drh-20210805
false000129894600012989462021-08-052021-08-050001298946us-gaap:CommonStockMember2021-08-052021-08-050001298946us-gaap:RedeemablePreferredStockMember2021-08-052021-08-05

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, 2021 
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.)
2 Bethesda Metro Center, Suite 1400
BethesdaMD 20814
(Address of Principal Executive Offices) (Zip Code)

(Registrant’s telephone number, including area code): (240) 744-1150
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))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareDRHNew York Stock Exchange
8.250% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per shareDRH Pr ANew York Stock Exchange

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).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      






ITEM 2.02. Results of Operations and Financial Condition.

On August 5, 2021, DiamondRock Hospitality Company issued a press release announcing its financial results for the three and six months ended June 30, 2021. A copy of that press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, 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, and shall not be deemed to be 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 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, 2021
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
Dated: August 5, 2021  By: 
/s/ Briony R. Quinn
   Briony R. Quinn
   Senior Vice President and Treasurer






Document

https://cdn.kscope.io/fb88613bc87e7b7ff80b4f78cb16757b-drhlogopressreleasea35.gif

COMPANY CONTACTS    

Jeff Donnelly
Chief Financial Officer
(240) 744-1190

Briony Quinn
Senior Vice President
(240) 744-1196

FOR IMMEDIATE RELEASE

DIAMONDROCK HOSPITALITY COMPANY REPORTS SECOND QUARTER RESULTS
Cash Flow Positive Throughout Second Quarter

Acquires Bourbon Orleans Hotel in New Orleans and Henderson Park Inn in Destin, Florida

BETHESDA, Maryland, Thursday, August 5, 2021 – DiamondRock Hospitality Company (the “Company”) (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 31 premium hotels in the United States, today announced results of operations for the quarter ended June 30, 2021.

Second Quarter 2021 Highlights:

Net Loss: Net loss was $19.1 million and loss per diluted share was $0.10.
Comparable Revenues: Comparable total revenues increased 514.8% from the second quarter of 2020.
Comparable RevPAR: Comparable RevPAR was $107.56, an increase of 563.1% from second quarter of 2020.
Comparable Hotel Adjusted EBITDA: Comparable Hotel Adjusted EBITDA was $29.0 million, a $31.6 million improvement from the first quarter of 2021.
Adjusted EBITDA: Adjusted EBITDA was $19.8 million, a $29.4 million increase from the first quarter of 2021.
Adjusted FFO: Adjusted FFO was $11.1 million and Adjusted FFO per diluted share was $0.05.
Liquidity: The Company ended the second quarter with $638.9 million total liquidity comprised of $192.9 million of unrestricted corporate cash, $46.0 million of unrestricted cash at its hotels and full capacity under the Company’s $400 million revolving credit facility. The Company has remained cash flow positive since March 2021.
Dispositions: On April 30, 2021, the Company sold the partially rebuilt Frenchman's Reef Marriott Resort & Spa and Noni Beach, Autograph Collection project in St. Thomas, U.S.V.I. (collectively, “Frenchman’s Reef”). On June 30, 2021, the Company sold the Lexington Hotel New York for $185.3 million.

Recent Developments:
Hotel Acquisitions: The Company acquired the Bourbon Orleans Hotel in New Orleans, Louisiana on July 29, 2021 and the Henderson Park Inn in Destin, Florida on July 30, 2021. These acquisitions are consistent with the Company's portfolio strategy to invest in high-quality, leisure-oriented properties located in high



barrier-to-entry markets. These acquisitions increase the Company's exposure to resort and leisure-oriented hotels to 34.0%.
Preliminary July Results: Preliminary RevPAR for July was $166.05, a 373.6% increase from July 2020 and a 11.8% decline from July 2019. Preliminary July ADR was $239.81, a 15.8% increase over July 2020 and a 5.1% increase over July 2019.

“The second quarter demonstrated a rapid return of travel demand and exceeded our internal expectations” said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company. "The majority of our portfolio turned cash flow positive during the quarter and we now expect DiamondRock to be cash flow positive for the full year 2021. In addition to stronger than expected profits, we have made significant portfolio enhancements to position the Company for a strong recovery as travel demand continues to improve. Earlier this year, we sold our development project in the U.S. Virgin Islands and a challenging hotel in New York City and redeployed a portion of those proceeds into one of the best located boutique hotels in the French Quarter of New Orleans and a lifestyle beachfront resort in Destin, Florida. With our strong balance sheet, DiamondRock is focused on external growth as well as internal return-on-investment opportunities like the upbrandings at our Vail and Sonoma resorts.”

