Document


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 9, 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 November 9, 2016, DiamondRock Hospitality Company (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 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 November 9, 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: November 9, 2016
 
 
 
By:
 
/s/ William J. Tennis
 
 
 
 
 
 
William J. Tennis
 
 
 
 
 
 
Executive Vice President, General Counsel and Corporate Secretary







Exhibit

https://cdn.kscope.io/3ca6953c10c8f747a2f15f9d8698e14e-drhlogopressrelease.gif

COMPANY CONTACT    

Sean Mahoney
(240) 744-1150

FOR IMMEDIATE RELEASE

DIAMONDROCK HOSPITALITY COMPANY REPORTS THIRD QUARTER 2016 RESULTS
Maintains Original Full Year Adjusted EBITDA & Adjusted FFO
BETHESDA, Maryland, Wednesday, November 9, 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 September 30, 2016.

Third Quarter 2016 Highlights
Net Income: Net income was $29.9 million and earnings per diluted share was $0.15.
Comparable RevPAR: RevPAR was $187.91, a 0.8% increase from the comparable period of 2015.
Comparable Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 32.12%, an increase of 23 basis points from the comparable period of 2015.
Adjusted EBITDA: Adjusted EBITDA was $65.6 million, a decrease of $3.7 million or 5.3% from 2015. Adjusted EBITDA for the comparable period of 2015 included $6.8 million of Adjusted EBITDA from the three non-core hotels that were sold in 2016.
Adjusted FFO: Adjusted FFO was $52.1 million and Adjusted FFO per diluted share was $0.26.
Hotel Disposition: As previously announced, the Company sold the 169-room Hilton Garden Inn Chelsea on July 7, 2016 for $65.0 million.
Share Repurchases: The Company repurchased 92,600 shares at an average price of $8.90 per share during the third quarter. Subsequent to September 30, 2016, the Company repurchased an additional 634,537 shares at an average price of $8.92 per share.
Dividends: The Company declared a dividend of $0.125 per share during the third quarter, which was paid on October 12, 2016.
Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "Our portfolio gained 2.1 points of market share in the quarter despite moderating transient demand. Our tight cost controls resulted in impressive third quarter profit margins. Year-to-date, the Company has kept total expenses flat. Additionally, the Company has successfully executed on its strategic priority of increasing liquidity and expects to end the year with over $200 million in corporate cash, no outstanding borrowings on our corporate credit facility, and more than half the portfolio unencumbered by debt. DiamondRock continues to pay a competitive, well-covered dividend and remains well positioned to deploy capital opportunistically, including through share repurchases, which began at the end of the quarter.”




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 September 30, 2016, the Company reported the following:
 
Third Quarter
 
 
2016
 
2015
Change

Comparable Operating Results (1)
 
 
 
 
ADR

$223.44

 

$223.34

0.0
 %
Occupancy
84.1
%
 
83.5
%
0.6 percentage points

RevPAR

$187.91

 

$186.47

0.8
 %
Revenues
$220.1 million

 
$214.1 million

2.8
 %
Hotel Adjusted EBITDA Margin
32.12
%
 
31.89
%
23 basis points

 
 
 
 
 
Actual Operating Results
 
 
 
 
Revenues
$220.2 million

 
$238.5 million

-7.7
 %
Net income
$29.9 million

 
$24.5 million

$5.4 million

Earnings per diluted share

$0.15

 

$0.12


$0.03

Adjusted EBITDA
$65.6 million

 
$69.3 million

-$3.7 million

Adjusted FFO
$52.1 million

 
$52.3 million

-$0.2 million

Adjusted FFO per diluted share

$0.26

 

$0.26


$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.

For the nine months ended September 30, 2016, the Company reported the following:
 
Year to Date
 
 
2016
 
2015
Change

Comparable Operating Results (1)(2)
 
 
 
 
ADR

$223.98

 

$223.05

0.4
 %
Occupancy
80.9
%
 
81.4
%
-0.5 percentage points

RevPAR

$181.30

 

$181.66

-0.2
 %
Revenues
$644.6 million

 
$639.1 million

0.9
 %
Hotel Adjusted EBITDA Margin
31.96
%
 
31.72
%
24 basis points

 
 
 
 
 
Actual Operating Results
 
 
 
 
Revenues
$689.9 million

 
$697.2 million

-1.1
 %
Net income
$90.9 million

 
$59.9 million

$31.0 million

Earnings per diluted share

$0.45

 

$0.30


$0.15

Adjusted EBITDA
$200.1 million

 
$198.9 million

$1.2 million

Adjusted FFO
$158.0 million

 
$151.5 million

$6.5 million

Adjusted FFO per diluted share

$0.78

 

$0.75


$0.03


2



(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.

Share Repurchase Program

In September 2016, the Company began repurchasing shares of its common stock pursuant to its previously announced $150 million share repurchase program, and it has continued such repurchases since the end of the third quarter. Year-to-date, the Company has repurchased 727,137 shares of its common stock at an average price of $8.92 per share for a total purchase price of $6.5 million. The Company has $143.5 million of remaining authorized capacity under its share repurchase program. The shares are purchased in the open market or through private transactions from time-to-time, depending upon market conditions, pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

Capital Expenditures

The Company spent approximately $78.7 million on capital improvements during the nine months ended September 30, 2016. The investments relate primarily to three major projects: the second phase of the Chicago Marriott Downtown renovation; the first phase of the renovation at The Gwen; and the Worthington Renaissance guest room renovation. The Company currently expects to spend approximately $130 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 Marriott's Luxury Collection brand 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 2016. This phase included the upgrade renovation of approximately 460 guest rooms as well as construction of 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 through early 2017.
Charleston Renaissance: The Company expects to renovate the guest rooms at the hotel during the seasonally slow period from the end of the year through early 2017.
Worthington Renaissance: The Company has commenced the guest room renovation at the hotel and expects to complete the project at the end of 2016.

Balance Sheet
 
As of September 30, 2016, the Company had $236.0 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.

Dividends

The Company’s Board of Directors declared a quarterly dividend of $0.125 per share to stockholders of record as of September 30, 2016. The dividend was paid on October 12, 2016.


3



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 U.S. Securities and Exchange Commission.  Comparable RevPAR assumes that all of the Company's 26 hotels were owned since January 1, 2015.

Given recent moderating trends in business transient demand, the Company is reducing its RevPAR outlook. However, because of better than expected cost controls from asset management initiatives, the Company is maintaining prior full year 2016 Adjusted EBITDA and Adjusted FFO guidance. In addition, the Company now expects full year 2016 corporate expenses to range from $23 million to $24 million.

The Company now expects the full year 2016 results to be as follows:
 
 
Previous Guidance
Current Guidance
 
Metric
Low End
High End
Low End
High End
 
 
Comparable RevPAR Growth

0 percent
1 percent
-0.75 percent
0 percent
 
Adjusted EBITDA

$250 million
$263 million
$250 million
$263 million
 
Adjusted FFO

$199 million
$209 million
$199 million
$209 million
 
Adjusted FFO per share
(based on 201.5 million shares)

$0.99 per share
$1.04 per share
$0.99 per share
$1.04 per share

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 includes our 2015 acquisitions for all periods presented and excludes our 2016 dispositions for all periods presented.
 
