 1.9 | % | (1,271 | ) | (917 | ) | 10,341 | 10,482 | (1.3 | )% | |||||||||||||||||
Incentive management fees | 3,769 | 3,704 | 1.8 | % | — | — | 3,769 | 3,704 | 1.8 | % | |||||||||||||||||||
Property taxes | 22,910 | 21,823 | 5.0 | % | (1,143 | ) | (806 | ) | 21,767 | 21,017 | 3.6 | % | |||||||||||||||||
Ground rent | 7,525 | 7,567 | (0.6 | )% | (2,901 | ) | (2,939 | ) | 4,624 | 4,628 | (0.1 | )% | |||||||||||||||||
Hotel manager transition costs | — | 534 | (100.0 | )% | — | — | — | 534 | (100.0 | )% | |||||||||||||||||||
Other fixed expenses | 6,130 | 5,811 | 5.5 | % | (440 | ) | (892 | ) | 5,690 | 4,919 | 15.7 | % | |||||||||||||||||
Total hotel operating expenses | $ | 324,420 | $ | 320,513 | 1.2 | % | $ | (33,028 | ) | $ | (27,368 | ) | $ | 291,392 | $ | 293,145 | (0.6 | )% | |||||||||||
14
Market Capitalization as of June 30, 2016 | ||||
(in thousands) | ||||
Enterprise Value | ||||
Common equity capitalization (at June 30, 2016 closing price of $9.03/share) | $ | 1,823,898 | ||
Consolidated debt | 925,294 | |||
Cash and cash equivalents | (166,548) | |||
Total enterprise value | $ | 2,582,644 | ||
Share Reconciliation | ||||
Common shares outstanding | 200,889 | |||
Unvested restricted stock held by management and employees | 685 | |||
Share grants under deferred compensation plan | 408 | |||
Combined shares outstanding | 201,982 | |||
15
Debt Summary as of June 30, 2016 | ||||||||||
(dollars in thousands) | ||||||||||
Property | Interest Rate | Term | Outstanding Principal | Maturity | ||||||
Marriott Salt Lake City Downtown | 4.25% | Fixed | $ | 59,234 | November 2020 | |||||
Westin Washington D.C. City Center | 3.99% | Fixed | 67,822 | January 2023 | ||||||
The Lodge at Sonoma, a Renaissance Resort & Spa | 3.96% | Fixed | 29,242 | April 2023 | ||||||
Westin San Diego | 3.94% | Fixed | 66,959 | April 2023 | ||||||
Courtyard Manhattan / Midtown East | 4.40% | Fixed | 86,000 | August 2024 | ||||||
Renaissance Worthington | 3.66% | Fixed | 85,000 | May 2025 | ||||||
JW Marriott Denver at Cherry Creek | 4.33% | Fixed | 65,000 | July 2025 | ||||||
Westin Boston Waterfront Hotel | 4.36% | Fixed | 203,115 | November 2025 | ||||||
Lexington Hotel New York | LIBOR + 2.25(1) | Variable | 170,368 | October 2017 (2) | ||||||
Debt issuance costs, net | (6,745 | ) | ||||||||
Total mortgage debt, net of unamortized debt issuance costs | $ | 825,995 | ||||||||
Senior unsecured term loan | LIBOR + 1.45(3) | Variable | 100,000 | May 2021 | ||||||
Debt issuance costs, net | (701 | ) | ||||||||
Senior unsecured term loan, net of unamortized debt issuance costs | $ | 99,299 | ||||||||
Senior unsecured credit facility | LIBOR + 1.50(4) | Variable | — | May 2020 (5) | ||||||
Total debt, net of unamortized debt issuance costs | $ | 925,294 | ||||||||
Weighted-average interest rate of fixed rate debt | 4.22% | |||||||||
Total weighted-average interest rate | 3.71% | |||||||||
(1) | The interest rate as of June 30, 2016 was 2.71%. |
(2) | May be extended for two additional one-year terms subject to the satisfaction of certain conditions, including a debt yield based on trailing 12-month hotel cash flows equal to or greater than 13%, and the payment of an extension fee. The debt yield as of June 30, 2016 was approximately 6.4%. |
(3) | The interest rate as of June 30, 2016 was 1.90%. |
(4) | The interest rate as of June 30, 2016 was 1.97%. |
(5) | May be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions. |
16
Operating Statistics – Second Quarter | |||||||||||||||||||||||||||||||
ADR | Occupancy | RevPAR | Hotel Adjusted EBITDA Margin | ||||||||||||||||||||||||||||
2Q 2016 | 2Q 2015 | B/(W) | 2Q 2016 | 2Q 2015 | B/(W) | 2Q 2016 | 2Q 2015 | B/(W) | 2Q 2016 | 2Q 2015 | B/(W) | ||||||||||||||||||||
Atlanta Alpharetta Marriott | $ | 171.07 | $ | 156.63 | 9.2 | % | 77.6 | % | 77.9 | % | (0.3 | )% | $ | 132.78 | $ | 122.04 | 8.8 | % | 35.89 | % | 34.07 | % | 182 bps | ||||||||
