drh-20221103
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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 3, 2022 
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.      






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 national and local economic and business conditions, including the impact of COVID-19 on occupancy rates at our hotels and the demand for hotel products and services, and those risks and uncertainties 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 22, 2022 and our Quarterly Reports on Form 10-Q filed on May 6, 2022 and August 4, 2022. 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 2.02. Results of Operations and Financial Condition.

On November 3, 2022, DiamondRock Hospitality Company issued a press release announcing its financial results for the three and nine months ended September 30, 2022. 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 (the "Securities Act"), 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 November 3, 2022
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: November 3, 2022  By: 
/s/ Briony R. Quinn
   Briony R. Quinn
   Senior Vice President and Treasurer






Document

https://cdn.kscope.io/ca5322cffdd5b52e93dc7bc2b7802bf6-drhlogopressreleasea35a.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 THIRD QUARTER RESULTS
Record Third Quarter Revenue & Profits
Completed $1.2 Billion Financing
BETHESDA, Maryland, Thursday, November 3, 2022 – DiamondRock Hospitality Company (the “Company”) (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 34 premium hotels and resorts in the United States, today announced results of operations for the quarter ended September 30, 2022.

Third Quarter 2022 Highlights

Net Income: Net income was $28.6 million and earnings per diluted share was $0.12.
Comparable Revenues: Comparable total revenues were $266.9 million, a 34.2% increase over 2021 and a 11.7% increase over 2019.
Comparable RevPAR: Comparable RevPAR was $211.40, a 29.3% increase over 2021 and a 8.7% increase over 2019.
Comparable Hotel Adjusted EBITDA: Comparable Hotel Adjusted EBITDA was $84.2 million, which exceeded the comparable period of 2019 by 16.3%.
Comparable Hotel Adjusted EBITDA Margin: Comparable Hotel Adjusted EBITDA margin was 31.55%, which exceeded the comparable period of 2019 by 125 basis points.
Adjusted EBITDA: Adjusted EBITDA was $76.3 million, a 13.0% increase over 2019.
Adjusted FFO: Adjusted FFO was $60.6 million and Adjusted FFO per diluted share was $0.28.
Credit Facility Refinancing: In September 2022, the Company successfully completed a $1.2 billion refinancing of its primary unsecured credit facility to address its near-term debt maturities.
Share Repurchases: In October 2022, the Company repurchased 1.6 million shares of its common stock at an average price of $7.81 per share.

“DiamondRock’s portfolio once again delivered record-setting results as travel demand continues to remain robust,” said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company. “These outstanding results were enabled by our multi-year strategy to invest in the right types of hotels and resorts in the right types of markets for today’s traveler. We continue to be set up favorably for the emerging travel demand trends.”





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 include our 2021 and 2022 acquisitions and exclude our 2021 dispositions, as well as the Kimpton Fort Lauderdale Beach Resort, which opened in April 2021, for all periods presented. See “Reconciliation of Comparable Operating Results” attached to this press release for a reconciliation to historical amounts.

Quarter Ended September 30,Change From
20222021201920212019
($ amounts in millions, except hotel statistics and per share amounts)
Comparable Operating Results (1)
ADR$281.36 $249.83 $239.39 12.6 %17.5 %
Occupancy75.1 %65.4 %81.2 %9.7 %(6.1)%
RevPAR$211.40 $163.45 $194.40 29.3 %8.7 %
Total RevPAR$306.35 $228.71 $274.93 33.9 %11.4 %
Revenues$266.9 $198.9 $239.0 34.2 %11.7 %
Hotel Adjusted EBITDA$84.2 $53.5 $72.4 57.4 %16.3 %
Hotel Adjusted EBITDA Margin31.55 %26.89 %30.30 %466 bps125 bps
Available Rooms871,332 869,584 869,216 1,748 2,116 
Actual Operating Results (2)
Revenues$268.2 $179.5 $240.3 49.4 %11.6 %
Net income (loss)$28.6 $(1.8)$11.6 1688.9 %146.6 %
Income (loss) per diluted share$0.12 $(0.02)$0.06 700.0 %100.0 %
Adjusted EBITDA$76.3 $38.9 $67.5 96.1 %13.0 %
Adjusted FFO $60.6 $20.9 $55.3 190.0 %9.6 %
Adjusted FFO per diluted share$0.28 $0.10 $0.27 180.0 %3.7 %



