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
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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This Current Report on Form 8-K (“Current Report”) 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,” “anticipate,” “position,” 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 those risks and uncertainties associated with our business described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on February 28, 2020 and in our Quarterly Report on Form 10-Q filed on May 11, 2020. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this Current Report is as of the date of this Current Report, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.
ITEM 7.01. Regulation FD Disclosure
A copy of a slide presentation that DiamondRock Hospitality Company (“DiamondRock”) intends to use at investor meetings is attached to this Current Report on Form 8-K (“Current Report”) as Exhibit 99.1 and is incorporated by reference herein. Additionally, DiamondRock has posted the slide presentation in the investor relations/presentations section of its website at www.drhc.com.
The information in this Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibit, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are included with this report:
Exhibit No. | Description | |
99.1 | ||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File | |
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: May 18, 2020 | By: | /s/ Briony R. Quinn | ||||
Briony R. Quinn | ||||||
Senior Vice President and Treasurer | ||||||
L’Auberge de Sedona DiamondRock Q1 2020 Supplemental Earnings Data | May 18, 2020 1
DiamondRock at a Glance 2019 FINANCIAL SUMMARY CREDIT FACILITY COMPLIANCE Covenant Limitation DRH Q1’20 31 (>10K) Hotels (Rooms) Maximum Leverage Ratio < 60.0% 34.5% Total Revenue $938.1MM Fixed Charge Coverage Ratio > 1.50x 2.92x Secured Indebtedness to Total < 45.0% 20.9% Room Revenue $661.2MM Asset Value Unencumbered Leverage Ratio < 60.0% 50.3% Hotel EBITDA Margin 29.70% Unencumbered Debt Service > 1.20x 1.49x Coverage Ratio Outstanding Debt $1.09B Q1 2020 DEBT STATS Net Debt/EBITDA 3.7x Net Debt Per Key $101K Current Cash Balance(1) $388MM TTM Net Debt Yield 24.3% URBAN AND RESORT HOTELS IN TOP MARKETS HIGH QUALITY BRANDS 4% San 3% Denver 4% Diego Washington DC 4% Other Independent 4% San 4% Francisco 30% Resort 9% 11% Other 11% (2) CBD Frenchman's Westin Reef (3) Courtyard Autograph Renaissance 11% New York 76% Sheraton 14% Boston . 14% Chicago (1) As of 3/31/2020 (2) Other CBD includes Burlington Hilton, Salt Lake City Marriott, and Worthington Renaissance. 2 (3) Based on 2016 actual EBITDA
High Quality Lodging REIT SIGNIFICANT INVESTMENT 3-Year Average CapEx as Percent of Revenue(1) 14.7% 14.1% 11.9% 10.5% Peer Average: 10.6% 9.8% 9.0% 7.9% 7.3% DRH HT SHO PEB RLJ XHR HST PK QUALITY ASSETS 2019 Portfolio Average Daily Rate(2) $256 $239 $234 $233 $226 $224 $222 Peer Average: $227 $183 PEB DRH SHO HST HT XHR PK RLJ 1) Source: CitiGroup, Evercore/ISI 2) Source: 2019 company filings 3
DiamondRock Balance Sheet Profile (1) DiamondRock Has Significant FUTURE PRINCIPAL PAYMENTS (IN $MM) Liquidity, Balance Sheet Flexibility and No Material Near-Term Maturities $400 • Net debt-to-EBITDA of 3.7x at year-end 2019 $350 $50 $326 • No preferred, no JVs, no private placements $145 $55 $80 2020 2021 2022 2023 2024 2025 • hotels are unencumbered by debt 23 of our 31 Secured Debt Term Loan Revolver LEVERAGE BELOW PEER AVERAGE(2) • All secured debt is non-recourse to DiamondRock 10.4 9.5 8.8 • $388MM of unrestricted cash on hand as of Q1 2020 6.3 • Refinancing November 2020 maturity to 2022-23 Average: 5.4X 4.7 3.9 3.7 3.5 • 67% of 2019A Hotel EBITDA unencumbered by debt 1.5 - 77% if Frenchman’s Reef were stabilized 1.2 AHT BHR HT INN PEB XHR DRH RLJ HST SHO (1) As of Q1 2020 (2) Source: Baird. As of 12/31/2019. Net Debt plus preferred / 2019 Consensus EBITDA 4 Note: Leverage calculation is not adjusted for estimated EBITDA contribution from Frenchman’s Reef