Bethesda Marriott Suites | $ | 182.79 | $ | 182.77 | — | % | 84.6 | % | 77.4 | % | 7.2 | % | $ | 154.63 | $ | 141.45 | 9.3 | % | 38.02 | % | 36.40 | % | 162 bps | ||||||||
Boston Westin | $ | 264.70 | $ | 261.84 | 1.1 | % | 87.1 | % | 81.7 | % | 5.4 | % | $ | 230.60 | $ | 213.80 | 7.9 | % | 38.18 | % | 36.73 | % | 145 bps | ||||||||
Hilton Boston Downtown | $ | 308.62 | $ | 315.17 | (2.1 | )% | 93.9 | % | 88.6 | % | 5.3 | % | $ | 289.82 | $ | 279.15 | 3.8 | % | 46.20 | % | 45.92 | % | 28 bps | ||||||||
Hilton Burlington | $ | 178.81 | $ | 163.37 | 9.5 | % | 85.0 | % | 84.7 | % | 0.3 | % | $ | 152.06 | $ | 138.40 | 9.9 | % | 43.29 | % | 41.88 | % | 141 bps | ||||||||
Renaissance Charleston | $ | 253.81 | $ | 248.37 | 2.2 | % | 94.0 | % | 95.2 | % | (1.2 | )% | $ | 238.64 | $ | 236.43 | 0.9 | % | 46.54 | % | 42.90 | % | 364 bps | ||||||||
Hilton Garden Inn Chelsea | $ | 242.12 | $ | 245.59 | (1.4 | )% | 99.0 | % | 96.7 | % | 2.3 | % | $ | 239.60 | $ | 237.51 | 0.9 | % | 35.55 | % | 34.39 | % | 116 bps | ||||||||
Chicago Marriott | $ | 243.58 | $ | 245.52 | (0.8 | )% | 83.3 | % | 85.0 | % | (1.7 | )% | $ | 202.88 | $ | 208.64 | (2.8 | )% | 38.66 | % | 32.91 | % | 575 bps | ||||||||
Chicago Gwen | $ | 225.43 | $ | 245.09 | (8.0 | )% | 86.2 | % | 83.3 | % | 2.9 | % | $ | 194.28 | $ | 204.18 | (4.8 | )% | 37.79 | % | 37.65 | % | 14 bps | ||||||||
Courtyard Denver Downtown | $ | 211.62 | $ | 207.82 | 1.8 | % | 84.6 | % | 82.6 | % | 2.0 | % | $ | 178.98 | $ | 171.60 | 4.3 | % | 52.39 | % | 49.44 | % | 295 bps | ||||||||
Courtyard Fifth Avenue | $ | 270.48 | $ | 289.68 | (6.6 | )% | 92.3 | % | 91.7 | % | 0.6 | % | $ | 249.74 | $ | 265.57 | (6.0 | )% | 25.45 | % | 30.80 | % | -535 bps | ||||||||
Courtyard Midtown East | $ | 272.85 | $ | 285.21 | (4.3 | )% | 95.0 | % | 94.3 | % | 0.7 | % | $ | 259.21 | $ | 268.89 | (3.6 | )% | 35.43 | % | 38.12 | % | -269 bps | ||||||||
Fort Lauderdale Westin | $ | 190.41 | $ | 172.43 | 10.4 | % | 93.6 | % | 84.7 | % | 8.9 | % | $ | 178.22 | $ | 146.01 | 22.1 | % | 38.47 | % | 29.78 | % | 869 bps | ||||||||
Frenchman's Reef | $ | 233.85 | $ | 242.58 | (3.6 | )% | 87.2 | % | 87.4 | % | (0.2 | )% | $ | 204.03 | $ | 211.98 | (3.8 | )% | 23.19 | % | 25.37 | % | -218 bps | ||||||||
JW Marriott Denver Cherry Creek | $ | 277.31 | $ | 281.04 | (1.3 | )% | 81.4 | % | 81.3 | % | 0.1 | % | $ | 225.81 | $ | 228.51 | (1.2 | )% | 38.66 | % | 36.33 | % | 233 bps | ||||||||
Inn at Key West | $ | 189.50 | $ | 210.18 | (9.8 | )% | 85.7 | % | 90.6 | % | (4.9 | )% | $ | 162.37 | $ | 190.42 | (14.7 | )% | 45.26 | % | 50.25 | % | -499 bps | ||||||||
Sheraton Suites Key West(1) | $ | 239.78 | $ | 235.94 | 1.6 | % | 90.8 | % | 94.6 | % | (3.8 | )% | $ | 217.77 | $ | 223.20 | (2.4 | )% | 43.13 | % | 40.10 | % | 303 bps | ||||||||
Lexington Hotel New York | $ | 249.39 | $ | 265.83 | (6.2 | )% | 95.2 | % | 95.3 | % | (0.1 | )% | $ | 237.36 | $ | 253.42 | (6.3 | )% | 23.53 | % | 37.55 | % | -1402 bps | ||||||||
Hilton Minneapolis(2) | $ | 169.82 | $ | 157.18 | 8.0 | % | 78.5 | % | 83.9 | % | (5.4 | )% | $ | 133.29 | $ | 131.82 | 1.1 | % | 30.87 | % | 27.94 | % | 293 bps | ||||||||
Orlando Airport Marriott(3) | $ | 110.43 | $ | 110.45 | — | % | 81.2 | % | 77.6 | % | 3.6 | % | $ | 89.63 | $ | 85.70 | 4.6 | % | 24.93 | % | 25.97 | % | -104 bps | ||||||||
Hotel Rex | $ | 228.36 | $ | 226.42 | 0.9 | % | 87.7 | % | 90.0 | % | (2.3 | )% | $ | 200.28 | $ | 203.76 | (1.7 | )% | 36.89 | % | 37.19 | % | -30 bps | ||||||||
Salt Lake City Marriott | $ | 152.89 | $ | 150.61 | 1.5 | % | 74.0 | % | 75.1 | % | (1.1 | )% | $ | 113.09 | $ | 113.10 | — | % | 35.33 | % | 33.52 | % | 181 bps | ||||||||
Shorebreak | $ | 221.47 | $ | 227.09 | (2.5 | )% | 82.7 | % | 81.5 | % | 1.2 | % | $ | 183.09 | $ | 185.07 | (1.1 | )% | 33.80 | % | 32.74 | % | 106 bps | ||||||||