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
76.5
%
84.3
%
83.5
%
77.1
%
80.3
%
RevPAR
$
162.02

$
196.15

$
186.47

$
175.45

$
180.09

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
844,784

856,751

867,168

866,732

3,435,435

 
Quarter 1, 2016
Quarter 2, 2016
Quarter 3, 2016
YTD 2016
 
ADR
$
216.03

$
231.31

$
223.44

$
223.98

 
Occupancy
73.2
%
85.5
%
84.1
%
80.9
%
 
RevPAR
$
158.22

$
197.69

$
187.91

$
181.30

 
Revenues (in thousands)
$
192,034

$
232,500

$
220,087

$
644,621

 
Hotel Adjusted EBITDA (in thousands)
$
51,968

$
83,362

$
70,686

$
206,016

 
Hotel Adjusted EBITDA Margin
27.06
%
35.85
%
32.12
%
31.96
%
 
Available Rooms
857,311

858,039

867,468

2,582,818

 

4



Earnings Call
The Company will host a conference call to discuss its third quarter results on Wednesday, November 9, 2016, at 10:00 a.m. Eastern Time (ET). To participate in the live call, investors are invited to dial 844-287-6622 (for domestic callers) or 530-379-4559 (for international callers). The participant passcode is 90906627. 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 brand families such as Hilton and Marriott as well as unique 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.

5





DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
 
September 30, 2016
 
December 31, 2015
ASSETS
 
 
 
Property and equipment, net
$
2,642,034

 
$
2,882,176

Restricted cash
47,661

 
59,339

Due from hotel managers
87,019

 
86,698

Favorable lease assets, net
18,076

 
23,955

Prepaid and other assets (1)
47,693

 
46,758

Cash and cash equivalents
235,965

 
213,584

Total assets
$
3,078,448

 
$
3,312,510

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Liabilities:
 
 
 
Mortgage debt, net of unamortized debt issuance costs
$
823,626

 
$
1,169,749

Term loan, net of unamortized debt issuance costs
99,336

 

Senior unsecured credit facility

 

Total debt
922,962

 
1,169,749

 
 
 
 
Deferred income related to key money, net
20,776

 
23,568

Unfavorable contract liabilities, net
73,123

 
74,657

Deferred ground rent
79,027

 
70,153

Due to hotel managers
55,350

 
65,350

Dividends declared and unpaid
23,586

 
25,599

Accounts payable and accrued expenses (2)
59,247

 
58,829

Total other liabilities
311,109

 
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; 200,796,110 and 200,741,777 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
2,008

 
2,007

Additional paid-in capital
2,059,638

 
2,056,878

Accumulated deficit
(217,269
)
 
(234,280
)
Total stockholders’ equity
1,844,377

 
1,824,605

Total liabilities and stockholders’ equity
$
3,078,448

 
$
3,312,510






(1) Includes $34.0 million of deferred tax assets, $5.0 million and $7.6 million of prepaid expenses, and $8.7 million and $5.2 million of other assets as of September 30, 2016 and December 31, 2015, respectively.

(2) Includes $21.2 million of deferred tax liabilities, $12.4 million and $13.3 million of accrued property taxes, $6.7 million and $11.6 million of accrued capital expenditures, and $18.9 million and $12.7 million of other accrued liabilities as of September 30, 2016 and December 31, 2015, respectively.

6



DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Rooms
$
163,158

 
$
178,529

 
$
498,714

 
$
504,729

Food and beverage
44,069

 
47,256

 
151,850

 
155,662

Other
13,012

 
12,717

 
39,373

 
36,801

Total revenues
220,239

 
238,502

 
689,937

 
697,192

Operating Expenses:
 
 
 
 
 
 
 
Rooms
39,766

 
42,415

 
121,737

 
122,872

Food and beverage
29,103

 
32,143

 
97,718

 
103,044

Management fees
7,655

 
7,562

 
23,036

 
22,665

Other hotel expenses
74,123

 
83,358

 
232,576

 
237,410

Depreciation and amortization
23,605

 
25,107

 
73,731

 
75,018

Hotel acquisition costs

 
453

 

 
945

Corporate expenses
4,684

 
6,048

 
17,420

 
17,790

Impairment losses

 

 

 
10,461

Total operating expenses, net
178,936

 
197,086

 
566,218

 
590,205

Operating profit
41,303

 
41,416

 
123,719

 
106,987

 
 
 
 
 
 
 
 
Interest and other income, net
(333
)
 
(126
)
 
(451
)
 
(480
)
Interest expense
9,504

 
12,907

 
32,242

 
38,963

Gain on sales of hotel properties
(2,198
)
 

 
(10,319
)
 

Total other expenses, net
6,973

 
12,781

 
21,472

 
38,483

Income before income taxes
34,330

 
28,635

 
102,247

 
68,504

Income tax expense
(4,393
)
 
(4,171
)
 
(11,357
)
 
(8,576
)
Net income
$
29,937

 
$
24,464

 
$
90,890

 
$
59,928

Earnings per share:
 
 
 
 
 
 
 
Basic earnings per share
$
0.15

 
$
0.12

 
$
0.45

 
$
0.30

Diluted earnings per share
$
0.15

 
$
0.12

 
$
0.45

 
$
0.30

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
201,297,846

 
200,852,072

 
201,188,563

 
200,776,641
Diluted
201,739,604

 
201,167,659

 
201,572,206

 
201,124,091

7



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.

Hotel EBITDA

Hotel EBITDA represents net income excluding: (1) interest expense, (2) income taxes, (3) depreciation and amortization, (4) corporate general and administrative expenses (shown as corporate expenses on the consolidated statements of operations), and (5) hotel acquisition costs. We believe that Hotel EBITDA provides our investors a useful financial measure to evaluate our hotel operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily depreciation and amortization), and our corporate-level expenses (corporate expenses and hotel acquisition costs). With respect to Hotel EBITDA, we believe that excluding the effect of corporate-level expenses provides a more complete understanding of the operating results over which individual hotels and third-party management companies have direct control. We believe property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis.




8



Adjustments to EBITDA, FFO and Hotel EBITDA

We adjust EBITDA, FFO and Hotel EBITDA 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, Adjusted FFO and Hotel Adjusted EBIDTA when combined with GAAP net income, EBITDA, FFO and Hotel EBITDA, is beneficial to an investor's complete understanding of our consolidated and property-level operating performance. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues.

We adjust EBITDA, FFO and Hotel EBITDA 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 actual rent amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.

Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of favorable and unfavorable contracts recorded in conjunction with certain acquisitions because the non-cash amortization is based on historical cost accounting and is of lesser significance in evaluating our actual performance for that period.

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, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current 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 these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels.

Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels.

Severance Costs: We exclude corporate severance costs incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations because we believe these costs do not reflect the ongoing 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 ongoing performance of the Company or our hotels. During the nine months ended September 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 consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to the following: pre-opening costs incurred with newly developed hotels; lease preparation costs incurred to prepare vacant space for marketing; management or franchise contract termination fees; gains or losses from legal settlements; bargain purchase gains incurred upon acquisition of a hotel; 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 are based on historical cost accounting and 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. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.