Operating Results

Please see “Non-GAAP Financial Measures” attached to this press release for an explanation of the terms “EBITDAre,” “Adjusted EBITDA,” “Hotel Adjusted EBITDA,” “Hotel Adjusted EBITDA Margin,” “FFO” and “Adjusted FFO” and a reconciliation of these measures to net income. Comparable operating results exclude our 2021 dispositions for all periods presented. See “Reconciliation of Comparable Operating Results” attached to this press release for a reconciliation to historical amounts.

Quarter Ended June 30,Change From
20212020201920202019
($ amounts in millions, except hotel statistics and per share amounts)
Comparable Operating Results (1)
ADR$221.79 $175.76 $248.50 26.2 %(10.7)%
Occupancy48.5 %9.2 %82.3 %39.3 %(33.8)%
RevPAR$107.56 $16.22 $204.41 563.1 %(47.4)%
Total RevPAR$154.45 $25.16 $296.90 513.9 %(48.0)%
Revenues$124.8 $20.3 $239.6 514.8 %(47.9)%
Hotel Adjusted EBITDA$29.0 $(26.8)$83.5 208.2 %(65.3)%
Hotel Adjusted EBITDA Margin23.27 %(131.63)%34.82 %15,490 bps(1,155) bps
Available Rooms807,869 807,625 807,170 244 699 
Actual Operating Results
Revenues$124.8 $20.4 $257.9 511.8 %(51.6)%
Net (loss) income$(19.1)$(73.4)$29.1 74.0 %(165.6)%
(Loss) income per diluted share$(0.10)$(0.36)$0.14 72.2 %(171.4)%
Adjusted EBITDA$19.8 $(37.0)$81.1 153.5 %(75.6)%
Adjusted FFO $11.1 $(41.0)$65.1 127.1 %(82.9)%
Adjusted FFO per diluted share$0.05 $(0.20)$0.32 125.0 %(84.4)%

(1) The amounts for all periods presented exclude the two hotels sold during 2021, Frenchman's Reef and The Lexington Hotel, and does not adjust for hotels that have suspended operations.

2


Six Months Ended June 30,Change From
20212020201920202019
($ amounts in millions, except hotel statistics and per share amounts)
Comparable Operating Results (1)
ADR$219.95 $213.39 $234.54 3.1 %(6.2)%
Occupancy38.9 %34.1 %77.5 %4.8 %(38.6)%
RevPAR$85.46 $72.72 $181.66 17.5 %(53.0)%
Total RevPAR$123.03 $112.47 $268.35 9.4 %(54.2)%
Revenues$197.7 $181.7 $430.8 8.8 %(54.1)%
Hotel Adjusted EBITDA$29.7 $(5.2)$131.5 671.2 %(77.4)%
Hotel Adjusted EBITDA Margin15.02 %(2.88)%30.52 %1,790 bps (1,550) bps
Available Rooms1,606,709 1,615,250 1,605,184 (8,541)1,525 
Actual Operating Results
Revenues$197.7 $190.4 $460.3 3.8 %(57.0)%
Net (loss) income$(190.7)$(108.1)$38.1 (76.4)%(600.5)%
(Loss) income per diluted share$(0.92)$(0.53)$0.19 (73.6)%(584.2)%
Adjusted EBITDA$10.2 $(25.2)$130.2 140.5 %(92.2)%
Adjusted FFO $(13.7)$(32.6)$107.1 58.0 %(112.8)%
Adjusted FFO per diluted share$(0.06)$(0.16)$0.53 62.5 %(111.3)%
(1) The amounts for all periods presented exclude the two hotels sold during 2021, Frenchman's Reef and The Lexington Hotel, and does not adjust for hotels that have suspended operations.

Hotel Operations

The following tables provide operating information for the six months ended June 30, 2021 and preliminary operating information for July 2021:
January 2021February 2021March 2021April 2021 May 2021 June 2021Preliminary July 2021
Comparable Operating Results (1)
Number of Hotels29 29 29 29 29 29 29 
Number of Rooms8,878 8,878 8,878 8,878 8,878 8,878 8,878 
Occupancy21.7 %29.6 %36.1 %39.1 %47.5 %59.0 %69.2 %
ADR$192.00 $215.29 $232.94 $224.72 $220.61 $220.83 $239.81 
RevPAR$41.61 $63.72 $84.05 $87.81 $104.77 $130.20 $166.05 
Total RevPAR$62.45 $93.83 $117.72 $128.41 $153.20 $181.77 $228.84 
2021 vs 2019 (1)
Occupancy change in bps(4,227) bps(4,532) bps(4,306) bps(4,213) bps(3,270) bps(2,648) bps(1,333) bps
ADR Rate % change(4.3)%(0.2)%(1.1)%(7.5)%(12.7)%(11.6)%5.1 %
RevPAR % change(67.6)%(60.6)%(54.9)%(55.5)%(48.3)%(39.0)%(11.8)%
Total RevPAR % change(68.5)%(62.0)%(57.0)%(55.0)%(48.8)%(40.5)%(13.3)%
(1) The amounts for all periods presented exclude the two hotels sold during 2021, Frenchman's Reef and The Lexington Hotel, and does not adjust for hotels that have suspended operations.