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Nine Months Ended September 30,Change From
20222021201920212019
($ amounts in millions, except hotel statistics and per share amounts)
Comparable Operating Results (1)
ADR$286.56 $244.24 $239.27 17.3 %19.8 %
Occupancy68.7 %48.3 %78.6 %20.4 %(9.9)%
RevPAR$196.84 $117.85 $188.15 67.0 %4.6 %
Total RevPAR$287.91 $167.80 $273.66 71.6 %5.2 %
Revenues$743.6 $433.0 $705.6 71.7 %5.4 %
Hotel Adjusted EBITDA$236.3 $91.6 $212.7 158.0 %11.1 %
Hotel Adjusted EBITDA Margin31.78 %21.15 %30.15 %1,063 bps163 bps
Available Rooms2,582,857 2,580,187 2,578,264 2,670 4,593 
Actual Operating Results (2)
Revenues$746.4 $377.2 $700.6 97.9 %6.5 %
Net income (loss)$91.3 $(192.5)$49.6 147.4 %84.1 %
Income (loss) per diluted share$0.39 $(0.94)$0.24 141.5 %62.5 %
Adjusted EBITDA$213.2 $49.1 $197.8 334.2 %7.8 %
Adjusted FFO $168.0 $7.2 $162.3 2233.3 %3.5 %
Adjusted FFO per diluted share$0.78 $0.03 $0.80 2500.0 %(2.5)%
(1) Amounts represent the pre-acquisition operating results for Bourbon Orleans Hotel from January 1, 2019 to July 28, 2021, Henderson Park Inn from January 1, 2019 to July 29, 2021, Henderson Beach Resort from January 1, 2019 to December 22, 2021 and Tranquility Bay Beachfront Resort from January 1, 2019 to January 5, 2022 and exclude the operating results of the Kimpton Fort Lauderdale Beach Resort as the hotel opened in April 2021. The pre-acquisition operating results were obtained from the sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.

(2) Actual operating results include the operating results of hotels acquired and disposed of for the Company's respective ownership periods.


The following tables provide comparable monthly operating information for the Company's portfolio:
January 2022February 2022March 2022April 2022May 2022June 2022
Number of Hotels33 33 33 333333
Number of Rooms9,454 9,454 9,454 9,454 9,454 9,471 
Occupancy41.3 %57.9 %68.4 %72.4 %72.9 %79.4 %
ADR$245.13 $283.49 $296.22 $291.71 $297.08 $302.78 
RevPAR$101.19 $164.25 $202.67 $211.29 $216.62 $240.37 
Total RevPAR$154.77 $242.91 $298.92 $304.35 $325.36 $344.28 
2022 vs 2019
Occupancy change in bps(2,216) bps(1,633) bps(1,062) bps(882) bps(740) bps(634) bps
ADR Rate % change20.6 %29.1 %21.7 %17.5 %16.1 %19.3 %
RevPAR % change(21.5)%0.7 %5.3 %4.7 %5.4 %10.5 %
Total RevPAR % change(22.2)%(2.3)%6.1 %4.3 %7.0 %10.2 %


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July 2022August 2022September 2022Preliminary October 2022
Number of Hotels33 33 33 33 
Number of Rooms9,471 9,471 9,471 9,471 
Occupancy74.9 %74.6 %75.9 %74.8 %
ADR$286.18 $261.49 $296.63 $306.32 
RevPAR$214.31 $195.19 $225.13 $229.24 
Total RevPAR$305.82 $285.29 $328.66 $337.21 
2022 vs 2019
Occupancy change in bps(750) bps(677) bps(386) bps(670) bps
ADR Rate % change21.7 %15.2 %15.4 %16.2 %
RevPAR % change10.6 %5.6 %9.8 %6.7 %
Total RevPAR % change12.4 %9.5 %12.2 %7.8 %