9



Reconciliations of Non-GAAP Measures

EBITDA and Adjusted EBITDA

The following tables are reconciliations of our GAAP net income to EBITDA and Adjusted EBITDA (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
29,937

 
$
24,464

 
$
90,890

 
$
59,928

Interest expense
9,504

 
12,907

 
32,242

 
38,963

Income tax expense
4,393

 
4,171

 
11,357

 
8,576

Real estate related depreciation and amortization
23,605

 
25,107

 
73,731

 
75,018

EBITDA
67,439

 
66,649

 
208,220

 
182,485

Non-cash ground rent
1,568

 
1,467

 
4,230

 
4,454

Non-cash amortization of favorable and unfavorable contract liabilities, net
(478
)
 
(407
)
 
(1,434
)
 
(1,134
)
Impairment losses

 

 

 
10,461

Gain on sale of hotel properties
(2,198
)
 

 
(10,319
)
 

Severance costs (1)
(682
)
 
428

 
(563
)
 
428

Hotel acquisition costs

 
453

 

 
945

Hotel manager transition costs (2)

 
754

 

 
1,287

Adjusted EBITDA
$
65,649

 
$
69,344

 
$
200,134

 
$
198,926


(1) 
Classified as corporate expenses on the consolidated statements of operations. During the three months ended September 30, 2016, we reversed $0.7 million of previously recognized compensation expense for forfeited equity awards related to the resignation of our former Executive Vice President and Chief Operating Officer.
(2) 
Classified as other hotel expenses on the consolidated statements of operations.

 
Full Year 2016 Guidance
 
Low End
 
High End
Net income
$
107,450

 
$
118,450

Interest expense
43,000

 
42,500

Income tax expense
9,432

 
12,932

Real estate related depreciation and amortization
98,000

 
97,000

EBITDA
257,882

 
270,882

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
(10,319
)
 
(10,319
)
Severance costs
(563
)
 
(563
)
Adjusted EBITDA
$
250,000

 
$
263,000









10



Hotel EBITDA and Hotel Adjusted EBITDA
The following table is a reconciliation of our GAAP net income to Hotel EBITDA and Hotel Adjusted EBITDA (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
29,937

 
$
24,464

 
$
90,890

 
$
59,928

Interest expense
9,504

 
12,907

 
32,242

 
38,963

Income tax expense
4,393

 
4,171

 
11,357

 
8,576

Real estate related depreciation and amortization
23,605

 
25,107

 
73,731

 
75,018

EBITDA
67,439

 
66,649

 
208,220

 
182,485

Corporate expenses
4,684

 
6,048

 
17,420

 
17,790

Interest and other income, net
(333
)
 
(126
)
 
(451
)
 
(480
)
Hotel acquisition costs

 
453

 

 
945

Gain on sale of hotel properties
(2,198
)
 

 
(10,319
)
 

Impairment losses

 

 

 
10,461

Hotel EBITDA
69,592

 
73,024

 
214,870

 
211,201

Non-cash ground rent
1,568

 
1,467

 
4,230

 
4,454

Non-cash amortization of favorable and unfavorable contract liabilities, net
(478
)
 
(407
)
 
(1,434
)
 
(1,134
)
Hotel manager transition costs

 
754

 

 
1,287

Hotel level severance costs

 
428

 

 
428

Hotel Adjusted EBITDA
$
70,682

 
$
75,266

 
$
217,666

 
$
216,236


FFO and Adjusted FFO
The following tables are reconciliations of our GAAP net income to FFO and Adjusted FFO (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
 
 
 
 
 
 
2016
 
2015
 
2016
 
2015
Net income
$
29,937

 
$
24,464

 
$
90,890

 
$
59,928

Real estate related depreciation and amortization
23,605

 
25,107

 
73,731

 
75,018

Gain on sales of hotel properties, net of income tax
(1,877
)
 

 
(8,887
)
 

Impairment losses

 

 

 
10,461

FFO
51,665

 
49,571

 
155,734

 
145,407

Non-cash ground rent
1,568

 
1,467

 
4,230

 
4,454

Non-cash amortization of favorable and unfavorable contract liabilities, net
(478
)
 
(407
)
 
(1,434
)
 
(1,134
)
Hotel acquisition costs

 
453

 

 
945

Hotel manager transition costs (1)

 
754

 

 
1,287

Severance costs (2)
(682
)
 
428

 
(563
)
 
428

Fair value adjustments to debt instruments

 
49

 
19

 
115

Adjusted FFO
$
52,073

 
$
52,315

 
$
157,986

 
$
151,502

Adjusted FFO per diluted share
$
0.26

 
$
0.26

 
$
0.78

 
$
0.75


(1) 
Classified as corporate expenses on the consolidated statements of operations.

11



(2) 
Classified as other hotel expenses on the consolidated statements of operations. During the three months ended September 30, 2016, we reversed $0.7 million of previously recognized compensation expense for forfeited equity award related to the resignation of our former Executive Vice President and Chief Operating Officer.

 
Full Year 2016 Guidance
 
Low End
 
High End
Net income
$
107,450

 
$
118,450

Real estate related depreciation and amortization
98,000

 
97,000

Gain on sales of hotel properties, net of income tax
(8,887
)
 
(8,887
)
FFO
196,563

 
206,563

Non-cash ground rent
4,800

 
4,800

Non-cash amortization of favorable and unfavorable contract liabilities, net
(1,800
)
 
(1,800
)
Severance costs
(563
)
 
(563
)
Adjusted FFO
$
199,000

 
$
209,000

Adjusted FFO per diluted share
$
0.99

 
$
1.04


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 September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenues
$
220,239

 
$
238,502

 
$
689,937

 
$
697,192

Hotel revenues from prior ownership (1)

 

 

 
11,537

Hotel revenues from sold hotels (2)
(152
)
 
(24,358
)
 
(45,316
)
 
(69,675
)
Comparable Revenues
$
220,087

 
$
214,144

 
$
644,621

 
$
639,054

 
 
 
 
 
 
 
 
Hotel Adjusted EBITDA
$
70,682

 
$
75,266

 
$
217,666

 
$
216,236

Hotel Adjusted EBITDA from prior ownership (1)

 

 

 
4,779

Hotel Adjusted EBITDA from sold hotels (2)
4

 
(6,966
)
 
(11,650
)
 
(18,292
)
Comparable Hotel Adjusted EBITDA
$
70,686

 
$
68,300

 
$
206,016

 
$
202,723

 
 
 
 
 
 
 
 
Hotel Adjusted EBITDA Margin
32.09
%
 
31.56
%
 
31.55
%
 
31.02
%
Comparable Hotel Adjusted EBITDA Margin
32.12
%
 
31.89
%
 
31.96
%
 
31.72
%
(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.


12



Comparable Hotel Operating Expenses
The following tables set forth hotel operating expenses for the three and nine months ended September 30, 2016 and 2015 for each of the hotels that we owned as of September 30, 2016. Our GAAP hotel operating expenses for the three and nine months ended September 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.
 