3


On January 3, 2021, the Company suspended operations at the Chicago Marriott Downtown Magnificent Mile due to lack of travel demand and new governmental restrictions put in place. The hotel was reopened on April 15, 2021. Following the reopening of the Hilton Garden Inn New York/Times Square Central on May 3, 2021 and the Courtyard New York Manhattan/Fifth Avenue on June 1, 2021, all of the Company’s hotels are now open. The Company will continue to aggressively manage costs at all of its hotels and ensure appropriate cleanliness and safety protocols. The Company is carefully monitoring demand trends and adjusted sales strategies and staffing to respond rapidly in a changing environment.

Hotel Dispositions

On June 30, 2021, the Company sold The Lexington Hotel New York for $185.3 million. Including the Company’s projected capital expenditures, the sale price represents a 14.2x multiple on 2019 Hotel EBITDA and a 5.4% capitalization rate on 2019 hotel net operating income. The sale reduced the Company’s exposure to New York City by almost 48% based on number of rooms. Also in the second quarter, the Company completed the sale of Frenchman’s Reef, a partially rebuilt resort in the US Virgin Islands, for $35.0 million in cash consideration, as well as a participation right in the future profits of the hotel once certain return metrics are achieved. The projected cost to complete the rebuild project exceeded $170 million. These two sales combined created significant investment capacity for the Company to pursue its external growth strategy.

Capital Expenditures

The Company invested approximately $16.9 million in capital improvements at its operating hotels during the six months ended June 30, 2021. The Company spent approximately $2.7 million on the rebuild of Frenchman's Reef during the six months ended June 30, 2021 and has no further obligation to fund any additional amounts related to the rebuild following the sale of the property on April 30, 2021.

The Company expects to spend approximately $55 million on necessary capital improvements and a select few transformational projects with attractive returns on investment in 2021. Significant projects include the following:

The Lodge at Sonoma: The Company completed an upgrade renovation to reposition and rebrand the hotel to an Autograph Collection Hotel. The renovation includes a new restaurant by celebrity chef Michael Mina.
Vail Marriott Mountain Resort: The Company plans to complete the final phase of a multi-year renovation to rebrand the resort as The Hythe Vail, a Luxury Collection Hotel in the fourth quarter of 2021.
JW Marriott Denver Cherry Creek: The Company plans to complete renovations in the second half of 2021 to rebrand the hotel as Hotel Clio, a Luxury Collection Hotel at the start of 2022.
Margaritaville Beach House Key West: The Company plans to invest $3 million to convert the Barbary Beach House Key West to the Margaritaville Beach Resort Key West in the fall of 2021.

Balance Sheet and Liquidity

As of June 30, 2021, the Company's liquidity was $638.9 million and is comprised of $192.9 million of unrestricted corporate cash, $46.0 million of unrestricted cash at its hotels and $400.0 million of capacity on its senior unsecured credit facility. As of June 30, 2021, the Company had $1.0 billion of total debt outstanding, which consisted of $590.1 million of property-specific, non-recourse mortgage debt, $400.0 million of unsecured term loans and no outstanding borrowings on its $400.0 million senior unsecured credit facility. The Company has no debt maturities until 2022. The acquisitions of the Bourbon Orleans and the Henderson Park Inn were funded by unrestricted corporate cash on hand.

Dividends

The Company declared a quarterly dividend of $0.515625 per share on its 8.250% Series A Cumulative Redeemable Preferred Stock to shareholders of record as of June 18, 2021. This dividend was paid on June 30, 2021. The

4


Company has suspended its quarterly common stock cash dividends. The resumption in quarterly common dividends will be determined by the Company’s Board of Directors after considering the Company’s obligations under its various financing agreements, projected taxable income, compliance with its debt covenants, long-term operating projections, expected capital requirements and risks affecting the Company’s business.

