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 reported):
October 20, 2005
DiamondRock Hospitality Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Maryland 001-32514 20-1180098
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
6903 Rockledge Drive, Suite 800
Bethesda, MD 20817
(Address of Principal Executive Offices) (Zip Code)
10400 Fernwood Road, Suite 300
Bethesda, MD 20817
(Former Address of Principal Executive Offices)(Former Zip Code)
(240) 744-1150
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities
Act(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. Results of Operations and Financial Condition.
The information in this Current Report on Form 8-K is furnished under Item 2.02
- - "Results of Operations and Financial Condition." Such information, including
the exhibits attached hereto, shall not be deemed to be "filed" for any purpose,
including for the purposes of Section 18 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or otherwise subject to the liabilities of that
Section. The information in this Current Report on Form 8-K shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act regardless of any general incorporation language in
such filing.
On October 20, 2005, DiamondRock Hospitality Company (the "Company") issued a
press release announcing its financial results for the third quarter ended
September 9, 2005. That press release referred to certain supplemental
information that is available on the Company's website. The press release and
the text of the supplemental information are attached hereto as Exhibits 99.1
and 99.2, respectively, and are incorporated by reference herein.
ITEM 9.01. Financial Statements and Exhibits.
(c) Exhibits.
See Index to Exhibits attached hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIAMONDROCK HOSPITALITY COMPANY
Date: October 20, 2005 By: /s/ Michael D. Schecter
-----------------------------------
Michael D. Schecter
General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press release dated October 20, 2005
99.2 DiamondRock Hospitality Company - Supplemental Operating
and Financial Data for the quarter ended September 9, 2005
Exhibit 99.1
DiamondRock Hospitality Company Reports
Results of Operations for Third Quarter 2005
BETHESDA, Md.--(BUSINESS WIRE)--Oct. 20, 2005--DiamondRock
Hospitality Company (the "Company") (NYSE: DRH) today announced
results of operations for the third quarter ended September 9, 2005.
DiamondRock Hospitality Company is a self-advised real estate
investment trust (REIT) that is an owner and acquirer of upper upscale
and upscale hotel properties located primarily in North America. To a
lesser extent, it may invest, on a selective basis, in premium
limited-service and extended-stay hotel properties in urban locations.
Highlights
-- Increased same-store revenue per available room ("RevPAR") by
8.25 percent from $96.34 to $104.29 over the comparable period
in 2004 for the twelve hotels addressed in prior guidance.
-- Quarterly adjusted earnings before interest expense, income
taxes, depreciation and amortization ("Adjusted EBITDA") of
$13.8 million.
-- Quarterly Funds from Operations ("FFO") per diluted share of
$0.19 and quarterly Adjusted FFO per diluted share of $0.22.
-- Quarterly net income of $2.2 million, or $0.04 per diluted
share.
-- Declared dividend of $0.1725 per share.
-- Acquired seven hotels for an aggregate contractual purchase
price of $475.1 million.
-- Obtained long-term, fixed-rate debt on three hotels for a
total of $202.5 million in proceeds at a weighted average
interest rate of 5.4 percent.
-- Secured a $75 million line of credit.
Operating Results
Please see "Certain Definitions" and "Non-GAAP Financial Measures"
attached to this press release for an explanation of the terms "twelve
hotels", "fourteen hotels", "EBITDA", "Adjusted EBITDA", "Hotel
Adjusted EBITDA", "FFO" and "Adjusted FFO". Moreover, the discussions
of RevPAR, Adjusted EBITDA margin and Hotel Adjusted EBITDA margin
assume that the acquired hotels were owned by the Company for the
entire reporting periods of 2005 and 2004.
Third Quarter Results
For the fiscal quarter ended September 9, 2005, the Company's
total revenue was $65.4 million; net income totaled $2.2 million
($0.04 per diluted share), and Adjusted EBITDA was $13.8 million.