As Reported
 
Adjustments for Acquisitions/Dispositions
 
Comparable
 
Three Months Ended September 30,
 
Three Months Ended September 30,
 
2016
 
2015
 
% Change
 
2016
 
2015
 
2016
 
2015
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms departmental expenses
$
39,766

 
$
42,415

 
(6.2
)%
 
$
(54
)
 
$
(3,950
)
 
$
39,712

 
$
38,465

 
3.2
 %
Food and beverage departmental expenses
29,103

 
32,143

 
(9.5
)%
 
(12
)
 
(4,101
)
 
29,091

 
28,042

 
3.7
 %
Other direct departmental
3,022

 
4,374

 
(30.9
)%
 

 
(221
)
 
3,022

 
4,153

 
(27.2
)%
General and administrative
17,742

 
18,799

 
(5.6
)%
 
(28
)
 
(2,016
)
 
17,714

 
16,783

 
5.5
 %
Utilities
6,740

 
7,178

 
(6.1
)%
 
(6
)
 
(695
)
 
6,734

 
6,483

 
3.9
 %
Repairs and maintenance
8,578

 
9,406

 
(8.8
)%
 
(5
)
 
(899
)
 
8,573

 
8,507

 
0.8
 %
Sales and marketing
14,765

 
16,340

 
(9.6
)%
 
(7
)
 
(2,092
)
 
14,758

 
14,248

 
3.6
 %
Franchise fees
5,483

 
5,939

 
(7.7
)%
 
(14
)
 
(344
)
 
5,469

 
5,595

 
(2.3
)%
Base management fees
5,393

 
5,909

 
(8.7
)%
 
(4
)
 
(665
)
 
5,389

 
5,244

 
2.8
 %
Incentive management fees
2,262

 
1,653

 
36.8
 %
 

 

 
2,262

 
1,653

 
36.8
 %
Property taxes
12,302

 
13,463

 
(8.6
)%
 
(26
)
 
(557
)
 
12,276

 
12,906

 
(4.9
)%
Ground rent
2,596

 
3,797

 
(31.6
)%
 

 
(1,475
)
 
2,596

 
2,322

 
11.8
 %
Hotel manager transition costs

 
754

 
(100.0
)%
 

 

 

 
754

 
(100.0
)%
Other fixed expenses
2,895

 
3,308

 
(12.5
)%
 

 
(176
)
 
2,895

 
3,132

 
(7.6
)%
Total hotel operating expenses
$
150,647

 
$
165,478

 
(9.0
)%
 
$
(156
)
 
$
(17,191
)
 
$150,491
 
$
148,287

 
1.5
 %

13



 
As Reported
 
Adjustments for Acquisitions/Dispositions
 
Comparable
 
Nine Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
% Change
 
2016
 
2015
 
2016
 
2015
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms departmental expenses
$
121,737

 
$
122,872

 
(0.9
)%
 
$
(7,455
)
 
$
(9,636
)
 
$
114,282

 
$
113,236

 
0.9
 %
Food and beverage departmental expenses
97,718

 
103,044

 
(5.2
)%
 
(8,251
)
 
(11,330
)
 
89,467

 
91,714

 
(2.5
)%
Other direct departmental
9,177

 
12,946

 
(29.1
)%
 
(116
)
 
(449
)
 
9,061

 
12,497

 
(27.5
)%
General and administrative
58,036

 
54,886

 
5.7
 %
 
(4,199
)
 
(5,133
)
 
53,837

 
49,753

 
8.2
 %
Utilities
20,035

 
20,889

 
(4.1
)%
 
(1,276
)
 
(1,606
)
 
18,759

 
19,283

 
(2.7
)%
Repairs and maintenance
27,069

 
27,397

 
(1.2
)%
 
(1,724
)
 
(2,196
)
 
25,345

 
25,201

 
0.6
 %
Sales and marketing
47,381

 
48,323

 
(1.9
)%
 
(3,790
)
 
(5,760
)
 
43,591

 
42,563

 
2.4
 %
Franchise fees
16,520

 
15,916

 
3.8
 %
 
(587
)
 
(27
)
 
15,933

 
15,889

 
0.3
 %
Base management fees
17,005

 
17,308

 
(1.8
)%
 
(1,274
)
 
(1,578
)
 
15,731

 
15,730

 
 %
Incentive management fees
6,031

 
5,357

 
12.6
 %
 

 

 
6,031

 
5,357

 
12.6
 %
Property taxes
35,212

 
35,286

 
(0.2
)%
 
(1,169
)
 
(1,362
)
 
34,043

 
33,924

 
0.4
 %
Ground rent
10,121

 
11,363

 
(10.9
)%
 
(2,901
)
 
(4,413
)
 
7,220

 
6,950

 
3.9
 %
Hotel manager transition costs

 
1,287

 
(100.0
)%
 

 

 

 
1,287

 
(100.0
)%
Other fixed expenses
9,025

 
9,117

 
(1.0
)%
 
(443
)
 
(536
)
 
8,582

 
8,581

 
 %
Total hotel operating expenses
$
475,067

 
$
485,991

 
(2.2
)%
 
$
(33,185
)
 
$
(44,026
)
 
$
441,882

 
$
441,965

 
 %

14




Market Capitalization as of September 30, 2016
(in thousands)

Enterprise Value
 
 
 
 
 
Common equity capitalization (at September 30, 2016 closing price of $9.10/share)
 
$
1,836,097

Consolidated debt
 
922,962

Cash and cash equivalents
 
(235,965)

Total enterprise value
 
$
2,523,094

Share Reconciliation
 
 
 
 
 
Common shares outstanding
 
200,796

Unvested restricted stock held by management and employees
 
563

Share grants under deferred compensation plan
 
410

Combined shares outstanding
 
201,769


15




Debt Summary as of September 30, 2016
(dollars in thousands)

Property
 
Interest Rate
 
Term
 
Outstanding Principal

 
Maturity
Marriott Salt Lake City Downtown
 
4.25%
 
Fixed
 
$
58,719

 
November 2020
Westin Washington D.C. City Center
 
3.99%
 
Fixed
 
66,623

 
January 2023
The Lodge at Sonoma, a Renaissance Resort & Spa
 
3.96%
 
Fixed
 
29,044

 
April 2023
Westin San Diego
 
3.94%
 
Fixed
 
67,341

 
April 2023
Courtyard Manhattan / Midtown East
 
4.40%
 
Fixed
 
85,790

 
August 2024
Renaissance Worthington
 
3.66%
 
Fixed
 
85,000

 
May 2025
JW Marriott Denver at Cherry Creek
 
4.33%
 
Fixed
 
64,839

 
July 2025
Westin Boston Waterfront Hotel
 
4.36%
 
Fixed
 
202,309

 
November 2025
Lexington Hotel New York
 
LIBOR + 2.25(1)
 
Variable
 
170,368

 
October 2017 (2)
     Debt issuance costs, net
 
 
 
 
 
(6,407
)
 
 
Total mortgage debt, net of unamortized debt issuance costs
 
 
 
 
 
$
823,626

 
 
 
 
 
 
 
 
 
 
 
Senior unsecured term loan
 
LIBOR + 1.45(3)
 
Variable
 
100,000

 
May 2021
     Debt issuance costs, net
 
 
 
 
 
(664
)
 
 
Senior unsecured term loan, net of unamortized debt issuance costs
 
 
 
$
99,336

 
 
 
 
 
 
 
 
 
 
 
Senior unsecured credit facility
 
LIBOR + 1.50
 
Variable
 

 
May 2020 (4)
 
 
 
 
 
 
 
 
 
Total debt, net of unamortized debt issuance costs
 
 
 
 
 
$
922,962

 
 
 
 
 
 
 
 
 
 
 
Weighted-average interest rate of fixed rate debt
 
4.22%
 
 
 
 
 
 
Total weighted-average interest rate
 
3.72%
 
 
 
 
 
 

(1) 
The interest rate as of September 30, 2016 was 2.77%.
(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% at the time the first extension option is exercised, and the payment of an extension fee. The debt yield as of September 30, 2016 was approximately 5.7%.
(3) 
The interest rate as of September 30, 2016 was 1.97%.
(4) 
May be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.