Capital Expenditures

The Company invested approximately $44.6 million in capital improvements at its hotels during the nine months ended September 30, 2022. The Company continues to expect to invest approximately $100 million on capital improvements at its hotels in 2022. Significant projects include the following:

Hotel Clio: The Company completed renovations in March 2022 to rebrand the JW Marriott Denver Cherry Creek as the Hotel Clio, a Luxury Collection Hotel.
Kimpton Hotel Palomar Phoenix: The Company is in the process of completing a comprehensive rebranding and repositioning of the rooftop bar and pool at the hotel.
Hilton Boston Downtown/Faneuil Hall: The Company expects to commence a comprehensive renovation in the fourth quarter of 2022 to reposition the hotel as an experiential lifestyle property with completion in mid-2023.
Hilton Burlington Lake Champlain: The Company has commenced a repositioning of the hotel to rebrand it as a Curio Collection hotel. The repositioning is expected to be completed in early 2023 and includes a new restaurant concept by a well-known and award-winning chef.

Credit Facility Refinancing

On September 27, 2022, the Company entered into an amendment and restatement of its existing $750 million credit facility, increasing the total credit facility to $1.2 billion and extending the Company's maturity schedule. The credit facility is comprised of a $400 million revolving credit facility, a $300 million term loan with a maturity in January 2026, inclusive of a one-year extension option, and a $500 million term loan maturing in January 2028. The revolving credit facility matures in September 2027, inclusive of two six-month extension options. The facilities will bear interest pursuant to a leverage-based pricing grid ranging from 1.35% to 2.25% over the applicable adjusted term SOFR. Based upon the Company's current leverage, the pricing is at the lowest end of the grid.

The Company utilized the proceeds from the term loans to repay the $350 million term loan in the prior facility, the $50 million term loan facility that was scheduled to mature in October 2023 and the $150 million that was outstanding on its revolving credit facility. Subsequent to September 30, 2022, the Company utilized the proceeds to repay the mortgage loans encumbering the Salt Lake City Marriott Downtown at City Creek, Westin Washington D.C. City Center and The Lodge at Sonoma Resort. The Company intends to repay the mortgage loan secured by the Westin San Diego Bayview in early December 2022 and will end the year with no debt maturities until August 2024.

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Balance Sheet and Liquidity

The Company ended the quarter with $843.4 million of liquidity, comprised of $313.9 million of unrestricted corporate cash, $129.5 million of unrestricted cash at its hotels and $400.0 million of capacity on its senior unsecured credit facility. As of September 30, 2022, the Company had $1.4 billion of total debt outstanding, which consisted of $568.7 million of property-specific, non-recourse mortgage debt, $800.0 million of unsecured term loans and no outstanding borrowings on its $400.0 million senior unsecured credit facility.

Share Repurchase Program

On September 29, 2022, the Company's Board of Directors approved a $200 million share repurchase program through February 28, 2025. The share repurchase program may be suspended or terminated at any time without prior notice. Subsequent to September 30, 2022, the Company repurchased 1.6 million shares of its common stock at an average price of $7.81 per share for a total purchase price of $12.3 million. The Company has $187.7 million of remaining authorized capacity under the share repurchase program.

Dividends

The Company declared a quarterly cash dividend of $0.03 per share on its common shares to shareholders of record as of September 30, 2022. The dividend was paid on October 12, 2022.

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 September 16, 2022. The dividend was paid on September 30, 2022.

Earnings Call

The Company will host a conference call to discuss its third quarter results on Friday, November 4, 2022, at 9:00 a.m. Eastern Time (ET). The conference call will be accessible by telephone and through the internet. Interested individuals are requested to register for the call by visiting https://investor.drhc.com. A replay of the conference call webcast will be archived and available online.