The Lodge at Sonoma | $ | 312.21 | $ | 286.72 | 8.9 | % | 82.5 | % | 84.0 | % | (1.5 | )% | $ | 257.49 | $ | 240.84 | 6.9 | % | 32.57 | % | 34.27 | % | -170 bps | ||||||||
Hilton Garden Inn Times Square Central | $ | 259.62 | $ | 277.41 | (6.4 | )% | 97.2 | % | 98.5 | % | (1.3 | )% | $ | 252.33 | $ | 273.37 | (7.7 | )% | 35.92 | % | 49.34 | % | -1342 bps | ||||||||
Vail Marriott | $ | 160.01 | $ | 161.62 | (1.0 | )% | 53.9 | % | 52.4 | % | 1.5 | % | $ | 86.21 | $ | 84.68 | 1.8 | % | 1.24 | % | 8.31 | % | -707 bps | ||||||||
Westin San Diego | $ | 187.94 | $ | 185.89 | 1.1 | % | 84.5 | % | 86.4 | % | (1.9 | )% | $ | 158.73 | $ | 160.61 | (1.2 | )% | 35.51 | % | 32.99 | % | 252 bps | ||||||||
Westin Washington D.C. City Center | $ | 259.45 | $ | 248.34 | 4.5 | % | 91.1 | % | 90.4 | % | 0.7 | % | $ | 236.31 | $ | 224.44 | 5.3 | % | 45.77 | % | 43.27 | % | 250 bps | ||||||||
Renaissance Worthington | $ | 184.87 | $ | 184.68 | 0.1 | % | 75.4 | % | 71.2 | % | 4.2 | % | $ | 139.31 | $ | 131.57 | 5.9 | % | 39.67 | % | 37.53 | % | 214 bps | ||||||||
Total | $ | 223.35 | $ | 223.50 | (0.1 | )% | 84.9 | % | 84.2 | % | 0.7 | % | $ | 189.71 | $ | 188.08 | 0.9 | % | 35.34 | % | 35.09 | % | 25 bps | ||||||||
Comparable Total(4) | $ | 231.31 | $ | 232.75 | (0.6 | )% | 85.4 | % | 84.2 | % | 1.2 | % | $ | 197.52 | $ | 195.98 | 0.8 | % | 35.85 | % | 35.74 | % | 11 bps | ||||||||
17
_______________________________________________________________
(1) | The hotel was acquired on June 30, 2015. The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016. |
(2) | The hotel was sold on June 30, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016. |
(3) | The hotel was sold on June 8, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016. |
(4) | Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea. |
18
Operating Statistics – Year to Date | |||||||||||||||||||||||||||||||
ADR | Occupancy | RevPAR | Hotel Adjusted EBITDA Margin | ||||||||||||||||||||||||||||
YTD 2016 | YTD 2015 | B/(W) | YTD 2016 | YTD 2015 | B/(W) | YTD 2016 | YTD 2015 | B/(W) | YTD 2016 | YTD 2015 | B/(W) | ||||||||||||||||||||
Atlanta Alpharetta Marriott | $ | 177.54 | $ | 165.05 | 7.6 | % | 73.3 | % | 73.1 | % | 0.2 | % | $ | 130.08 | $ | 120.68 | 7.8 | % | 35.76 | % | 35.10 | % | 66 bps | ||||||||
Bethesda Marriott Suites | $ | 173.45 | $ | 177.33 | (2.2 | )% | 72.6 | % | 67.1 | % | 5.5 | % | $ | 125.94 | $ | 118.95 | 5.9 | % | 30.34 | % | 29.62 | % | 72 bps | ||||||||
Boston Westin | $ | 236.15 | $ | 234.85 | 0.6 | % | 79.2 | % | 77.3 | % | 1.9 | % | $ | 186.97 | $ | 181.44 | 3.0 | % | 30.59 | % | 29.63 | % | 96 bps | ||||||||
Hilton Boston Downtown | $ | 262.60 | $ | 270.15 | (2.8 | )% | 85.3 | % | 79.1 | % | 6.2 | % | $ | 224.09 | $ | 213.69 | 4.9 | % | 37.82 | % | 35.42 | % | 240 bps | ||||||||
Hilton Burlington | $ | 155.50 | $ | 149.26 | 4.2 | % | 76.5 | % | 73.9 | % | 2.6 | % | $ | 118.98 | $ | 110.35 | 7.8 | % | 35.46 | % | 34.03 | % | 143 bps | ||||||||
Renaissance Charleston | $ | 229.83 | $ | 225.84 | 1.8 | % | 90.2 | % | 91.3 | % | (1.1 | )% | $ | 207.31 | $ | 206.24 | 0.5 | % | 40.85 | % | 37.35 | % | 350 bps | ||||||||
Hilton Garden Inn Chelsea | $ | 203.43 | $ | 205.98 | (1.2 | )% | 98.0 | % | 92.2 | % | 5.8 | % | $ | 199.35 | $ | 190.00 | 4.9 | % | 26.57 | % | 25.14 | % | 143 bps | ||||||||
Chicago Marriott | $ | 217.00 | $ | 213.90 | 1.4 | % | 61.8 | % | 71.1 | % | (9.3 | )% | $ | 134.20 | $ | 152.18 | (11.8 | )% | 21.69 | % | 20.71 | % | 98 bps | ||||||||
Chicago Gwen | $ | 199.94 | $ | 213.82 | (6.5 | )% | 70.7 | % | 73.4 | % | (2.7 | )% | $ | 141.32 | $ | 156.92 | (9.9 | )% | 23.59 | % | 23.67 | % | -8 bps | ||||||||
Courtyard Denver Downtown | $ | 199.18 | $ | 198.69 | 0.2 | % | 80.2 | % | 78.8 | % | 1.4 | % | $ | 159.68 | $ | 156.66 | 1.9 | % | 47.51 | % | 46.40 | % | 111 bps | ||||||||