16



Operating Statistics – Third Quarter
 
 
ADR
 
Occupancy
 
RevPAR
 
Hotel Adjusted EBITDA Margin
 
 
3Q 2016
3Q 2015
B/(W)
 
3Q 2016
3Q 2015
B/(W)
 
3Q 2016
3Q 2015
B/(W)
 
3Q 2016
3Q 2015
B/(W)
Atlanta Alpharetta Marriott
 
$
168.83

$
162.26

4.0
 %
 
74.6
%
78.4
%
(3.8
)%
 
$
125.87

$
127.24

(1.1
)%
 
36.03
 %
38.98
%
-295 bps
Bethesda Marriott Suites
 
$
164.31

$
153.53

7.0
 %
 
69.1
%
67.2
%
1.9
 %
 
$
113.56

$
103.14

10.1
 %
 
23.62
 %
19.89
%
373 bps
Boston Westin
 
$
252.89

$
248.93

1.6
 %
 
87.5
%
87.7
%
(0.2
)%
 
$
221.19

$
218.41

1.3
 %
 
32.06
 %
34.24
%
-218 bps
Hilton Boston Downtown
 
$
319.55

$
312.36

2.3
 %
 
92.6
%
95.4
%
(2.8
)%
 
$
295.76

$
298.02

(0.8
)%
 
45.15
 %
45.54
%
-39 bps
Hilton Burlington
 
$
221.77

$
212.95

4.1
 %
 
91.0
%
88.1
%
2.9
 %
 
$
201.88

$
187.53

7.7
 %
 
49.40
 %
49.30
%
10 bps
Renaissance Charleston
 
$
209.97

$
203.53

3.2
 %
 
92.3
%
89.2
%
3.1
 %
 
$
193.72

$
181.55

6.7
 %
 
37.14
 %
33.89
%
325 bps
Hilton Garden Inn Chelsea (1)
 
$
149.01

$
227.32

(34.4
)%
 
99.8
%
97.9
%
1.9
 %
 
$
148.72

$
222.46

(33.1
)%
 
(2.63
)%
40.50
%
-4313 bps
Chicago Marriott
 
$
223.48

$
227.50

(1.8
)%
 
84.5
%
84.2
%
0.3
 %
 
$
188.75

$
191.66

(1.5
)%
 
31.58
 %
28.68
%
290 bps
Chicago Gwen
 
$
222.73

$
233.92

(4.8
)%
 
88.9
%
76.9
%
12.0
 %
 
$
197.93

$
179.79

10.1
 %
 
38.04
 %
30.92
%
712 bps
Courtyard Denver Downtown
 
$
211.53

$
215.61

(1.9
)%
 
88.4
%
84.6
%
3.8
 %
 
$
187.03

$
182.34

2.6
 %
 
52.69
 %
50.08
%
261 bps
Courtyard Fifth Avenue
 
$
266.76

$
278.40

(4.2
)%
 
93.7
%
90.7
%
3.0
 %
 
$
250.09

$
252.47

(0.9
)%
 
24.22
 %
25.57
%
-135 bps
Courtyard Midtown East
 
$
270.70

$
282.99

(4.3
)%
 
95.1
%
89.5
%
5.6
 %
 
$
257.53

$
253.32

1.7
 %
 
33.38
 %
33.48
%
-10 bps
Fort Lauderdale Westin
 
$
140.24

$
136.22

3.0
 %
 
85.1
%
77.8
%
7.3
 %
 
$
119.30

$
106.00

12.5
 %
 
27.77
 %
20.11
%
766 bps
Frenchman's Reef
 
$
196.57

$
181.61

8.2
 %
 
81.6
%
77.0
%
4.6
 %
 
$
160.31

$
139.90

14.6
 %
 
14.09
 %
7.97
%
612 bps
JW Marriott Denver Cherry Creek
 
$
275.52

$
272.60

1.1
 %
 
87.1
%
87.4
%
(0.3
)%
 
$
240.03

$
238.21

0.8
 %
 
38.30
 %
36.53
%
177 bps
Inn at Key West
 
$
165.14

$
179.25

(7.9
)%
 
79.1
%
81.0
%
(1.9
)%
 
$
130.56

$
145.25

(10.1
)%
 
37.84
 %
37.21
%
63 bps
Sheraton Suites Key West
 
$
218.30

$
221.65

(1.5
)%
 
78.4
%
80.2
%
(1.8
)%
 
$
171.24

$
177.68

(3.6
)%
 
33.54
 %
34.20
%
-66 bps
Lexington Hotel New York
 
$
251.31

$
266.34

(5.6
)%
 
94.8
%
94.4
%
0.4
 %
 
$
238.14

$
251.30

(5.2
)%
 
20.53
 %
29.07
%
-854 bps
Hotel Rex
 
$
237.76

$
260.95

(8.9
)%
 
84.9
%
87.2
%
(2.3
)%
 
$
201.96

$
227.64

(11.3
)%
 
38.26
 %
42.26
%
-400 bps
Salt Lake City Marriott
 
$
165.71

$
164.54

0.7
 %
 
73.4
%
73.0
%
0.4
 %
 
$
121.65

$
120.13

1.3
 %
 
39.47
 %
35.13
%
434 bps
Shorebreak
 
$
256.64

$
263.32

(2.5
)%
 
85.7
%
83.4
%
2.3
 %
 
$
220.01

$
219.65

0.2
 %
 
41.33
 %
40.68
%
65 bps
The Lodge at Sonoma
 
$
336.17

$
315.38

6.6
 %
 
88.2
%
92.7
%
(4.5
)%
 
$
296.45

$
292.23

1.4
 %
 
38.04
 %
35.05
%
299 bps
Hilton Garden Inn Times Square Central
 
$
260.05

$
265.28

(2.0
)%
 
98.1
%
98.3
%
(0.2
)%
 
$
255.16

$
260.68

(2.1
)%
 
34.25
 %
39.75
%
-550 bps
Vail Marriott
 
$
187.56

$
172.12

9.0
 %
 
76.9
%
71.6
%
5.3
 %
 
$
144.31

$
123.22

17.1
 %
 
26.12
 %
23.96
%
216 bps
Westin San Diego
 
$
193.87

$
190.12

2.0
 %
 
90.9
%
90.4
%
0.5
 %
 
$
176.27

$
171.92

2.5
 %
 
37.99
 %
33.81
%
418 bps
Westin Washington D.C. City Center
 
$
198.32

$
188.96

5.0
 %
 
86.4
%
85.1
%
1.3
 %
 
$
171.30

$
160.78

6.5
 %
 
34.44
 %
34.43
%
1 bps
Renaissance Worthington
 
$
170.16

$
175.17

(2.9
)%
 
50.2
%
65.2
%
(15.0
)%
 
$
85.34

$
114.14

(25.2
)%
 
19.70
 %
29.14
%
-944 bps
Total 
 
$
223.34

$
223.35

 %
 
84.1
%
83.5
%
0.6
 %
 
$
187.87

$
186.51

0.7
 %
 
32.09
 %
31.56
%
53 bps
Comparable Total (2)
 
$
223.44

$
223.34

 %
 
84.1
%
83.5
%
0.6
 %
 
$
187.91

$
186.47

0.8
 %
 
32.12
 %
31.89
%
23 bps

(1) 
The hotel was sold on July 7, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.
(2) 
Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.