DiamondRock Action Plan Bank Debt: Seek covenant relief 2020 Maturity: Seek extension of Salt Lake City Mortgage Balance Sheet CMBS Debt: Seek relief to use FF&E escrow for working capital and waive cash traps Reduced Capital Reduced capital expenditures by 65% Expenditures Non-essential capital expenditures cancelled or postponed Suspended common share dividend effective Q1 2020 Suspended Dividends No preferred equity in capital structure Paused Share Paused share repurchases after $10MM investment in Q1 2020 Repurchases Operating Cost Suspended operations at 20 hotels Reductions Minimum Staffing (security, engineering, and minimal front desk) Corporate Overhead Reduced cash G&A by $5MM or over 20% Exploring Employee Retention Tax Credit under CARES Act Public Assistance Temporary hospitals and housing first responders Liquidity $388MM cash on hand as of Q1 2020 5
A Closer Look At Staffing Models Manager Hourly Total FTE Average Monthly Headcount Headcount Headcount Payroll (in 000’s) Total 736 3,822 $25,550 Portfolio 4,559 Prior Staffing Average 24 123 147 $851 Manager Hourly Total FTE Projected April Headcount Headcount Headcount Payroll (in 000’s) Total 194 148 $5,968 Portfolio 343 Average 6 5 11 $199 Current Staffing Decreased Monthly Payroll Expense Nearly 80% 6
Scaling Back Hotel Operations 4/10 Current Chicago 4/6 Marriott Charleston 3/31 Renaissance Chicago Gwen Palomar Phoenix Five closures due to Orchards Inn government mandates Burlington 3/29 Hilton The Lexington Hotel 15 Hilton Garden Elective 3/27 Inn Times Sq New York Suspended Courtyard 5th 3/25 Ave Operations 3/23 Boston Westin Boston Hilton The Landing Resort Lake Tahoe Hotel Emblem Havana Cabana Sheraton Suites 3/22 Key West Denver JW 3/21 Marriott 3/20 Sonoma 5 Denver Courtyard Mandated Suspended Vail Marriott 3/17 Operations Cavallo Point 7
APPENDIX 8 Havana Cabana Key West
Hotel Occupancy Trailing 7 Day Average Portfolio Occupancy 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2/29/2020 3/10/2020 3/20/2020 3/30/2020 4/9/2020 4/19/2020 4/29/2020 For the week ending May 2nd, average occupancy of operating hotels was 19% 9
Group Cancellations % Share of Weekly Cancellations Mar 16 Mar 23 Mar 27 Apr 3 Apr 10 Apr 17 Apr 24 May 1 May 8 Total to Date February 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% March 55% 18% 9% -3% 0% 0% 0% 0% 0% 19% April 29% 46% 19% 6% 2% 0% 10% 0% 15% 21% May 8% 21% 56% 36% 25% 3% 28% 7% 23% 20% June 5% 17% 13% 14% 47% 35% 17% 28% 32% 18% July 3% -3% 3% 44% 19% 14% 21% 16% 9% 10% August 0% 0% 0% 0% 6% 17% 16% 23% 0% 5% September 0% 0% 0% 0% 0% 20% 7% 11% 0% 4% October 0% 0% 0% 2% 0% 11% 1% 2% 21% 2% November 0% 0% 0% 0% 0% 0% 0% 14% 0% 1% December 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Cumulative Group Revenue Cancelled $22,909 $45,071 $53,924 $63,936 $67,885 $77,864 $83,951 $92,384 $94,201 $94,201 (in MM) 10