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 leisure destinations and top gateway markets. The Company currently owns 34 premium quality hotels with over 9,500 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent 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; 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

5


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.

6


DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

September 30, 2022December 31, 2021
ASSETS(unaudited)
Property and equipment, net$2,674,380 $2,651,444 
Right-of-use assets99,332 100,212 
Restricted cash45,989 36,887 
Due from hotel managers182,845 120,671 
Prepaid and other assets 69,792 17,472 
Cash and cash equivalents313,871 38,620 
Total assets
$3,386,209 $2,965,306 
LIABILITIES AND EQUITY
Liabilities:
Mortgage and other debt, net of unamortized debt issuance costs$567,369 $578,651 
Unsecured term loans, net of unamortized debt issuance costs799,071 398,572 
Senior unsecured credit facility— 90,000 
Total debt1,366,440 1,067,223 
Lease liabilities110,287 108,605 
Deferred rent64,132 60,800 
Due to hotel managers123,837 85,493 
Unfavorable contract liabilities, net61,484 62,780 
Accounts payable and accrued expenses 41,190 51,238 
Distributions declared and unpaid6,489 — 
Deferred income related to key money, net8,888 8,203 
Total liabilities
1,782,747 1,444,342 
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 September 30, 2022 and December 31, 202148 48 
Common stock, $0.01 par value; 400,000,000 shares authorized; 210,944,517 and 210,746,895 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively2,109 2,107 
Additional paid-in capital2,298,866 2,293,990 
Distributions in excess of earnings(703,747)(780,931)
Total stockholders’ equity
1,597,276 1,515,214 
Noncontrolling interests6,186 5,750 
Total equity
1,603,462 1,520,964 
Total liabilities and equity
$3,386,209 $2,965,306 



7


DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2022202120222021
Revenues:
Rooms
$184,994 $128,743 $510,189 $266,051 
Food and beverage
61,940 36,513 176,294 76,052 
Other
21,274 14,216 59,965 35,097 
Total revenues
268,208 179,472 746,448 377,200 
Operating Expenses:
Rooms
43,899 32,442 120,374 67,736 
Food and beverage
43,227 26,957 119,919 58,091 
Management fees
6,697 3,104 17,029 6,514 
Franchise fees
8,709 6,011 23,212 12,193 
Other hotel expenses
83,318 66,399 234,325 167,208 
Depreciation and amortization
27,053 25,555 81,097 77,209 
Impairment losses
— — 2,843 126,697 
Corporate expenses
7,516 8,341 22,275 23,790 
Business interruption insurance income— — (499)— 
Total operating expenses, net
220,419 168,809 620,575 539,438 
Interest and other expense (income), net
152 11 1,044 (460)
Interest expense
9,072 10,052 22,866 29,246 
Loss on early extinguishment of debt
9,698 — 9,698 — 
  Total other expenses, net
18,922 10,063 33,608 28,786 
Income (loss) before income taxes
28,867 600 92,265 (191,024)
Income tax expense
(312)(2,371)(949)(1,433)
Net income (loss)
28,555 (1,771)91,316 (192,457)
Less: Net (income) loss attributable to noncontrolling interests
(99)(315)812 
Net income (loss) attributable to the Company
28,456 (1,765)91,001 (191,645)
Distributions to preferred stockholders(2,454)(2,454)(7,362)(7,362)
Net income (loss) attributable to common stockholders$26,002 $(4,219)$83,639 $(199,007)
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders - basic
$0.12 $(0.02)$0.39 $(0.94)
Earnings (loss) per share available to common stockholders - diluted
$0.12 $(0.02)$0.39 $(0.94)
Weighted-average number of common shares outstanding:
Basic
212,878,364 212,256,590 212,736,133 211,966,969
Diluted
214,145,329 212,256,590 213,459,354 211,966,969



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Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, 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.

9


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.