17



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
 
$
174.58

$
164.07

6.4
 %
 
73.7
%
74.9
%
(1.2
)%
 
$
128.67

$
122.89

4.7
 %
 
35.86
%
36.47
%
-61 bps
Bethesda Marriott Suites
 
$
170.48

$
169.30

0.7
 %
 
71.4
%
67.1
%
4.3
 %
 
$
121.78

$
113.62

7.2
 %
 
28.24
%
26.67
%
157 bps
Boston Westin
 
$
242.15

$
240.01

0.9
 %
 
82.0
%
80.8
%
1.2
 %
 
$
198.46

$
193.90

2.4
 %
 
31.11
%
31.24
%
-13 bps
Hilton Boston Downtown
 
$
282.76

$
286.90

(1.4
)%
 
87.8
%
84.9
%
2.9
 %
 
$
248.16

$
243.46

1.9
 %
 
40.72
%
39.74
%
98 bps
Hilton Burlington
 
$
180.39

$
173.28

4.1
 %
 
81.4
%
78.7
%
2.7
 %
 
$
146.82

$
136.36

7.7
 %
 
41.53
%
40.75
%
78 bps
Renaissance Charleston
 
$
223.06

$
218.44

2.1
 %
 
90.9
%
90.6
%
0.3
 %
 
$
202.75

$
197.92

2.4
 %
 
39.64
%
36.30
%
334 bps
Hilton Garden Inn Chelsea (1)
 
$
201.66

$
206.70

(2.4
)%
 
98.1
%
92.4
%
5.7
 %
 
$
197.74

$
191.04

3.5
 %
 
25.85
%
31.22
%
-537 bps
Chicago Marriott
 
$
219.65

$
219.01

0.3
 %
 
69.4
%
75.6
%
(6.2
)%
 
$
152.52

$
165.49

(7.8
)%
 
25.77
%
23.74
%
203 bps
Chicago Gwen
 
$
208.80

$
220.74

(5.4
)%
 
76.8
%
74.6
%
2.2
 %
 
$
160.33

$
164.56

(2.6
)%
 
29.77
%
26.41
%
336 bps
Courtyard Denver Downtown
 
$
203.60

$
204.66

(0.5
)%
 
82.9
%
80.8
%
2.1
 %
 
$
168.86

$
165.31

2.1
 %
 
49.43
%
47.78
%
165 bps
Courtyard Fifth Avenue
 
$
250.14

$
261.65

(4.4
)%
 
88.2
%
88.8
%
(0.6
)%
 
$
220.50

$
232.22

(5.0
)%
 
17.72
%
21.17
%
-345 bps
Courtyard Midtown East
 
$
251.17

$
260.63

(3.6
)%
 
91.9
%
89.7
%
2.2
 %
 
$
230.80

$
233.68

(1.2
)%
 
28.31
%
29.73
%
-142 bps
Fort Lauderdale Westin
 
$
196.63

$
182.12

8.0
 %
 
92.1
%
86.4
%
5.7
 %
 
$
181.03

$
157.31

15.1
 %
 
39.84
%
32.88
%
696 bps
Frenchman's Reef
 
$
257.46

$
255.49

0.8
 %
 
86.5
%
85.6
%
0.9
 %
 
$
222.74

$
218.74

1.8
 %
 
26.32
%
24.83
%
149 bps
JW Marriott Denver Cherry Creek
 
$
270.10

$
271.88

(0.7
)%
 
81.9
%
80.9
%
1.0
 %
 
$
221.10

$
219.84

0.6
 %
 
36.19
%
33.72
%
247 bps
Inn at Key West
 
$
208.16

$
226.21

(8.0
)%
 
87.1
%
88.6
%
(1.5
)%
 
$
181.22

$
200.40

(9.6
)%
 
46.85
%
51.91
%
-506 bps
Sheraton Suites Key West (2)
 
$
260.24

$
258.07

0.8
 %
 
88.2
%
91.1
%
(2.9
)%
 
$
229.56

$
235.11

(2.4
)%
 
44.35
%
34.96
%
939 bps
Lexington Hotel New York
 
$
230.77

$
238.68

(3.3
)%
 
90.3
%
92.9
%
(2.6
)%
 
$
208.44

$
221.81

(6.0
)%
 
14.76
%
26.43
%
-1167 bps
Hilton Minneapolis (3)
 
$
149.38

$
141.74

5.4
 %
 
69.8
%
75.2
%
(5.4
)%
 
$
104.32

$
106.58

(2.1
)%
 
19.92
%
23.45
%
-353 bps
Orlando Airport Marriott (4)
 
$
129.43

$
128.65

0.6
 %
 
86.8
%
84.6
%
2.2
 %
 
$
112.29

$
108.79

3.2
 %
 
35.80
%
29.29
%
651 bps
Hotel Rex
 
$
238.58

$
238.66

 %
 
83.9
%
85.2
%
(1.3
)%
 
$
200.28

$
203.23

(1.5
)%
 
36.77
%
36.83
%
-6 bps
Salt Lake City Marriott
 
$
161.18

$
158.13

1.9
 %
 
71.0
%
73.8
%
(2.8
)%
 
$
114.44

$
116.67

(1.9
)%
 
36.45
%
34.44
%
201 bps
Shorebreak (5)
 
$
232.01

$
232.71

(0.3
)%
 
81.3
%
81.4
%
(0.1
)%
 
$
188.73

$
189.35

(0.3
)%
 
34.10
%
36.16
%
-206 bps
The Lodge at Sonoma
 
$
294.85

$
276.28

6.7
 %
 
81.4
%
83.9
%
(2.5
)%
 
$
240.07

$
231.66

3.6
 %
 
30.92
%
29.18
%
174 bps
Hilton Garden Inn Times Square Central
 
$
234.74

$
242.32

(3.1
)%
 
96.4
%
97.0
%
(0.6
)%
 
$
226.36

$
235.05

(3.7
)%
 
29.71
%
42.28
%
-1257 bps
Vail Marriott
 
$
271.71

$
261.69

3.8
 %
 
73.4
%
71.8
%
1.6
 %
 
$
199.34

$
187.77

6.2
 %
 
37.13
%
36.39
%
74 bps
Westin San Diego
 
$
189.79

$
187.95

1.0
 %
 
86.4
%
86.0
%
0.4
 %
 
$
163.95

$
161.73

1.4
 %
 
37.74
%
34.10
%
364 bps
Westin Washington D.C. City Center
 
$
222.66

$
215.77

3.2
 %
 
85.9
%
82.8
%
3.1
 %
 
$
191.30

$
178.60

7.1
 %
 
38.65
%
35.81
%
284 bps
Renaissance Worthington
 
$
180.21

$
181.28

(0.6
)%
 
64.1
%
70.3
%
(6.2
)%
 
$
115.59

$
127.47

(9.3
)%
 
32.89
%
35.48
%
-259 bps
Total
 
$
217.54

$
216.25

0.6
 %
 
80.7
%
81.3
%
(0.6
)%
 
$
175.58

$
175.86

(0.2
)%
 
31.55
%
31.02
%
53 bps
Comparable Total (6)
 
$
223.98

$
223.05

0.4
 %
 
80.9
%
81.4
%
(0.5
)%
 
$
181.30

$
181.66

(0.2
)%
 
31.96
%
31.72
%
24 bps

18



_______________________________________________________________ 
(1) 
The hotel was sold on July 7, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.
(2) 
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.
(3) 
The hotel was sold on June 30, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.
(4) 
The hotel was sold on June 8, 2016. The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.
(5) 
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.
(6) 
Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.