Additionally, the Company reported FFO of $9.6 million ($0.19 per
diluted share) and Adjusted FFO of $11.3 million ($0.22 per diluted
share) for the third quarter. FFO and Adjusted FFO include the impact
of a $1.7 million tax benefit recorded on the pre-tax net loss
generated by our taxable REIT subsidiary.
RevPAR for our twelve hotels increased 8.25 percent to $104.29
compared to a RevPAR of $96.34 in the same period in the prior year,
driven by a 7 percent increase in the average daily rate and a 0.9
percentage point increase in occupancy. Due to a major renovation that
we completed during the quarter, approximately one third of the
Courtyard New York/Manhattan Fifth Avenue hotel's rooms were out of
service during the third quarter and have been excluded from the
calculation of RevPAR. Our prior guidance did not include adjustment
for the out of service rooms; if we had included such rooms in our
calculations for the third quarter, the RevPAR growth for our twelve
hotels was 7.1%.
Hotel Adjusted EBITDA margins for our twelve hotels increased 1.26
percentage points to 22.34 percent compared to the same period in the
prior year. Hotel Adjusted EBITDA margins were affected by a major
renovation during the quarter at the Courtyard New York/Manhattan
Fifth Avenue. Excluding this hotel, Hotel Adjusted EBITDA margin
increased 1.74 percentage points to 22.94 percent.
William W. McCarten, chief executive officer, stated, "The third
quarter results indicate that our portfolio of high quality hotels
continues to benefit from the lodging recovery and our unique and
preferential sourcing relationship with Marriott International.
Operating performance met our expectations during a quarter in which
we also completed the acquisition of seven hotels, more than doubling
our Company's size. We also completed our first major hotel
renovation, finishing the extensive Courtyard New York/Manhattan Fifth
Avenue rooms renovation on budget and in time for the seasonally
strong fourth quarter."
Year to Date Results
For the period from January 1, 2005 to September 9, 2005, the
Company reported:
-- RevPAR increased 10.4 percent to $110.07 for our twelve hotels
compared to a RevPAR of $99.72 during the same period in the
prior year, driven by an 8.8 percent increase in average daily
room rate and a 1.1 percentage point increase in occupancy.
-- Hotel Adjusted EBITDA margins increased 2.3 percentage points
to 26.4 percent for our twelve hotels compared to the same
period in the prior year.
-- Total revenues were $125.3 million.
-- Net loss was $8.9 million, or $(0.27) per diluted share.
-- Adjusted EBITDA was $25.3 million.
-- FFO and Adjusted FFO were $7.2 million and $15.8 million,
respectively.
Recent Acquisitions
The Company completed several hotel acquisitions during the
quarter as follows:
-- A portfolio of four hotels, including the Marriott Los Angeles
Airport Hotel, the Worthington Renaissance Hotel (Fort Worth),
the Atlanta Alpharetta Marriott Hotel, and the Marriott
Frenchman's Reef & Morning Star Resort (St. Thomas, USVI) for
a contractual purchase price of $315.0 million.
-- The Vail Marriott Mountain Resort and Spa for the contractual
purchase price of $62.0 million.
-- The Buckhead SpringHill Suites by Marriott in the Buckhead
area of Atlanta, Georgia for a contractual purchase price of
$34.1 million.
-- The Oak Brook Hills Resort & Conference Center in Oak Brook,
Illinois for a contractual purchase price of $64.0 million.
This hotel was rebranded as the Oak Brook Hills Marriott
Resort.
Capital Projects
During the third quarter we substantially completed the brand
conversion and renovation project at the Courtyard New York/Manhattan
Fifth Avenue for an estimated cost of $6.1 million. The renovation
included complete rooms and bathroom renovation, as well as a
renovation of the common areas, and the construction of a new fitness
facility.
During the fourth quarter, we have begun a major renovation of the
Torrance Marriott, which will include a renovation of the rooms and
public spaces. At the Los Angeles Airport Marriott, we are commencing
the renovation of the ballrooms. At the Frenchman's Reef & Morning
Star Resort, we are completing a substantial renovation of the rooms.