10


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 September 30,
202220212019
Net income (loss)$28,555 $(1,771)$11,574 
Interest expense 9,072 10,052 14,184 
Income tax expense 312 2,371 1,217 
Real estate related depreciation and amortization27,053 25,555 29,474 
EBITDAre
64,992 36,207 56,449 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 335 6,378 
Non-cash lease expense and other amortization1,551 1,664 1,750 
Hotel manager transition items 11 523 582 
Uninsured costs related to natural disasters — 187 — 
Loss on early extinguishment of debt9,698 — 2,373 
Adjusted EBITDA$76,252 $38,916 $67,532 
Nine Months Ended September 30,
202220212019
Net income (loss)$91,316 $(192,457)$49,628 
Interest expense 22,866 29,246 38,264 
Income tax expense949 1,433 1,939 
Real estate related depreciation and amortization81,097 77,209 87,805 
EBITDA196,228 (84,569)177,636 
Impairment losses2,843 126,697 — 
EBITDAre
199,071 42,128 177,636 
Non-cash lease expense and other amortization4,675 5,007 5,249 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 1,388 11,445 
Uninsured costs related to natural disasters— 187 — 
Loss on early extinguishment of debt9,698 — 2,373 
Severance costs (2)
(532)(216)— 
Hotel manager transition items 247 651 1,050 
Adjusted EBITDA$213,159 $49,145 $197,753 
(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, and adjustments thereto, associated with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.












11


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,
202220212019
Net income (loss)$28,555 $(1,771)$11,574 
Interest expense 9,072 10,052 14,184 
Income tax expense 312 2,371 1,217 
Real estate related depreciation and amortization27,053 25,555 29,474 
EBITDA64,992 36,207 56,449 
Corporate expenses7,516 8,341 6,318 
Interest and other expense (income), net152 11 (102)
Uninsured costs related to natural disasters — 187 — 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 335 6,378 
Loss on early extinguishment of debt9,698 — 2,373 
Hotel EBITDA82,358 45,081 71,416 
Non-cash lease expense and other amortization1,551 1,664 1,750 
Hotel manager transition items 11 523 582 
Hotel Adjusted EBITDA$83,920 $47,268 $73,748 
Nine Months Ended September 30,
202220212019
Net income (loss)$91,316 $(192,457)$49,628 
Interest expense 22,866 29,246 38,264 
Income tax expense 949 1,433 1,939 
Real estate related depreciation and amortization81,097 77,209 87,805 
EBITDA196,228 (84,569)177,636 
Corporate expenses22,275 23,790 20,785 
Interest and other expense (income), net1,044 (460)(510)
Uninsured costs related to natural disasters — 187 — 
Loss on early extinguishment of debt9,698 — 2,373 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 1,388 11,445 
Impairment losses2,843 126,697 — 
Hotel EBITDA232,088 67,033 211,729 
Non-cash lease expense and other amortization4,675 5,007 5,249 
Hotel manager transition items 247 651 1,050 
Severance costs (2)
(532)(216)— 
Hotel Adjusted EBITDA$236,478 $72,475 $218,028 
(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, or adjustments thereto, associated with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.