19



 
Hotel Adjusted EBITDA Reconciliation
 
 
Third Quarter 2016
 
 
 
 
 
Plus:
Plus:
Plus:
Equals:
 
 
Total Revenues
 
Net Income / (Loss)
Depreciation
Interest Expense
Adjustments (1)
Hotel Adjusted EBITDA
Atlanta Alpharetta Marriott
 
$
5,015

 
$
1,441

$
366

$

$

$
1,807

Bethesda Marriott Suites
 
$
3,789

 
$
(993
)
$
355

$

$
1,533

$
895

Boston Westin
 
$
25,683

 
$
3,804

$
2,193

$
2,298

$
(60
)
$
8,235

Hilton Boston Downtown
 
$
11,681

 
$
4,067

$
1,207

$

$

$
5,274

Hilton Burlington
 
$
5,834

 
$
2,365

$
517

$

$

$
2,882

Renaissance Charleston
 
$
3,398

 
$
1,034

$
260

$

$
(32
)
$
1,262

Hilton Garden Inn Chelsea
 
$
152

 
$
(4
)
$

$

$

$
(4
)
Chicago Marriott
 
$
30,621

 
$
6,651

$
3,450

$
(34
)
$
(397
)
$
9,670

Chicago Gwen
 
$
7,615

 
$
2,169

$
728

$

$

$
2,897

Courtyard Denver Downtown
 
$
3,234

 
$
1,413

$
291

$

$

$
1,704

Courtyard Fifth Avenue
 
$
4,438

 
$
554

$
469

$

$
52

$
1,075

Courtyard Midtown East
 
$
7,889

 
$
946

$
669

$
1,018

$

$
2,633

Fort Lauderdale Westin
 
$
8,824

 
$
1,267

$
1,183

$

$

$
2,450

Frenchman's Reef
 
$
14,072

 
$
366

$
1,617

$

$

$
1,983

JW Marriott Denver Cherry Creek
 
$
6,504

 
$
1,258

$
506

$
727

$

$
2,491

Inn at Key West
 
$
1,707

 
$
461

$
185

$

$

$
646

Sheraton Suites Key West
 
$
3,679

 
$
718

$
516

$

$

$
1,234

Lexington Hotel New York
 
$
16,641

 
$
(1,369
)
$
3,413

$
1,366

$
7

$
3,417

Hotel Rex
 
$
1,968

 
$
610

$
143

$

$

$
753

Salt Lake City Marriott
 
$
7,963

 
$
1,960

$
521

$
662

$

$
3,143

Shorebreak
 
$
4,152

 
$
1,348

$
383

$

$
(15
)
$
1,716

The Lodge at Sonoma
 
$
7,324

 
$
2,108

$
378

$
300

$

$
2,786

Hilton Garden Inn Times Square Central
 
$
6,727

 
$
1,476

$
828

$

$

$
2,304

Vail Marriott
 
$
7,772

 
$
1,553

$
477

$

$

$
2,030

Westin San Diego
 
$
9,268

 
$
1,817

$
1,024

$
680

$

$
3,521

Westin Washington D.C. City Center
 
$
7,959

 
$
763

$
1,251

$
727

$

$
2,741

Renaissance Worthington
 
$
6,330

 
$
(247
)
$
676

$
816

$
2

$
1,247

Total
 
$
220,239

 
$
37,536

$
23,606

$
8,560

$
1,090

$
70,682

Less: Sold Hotel(2)
 
$
(152
)
 
$
4

$

$

$

$
4

Comparable Total
 
$
220,087

 
$
37,540

$
23,606

$
8,560

$
1,090

$
70,686

__________________________________________________ 
(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 Hilton Garden Inn Chelsea.
 

20



Hotel Adjusted EBITDA Reconciliation
 
 
Third Quarter 2015
 
 
 
 
 
Plus:
Plus:
Plus:
Equals:
 
 
Total Revenues
 
Net Income / (Loss)
Depreciation
Interest Expense
Adjustments (1)
Hotel Adjusted EBITDA
Atlanta Alpharetta Marriott
 
$
5,282

 
$
1,674

$
385

$

$

$
2,059

Bethesda Marriott Suites
 
$
3,479

 
$
(1,211
)
$
362

$

$
1,541

$
692

Boston Westin
 
$
24,679

 
$
6,231

$
2,218

$

$
2

$
8,451

Hilton Boston Downtown
 
$
11,757

 
$
4,110

$
1,215

$

$
29

$
5,354

Hilton Burlington
 
$
5,456

 
$
2,203

$
464

$

$
23

$
2,690

Renaissance Charleston
 
$
3,101

 
$
736

$
347

$

$
(32
)
$
1,051

Hilton Garden Inn Chelsea
 
$
3,936

 
$
1,232

$
362

$

$

$
1,594

Chicago Marriott
 
$
29,530

 
$
2,952

$
2,744

$
3,171

$
(397
)
$
8,470

Chicago Gwen
 
$
7,331

 
$
851

$
731

$

$
685

$
2,267

Courtyard Denver Downtown
 
$
3,177

 
$
1,308

$
283

$

$

$
1,591

Courtyard Fifth Avenue
 
$
4,334

 
$
(228
)
$
450

$
834

$
52

$
1,108

Courtyard Midtown East
 
$
7,653

 
$
860

$
683

$
1,019

$

$
2,562

Fort Lauderdale Westin
 
$
7,604

 
$
397

$
1,132

$

$

$
1,529

Frenchman's Reef
 
$
11,625

 
$
(662
)
$
1,589

$

$

$
927

JW Marriott Denver Cherry Creek
 
$
6,639

 
$
1,172

$
525

$
728

$

$
2,425

Inn at Key West
 
$
1,685

 
$
451

$
176

$

$

$
627

Sheraton Suites Key West
 
$
3,687

 
$
749

$
512

$

$

$
1,261

Lexington Hotel New York
 
$
17,483

 
$
448

$
3,342

$
1,282

$
10

$
5,082

Minneapolis Hilton
 
$
14,907

 
$
1,869

$
1,474

$
1,297

$
(202
)
$
4,438

Orlando Airport Marriott
 
$
5,515

 
$
(448
)
$
575

$
807

$

$
934

Hotel Rex
 
$
2,158

 
$
770

$
142

$

$

$
912

Salt Lake City Marriott
 
$
7,688

 
$
1,256

$
767

$
678

$

$
2,701

Shorebreak
 
$
4,233

 
$
1,503

$
217

$

$
2

$
1,722

The Lodge at Sonoma
 
$
7,495

 
$
1,950

$
371

$
306

$

$
2,627

Hilton Garden Inn Times Square Central
 
$
6,873

 
$
1,955

$
777

$

$

$
2,732

Vail Marriott
 
$
6,802

 
$
1,150

$
480

$

$

$
1,630

Westin San Diego
 
$
8,601

 
$
1,149

$
1,020

$
693

$
46

$
2,908

Westin Washington D.C. City Center
 
$
7,471

 
$
585

$
1,189

$
746

$
52

$
2,572

Renaissance Worthington
 
$
8,321

 
$
1,034

$
575

$
814

$
2

$
2,425

Total
 
$
238,502

 
$
36,046

$
25,107

$
12,375

$
1,813

$
75,266

Less: Sold Hotels (2)
 
$
(24,358
)
 
$
(2,653
)
$
(2,411
)
$
(2,104
)
$
202

$
(6,966
)
Comparable Total
 
$
214,144

 
$
33,393

$
22,696

$
10,271

$
2,015

$
68,300

(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 operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea.