Operating Statistics Pro Forma Operating Statistics - First Fiscal Quarter ADR Occupancy RevPAR Hotel Adjusted EBITDA Margin 1Q 2020 1Q 2019 B/(W) 1Q 2020 1Q 2019 B/(W) 1Q 2020 1Q 2019 B/(W) 1Q 2020 1Q 2019 B/(W) Atlanta Alpharetta $ 173.72 $ 177.33 (2.0%) 51.4% 70.5% (19.1%)$ 89.35 $ 124.93 (28.5%) 28.10% 38.67% -1057 bps Bethesda Marriott Suites $ 171.19 $ 172.21 (0.6%) 47.4% 65.3% (17.9%)$ 81.17 $ 112.46 (27.8%) (1.96%) 26.21% -2817 bps Boston Westin $ 196.54 $ 202.24 (2.8%) 59.9% 65.5% (5.6%)$ 117.65 $ 132.39 (11.1%) 5.62% 13.89% -827 bps Cavallo Point $ 444.90 $ 437.76 1.6% 46.4% 63.4% (17.0%)$ 206.44 $ 277.38 (25.6%) 11.61% 18.94% -733 bps Chicago Gwen $ 192.82 $ 188.98 2.0% 61.0% 70.4% (9.4%)$ 117.59 $ 133.05 (11.6%) (9.30%) (9.91%) 61 bps Chicago Marriott $ 164.30 $ 158.35 3.8% 43.0% 51.7% (8.7%)$ 70.59 $ 81.79 (13.7%) (27.09%) (1.64%) -2545 bps Courtyard Denver Downtown $ 170.21 $ 171.92 (1.0%) 46.4% 73.3% (26.9%)$ 78.96 $ 126.00 (37.3%) 23.25% 37.59% -1434 bps Courtyard Fifth Avenue $ 205.95 $ 212.18 (2.9%) 61.6% 77.4% (15.8%)$ 126.83 $ 164.30 (22.8%) (34.67%) (7.32%) -2735 bps Courtyard Midtown East $ 167.45 $ 190.02 (11.9%) 76.7% 92.0% (15.3%)$ 128.39 $ 174.85 (26.6%) (27.18%) 0.55% -2773 bps Fort Lauderdale Westin $ 276.24 $ 254.27 8.6% 80.6% 95.5% (14.9%)$ 222.56 $ 242.76 (8.3%) 41.69% 42.84% -115 bps Hilton Boston Downtown $ 192.00 $ 197.84 (3.0%) 65.7% 83.5% (17.8%)$ 126.06 $ 165.25 (23.7%) 3.47% 17.34% -1387 bps Hilton Burlington $ 133.84 $ 130.74 2.4% 39.4% 70.7% (31.3%)$ 52.78 $ 92.39 (42.9%) (18.76%) 18.62% -3738 bps Hotel Emblem $ 256.36 $ 247.10 3.7% 67.1% 57.5% 9.6%$ 172.02 $ 142.06 21.1% 15.94% 1.41% 1453 bps JW Marriott Denver at Cherry Creek $ 231.22 $ 240.96 (4.0%) 56.4% 46.5% 9.9%$ 130.42 $ 112.09 16.4% 5.81% (9.23%) 1504 bps Key West - Barbary Beach House $ 328.93 $ 310.04 6.1% 81.8% 94.1% (12.3%)$ 269.09 $ 291.63 (7.7%) 37.21% 47.17% -996 bps Key West - Havana Cabana $ 286.60 $ 254.41 12.7% 80.8% 94.7% (13.9%)$ 231.60 $ 240.94 (3.9%) 41.60% 49.62% -802 bps Lexington Hotel New York $ 183.27 $ 192.38 (4.7%) 61.5% 80.1% (18.6%)$ 112.67 $ 154.04 (26.9%) (42.76%) (7.80%) -3496 bps Palomar Phoenix $ 230.87 $ 233.06 (0.9%) 71.4% 88.2% (16.8%)$ 164.76 $ 205.66 (19.9%) 37.48% 40.39% -291 bps Renaissance Charleston $ 235.80 $ 236.72 (0.4%) 65.7% 83.8% (18.1%)$ 154.89 $ 198.44 (21.9%) 21.09% 36.20% -1511 bps Renaissance Worthington $ 195.06 $ 188.12 3.7% 57.6% 79.4% (21.8%)$ 112.30 $ 149.42 (24.8%) 18.62% 42.13% -2351 bps Salt Lake City Marriott $ 170.97 $ 173.62 (1.5%) 51.3% 59.2% (7.9%)$ 87.70 $ 102.73 (14.6%) 31.86% 31.89% -3 bps Sedona - L'Auberge $ 553.74 $ 575.73 (3.8%) 64.0% 80.4% (16.4%)$ 354.18 $ 462.91 (23.5%) 2.86% 22.96% -2010 bps Sedona - Orchards Inn $ 214.66 $ 255.22 (15.9%) 55.3% 73.9% (18.6%)$ 118.75 $ 188.58 (37.0%) 5.50% 29.50% -2400 bps Shorebreak $ 229.09 $ 236.80 (3.3%) 60.8% 75.3% (14.5%)$ 139.20 $ 178.23 (21.9%) 16.52% 24.77% -825 bps The Landing Lake Tahoe $ 281.05 $ 275.79 1.9% 47.3% 53.0% (5.7%)$ 132.92 $ 146.21 (9.1%) (0.22%) (4.79%) 457 bps The Lodge at Sonoma $ 229.83 $ 233.68 (1.6%) 45.9% 61.5% (15.6%)$ 105.52 $ 143.63 (26.5%) (10.51%) 10.55% -2106 bps Times Square $ 154.35 $ 181.10 (14.8%) 77.0% 98.0% (21.0%)$ 118.80 $ 177.48 (33.1%) (33.97%) 3.76% -3773 bps Vail Marriott $ 465.29 $ 440.49 5.6% 63.5% 82.4% (18.9%)$ 295.40 $ 362.79 (18.6%) 40.17% 48.94% -877 bps Westin San Diego $ 188.39 $ 189.85 (0.8%) 66.8% 77.5% (10.7%)$ 125.88 $ 147.20 (14.5%) 31.19% 40.00% -881 bps Westin Washington D.C. City Center $ 193.00 $ 201.14 (4.0%) 60.3% 77.5% (17.2%)$ 116.33 $ 155.88 (25.4%) 7.28% 24.64% -1736 bps TOTAL $ 216.42 $ 216.38 0.0% 59.1% 73.2% (14.1%)$ 127.98 $ 158.30 (19.2%) 10.48% 23.28% -1280 bps 11
EBITDA Reconciliation 1st Quarter 2020 (1) Plus: Plus: Plus: Equals: Net Income / Interest Non-Cash Hotel Adjusted Total Revenues Depreciation (Loss) Expense Adjustments(2) EBITDA Atlanta Alpharetta 3,980 744 374 - - 1,118 Bethesda Marriott Suites 2,735 (2,097) 529 - 1,514 (54) Boston Westin 16,130 (3,781) 2,609 2,138 (60) 906 Cavallo Point 7,716 (1,068) 1,869 - 94 895 Chicago Gwen 4,687 (1,549) 1,113 - - (436) Chicago Marriott 13,602 (7,564) 4,224 53 (397) (3,684) Courtyard Denver Downtown 1,468 (2) 343 - - 341 Courtyard Fifth Avenue 2,278 (1,494) 451 - 253 (790) Courtyard Midtown East 3,982 (2,755) 721 951 - (1,083) Fort Lauderdale Westin 16,787 5,946 1,052 - - 6,998 Hilton Boston Downtown 5,265 (1,045) 1,227 - - 182 Hilton Burlington 1,696 (824) 506 - - (318) Hotel Emblem 1,835 6 287 - - 293 JW Marriott Denver at Cherry Creek 3,405 (1,294) 807 678 6 197 Key West - Barbary Beach House 5,400 1,332 678 - - 2,010 Key West - Havana Cabana 2,717 877 253 - - 1,130 Lexington Hotel New York 8,647 (7,332) 3,621 5 8 (3,698) Palomar Phoenix 6,416 1,401 673 38 293 2,405 Renaissance Charleston 2,894 215 427 - (32) 610 Renaissance Worthington 8,637 (299) 1,136 769 2 1,608 Salt Lake City Marriott 6,725 992 559 592 - 2,143 Sedona - L'Auberge 4,639 (606) 738 - - 132 Sedona - Orchards Inn 1,252 (190) 217 - 42 69 Shorebreak 3,212 93 411 - 27 531 The Landing Lake Tahoe 1,714 (414) 410 - - (4) The Lodge at Sonoma 3,554 (1,102) 453 275 - (374) Times Square 3,180 (1,928) 847 - - (1,081) Vail Marriott 12,480 3,903 1,110 - - 5,013 Westin San Diego 7,600 611 1,137 622 - 2,370 Westin Washington D.C. City Center 5,362 (1,573) 1,318 645 - 390 TOTAL 169,995 (20,797) 30,100 6,766 1,750 17,819 1) In thousands 12 2) 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.
Schedule of Mortgages (1) # of Principal Property Location (2) (2) Maturity Keys Balance Per Key Salt Lake City Marriott Downtown(3) Salt Lake City, UT 510 52,968 104 Nov 2020 Westin Washington, DC City Center Washington, DC 410 59,988 146 Jan 2023 The Lodge at Sonoma, a Renaissance Resort & Spa Sonoma, CA 182 26,846 147 Apr 2023 Westin San Diego San Diego, CA 436 61,456 141 Apr 2023 Courtyard Manhattan/Midtown East New York, NY 321 80,716 251 Aug 2024 Worthington Renaissance Fort Worth Fort Worth, TX 504 80,483 160 May 2025 JW Marriott Denver at Cherry Creek Denver, CO 199 60,954 306 Jul 2025 Westin Boston Waterfront Boston, MA 793 189,759 239 Nov 2025 1) As of 3/31/2020 2) In thousands 3) DRH is currently negotiating a maturity extension for this property 13
Forward Looking Statements Certain statements made during this presentation are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements generally include the words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “project,” “will,” “intend” or other similar expressions. Forward-looking statements include, without limitation, statements regarding, industry outlook, results of operations, cash flows, business strategies, growth and value opportunities, capital and other expenditures, financing plans, expense reduction initiatives and projected dispositions. Factors that could cause actual results to materially differ from those contained in the forward-looking statements include, without limitation, those risks and uncertainties discussed in the Company’s most recent Annual Report on Form 10-K, quarterly report on Form 10-Q and current reports on Form 8-K, which have been filed with the Securities and Exchange Commission, all of which you should carefully review. The forward-looking statements made are based on our beliefs, assumptions and expectations of future performance, taking into account all information currently available to us. Actual results could differ materially from the forward-looking statements made during this presentation. The forward-looking statements made during this presentation are subject to the safe harbor of the Private Securities Litigation Reform Act of 1995. Any forward-looking statement speaks only as of the date on which it is made. 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 presentation is as of the date of this presentation, 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. This presentation contains statistics and other data that has been obtained or compiled from information made available by third-party service providers. 15