12


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,
202220212019
Net income (loss)$28,555 $(1,771)$11,574 
Real estate related depreciation and amortization27,053 25,555 29,474 
Impairment losses, net of tax— (2,215)— 
FFO55,608 21,569 41,048 
Distribution to preferred stockholders(2,454)(2,454)— 
FFO available to common stock and unit holders53,154 19,115 41,048 
Non-cash lease expense and other amortization1,551 1,664 1,750 
Uninsured costs related to natural disasters — 187 — 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 335 6,378 
Loss on early extinguishment of debt9,698 — 2,373 
Hotel manager transition items 11 523 582 
Fair value adjustments to interest rate swaps(3,780)(919)3,143 
Adjusted FFO available to common stock and unit holders$60,634 $20,905 $55,274 
Adjusted FFO available to common stock and unit holders, per diluted share$0.28 $0.10 $0.27 
Nine Months Ended September 30,
202220212019
Net income (loss)$91,316 $(192,457)$49,628 
Real estate related depreciation and amortization81,097 77,209 87,805 
Impairment losses, net of tax2,843 127,282 — 
FFO175,256 12,034 137,433 
Distribution to preferred stockholders(7,362)(7,362)— 
FFO available to common stock and unit holders167,894 4,672 137,433 
Non-cash lease expense and other amortization4,675 5,007 5,249 
Uninsured costs related to natural disasters — 187 — 
Professional fees and pre-opening costs related to Frenchman's Reef (1)
— 1,388 11,445 
Hotel manager transition items 247 651 1,050 
Loss on early extinguishment of debt9,698 (216)2,373 
Severance costs (2)
(532)— — 
Fair value adjustments to interest rate swaps(14,002)(4,488)4,790 
Adjusted FFO available to common stock and unit holders$167,980 $7,201 $162,340 
Adjusted FFO available to common stock and unit holders, per diluted share$0.78 $0.03 $0.80 
(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, or adjustments thereto, associated with the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.









13


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 September 30,
202220212019
Revenues$268,208 $179,472 $240,279 
Hotel revenues from prior ownership (1)
(1,275)19,413 17,036 
Hotel revenues from sold hotels (2)
— — (18,338)
Comparable Revenues$266,933 $198,885 $238,977 
Hotel Adjusted EBITDA$83,920 $47,268 $73,748 
Hotel Adjusted EBITDA from prior ownership (1)
291 6,026 3,601 
Hotel Adjusted EBITDA from sold hotels (2)
— 178 (4,938)
Comparable Hotel Adjusted EBITDA$84,211 $53,472 $72,411 
Hotel Adjusted EBITDA Margin31.29 %26.34 %30.69 %
Comparable Hotel Adjusted EBITDA Margin31.55 %26.89 %30.30 %
Nine Months Ended September 30,
202220212019
Revenues$746,448 $377,200 $700,572 
Hotel revenues from prior ownership (1)
(3,237)55,816 52,876 
Hotel revenues from sold hotels (2)
430 (60)(47,872)
Comparable Revenues$743,641 $432,956 $705,576 
Hotel Adjusted EBITDA$236,478 $72,475 $218,028 
Hotel Adjusted EBITDA from prior ownership (1)
(62)14,445 12,426 
Hotel Adjusted EBITDA from sold hotels (2)
(106)4,664 (17,758)
Comparable Hotel Adjusted EBITDA$236,310 $91,584 $212,696 
Hotel Adjusted EBITDA Margin31.68 %19.21 %31.12 %
Comparable Hotel Adjusted EBITDA Margin31.78 %21.15 %30.15 %
(1) Amounts represent the pre-acquisition operating results for Bourbon Orleans Hotel from January 1, 2019 to July 28, 2021, Henderson Park Inn from January 1, 2019 to July 29, 2021, Henderson Beach Resort from January 1, 2019 to December 22, 2021 and Tranquility Bay Beachfront Resort from January 1, 2019 to January 5, 2022. The pre-acquisition operating results were obtained from the sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.
(2) Amounts represent the operating results of Frenchman's Reef and The Lexington Hotel.



14


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 portfolio, excluding the Kimpton Fort Lauderdale Beach Resort as the hotel opened in April 2021.

Quarter 1, 2019Quarter 2, 2019Quarter 3, 2019Quarter 4, 2019Full Year 2019
ADR$223.66 $252.68 $239.39 $242.68 $240.10 
Occupancy72.2 %82.4 %81.2 %75.2 %77.8 %
RevPAR$161.44 $208.24 $194.40 $182.52 $186.73 
Total RevPAR$242.88 $302.81 $274.93 $265.26 $271.55 
Revenues (in thousands)$206,370 $260,227 $238,977 $230,571 $936,145 
Hotel Adjusted EBITDA (in thousands)$50,975 $89,310 $72,411 $65,196 $277,892 
Hotel Adjusted EBITDA Margin24.70 %34.32 %30.30 %28.28 %29.68 %
Available Rooms849,674 859,374 869,216 869,216 3,447,480 