In the first quarter of 2006, we plan to complete the renovation
of the Torrance Marriott as well as renovate the rooms at the
Courtyard Midtown East and the Bethesda Marriott Suites. The
renovation of the Oak Brook Hills Marriott Resort will begin in 2006.
Balance Sheet & Recent Financings
As of September 9, 2005, the Company had total assets of $890.9
million, including $33.0 million of restricted cash dedicated to
capital improvements at the hotels. Moreover, the Company had $366
million of total debt. Over 90 percent of the debt is long-term,
fixed-rate, single property limited recourse mortgage debt. The debt
bears interest at a weighted average interest rate of 5.5 percent.
The Company obtained long-term, fixed rate, single property debt
secured by the Marriott Los Angeles Airport, the Worthington
Renaissance Hotel and the Marriott Frenchman's Reef & Morning Star
Resort. The loan on the Marriott Los Angeles Airport Hotel has a
principal balance of $82.6 million, a term of 10 years, bears interest
at 5.30 percent, and is interest only for the entire term. The loan on
the Worthington Renaissance Hotel has a principal balance of $57.4
million, a term of 10 years, bears interest at 5.40 percent, and is
interest only for the first four years and then amortizes on a 30-year
schedule. The loan on the Marriott Frenchman's Reef & Morning Star
Resort has a principal balance of $62.5 million, a term of 10 years,
bears interest at 5.44 percent, and is interest only for the first
three years and then amortizes on a 30-year schedule.
On July 8, 2005, the Company consummated its senior secured
revolving credit facility. The facility has a three-year term and a
$75.0 million limit, with an ability to increase the facility up to
$250 million with lender approval. As long as the Company maintains a
debt-to-asset value of less than 65 percent, outstanding funds on the
credit facility will bear interest at LIBOR plus 1.45 percent.
Wachovia Bank, Citigroup North America, and Bank of America
participated in the credit facility. At the end of the third quarter,
the Company had $5.0 million drawn under this credit facility and
$70.0 million available.
Outlook
The Company is providing guidance, but does not undertake to
update it for any developments in its business. Achievement of the
anticipated results is subject to the risks disclosed in the Company's
filings with the Securities and Exchange Commission. The guidance
below on margins and RevPAR includes the meaningful negative impact
from the renovations of the Courtyard New York/Manhattan Fifth Avenue
in the third quarter and the Torrance and LAX Marriott Hotels in the
fourth quarter. Furthermore, the RevPAR and Hotel Adjusted EBITDA
margin guidance are pro forma as they assume that the acquired hotels
were owned by the Company for the entire reporting periods of 2005 and
2004.
For the full year 2005 the Company expects:
-- Pro forma RevPAR for the twelve hotels to increase in the
range of 9.0 to 10.0 percent.
-- Pro forma Hotel Adjusted EBITDA margins for the twelve hotels
should increase by approximately 2.10 to 2.30 percentage
points.
-- Actual Adjusted EBITDA for the Company should be between $44
million and $46 million.
-- Actual FFO for the Company will be between $17.5 million and
$19.5 million and actual Adjusted FFO for the Company will be
between $28.4 million and $30.4 million.
The Company has just begun its budget process for 2006 and is not
in a position to provide formal guidance. However, based on initial
discussions with our operators, the Company expects 2006 same store
RevPAR to increase 7 to 9 percent.
Comparative Results and Guidance
The following table reflects our prior guidance for the third
quarter compared to our actual results:
Guidance Actual Results
- ----------------------------------------------------------------------
RevPAR Growth (1) 6% - 8% 8.25% (2)
- ----------------------------------------------------------------------
Adjusted EBITDA $12M - $14M $13.8M
- ----------------------------------------------------------------------
FFO $5.4M - $7.4M $9.6M(3)
- ----------------------------------------------------------------------
Adjusted FFO $7.0M - $9.0M $11.3M(3)
- ----------------------------------------------------------------------
(1) Represents pro forma RevPAR growth for the twelve hotels
(excluding the Oak Brook Hills Marriott and Buckhead SpringHill
Suites).