Earnings Call

The Company will host a conference call to discuss its second quarter results on Friday, August 6, 2021, at 8:00 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 1363067. 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 currently owns 31 premium quality hotels with over 9,100 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families 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: the adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies, travel, the hospitality industry, and the financial condition and results of operations of the Company and its hotels; 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 and its ability to obtain covenant waivers on its credit agreements for its senior unsecured credit facility and unsecured term loans; 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)

June 30, 2021December 31, 2020
ASSETS(unaudited)
Property and equipment, net$2,439,555 $2,817,356 
Right-of-use assets99,982 96,673 
Restricted cash26,686 23,050 
Due from hotel managers89,326 69,495 
Prepaid and other assets (1)
20,582 28,403 
Cash and cash equivalents192,942 111,796 
Total assets
$2,869,073 $3,146,773 
LIABILITIES AND EQUITY
Liabilities:
Mortgage and other debt, net of unamortized debt issuance costs$587,972 $595,149 
Unsecured term loans, net of unamortized debt issuance costs398,275 398,550 
Senior unsecured credit facility— 55,000 
Total debt986,247 1,048,699 
Lease liabilities106,480 104,973 
Deferred rent58,633 56,344 
Due to hotel managers86,071 95,548 
Unfavorable contract liabilities, net63,916 64,796 
Accounts payable and accrued expenses (2)
33,502 46,542 
Deferred income related to key money, net7,809 10,946 
Total liabilities
1,342,658 1,427,848 
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized;
    8.250% Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), 4,760,000 shares issued and outstanding at June 30, 2021 and December 31, 202048 48 
Common stock, $0.01 par value; 400,000,000 shares authorized; 210,303,850 and 210,073,514 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively2,103 2,101 
Additional paid-in capital2,288,070 2,285,491 
Accumulated deficit(771,318)(576,531)
Total stockholders’ equity
1,518,903 1,711,109 
Noncontrolling interests7,512 7,816 
Total equity
1,526,415 1,718,925 
Total liabilities and equity
$2,869,073 $3,146,773 

(1) Includes $9.0 million and $10.7 million of prepaid expenses and $11.6 million and $15.3 million of other assets as of June 30, 2021 and December 31, 2020, respectively, and $2.4 million of insurance receivables as of December 31, 2020.

(2) Includes $11.6 million and $15.2 million of accrued property taxes, $2.5 million and $3.9 million of accrued capital expenditures and $19.4 million and $24.8 million of other accrued liabilities as of June 30, 2021 and December 31, 2020, respectively, and $2.6 million of deferred tax liabilities as of December 31, 2020.

6


DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2021202020212020
Revenues:
Rooms
$86,896 $13,099 $137,308 $124,900 
Food and beverage
25,614 3,038 39,539 46,943 
Other
12,281 4,242 20,881 18,531 
Total revenues
124,791 20,379 197,728 190,374 
Operating Expenses:
Rooms
21,466 7,143 35,294 42,796 
Food and beverage
19,573 4,715 31,134 35,802 
Management fees
2,291 (78)3,410 3,399 
Franchise fees
3,735 793 6,182 6,589 
Other hotel expenses
51,874 40,720 100,809 118,563 
Depreciation and amortization
24,692 28,783 51,654 58,883 
Impairment losses
4,145 — 126,697 — 
Corporate expenses
8,290 6,826 15,449 12,383 
Total operating expenses, net
136,066 88,902 370,629 278,415 
Interest and other (income) expense, net
(315)(150)(471)249 
Interest expense
10,710 11,629 19,194 32,847 
  Total other expenses, net
10,395 11,479 18,723 33,096 
Loss before income taxes
(21,670)(80,002)(191,624)(121,137)
Income tax benefit
2,551 6,615 938 13,058 
Net loss
(19,119)(73,387)(190,686)(108,079)
Less: Net loss attributable to noncontrolling interests
86 605 806 738 
Net loss attributable to the Company
(19,033)(72,782)(189,880)(107,341)
Distributions to preferred stockholders(2,454)— (4,908)— 
Net loss attributable to common stockholders$(21,487)$(72,782)$(194,788)$(107,341)
Loss per share:
Net loss per share available to common stockholders - basic
$(0.10)$(0.36)$(0.92)$(0.53)
Net loss per share available to common stockholders - diluted
$(0.10)$(0.36)$(0.92)$(0.53)
Weighted-average number of common shares outstanding:
Basic
211,966,308 200,797,317 211,819,758 201,002,576
Diluted
211,966,308 200,797,317 211,819,758 201,002,576






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, EBITDAre, 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 U.S. GAAP. EBITDA, EBITDAre, 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, EBITDAre, 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 U.S. 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 U.S. GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by U.S. GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our U.S. GAAP results and the reconciliations to the corresponding U.S. 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, EBITDAre and FFO

EBITDA represents net income (calculated in accordance with U.S. GAAP) excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. The Company computes EBITDAre in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDAre represents net income (calculated in accordance with U.S. GAAP) adjusted for: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; (4) gains or losses on the disposition of depreciated property including gains or losses on change of control; (5) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (6) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

We believe EBITDA and EBITDAre are useful to an investor in evaluating our operating performance because they help 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, and in the case of EBITDAre, impairment and gains or losses on dispositions of depreciated property) from our operating results. In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA and EBITDAre as measures in determining the value of hotel acquisitions and dispositions.