Courtyard Fifth Avenue | $ | 240.81 | $ | 252.85 | (4.8 | )% | 85.3 | % | 87.8 | % | (2.5 | )% | $ | 205.39 | $ | 221.92 | (7.4 | )% | 13.74 | % | 18.63 | % | -489 bps | ||||||||
Courtyard Midtown East | $ | 240.70 | $ | 249.30 | (3.4 | )% | 90.2 | % | 89.7 | % | 0.5 | % | $ | 217.20 | $ | 223.70 | (2.9 | )% | 25.26 | % | 27.59 | % | -233 bps | ||||||||
Fort Lauderdale Westin | $ | 222.00 | $ | 202.13 | 9.8 | % | 95.6 | % | 90.7 | % | 4.9 | % | $ | 212.23 | $ | 183.39 | 15.7 | % | 43.64 | % | 36.66 | % | 698 bps | ||||||||
Frenchman's Reef | $ | 285.65 | $ | 287.65 | (0.7 | )% | 87.5 | % | 88.5 | % | (1.0 | )% | $ | 250.05 | $ | 254.47 | (1.7 | )% | 30.76 | % | 29.94 | % | 82 bps | ||||||||
JW Marriott Denver Cherry Creek | $ | 267.08 | $ | 271.46 | (1.6 | )% | 79.2 | % | 77.5 | % | 1.7 | % | $ | 211.54 | $ | 210.50 | 0.5 | % | 35.08 | % | 32.20 | % | 288 bps | ||||||||
Inn at Key West | $ | 227.04 | $ | 247.13 | (8.1 | )% | 91.1 | % | 92.4 | % | (1.3 | )% | $ | 206.82 | $ | 228.44 | (9.5 | )% | 50.00 | % | 57.33 | % | -733 bps | ||||||||
Sheraton Suites Key West(1) | $ | 278.09 | $ | 273.42 | 1.7 | % | 93.1 | % | 96.7 | % | (3.6 | )% | $ | 259.04 | $ | 264.30 | (2.0 | )% | 48.10 | % | 45.93 | % | 217 bps | ||||||||
Lexington Hotel New York | $ | 219.60 | $ | 224.30 | (2.1 | )% | 88.1 | % | 92.2 | % | (4.1 | )% | $ | 193.42 | $ | 206.81 | (6.5 | )% | 11.17 | % | 24.86 | % | -1369 bps | ||||||||
Hilton Minneapolis(2) | $ | 149.38 | $ | 141.74 | 5.4 | % | 69.8 | % | 75.2 | % | (5.4 | )% | $ | 104.32 | $ | 106.58 | (2.1 | )% | 19.91 | % | 19.54 | % | 37 bps | ||||||||
Orlando Airport Marriott(3) | $ | 129.43 | $ | 128.65 | 0.6 | % | 86.8 | % | 84.6 | % | 2.2 | % | $ | 112.29 | $ | 108.79 | 3.2 | % | 35.81 | % | 35.31 | % | 50 bps | ||||||||
Hotel Rex | $ | 239.01 | $ | 226.91 | 5.3 | % | 83.4 | % | 84.1 | % | (0.7 | )% | $ | 199.43 | $ | 190.82 | 4.5 | % | 36.02 | % | 33.65 | % | 237 bps | ||||||||
Salt Lake City Marriott | $ | 158.77 | $ | 154.92 | 2.5 | % | 69.8 | % | 74.2 | % | (4.4 | )% | $ | 110.79 | $ | 114.92 | (3.6 | )% | 34.78 | % | 34.07 | % | 71 bps | ||||||||
Shorebreak(4) | $ | 218.53 | $ | 216.55 | 0.9 | % | 79.1 | % | 80.3 | % | (1.2 | )% | $ | 172.92 | $ | 173.95 | (0.6 | )% | 29.77 | % | 27.38 | % | 239 bps | ||||||||
The Lodge at Sonoma | $ | 271.24 | $ | 253.07 | 7.2 | % | 78.0 | % | 79.4 | % | (1.4 | )% | $ | 211.57 | $ | 200.87 | 5.3 | % | 26.70 | % | 25.60 | % | 110 bps | ||||||||
Hilton Garden Inn Times Square Central | $ | 221.61 | $ | 230.42 | (3.8 | )% | 95.6 | % | 96.4 | % | (0.8 | )% | $ | 211.80 | $ | 222.03 | (4.6 | )% | 26.95 | % | 43.78 | % | -1683 bps | ||||||||
Vail Marriott | $ | 317.45 | $ | 307.06 | 3.4 | % | 71.6 | % | 71.8 | % | (0.2 | )% | $ | 227.15 | $ | 220.58 | 3.0 | % | 41.35 | % | 40.77 | % | 58 bps | ||||||||
Westin San Diego | $ | 187.57 | $ | 186.76 | 0.4 | % | 84.1 | % | 83.8 | % | 0.3 | % | $ | 157.72 | $ | 156.55 | 0.7 | % | 37.62 | % | 34.24 | % | 338 bps | ||||||||
Westin Washington D.C. City Center | $ | 235.06 | $ | 230.00 | 2.2 | % | 85.7 | % | 81.6 | % | 4.1 | % | $ | 201.41 | $ | 187.68 | 7.3 | % | 40.49 | % | 36.42 | % | 407 bps | ||||||||
Renaissance Worthington | $ | 183.79 | $ | 184.05 | (0.1 | )% | 71.2 | % | 72.9 | % | (1.7 | )% | $ | 130.88 | $ | 134.25 | (2.5 | )% | 37.10 | % | 37.99 | % | -89 bps | ||||||||
Total | $ | 214.82 | $ | 212.97 | 0.9 | % | 79.2 | % | 80.3 | % | (1.1 | )% | $ | 170.05 | $ | 171.00 | (0.6 | )% | 31.29 | % | 31.03 | % | 26 bps | ||||||||
Comparable Total(5) | $ | 224.26 | $ | 222.90 | 0.6 | % | 79.3 | % | 80.3 | % | (1.0 | )% | $ | 177.81 | $ | 179.05 | (0.7 | )% | 31.88 | % | 31.64 | % | 24 bps | ||||||||
19
_______________________________________________________________
(1) | The hotel was acquired on June 30, 2015. The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016. |
(2) | The hotel was sold on June 30, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016. |