(2) On a comparable basis (including the unavailable rooms at
Courtyard Manhattan/New York Fifth Avenue), RevPAR growth was
7.1%.
(3) Includes a $1.7 million tax benefit recorded by our taxable REIT
subsidiary
The following table reflects our prior guidance for the full year
compared to our new guidance for the full year:
Prior Guidance New Guidance
- ----------------------------------------------------------------------
RevPAR Growth (1) 8% - 10% 9%-10%
- ----------------------------------------------------------------------
Improvement in Hotel Adjusted
EBITDA Margins (1) 210 bps - 230 bps 210 bps - 230 bps
- ----------------------------------------------------------------------
Adjusted EBITDA $43M - $46M $44M - $46M
- ----------------------------------------------------------------------
FFO $13.5M - $16.5M $17.5M - $19.5M
- ----------------------------------------------------------------------
Adjusted FFO $24.1M-$27.1M $28.4M - $30.4M
- ----------------------------------------------------------------------
(1) Represents pro forma RevPAR growth and Hotel Adjusted EBITDA
Margin growth for the twelve hotels (excluding the Oak Brook Hills
Marriott and Buckhead SpringHill Suites).
Ground Leases
Several hotels owned by the Company are subject to ground leases.
These include Bethesda Suites Marriott, Courtyard New York Fifth
Avenue, Salt Lake City Downtown Marriott, Griffin Gate Marriott Resort
and Oak Brook Hills Marriott Resort. In the third quarter, the
contractual cash rent payable on the ground leases totaled $417,000.
In accordance with GAAP, the Company records rent expense on a
straight-line basis for ground leases that provide minimal rental
payments that increase in pre-established amounts over the remaining
term of the ground lease. In addition, the Company recorded a $12.3
million favorable lease asset in conjunction with the acquisition of
the Oak Brook Hills Marriott Resort that will be amortized over the
20.5 year period until lease rental payments are adjusted to market.
The Company recorded approximately $71,000 of non-cash ground rent
expense during the third quarter related to the amortization of the
favorable lease asset. In total, the Company recorded approximately
$2.1 million in ground rent expense for the third quarter. The
non-cash portion of ground rent expense recorded during the third
quarter was $1.7 million.
Dividend Update
During the third quarter, the Company declared a dividend of
$0.1725 per share, payable to its common stockholders of record as of
September 9, 2005. The dividend was paid on September 27, 2005.
Earnings Call
The Company will host a conference call to discuss second quarter
results on Thursday, October 20, 2005, at 2:00 p.m. EST. To
participate in the live call, investors are invited to dial
1-866-831-6247 (for domestic callers) or 617-213-8856 (for
international callers). The participant passcode is 40960633. A live
webcast of the call will be available via the investor relations
section of DiamondRock Hospitality Company's website at www.drhc.com.
A replay of the webcast will also be archived on the website for 30
days.
In addition, the Company has produced a supplemental package that
includes detailed financial information regarding the operating
results, which is available via the investor relations section of the
website at www.drhc.com.
About the Company
DiamondRock Hospitality Company is a self-advised real estate
investment trust (REIT) that is an owner and acquirer of upper upscale
and upscale hotel properties located primarily in North America. To a
lesser extent, it may invest, on a selective basis, in premium
limited-service and extended-stay hotel properties in urban locations.