The Company computes FFO in accordance with standards established by the Nareit, which defines FFO as net income determined in accordance with U.S. GAAP, excluding gains or losses from sales of properties and impairment losses, plus real estate related 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 related depreciation and amortization and gains or losses on the sale of assets. The Company also uses FFO as one measure in assessing its operating results.

8


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.

Adjustments to EBITDAre, FFO and Hotel EBITDA

We adjust EBITDAre, 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 EBITDA when combined with U.S. GAAP net income, EBITDAre, 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 EBITDAre, FFO and Hotel EBITDA for the following items:

Non-Cash Lease Expense and Other Amortization: We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions. We exclude these non-cash items because they do not reflect the actual cash amounts due to the respective lessors and service providers in the current period and they are of lesser significance in evaluating our actual performance for that period.

Cumulative Effect of a Change in Accounting Principle: The Financial Accounting Standards Board promulgates new accounting standards that require or permit 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, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels.

Hotel Manager Transition Items: We exclude the transition items associated with a change in hotel manager because we believe these items do not reflect the ongoing performance of the Company or our hotels.

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; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.

In addition, to derive Adjusted FFO we exclude any fair value adjustments to interest rate swaps. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.



9


Reconciliations of Non-GAAP Measures

EBITDA, EBITDAre and Adjusted EBITDA

The following tables are reconciliations of our GAAP net income to EBITDA, EBITDAre and Adjusted EBITDA (in thousands):
Three Months Ended June 30,
202120202019
Net (loss) income$(19,119)$(73,387)$29,074 
Interest expense 10,710 11,629 12,418 
Income tax (benefit) expense(2,551)(6,615)4,571 
Real estate related depreciation and amortization24,692 28,783 29,335 
EBITDA13,732 (39,590)75,398 
Impairment losses4,145 — — 
EBITDAre
17,877 (39,590)75,398 
Non-cash lease expense and other amortization1,671 1,708 1,784 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
478122 3,700 
Hotel manager transition items — 334 171 
Severance costs (2)
(226)393 — 
Adjusted EBITDA$19,800 $(37,033)$81,053 
Six Months Ended June 30,
202120202019
Net (loss) income$(190,686)$(108,079)$38,054 
Interest expense 19,194 32,847 24,080 
Income tax (benefit) expense(938)(13,058)722 
Real estate related depreciation and amortization51,654 58,883 58,331 
EBITDA(120,776)(29,407)121,187 
Impairment losses126,697 — — 
EBITDAre
5,921 (29,407)121,187 
Non-cash lease expense and other amortization3,343 3,458 3,499 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
1,053 (175)5,067 
Hotel manager transition items 128 561 468 
Severance costs (2)
(216)393 — 
Adjusted EBITDA$10,229 $(25,170)$130,221 
(1)Represents pre-opening costs related to the re-opening of Frenchman's Reef, as well as legal and professional fees and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that are not covered by insurance.
(2)Consists of severance costs incurred with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.












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 June 30,
202120202019
Net (loss) income$(19,119)$(73,387)$29,074 
Interest expense 10,710 11,629 12,418 
Income tax (benefit) expense(2,551)(6,615)4,571 
Real estate related depreciation and amortization24,692 28,783 29,335 
EBITDA13,732 (39,590)75,398 
Corporate expenses8,290 6,826 7,403 
Interest and other (income) expense, net(315)(150)(105)
Professional fees and pre-opening costs related to Frenchman's Reef (1)
478122 3,700 
Impairment losses4,145 — — 
Hotel EBITDA26,330 (32,792)86,396 
Non-cash lease expense and other amortization1,671 1,708 1,784 
Hotel manager transition items — 334 171 
Severance costs (2)
(226)393 — 
Hotel Adjusted EBITDA$27,775 $(30,357)$88,351 
Six Months Ended June 30,
202120202019
Net (loss) income$(190,686)$(108,079)$38,054 
Interest expense 19,194 32,847 24,080 
Income tax (benefit) expense(938)(13,058)722 
Real estate related depreciation and amortization51,654 58,883 58,331 
EBITDA(120,776)(29,407)121,187 
Corporate expenses15,449 12,383 14,467 
Interest and other (income) expense, net(471)249 (408)
Professional fees and pre-opening costs related to Frenchman's Reef (1)
1,053 (175)5,067 
Impairment losses126,697 — — 
Hotel EBITDA21,952 (16,950)140,313 
Non-cash lease expense and other amortization3,343 3,458 3,499 
Hotel manager transition items 128 561 468 
Severance costs (2)
(216)393 — 
Hotel Adjusted EBITDA$25,207 $(12,538)$144,280 
(1)Represents pre-opening costs related to the re-opening of Frenchman's Reef, as well as legal and professional fees and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that are not covered by insurance.
(2)Consists of severance costs incurred with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.