Quarter 1, 2021Quarter 2, 2021Quarter 3, 2021Quarter 4, 2021Full Year 2021
ADR$236.48 $241.35 $249.83 $265.54 $250.62 
Occupancy29.6 %49.3 %65.4 %61.2 %51.5 %
RevPAR$70.08 $119.00 $163.45 $162.47 $129.10 
Total RevPAR$101.74 $171.53 $228.71 $233.25 $184.30 
Revenues (in thousands)$86,534 $147,537 $198,885 $202,826 $635,782 
Hotel Adjusted EBITDA (in thousands)$2,156 $35,956 $53,472 $45,017 $136,601 
Hotel Adjusted EBITDA Margin2.49 %24.37 %26.89 %22.19 %21.49 %
Available Rooms850,500 860,103 869,584 869,584 3,449,771 

Quarter 1, 2022Quarter 2, 2022Quarter 3, 2022
ADR$279.09 $297.36 $281.36 
Occupancy55.8 %74.9 %75.1 %
RevPAR$155.76 $222.70 $211.40 
Total RevPAR$231.84 $324.68 $306.35 
Revenues (in thousands)$197,263 $279,445 $266,933 
Hotel Adjusted EBITDA (in thousands)$51,121 $100,978 $84,211 
Hotel Adjusted EBITDA Margin25.92 %36.14 %31.55 %
Available Rooms850,842 860,683 871,332 

15


Market Capitalization as of September 30, 2022
(in thousands)
Enterprise Value
Common equity capitalization (at September 30, 2022 closing price of $7.51/share)$1,615,230 
Preferred equity capitalization (at liquidation value of $25.00/share)119,000 
Consolidated debt (face amount)1,368,651 
Cash and cash equivalents(313,871)
Total enterprise value
$2,789,010 
Share Reconciliation
Common shares outstanding210,945 
Operating partnership units817 
Unvested restricted stock held by management and employees1,365 
Share grants under deferred compensation plan1,950 
Combined shares and units215,077
Debt Summary as of November 3, 2022
(dollars in thousands)
LoanInterest RateTermOutstanding PrincipalMaturity
Westin San Diego Bayview3.94%Fixed57,163 April 2023
Courtyard New York Manhattan / Midtown East4.40%Fixed76,445 August 2024
Worthington Renaissance Fort Worth Hotel3.66%Fixed75,933 May 2025
Hotel Clio4.33%Fixed57,692 July 2025
Westin Boston Seaport District4.36%Fixed179,208 November 2025
     Unamortized debt issuance costs(1,218)
Total mortgage debt, net of unamortized debt issuance costs445,223 
Unsecured term loanSOFR + 1.35% Variable500,000 January 2028
Unsecured term loanSOFR + 1.35%Variable300,000 
January 2025 (1)
     Unamortized debt issuance costs(907)
Unsecured term loans, net of unamortized debt issuance costs799,093 
Senior unsecured credit facility SOFR + 1.40%Variable— 
September 2026 (1)
Total debt, net of unamortized debt issuance costs$1,244,316 
Weighted-average interest rate of fixed rate debt3.92%
Total weighted-average interest rate (2)
4.54%

(1)    May be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.
(2)    Weighted-average interest rate includes effect of interest rate swaps.