As of September 9, 2005, the Company owns 14 hotels that comprise
5,633 rooms. The Company has a strategic acquisition sourcing
relationship with Marriott International. For further information,
please visit the 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 "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "should," "will,"
"continue" and other similar terms and phrases, including references
to assumptions and forecasts of future results. Forward- looking
statements are not guarantees of future performance and involve known
and unknown risks, uncertainties and other factors which may cause the
actual results to differ materially from those anticipated at the time
the forward- looking statements are made. These risks include, but are
not limited to: national and local economic and business conditions,
including the potential for additional terrorist attacks, that will
affect occupancy rates at our hotels and the demand for hotel products
and services; operating risks associated with the hotel business;
risks associated with the level of our indebtedness and our ability to
meet covenants in our debt agreements; relationships with property
managers; our ability to maintain our properties in a first-class
manner, including meeting capital expenditure requirements; our
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; our
ability to complete acquisitions; the performance of acquired
properties after they are acquired; necessary capital expenditures on
the acquired properties; and our ability to continue to satisfy
complex rules in order for us to qualify as a REIT for federal income
tax purposes; and other risks and uncertainties associated with our
business described in the Company's filings with the SEC. 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 October
20, 2005, 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.
FFO per share, Adjusted EBITDA, and comparable Hotel Adjusted
EBITDA margins (discussed below) are non-GAAP financial measures
within the meaning of the rules of the Securities and Exchange
Commission (SEC). Included in the press release is a reconciliation of
such terms to net income.
The Company has included in this press release for the comparable
period (quarter ended September 10, 2004) a pro forma income statement
that includes the effects of the initial public offering (as described
in the Company's prospectus dated May 25, 2005), acquisitions and
financings. The Company believes that this pro forma income statement
is useful to enhance the comparability of the third quarter of 2005
with prior periods.
Reporting Periods for Statement of Operations
The results we report in our consolidated statements of operations
are based on results of our hotels reported to us by our hotel
managers. Our hotel managers use different reporting periods. Marriott
International, the manager of the majority of the Company properties,
uses a fiscal year ending on the Friday closest to December 31 and
reports twelve weeks of operations for the first three quarters and
sixteen or seventeen weeks for the fourth quarter of the year for its
domestic managed hotels. In contrast, Marriott for its non-domestic
hotels (including Frenchman's Reef) and Vail Resorts, our manager of
the Vail Marriott, report results on a monthly basis. Additionally,
the Company, as a REIT, is required by tax laws to report results on a
calendar year. As a result, the Company has adopted the reporting
periods used by Marriott International for its domestic hotels, except
that the fiscal year always ends on December 31 to comply with REIT
rules. The first three fiscal quarters end on the same day as Marriott
International's fiscal quarters but our fourth quarter ends on
December 31 and our full year results, as reported in our statement of
operations, always includes the same number of days as the calendar
year.
Two consequences of the reporting cycle we have adopted are: (1)
quarterly start dates will usually differ between years, except for
the first quarter which always commences on January 1, and (2) our
first and fourth quarters of operations and year-to-date operations
may not include the same number of days as reflected in prior years.
While the reporting calendar we adopted is more closely aligned
with the reporting calendar used by the manager of a majority of our
properties, one final consequence of our calendar is we are unable to
report any results for Frenchman's Reef or for the Vail Marriott for
the month of operations that ends after our fiscal quarter-end because
neither Vail Resorts nor Marriott International make mid- month
results available to us. As a result, our quarterly results of
operations include results from Frenchman's Reef and the Vail Marriott
as follows: first quarter (January, February), second quarter (March
to May), third quarter (June to August) and fourth quarter (September
to December). While this does not affect full-year results, it does
affect the reporting of quarterly results.
Reporting Periods for Hotel Operating Statistics and Comparable
Hotel Results
In contrast to the reporting periods for our consolidated
statement of operations, our hotel operating statistics (i.e., RevPAR,
average daily rate and average occupancy) and our comparable hotel
results are always reported based on the reporting cycle used by
Marriott International for our Marriott- managed hotel(s). This
facilitates year-to-year comparisons, as each reporting period will be
comprised of the same number of days of operations as in the prior
year (except in the case of fourth quarters comprised of seventeen
weeks versus sixteen weeks). This means, however, that the reporting
periods we use for hotel operating statistics and our comparable
hotels results may differ slightly from the reporting periods used for
our statements of operations for the first and fourth quarters and the
full year. Results from hotel managers reporting on a monthly basis
are included in our operating statistics and comparable hotel results
consistent with their reporting in our consolidated statement of
operations for the hotel operating statistics and comparable hotel
results reported herein.