11


FFO and Adjusted FFO
The following tables are reconciliations of our GAAP net income to FFO and Adjusted FFO (in thousands):
Three Months Ended June 30,
202120202019
Net (loss) income$(19,119)$(73,387)$29,074 
Real estate related depreciation and amortization24,692 28,783 29,335 
Impairment losses, net of tax6,945 — — 
FFO12,518 (44,604)58,409 
Distribution to preferred stockholders(2,454)— — 
FFO available to common stock and unit holders10,064 (44,604)58,409 
Non-cash lease expense and other amortization1,671 1,708 1,784 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
478122 3,700 
Hotel manager transition items — 334 171 
Severance costs (2)
(226)393 — 
Fair value adjustments to interest rate swaps(838)1,000 1,075 
Adjusted FFO available to common stock and unit holders$11,149 $(41,047)$65,139 
Adjusted FFO available to common stock and unit holders, per diluted share$0.05 $(0.20)$0.32 
Six Months Ended June 30,
202120202019
Net (loss) income$(190,686)$(108,079)$38,054 
Real estate related depreciation and amortization51,654 58,883 58,331 
Impairment losses, net of tax129,497 — — 
FFO(9,535)(49,196)96,385 
Distribution to preferred stockholders(4,908)— — 
FFO available to common stock and unit holders(14,443)(49,196)96,385 
Non-cash lease expense and other amortization3,343 3,458 3,499 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
1,053 (175)5,067 
Hotel manager transition items 128 561 468 
Severance costs (2)
(216)393 — 
Fair value adjustments to interest rate swaps(3,569)12,312 1,647 
Adjusted FFO available to common stock and unit holders$(13,704)$(32,647)$107,066 
Adjusted FFO available to common stock and unit holders, per diluted share$(0.06)$(0.16)$0.53 
(1)Represents pre-opening costs related to the re-opening of Frenchman's Reef, as well as legal and professional fees and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that are not covered by insurance.
(2) Consists of severance costs incurred with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.













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 2021 dispositions (in thousands):
Three Months Ended June 30,
202120202019
Revenues$124,791 $20,379 $257,918 
Hotel revenues from sold hotels (1)
(18)(56)(18,275)
Comparable Revenues$124,773 $20,323 $239,643 
Hotel Adjusted EBITDA$27,775 $(30,357)$88,351 
Hotel Adjusted EBITDA from sold hotels (1)
1,263 3,600 (4,895)
Comparable Hotel Adjusted EBITDA$29,038 $(26,757)$83,456 
Hotel Adjusted EBITDA Margin22.26 %(148.96)%34.26 %
Comparable Hotel Adjusted EBITDA Margin23.27 %(131.66)%34.83 %
Six Months Ended June 30,
202120202019
Revenues$197,728 $190,374 $460,293 
Hotel revenues from sold hotels (1)
(60)(8,703)(29,534)
Comparable Revenues$197,668 $181,671 $430,759 
Hotel Adjusted EBITDA$25,207 $(12,538)$144,280 
Hotel Adjusted EBITDA from sold hotels (1)
4,486 7,303 (12,815)
Comparable Hotel Adjusted EBITDA$29,693 $(5,235)$131,465 
Hotel Adjusted EBITDA Margin12.75 %(6.59)%31.35 %
Comparable Hotel Adjusted EBITDA Margin15.02 %(2.88)%30.52 %
(1) Amounts represent the operating results of Frenchman's Reef and The Lexington Hotel.



13


Selected Quarterly Comparable Operating Information

The following tables are presented to provide investors with selected quarterly comparable operating information. The operating information includes historical quarterly operating results for our 31-hotel portfolio, which includes our 2021 acquisitions and excludes our 2021 dispositions.

Quarter 1, 2019Quarter 2, 2019Quarter 3, 2019Quarter 4, 2019Full Year 2019
ADR$219.47 $248.90 $236.57 $241.30 $237.05 
Occupancy72.7 %82.5 %81.6 %76.0 %78.2 %
RevPAR$159.65 $205.33 $192.99 $183.45 $185.44 
Total RevPAR$240.00 $297.31 $271.43 $265.12 $268.54 
Revenues (in thousands)$197,032 $246,875 $227,987 $222,692 $894,586 
Hotel Adjusted EBITDA (in thousands)$49,794 $86,216 $70,566 $65,256 $271,832 
Hotel Adjusted EBITDA Margin25.27 %34.92 %30.95 %29.30 %30.39 %
Available Rooms820,964 830,375 839,960 839,960 3,331,259 
Quarter 1, 2020Quarter 2, 2020Quarter 3, 2020Quarter 4, 2020Full Year 2020
ADR$220.21 $182.83 $209.07 $204.26 $211.78 
Occupancy58.9 %9.2 %19.9 %23.2 %27.8 %
RevPAR$129.70 $16.75 $41.55 $47.47 $58.79 
Total RevPAR$199.94 $26.09 $62.18 $72.34 $90.01 
Revenues (in thousands)$166,112 $21,677 $52,231 $60,760 $300,780 
Hotel Adjusted EBITDA (in thousands)$22,901 $(27,200)$(14,259)$(4,727)$(23,285)
Hotel Adjusted EBITDA Margin13.79 %(125.48)%(27.30)%(7.78)%(7.74)%
Available Rooms830,830 830,830 839,960 839,960 3,341,580 