21




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
 
$
15,506

 
$
4,475

$
1,085

$

$

$
5,560

Bethesda Marriott Suites
 
$
12,130

 
$
(2,240
)
$
1,067

$

$
4,598

$
3,425

Boston Westin
 
$
73,021

 
$
9,430

$
6,595

$
6,873

$
(181
)
$
22,717

Hilton Boston Downtown
 
$
29,583

 
$
8,406

$
3,631

$

$
8

$
12,045

Hilton Burlington
 
$
13,387

 
$
4,100

$
1,460

$

$

$
5,560

Renaissance Charleston
 
$
10,468

 
$
3,485

$
759

$

$
(95
)
$
4,149

Hilton Garden Inn Chelsea
 
$
6,413

 
$
1,057

$
601

$

$

$
1,658

Chicago Marriott
 
$
74,356

 
$
10,074

$
9,866

$
410

$
(1,192
)
$
19,158

Chicago Gwen
 
$
17,816

 
$
3,216

$
2,087

$

$

$
5,303

Courtyard Denver Downtown
 
$
8,738

 
$
3,456

$
863

$

$

$
4,319

Courtyard Fifth Avenue
 
$
11,645

 
$
(660
)
$
1,357

$
1,212

$
155

$
2,064

Courtyard Midtown East
 
$
21,010

 
$
904

$
2,010

$
3,034

$

$
5,948

Fort Lauderdale Westin
 
$
36,822

 
$
11,149

$
3,520

$

$

$
14,669

Frenchman's Reef
 
$
52,794

 
$
9,060

$
4,834

$

$

$
13,894

JW Marriott Denver Cherry Creek
 
$
18,935

 
$
3,141

$
1,545

$
2,166

$

$
6,852

Inn at Key West
 
$
6,550

 
$
2,521

$
548

$

$

$
3,069

Sheraton Suites Key West
 
$
14,298

 
$
4,797

$
1,544

$

$

$
6,341

Lexington Hotel New York
 
$
43,433

 
$
(7,833
)
$
10,185

$
4,036

$
22

$
6,410

Minneapolis Hilton
 
$
24,786

 
$
(11
)
$
2,917

$
2,514

$
(482
)
$
4,938

Orlando Airport Marriott
 
$
14,117

 
$
4,481

$
573

$

$

$
5,054

Hotel Rex
 
$
5,858

 
$
1,725

$
429

$

$

$
2,154

Salt Lake City Marriott
 
$
22,366

 
$
4,586

$
1,583

$
1,983

$

$
8,152

Shorebreak
 
$
11,078

 
$
2,692

$
1,130

$

$
(44
)
$
3,778

The Lodge at Sonoma
 
$
19,662

 
$
4,069

$
1,111

$
899

$

$
6,079

Hilton Garden Inn Times Square Central
 
$
17,810

 
$
2,910

$
2,382

$

$

$
5,292

Vail Marriott
 
$
28,034

 
$
8,976

$
1,433

$

$

$
10,409

Westin San Diego
 
$
26,945

 
$
5,053

$
3,083

$
2,034

$

$
10,170

Westin Washington D.C. City Center
 
$
26,264

 
$
4,270

$
3,703

$
2,179

$

$
10,152

Renaissance Worthington
 
$
26,112

 
$
4,321

$
1,829

$
2,431

$
6

$
8,587

Total 
 
$
689,937

 
$
111,610

$
73,730

$
29,771

$
2,795

$
217,666

Less: Sold Hotels(2)
 
$
(45,316
)
 
$
(5,527
)
$
(4,091
)
$
(2,514
)
$
482

$
(11,650
)
Comparable Total 
 
$
644,621

 
$
106,083

$
69,639

$
27,257

$
3,277

$
206,016

(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.

22



 
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
 
$
14,945

 
$
4,292

$
1,159

$

$

$
5,451

Bethesda Marriott Suites
 
$
11,460

 
$
(2,685
)
$
1,117

$

$
4,624

$
3,056

Boston Westin
 
$
71,004

 
$
15,499

$
6,674

$

$
7

$
22,180

Hilton Boston Downtown
 
$
27,510

 
$
7,368

$
3,452

$

$
113

$
10,933

Hilton Burlington
 
$
12,394

 
$
3,613

$
1,370

$

$
68

$
5,051

Renaissance Charleston
 
$
10,277

 
$
2,695

$
1,131

$

$
(95
)
$
3,731

Hilton Garden Inn Chelsea
 
$
9,932

 
$
2,015

$
1,086

$

$

$
3,101

Chicago Marriott
 
$
77,669

 
$
3,353

$
6,852

$
9,425

$
(1,192
)
$
18,438

Chicago Gwen
 
$
19,428

 
$
2,091

$
2,338

$

$
702

$
5,131

Courtyard Denver Downtown
 
$
8,554

 
$
3,236

$
851

$

$

$
4,087

Courtyard Fifth Avenue
 
$
11,835

 
$
(1,480
)
$
1,347

$
2,483

$
155

$
2,505

Courtyard Midtown East
 
$
20,995

 
$
1,167

$
2,051

$
3,024

$

$
6,242

Fort Lauderdale Westin
 
$
33,319

 
$
7,416

$
3,388

$

$
151

$
10,955

Frenchman's Reef
 
$
49,929

 
$
6,464

$
4,767

$
1,164

$

$
12,395

JW Marriott Denver Cherry Creek
 
$
18,907

 
$
2,958

$
1,577

$
1,840

$

$
6,375

Inn at Key West
 
$
6,770

 
$
2,992

$
522

$

$

$
3,514

Sheraton Suites Key West (2)
 
$
3,750

 
$
799

$
512

$

$

$
1,311

Lexington Hotel New York
 
$
46,742

 
$
(1,663
)
$
10,027

$
3,945

$
47

$
12,356

Minneapolis Hilton
 
$
39,514

 
$
(180
)
$
6,177

$
3,874

$
(606
)
$
9,265

Orlando Airport Marriott
 
$
20,229

 
$
1,808

$
1,714

$
2,404

$

$
5,926

Hotel Rex
 
$
5,824

 
$
1,720

$
425

$

$

$
2,145

Salt Lake City Marriott
 
$
22,331

 
$
3,404

$
2,262

$
2,025

$

$
7,691

Shorebreak (2)
 
$
9,925

 
$
2,243

$
973

$

$
373

$
3,589

The Lodge at Sonoma
 
$
19,849

 
$
3,754

$
1,124

$
913

$

$
5,791

Hilton Garden Inn Times Square Central
 
$
18,429

 
$
5,550

$
2,332

$

$
(90
)
$
7,792

Vail Marriott
 
$
26,062

 
$
8,021

$
1,462

$

$

$
9,483

Westin San Diego
 
$
26,170

 
$
3,667

$
3,053

$
2,066

$
137

$
8,923

Westin Washington D.C. City Center
 
$
24,247

 
$
2,711

$
3,536

$
2,229

$
207

$
8,683

Renaissance Worthington
 
$
29,192

 
$
6,300

$
1,740

$
2,310

$
6

$
10,356

Total 
 
$
697,192

 
$
99,128

$
75,019

$
37,702

$
4,607

$
216,236

Add: Prior Ownership Results(2)
 
$
11,537

 
$
3,760

$
1,026

$

$
(7
)
$
4,779

Less: Sold Hotels(3)
 
$
(69,675
)
 
$
(3,643
)
$
(8,977
)
$
(6,278
)
$
606

$
(18,292
)
Comparable Total 
 
$
639,054

 
$
99,245

$
67,068

$
31,424

$
5,206

$
202,723

 

23



__________________________________________________ 
(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 Shorebreak 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.
(3) 
Amounts represent the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea.



24