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Quarter Ended September 9, 2005, the Period from
January 1, 2005 to September 9, 2005, and the Fiscal Quarter Ended
September 10, 2004 and Period from May 6, 2004 (Incorporation) to
September 10, 2004
Fiscal Quarter
Ended September
10, 2004 and
Fiscal Period from Period from
Quarter January 1, May 6, 2004
Ended 2005 to (Incorporation)
September 9, September 9, to September 10,
2005 2005 2004
------------ ------------------------------
(Unaudited) (Unaudited) (Unaudited)
Rooms $43,007,699 $85,509,567 $ -
Food and beverage 17,607,225 31,812,477 -
Other 4,792,077 7,949,454 -
------------ ------------------------------
Total revenues 65,407,001 125,271,498 -
------------ ------------------------------
Operating Expenses:
Rooms 10,853,919 21,439,976 -
Food and beverage 13,658,368 24,420,522 -
Management fees 2,171,128 4,280,139 -
Other hotel expenses 24,887,133 49,247,846 -
Depreciation and
amortization 7,369,396 16,072,526 9,168
Corporate expenses 2,452,887 10,399,626 1,715,699
------------ ------------------------------
Total operating expenses 61,392,831 125,860,635 1,724,867
------------ ------------------------------
Operating profit (loss) 4,014,170 (589,137) (1,724,867)
------------ ------------------------------
Other Expenses (Income):
Interest income (654,201) (1,215,028) (452,300)
Interest expense 4,156,249 10,640,988 -
------------ ------------------------------
Total other
expenses/(income) 3,502,048 9,425,960 (452,300)
------------ ------------------------------
Income (loss) before
income taxes 512,122 (10,015,097) (1,272,567)
Income tax benefit 1,684,346 1,125,499 552,294
------------ ------------------------------
Net income (loss) $2,196,468 $(8,889,598) $ (720,273)
============ ==============================
Earnings (loss) per share:
Basic and diluted $0.04 $(0.27) $ (0.05)
============ ==============================
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 9, 2005 and December 31, 2004
ASSETS
September 9, December 31,
2005 2004
------------ ------------
(Unaudited)
Property and equipment, at cost $811,084,017 $286,727,306
Less: accumulated depreciation (17,300,783) (1,084,867)
------------ ------------
793,783,234 285,642,439
Deferred financing costs, net 2,925,759 1,344,378
Restricted cash 33,035,939 17,482,515
Due from hotel managers 34,543,143 2,626,262
Favorable lease asset, net 12,214,838 -
Purchase deposits and pre-acquisition
costs - 3,272,219
Prepaid and other assets 4,464,554 4,340,259
Cash and cash equivalents 9,968,037 76,983,107
------------ ------------
Total assets $890,935,504 $391,691,179
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Debt, at face amount $363,181,035 $177,827,573
Debt premium 2,832,142 2,944,237
------------ ------------
Total debt 366,013,177 180,771,810
Deferred income related to key money, net 6,383,518 2,490,385
Unfavorable lease liability, net 5,426,955 5,776,946
Due to hotel managers 21,649,144 3,985,795
Dividends declared and unpaid 8,893,732 -
Accounts payable and accrued expenses 12,270,323 3,078,825
------------ ------------
Total other liabilities 54,623,672 15,331,951
------------ ------------
Shareholders' Equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized; no shares
issued and outstanding - -
Common stock, $.01 par value; 100,000,000
shares authorized; 50,819,864 and
21,020,100 shares issued and outstanding
at September 9, 2005 and December 31,
2004, respectively 508,199 210,201
Additional paid-in capital 491,450,709 197,494,842
Accumulated deficit (21,660,253) (2,117,625)
------------ ------------
Total shareholders' equity 470,298,655 195,587,418
------------ ------------
Total liabilities and shareholders'
equity $890,935,504 $391,691,179
============ ============
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period from January 1, 2005 to September 9, 2005 and the
Period from May 6, 2004 (Incorporation) to September 10, 2004
Period from
Period from May 6, 2004
January 1, 2005 (Incorporation)
to September to September
9, 2005 10, 2004
(Unaudited) (Unaudited)