(3) | The hotel was sold on June 8, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016. |
(4) | The hotel was acquired on February 6, 2015. The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016. |
(5) | Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea. |
20
Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Second Quarter 2016 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta Marriott | $ | 5,274 | $ | 1,533 | $ | 360 | $ | — | $ | — | $ | 1,893 | ||||||||
Bethesda Marriott Suites | $ | 5,031 | $ | 24 | $ | 356 | $ | — | $ | 1,533 | $ | 1,913 | ||||||||
Boston Westin | $ | 29,014 | $ | 6,655 | $ | 2,199 | $ | 2,283 | $ | (60 | ) | $ | 11,077 | |||||||
Hilton Boston Downtown | $ | 11,314 | $ | 4,032 | $ | 1,195 | $ | — | $ | — | $ | 5,227 | ||||||||
Hilton Burlington | $ | 4,756 | $ | 1,583 | $ | 476 | $ | — | $ | — | $ | 2,059 | ||||||||
Renaissance Charleston | $ | 3,971 | $ | 1,631 | $ | 249 | $ | — | $ | (32 | ) | $ | 1,848 | |||||||
Hilton Garden Inn Chelsea | $ | 3,747 | $ | 1,092 | $ | 240 | $ | — | $ | — | $ | 1,332 | ||||||||
Chicago Marriott | $ | 31,358 | $ | 9,018 | $ | 3,475 | $ | 28 | $ | (397 | ) | $ | 12,124 | |||||||
Chicago Gwen | $ | 7,045 | $ | 1,961 | $ | 701 | $ | — | $ | — | $ | 2,662 | ||||||||
Courtyard Denver Downtown | $ | 3,050 | $ | 1,312 | $ | 286 | $ | — | $ | — | $ | 1,598 | ||||||||
Courtyard Fifth Avenue | $ | 4,374 | $ | 222 | $ | 448 | $ | 391 | $ | 52 | $ | 1,113 | ||||||||
Courtyard Midtown East | $ | 7,872 | $ | 1,112 | $ | 669 | $ | 1,008 | $ | — | $ | 2,789 | ||||||||
Fort Lauderdale Westin | $ | 12,255 | $ | 3,546 | $ | 1,169 | $ | — | $ | — | $ | 4,715 | ||||||||
Frenchman's Reef | $ | 16,963 | $ | 2,330 | $ | 1,604 | $ | — | $ | — | $ | 3,934 | ||||||||
JW Marriott Denver Cherry Creek | $ | 6,523 | $ | 1,288 | $ | 515 | $ | 719 | $ | — | $ | 2,522 | ||||||||
Inn at Key West | $ | 2,026 | $ | 733 | $ | 184 | $ | — | $ | — | $ | 917 | ||||||||
Sheraton Suites Key West | $ | 4,653 | $ | 1,493 | $ | 514 | $ | — | $ | — | $ | 2,007 | ||||||||
Lexington Hotel New York | $ | 16,372 | $ | (892 | ) | $ | 3,405 | $ | 1,331 | $ | 8 | $ | 3,852 | |||||||
Minneapolis Hilton | $ | 15,370 | $ | 2,283 | $ | 1,455 | $ | 1,246 | $ | (240 | ) | $ | 4,744 | |||||||
Orlando Airport Marriott | $ | 5,047 | $ | 1,258 | $ | — | $ | — | $ | — | $ | 1,258 | ||||||||
Hotel Rex | $ | 1,930 | $ | 568 | $ | 144 | $ | — | $ | — | $ | 712 | ||||||||
Salt Lake City Marriott | $ | 7,190 | $ | 1,364 | $ | 517 | $ | 659 | $ | — | $ | 2,540 | ||||||||
Shorebreak | $ | 3,612 | $ | 864 | $ | 372 | $ | — | $ | (15 | ) | $ | 1,221 | |||||||
The Lodge at Sonoma | $ | 6,863 | $ | 1,570 | $ | 366 | $ | 299 | $ | — | $ | 2,235 | ||||||||
Hilton Garden Inn Times Square Central | $ | 6,582 | $ | 1,587 | $ | 777 | $ | — | $ | — | $ | 2,364 | ||||||||
Vail Marriott | $ | 4,847 | $ | (416 | ) | $ | 476 | $ | — | $ | — | $ | 60 | |||||||
Westin San Diego | $ | 8,557 | $ | 1,329 | $ | 1,034 | $ | 676 | $ | — | $ | 3,039 | ||||||||
Westin Washington D.C. City Center | $ | 10,618 | $ | 2,903 | $ | 1,233 | $ | 724 | $ | — | $ | 4,860 | ||||||||
Renaissance Worthington | $ | 10,450 | $ | 2,750 | $ | 585 | $ | 808 | $ | 2 | $ | 4,145 | ||||||||
Total | $ | 256,664 | $ | 54,733 | $ | 25,004 | $ | 10,172 | $ | 851 | $ | 90,696 | ||||||||
Less: Sold Hotels(2) | $ | (24,164 | ) | $ | (4,633 | ) | $ | (1,695 | ) | $ | (1,246 | ) | $ | 240 | $ | (7,334 | ) | |||
Comparable Total | $ | 232,500 | $ | 50,100 | $ | 23,309 | $ | 8,926 | $ | 1,091 | $ | 83,362 | ||||||||
__________________________________________________
(1) | Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations and the non-cash amortization favorable and unfavorable contract liabilities. |
(2) | Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. |
21
Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Second Quarter 2015 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta Marriott | $ | 4,799 | $ | 1,254 | $ | 381 | $ | — | $ | — | $ | 1,635 | ||||||||
Bethesda Marriott Suites | $ | 4,656 | $ | (213 | ) | $ | 367 | $ | — | $ | 1,541 | $ | 1,695 | |||||||
Boston Westin | $ | 26,231 | $ | 7,422 | $ | 2,210 | $ | — | $ | 3 | $ | 9,635 | ||||||||
Hilton Boston Downtown | $ | 10,493 | $ | 3,624 | $ | 1,152 | $ | — | $ | 42 | $ | 4,818 | ||||||||
Hilton Burlington | $ | 4,308 | $ | 1,327 | $ | 454 | $ | — | $ | 23 | $ | 1,804 | ||||||||
Renaissance Charleston | $ | 4,026 | $ | 1,366 | $ | 393 | $ | — | $ | (32 | ) | $ | 1,727 | |||||||
Hilton Garden Inn Chelsea | $ | 3,740 | $ | 924 | $ | 362 | $ | — | $ | — | $ | 1,286 | ||||||||
Chicago Marriott | $ | 32,040 | $ | 5,278 | $ | 2,545 | $ | 3,119 | $ | (397 | ) | $ | 10,545 | |||||||
Chicago Gwen | $ | 8,039 | $ | 2,289 | $ | 738 | $ | — | $ | — | $ | 3,027 | ||||||||
Courtyard Denver Downtown | $ | 2,951 | $ | 1,174 | $ | 285 | $ | — | $ | — | $ | 1,459 | ||||||||
Courtyard Fifth Avenue | $ | 4,507 | $ | 60 | $ | 448 | $ | 828 | $ | 52 | $ | 1,388 | ||||||||
Courtyard Midtown East | $ | 8,041 | $ | 1,373 | $ | 684 | $ | 1,008 | $ | — | $ | 3,065 | ||||||||
Fort Lauderdale Westin | $ | 10,560 | $ | 2,016 | $ | 1,129 | $ | — | $ | — | $ | 3,145 | ||||||||
Frenchman's Reef | $ | 17,234 | $ | 2,390 | $ | 1,608 | $ | 374 | $ | — | $ | 4,372 | ||||||||
JW Marriott Denver Cherry Creek | $ | 6,630 | $ | 1,332 | $ | 523 | $ | 554 | $ | — | $ | 2,409 | ||||||||
Inn at Key West | $ | 2,177 | $ | 920 | $ | 174 | $ | — | $ | — | $ | 1,094 | ||||||||
Sheraton Suites Key West | $ | 111 | $ | 28 | $ | — | $ | — | $ | — | $ | 28 | ||||||||
Lexington Hotel New York | $ | 17,936 | $ | 2,080 | $ | 3,356 | $ | 1,293 | $ | 6 | $ | 6,735 | ||||||||
Minneapolis Hilton | $ | 14,838 | $ | 705 | $ | 2,357 | $ | 1,291 | $ | (202 | ) | $ | 4,151 | |||||||
Orlando Airport Marriott | $ | 6,032 | $ | 110 | $ | 577 | $ | 801 | $ | — | $ | 1,488 | ||||||||
Hotel Rex | $ | 1,952 | $ | 584 | $ | 142 | $ | — | $ | — | $ | 726 | ||||||||
Salt Lake City Marriott | $ | 7,208 | $ | 983 | $ | 758 | $ | 675 | $ | — | $ | 2,416 | ||||||||
Shorebreak | $ | 3,696 | $ | 624 | $ | 522 | $ | — | $ | 64 | $ | 1,210 | ||||||||
The Lodge at Sonoma | $ | 6,901 | $ | 1,684 | $ | 377 | $ | 304 | $ | — | $ | 2,365 | ||||||||
Hilton Garden Inn Times Square Central | $ | 7,124 | $ | 2,827 | $ | 777 | $ | — | $ | (89 | ) | $ | 3,515 | |||||||
Vail Marriott | $ | 4,679 | $ | (108 | ) | $ | 497 | $ | — | $ | — | $ | 389 | |||||||
Westin San Diego | $ | 8,520 | $ | 1,058 | $ | 1,018 | $ | 689 | $ | 46 | $ | 2,811 | ||||||||
Westin Washington D.C. City Center | $ | 9,925 | $ | 2,288 | $ | 1,157 | $ | 743 | $ | 107 | $ | 4,295 | ||||||||
Renaissance Worthington | $ | 10,447 | $ | 2,559 | $ | 585 | $ | 775 | $ | 2 | $ | 3,921 | ||||||||
Total | $ | 249,801 | $ | 47,958 | $ | 25,576 | $ | 12,454 | $ | 1,166 | $ | 87,175 | ||||||||
Add: Prior Ownership Results(2) | $ | 4,455 | $ | 1,309 | $ | 513 | $ | — | $ | — | $ | 1,822 | ||||||||
Less: Sold Hotels(3) | $ | (24,610 | ) | $ | (1,739 | ) | $ | (3,296 | ) | $ | (2,092 | ) | $ | 202 | $ | (6,925 | ) | |||
Comparable Total | $ | 229,646 | $ | 47,528 | $ | 22,793 | $ | 10,362 | $ | 1,368 | $ | 82,072 | ||||||||
22
__________________________________________________
(1) | Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization favorable and unfavorable contract liabilities and hotel manger transition costs. |
(2) | Amounts represent the pre-acquisition operating results of the the Sheraton Suites Key West for the period from April 1, 2015 to June 29, 2015. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors. |
(3) | Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. |
23
Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Year to Date 2016 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta Marriott | $ | 10,491 | $ | 3,034 | $ | 718 | $ | — | $ | — | $ | 3,752 | ||||||||
Bethesda Marriott Suites | $ | 8,341 | $ | (1,247 | ) | $ | 713 | $ | — | $ | 3,065 | $ | 2,531 | |||||||
Boston Westin | $ | 47,338 | $ | 5,626 | $ | 4,402 | $ | 4,574 | $ | (120 | ) | $ | 14,482 | |||||||
Hilton Boston Downtown | $ | 17,902 | $ | 4,339 | $ | 2,424 | $ | — | $ | 8 | $ | 6,771 | ||||||||
Hilton Burlington | $ | 7,553 | $ | 1,735 | $ | 943 | $ | — | $ | — | $ | 2,678 | ||||||||
Renaissance Charleston | $ | 7,070 | $ | 2,451 | $ | 500 | $ | — | $ | (63 | ) | $ | 2,888 | |||||||
Hilton Garden Inn Chelsea | $ | 6,260 | $ | 1,062 | $ | 601 | $ | — | $ | — | $ | 1,663 | ||||||||
Chicago Marriott | $ | 43,734 | $ | 3,421 | $ | 6,416 | $ | 444 | $ | (795 | ) | $ | 9,486 | |||||||
Chicago Gwen | $ | 10,202 | $ | 1,048 | $ | 1,359 | $ | — | $ | — | $ | 2,407 | ||||||||
Courtyard Denver Downtown | $ | 5,504 | $ | 2,043 | $ | 572 | $ | — | $ | — | $ | 2,615 | ||||||||
Courtyard Fifth Avenue | $ | 7,207 | $ | (1,214 | ) | $ | 889 | $ | 1,212 | $ | 103 | $ | 990 | |||||||
Courtyard Midtown East | $ | 13,121 | $ | (42 | ) | $ | 1,341 | $ | 2,016 | $ | — | $ | 3,315 | |||||||
Fort Lauderdale Westin | $ | 27,999 | $ | 9,882 | $ | 2,337 | $ | — | $ | — | $ | 12,219 | ||||||||
Frenchman's Reef | $ | 38,722 | $ | 8,694 | $ | 3,217 | $ | — | $ | — | $ | 11,911 | ||||||||
JW Marriott Denver Cherry Creek | $ | 12,431 | $ | 1,883 | $ | 1,040 | $ | 1,438 | $ | — | $ | 4,361 | ||||||||
Inn at Key West | $ | 4,844 | $ | 2,059 | $ | 363 | $ | — | $ | — | $ | 2,422 | ||||||||
Sheraton Suites Key West | $ | 10,618 | $ | 4,079 | $ | 1,028 | $ | — | $ | — | $ | 5,107 | ||||||||
Lexington Hotel New York | $ | 26,792 | $ | (6,464 | ) | $ | 6,772 | $ | 2,670 | $ | 15 | $ | 2,993 | |||||||
Minneapolis Hilton | $ | 24,788 | $ | (13 | ) | $ | 2,917 | $ | 2,514 | $ | (482 | ) | $ | 4,936 | ||||||
Orlando Airport Marriott | $ | 14,116 | $ | 4,482 | $ | 573 | $ | — | $ | — | $ | 5,055 | ||||||||
Hotel Rex | $ | 3,889 | $ | 1,115 | $ | 286 | $ | — | $ | — | $ | 1,401 | ||||||||
Salt Lake City Marriott | $ | 14,403 | $ | 2,626 | $ | 1,062 | $ | 1,322 | $ | — | $ | 5,010 | ||||||||
Shorebreak | $ | 6,926 | $ | 1,344 | $ | 747 | $ | — | $ | (29 | ) | $ | 2,062 | |||||||
The Lodge at Sonoma | $ | 12,338 | $ | 1,962 | $ | 733 | $ | 599 | $ | — | $ | 3,294 | ||||||||
Hilton Garden Inn Times Square Central | $ | 11,083 | $ | 1,433 | $ | 1,554 | $ | — | $ | — | $ | 2,987 | ||||||||
Vail Marriott | $ | 20,262 | $ | 7,423 | $ | 956 | $ | — | $ | — | $ | 8,379 | ||||||||
Westin San Diego | $ | 17,677 | $ | 3,236 | $ | 2,060 | $ | 1,354 | $ | — | $ | 6,650 | ||||||||
Westin Washington D.C. City Center | $ | 18,305 | $ | 3,507 | $ | 2,452 | $ | 1,453 | $ | — | $ | 7,412 | ||||||||
Renaissance Worthington | $ | 19,782 | $ | 4,567 | $ | 1,153 | $ | 1,615 | $ | 4 | $ | 7,339 | ||||||||
Total | $ | 469,698 | $ | 74,071 | $ | 50,128 | $ | 21,211 | $ | 1,706 | $ | 146,984 | ||||||||
Less: Sold Hotels(2) | $ | (45,164 | ) | $ | (5,531 | ) | $ | (4,091 | ) | $ | (2,514 | ) | $ | 482 | $ | (11,654 | ) | |||
Comparable Total | $ | 424,534 | $ | 68,540 | $ | 46,037 | $ | 18,697 | $ | 2,188 | $ | 135,330 | ||||||||
__________________________________________________
(1) | Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations and the non-cash amortization favorable and unfavorable contract liabilities. |
(2) | Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. |
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Hotel Adjusted EBITDA Reconciliation | ||||||||||||||||||||
Year to Date 2015 | ||||||||||||||||||||
Plus: | Plus: | Plus: | Equals: | |||||||||||||||||
Total Revenues | Net Income / (Loss) | Depreciation | Interest Expense | Adjustments (1) | Hotel Adjusted EBITDA | |||||||||||||||