Quarter 1, 2021Quarter 2, 2021
ADR$217.87 $221.73 
Occupancy28.6 %48.3 %
RevPAR$62.25 $107.09 
Total RevPAR$90.13 $153.37 
Revenues (in thousands)$74,064 $127,459 
Hotel Adjusted EBITDA (in thousands)$(58)$29,569 
Hotel Adjusted EBITDA Margin(0.08)%23.20 %
Available Rooms821,790 831,074 

14


Market Capitalization as of June 30, 2021
(in thousands)
Enterprise Value
Common equity capitalization (at June 30, 2021 closing price of $9.70/share)$2,070,237 
Preferred equity capitalization (at liquidation value of $25.00/share)119,000 
Consolidated debt (face amount)990,141 
Cash and cash equivalents(192,942)
Total enterprise value
$2,986,436 
Share Reconciliation
Common shares outstanding210,304 
Operating partnership units956 
Unvested restricted stock held by management and employees1,424 
Share grants under deferred compensation plan1,698 
Combined shares and units214,382
Debt Summary as of June 30, 2021
(dollars in thousands)
LoanInterest Rate as of June 30, 2021TermOutstanding PrincipalMaturity
Salt Lake City Marriott Downtown at City Creek
LIBOR + 3.25 (1)
Variable46,350 
January 2022 (2)
Westin Washington D.C. City Center3.99%Fixed57,106 January 2023
The Lodge at Sonoma Resort3.96%Fixed25,966 April 2023
Westin San Diego Downtown3.94%Fixed59,436 April 2023
Courtyard New York Manhattan / Midtown East4.40%Fixed78,713 August 2024
Worthington Renaissance Fort Worth Hotel3.66%Fixed78,338 May 2025
JW Marriott Denver Cherry Creek 4.33%Fixed59,423 July 2025
Westin Boston Seaport District4.36%Fixed184,809 November 2025
     Unamortized debt issuance costs(2,169)
Total mortgage and other debt, net of unamortized debt issuance costs587,972 
Unsecured term loan
LIBOR + 2.40% (3)
Variable350,000 July 2024
Unsecured term loan
LIBOR + 2.40% (4)
Fixed50,000 October 2023
     Unamortized debt issuance costs(1,725)
Unsecured term loans, net of unamortized debt issuance costs398,275 
Senior unsecured credit facility
LIBOR + 2.55% (5)
Variable— 
July 2023 (6)
Total debt, net of unamortized debt issuance costs$986,247 
Weighted-average interest rate of fixed rate debt4.25 %
Total weighted-average interest rate3.97 %
(1)LIBOR is subject to a floor of 1.0%.
(2)The loan may be extended for an additional year upon satisfaction of certain conditions.
(3)The Company entered into an interest rate swap agreement in July 2019 to fix LIBOR at 1.70% for $175 million of the term loan through July 2024. LIBOR is subject to a floor of 0.25%.
(4)    The Company entered into an interest rate swap agreement in January 2019 to fix LIBOR at 2.41% through October 2023.
(5)    LIBOR is subject to a floor of 0.25%.
(6)    May be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.