16


Monthly Operating Statistics (1)
Number of RoomsADROccupancyRevPAR
July 2022July 2021B/(W) 2021July 2022July 2021B/(W) 2021July 2022July 2021B/(W) 2021
Total - 33 Hotels9,471 $286.18 $259.43 10.3 %74.9 %70.2 %4.7 %$214.31 $182.00 17.8 %
Resort/Lifestyle - 20 Hotels3,656 $373.15 $371.90 0.3 %74.1 %75.3 %(1.2)%$276.43 $280.02 (1.3)%
Number of RoomsJuly 2022July 2019B/(W) 2019July 2022July 2019B/(W) 2019July 2022July 2019B/(W) 2019
Total - 33 Hotels9,471 $286.18 $235.11 21.7 %74.9 %82.4 %(7.5)%$214.31 $193.72 10.6 %
Resort/Lifestyle - 20 Hotels3,656 $373.15 $262.65 42.1 %74.1 %81.6 %(7.5)%$276.43 $214.40 28.9 %
Number of RoomsAugust 2022August 2021B/(W) 2021August 2022August 2021B/(W) 2021August 2022August 2021B/(W) 2021
Total - 33 Hotels9,471 $261.49 $237.99 9.9 %74.6 %63.6 %11.0 %$195.19 $151.37 28.9 %
Resort/Lifestyle - 20 Hotels3,656 $333.49 $335.02 (0.5)%72.5 %64.3 %8.2 %$241.79 $215.31 12.3 %
Number of RoomsAugust 2022August 2019B/(W) 2019August 2022August 2019B/(W) 2019August 2022August 2019B/(W) 2019
Total - 33 Hotels9,471 $261.49 $226.98 15.2 %74.6 %81.4 %(6.8)%$195.19 $184.80 5.6 %
Resort/Lifestyle - 20 Hotels3,656 $333.49 $252.70 32.0 %72.5 %78.6 %(6.1)%$241.79 $198.53 21.8 %

Number of RoomsSeptember 2022September 2021B/(W) 2021September 2022September 2021B/(W) 2021September 2022September 2021B/(W) 2021
Total - 33 Hotels9,471 $296.63 $251.13 18.1 %75.9 %62.4 %13.5 %$225.13 $156.76 43.6 %
Resort/Lifestyle - 20 Hotels3,656 $343.17 $328.84 4.4 %70.3 %63.0 %7.3 %$241.14 $207.21 16.4 %
Number of RoomsSeptember 2022September 2019B/(W) 2019September 2022September 2019B/(W) 2019September 2022September 2019B/(W) 2019
Total - 33 Hotels9,471 $296.63 $257.04 15.4 %75.9 %79.8 %(3.9)%$225.13 $205.01 9.8 %
Resort/Lifestyle - 20 Hotels3,656 $343.17 $257.73 33.2 %70.3 %72.0 %(1.7)%$241.14 $185.66 29.9 %

(1) All periods presented include the pre-acquisition operating results of hotels acquired in 2021 and 2022 and excludes hotels sold in 2021 and the Kimpton Fort Lauderdale Beach Resort as the hotel opened during 2021.

17




Operating Statistics – Third Quarter
Number of RoomsADROccupancyRevPAR
3Q 20223Q 2021B/(W) 20213Q 20223Q 2021B/(W) 20213Q 20223Q 2021B/(W) 2021
Atlanta Marriott Alpharetta318 $155.35 $119.77 29.7 %60.7 %63.2 %(2.5)%$94.35 $75.75 24.6 %
Bourbon Orleans Hotel220 $198.82 $185.94 6.9 %67.0 %57.4 %9.6 %$133.24 $106.65 24.9 %
Cavallo Point, The Lodge at the Golden Gate 142 $723.68 $697.33 3.8 %50.8 %58.6 %(7.8)%$367.33 $408.40 (10.1)%
Chicago Marriott Downtown Magnificent Mile1,200 $253.84 $204.01 24.4 %72.9 %54.4 %18.5 %$185.02 $110.97 66.7 %
Courtyard Denver Downtown177 $232.76 $198.04 17.5 %83.0 %77.0 %6.0 %$193.21 $152.42 26.8 %
Courtyard New York Manhattan/Fifth Avenue189 $288.20 $188.42 53.0 %96.8 %94.3 %2.5 %$279.10 $177.64 57.1 %
Courtyard New York Manhattan/Midtown East321 $338.74 $221.26 53.1 %90.7 %77.5 %13.2 %$307.21