Atlanta Alpharetta Marriott | $ | 9,663 | $ | 2,618 | $ | 774 | $ | — | $ | — | $ | 3,392 | ||||||||
Bethesda Marriott Suites | $ | 7,981 | $ | (1,474 | ) | $ | 755 | $ | — | $ | 3,083 | $ | 2,364 | |||||||
Boston Westin | $ | 46,325 | $ | 9,268 | $ | 4,456 | $ | — | $ | 4 | $ | 13,728 | ||||||||
Hilton Boston Downtown | $ | 15,753 | $ | 3,259 | $ | 2,237 | $ | — | $ | 84 | $ | 5,580 | ||||||||
Hilton Burlington | $ | 6,938 | $ | 1,410 | $ | 906 | $ | — | $ | 45 | $ | 2,361 | ||||||||
Renaissance Charleston | $ | 7,176 | $ | 1,959 | $ | 784 | $ | — | $ | (63 | ) | $ | 2,680 | |||||||
Hilton Garden Inn Chelsea | $ | 5,995 | $ | 783 | $ | 724 | $ | — | $ | — | $ | 1,507 | ||||||||
Chicago Marriott | $ | 48,139 | $ | 401 | $ | 4,108 | $ | 6,255 | $ | (795 | ) | $ | 9,969 | |||||||
Chicago Gwen | $ | 12,097 | $ | 1,257 | $ | 1,606 | $ | — | $ | — | $ | 2,863 | ||||||||
Courtyard Denver Downtown | $ | 5,379 | $ | 1,929 | $ | 567 | $ | — | $ | — | $ | 2,496 | ||||||||
Courtyard Fifth Avenue | $ | 7,500 | $ | (1,252 | ) | $ | 897 | $ | 1,649 | $ | 103 | $ | 1,397 | |||||||
Courtyard Midtown East | $ | 13,343 | $ | 306 | $ | 1,369 | $ | 2,006 | $ | — | $ | 3,681 | ||||||||
Fort Lauderdale Westin | $ | 25,715 | $ | 7,020 | $ | 2,256 | $ | — | $ | 151 | $ | 9,427 | ||||||||
Frenchman's Reef | $ | 38,304 | $ | 7,126 | $ | 3,178 | $ | 1,164 | $ | — | $ | 11,468 | ||||||||
JW Marriott Denver Cherry Creek | $ | 12,268 | $ | 1,786 | $ | 1,052 | $ | 1,112 | $ | — | $ | 3,950 | ||||||||
Inn at Key West | $ | 5,036 | $ | 2,541 | $ | 346 | $ | — | $ | — | $ | 2,887 | ||||||||
Sheraton Suites Key West (2) | $ | 111 | $ | 26 | $ | — | $ | — | $ | — | $ | 26 | ||||||||
Lexington Hotel New York | $ | 29,259 | $ | (2,111 | ) | $ | 6,685 | $ | 2,663 | $ | 37 | $ | 7,274 | |||||||
Minneapolis Hilton | $ | 24,607 | $ | (2,048 | ) | $ | 4,703 | $ | 2,576 | $ | (404 | ) | $ | 4,827 | ||||||
Orlando Airport Marriott | $ | 14,713 | $ | 2,257 | $ | 1,138 | $ | 1,597 | $ | — | $ | 4,992 | ||||||||
Hotel Rex | $ | 3,667 | $ | 950 | $ | 284 | $ | — | $ | — | $ | 1,234 | ||||||||
Salt Lake City Marriott | $ | 14,643 | $ | 2,148 | $ | 1,495 | $ | 1,346 | $ | — | $ | 4,989 | ||||||||
Shorebreak (2) | $ | 5,690 | $ | 741 | $ | 756 | $ | — | $ | 370 | $ | 1,867 | ||||||||
The Lodge at Sonoma | $ | 12,354 | $ | 1,803 | $ | 753 | $ | 607 | $ | — | $ | 3,163 | ||||||||
Hilton Garden Inn Times Square Central | $ | 11,556 | $ | 3,595 | $ | 1,554 | $ | — | $ | (90 | ) | $ | 5,059 | |||||||
Vail Marriott | $ | 19,260 | $ | 6,871 | $ | 982 | $ | — | $ | — | $ | 7,853 | ||||||||
Westin San Diego | $ | 17,569 | $ | 2,518 | $ | 2,033 | $ | 1,373 | $ | 91 | $ | 6,015 | ||||||||
Westin Washington D.C. City Center | $ | 16,776 | $ | 2,125 | $ | 2,347 | $ | 1,483 | $ | 155 | $ | 6,110 | ||||||||
Renaissance Worthington | $ | 20,872 | $ | 5,266 | $ | 1,165 | $ | 1,495 | $ | 4 | $ | 7,930 | ||||||||
Total | $ | 458,689 | $ | 63,078 | $ | 49,910 | $ | 25,326 | $ | 2,775 | $ | 140,970 | ||||||||
Add: Prior Ownership Results(2) | $ | 11,537 | $ | 3,760 | $ | 1,026 | $ | — | $ | (7 | ) | $ | 4,779 | |||||||
Less: Sold Hotels(3) | $ | (45,315 | ) | $ | (992 | ) | $ | (6,565 | ) | $ | (4,173 | ) | $ | 404 | $ | (11,326 | ) | |||
Comparable Total | $ | 424,911 | $ | 65,846 | $ | 44,371 | $ | 21,153 | $ | 3,172 | $ | 134,423 | ||||||||
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__________________________________________________
(1) | Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization favorable and unfavorable contract liabilities and manager transition costs. |
(2) | Amounts represent the pre-acquisition operating results of the the Sheraton Suites Key West for the period from April 1, 2015 to June 29, 2015. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors. |
(3) | Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. |
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