15


Monthly Operating Statistics (1)
Number of RoomsADROccupancyRevPAR
April 2021April 2020B/(W) 2020April 2021April 2020B/(W) 2020April 2021April 2020B/(W) 2020
Total Open for Entire Period - 26 Hotels7,207 $226.38 $123.03 84.0 %47.1 %7.2 %39.9 %$106.52 $8.90 1,096.9 %
Resorts - 12 Hotels2,215 $343.72 $65.76 422.7 %64.3 %6.3 %58.0 %$220.87 $4.14 5,235.0 %
Total - 29 Hotels8,878 $224.72 $122.82 83.0 %39.1 %5.9 %33.2 %$87.81 $7.21 1,117.9 %
Number of RoomsApril 2021April 2019B/(W) 2019April 2021April 2019B/(W) 2019April 2021April 2019B/(W) 2019
Total Open for Entire Period - 26 Hotels7,207 $226.38 $245.39 (7.7)%47.1 %81.0 %(33.9)%$106.52 $198.70 (46.4)%
Resorts - 12 Hotels2,215 $343.72 $282.94 21.5 %64.3 %75.0 %(10.7)%$220.87 $212.27 4.1 %
Total - 29 Hotels8,878 $224.72 $242.97 (7.5)%39.1 %81.2 %(42.1)%$87.81 $197.31 (55.5)%
Number of RoomsMay 2021May 2020B/(W) 2020May 2021May 2020B/(W) 2020May 2021May 2020B/(W) 2020
Total Open for Entire Period - 27 Hotels8,407 $223.63 $182.41 22.6 %48.4 %8.1 %40.3 %$108.27 $14.78 632.5 %
Resorts - 12 Hotels2,215 $364.83 $274.32 33.0 %60.3 %7.7 %52.6 %$220.15 $21.01 947.8 %
Total - 29 Hotels8,878 $220.61 $182.39 21.0 %47.5 %7.7 %39.8 %$104.77 $13.99 648.9 %
Number of RoomsMay 2021May 2019B/(W) 2019May 2021May 2019B/(W) 2019May 2021May 2019B/(W) 2019
Total Open for Entire Period - 27 Hotels8,407 $223.63 $250.67 (10.8)%48.4 %79.4 %(31.0)%$108.27 $198.92 (45.6)%
Resorts - 12 Hotels2,215 $364.83 $268.21 36.0 %60.3 %71.3 %(11.0)%$220.15 $191.25 15.1 %
Total - 29 Hotels8,878 $220.61 $252.56 (12.7)%47.5 %80.2 %(32.7)%$104.77 $202.54 (48.3)%

Number of RoomsJune 2021June 2020B/(W) 2020June 2021June 2020B/(W) 2020June 2021June 2020B/(W) 2020
Total Open for Entire Period - 29 Hotels8,878 $220.83 $193.96 13.9 %59.0 %14.2 %44.8 %$130.20 $27.53 372.9 %
Resorts - 12 Hotels2,215 $347.29 $246.74 40.8 %70.4 %25.9 %44.5 %$244.35 $63.86 282.6 %
Number of RoomsJune 2021June 2019B/(W) 2019June 2021June 2019B/(W) 2019June 2021June 2019B/(W) 2019
Total Open for Entire Period - 29 Hotels8,878 $220.83 $249.81 (11.6)%59.0 %85.4 %(26.4)%$130.20 $213.44 (39.0)%
Resorts - 12 Hotels2,215 $347.29 $244.58 42.0 %70.4 %78.7 %(8.3)%$244.35 $192.52 26.9 %
16



Operating Statistics – Second Quarter
Number of RoomsADROccupancyRevPAR
2Q 20212Q 2020B/(W) 20202Q 20212Q 2020B/(W) 20202Q 20212Q 2020B/(W) 2020
Atlanta Marriott Alpharetta318 $102.97 $120.47 (14.5)%49.4 %6.8 %42.6 %$50.82 $8.14 524.3 %
Barbary Beach House Key West186 $416.33 $217.38 91.5 %96.1 %11.3 %84.8 %$400.05 $24.64 1,523.6 %
Bethesda Marriott Suites272 $106.48 $137.27 (22.4)%32.0 %4.3 %27.7 %$34.07 $5.96 471.6 %
Cavallo Point, The Lodge at the Golden Gate 142 $591.42 $496.03 19.2 %45.4 %0.5 %44.9 %$268.80 $2.69 9,892.6 %
Courtyard Denver Downtown177 $130.97 $103.98 26.0 %65.5 %5.6 %59.9 %$85.82 $5.84 1,369.5 %
Courtyard New York Manhattan/Midtown East321 $159.76 $141.61 12.8 %81.7 %75.8 %5.9 %$130.51 $107.33 21.6 %
Havana Cabana Key West106 $300.11 $195.05 53.9 %97.0 %16.6 %80.4 %$291.21 $32.37 799.6 %
Hilton Boston Downtown/Faneuil Hall403 $161.64 $— 100.0 %54.5 %— %54.5 %$88.05 $— 100.0 %
Hilton Burlington Lake Champlain258 $190.76 $— 100.0 %61.7 %— %61.7 %$117.78 $— 100.0 %
Hotel Emblem San Francisco96 $145.08 $127.09 14.2 %37.8 %0.7 %37.1 %$54.77 $0.89 6,053.9 %
Hotel Palomar Phoenix242 $158.11 $121.27 30.4 %60.6 %3.5 %57.1 %$95.78 $4.21 2,175.1 %
JW Marriott Denver Cherry Creek 199 $248.86 $206.39 20.6 %68.4 %6.8 %61.6 %$170.32 $13.96 1,120.1 %
Kimpton Shorebreak Resort157 $302.65 $190.15 59.2 %74.4 %49.6 %24.8 %$225.22 $94.27 138.9 %
L'Auberge de Sedona 88 $997.93 $594.35 67.9 %