-------------------------------
Cash flows from operating activities:
Net loss $ (8,889,598) $ (720,273)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Real estate depreciation 16,072,526 9,167
Corporate asset depreciation as
corporate expenses 75,166
Non-cash straight line ground rent 4,839,677 -
Non-cash financing costs as
interest 1,100,820 -
Market value adjustment to interest
rate caps (11,402) -
Amortization of favorable lease
asset 70,601 -
Amortization of debt premium and
unfavorable lease liability (209,835) -
Amortization of deferred income (106,867) -
Stock-based compensation 5,582,077 645,000
Income tax benefit (1,125,499) (552,294)
Changes in assets and liabilities:
Prepaid expenses and other assets 1,012,604 (204,170)
Due to/from hotel managers (11,837,240) -
Accounts payable and accrued
expenses 4,069,073 388,914
-------------------------------
Net cash provided by (used in)
operating activities 10,642,103 (433,656)
-------------------------------
Cash flows from investing activities:
Hotel acquisitions (530,905,343) (81,302)
Hotel capital expenditures (9,646,244) -
Receipt of deferred key money 4,000,000 -
Cash paid for restricted cash at
acquisition (17,740,652) -
Purchase deposits and pre-
acquisition costs - (1,096,221)
-------------------------------
Net cash used in investing
activities (554,292,239) (1,177,523)
-------------------------------
Cash flows from financing activities:
Proceeds from mortgage debt 246,500,000 -
Draws on senior secured credit
facility 5,000,000 -
Repayments of mortgage debt (56,948,685) -
Scheduled mortgage debt principal
payments (2,146,538) -
Payment of financing costs (2,682,201) -
Proceeds from sale of common stock 291,799,785 197,376,548
Payment of dividends (1,680,656) -
Payment of costs related to sale of
common stock (3,206,639) (1,028,588)
-------------------------------
Net cash provided by financing
activities 476,635,066 196,347,960
-------------------------------
The accompanying notes are an integral part of these condensed
consolidated financial statements.
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Period from January 1, 2005 to September 9, 2005 and the
Period from May 6, 2004 (Incorporation) to September 10, 2004
Period from
Period from May 6, 2004
January 1, 2005 (Incorporation)
to September 9, to September
2005 10, 2004
--------------------------------
Net (decrease) increase in cash and
cash equivalents (67,015,070) 194,736,781
Cash and cash equivalents, beginning
of period 76,983,107 -
--------------------------------
Cash and cash equivalents, end of
period $ 9,968,037 $ 194,736,781
================================
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $ 9,283,715 $ -
================================
Cash paid for income taxes $ 1,114,363 $ -
================================
Non-Cash Investing and Financing
Activities:
Repayments of mortgage debt with
restricted cash $ 7,051,315 $ -
================================
Non-GAAP Financial Measures
We use the following four non-GAAP financial measures that we
believe are useful to investors as key measures of our operating
performance: (1) EBITDA (2) Adjusted EBITDA, (3) FFO and (4) Adjusted
FFO.
EBITDA represents net income (loss) excluding: (1) interest
expense; (2) provision for income taxes, including income taxes
applicable to sale of assets; and (3) depreciation and amortization.
We believe EBITDA is useful to an investor in evaluating our operating
performance because it helps investors evaluate and compare the
results of our operations from period to period by removing the impact
of our capital structure (primarily interest expense) and our asset
base (primarily depreciation and amortization) from our operating
results. We also use EBITDA as one measure in determining the value of
hotel acquisitions and dispositions.
Historical
--------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9, 2005 September 9, 2005
------------------- ------------------
Net income (loss) $ 2,196,468 $ (8,889,598)
Interest expense 4,156,249 10,640,988
Income tax benefit (1,684,346) (1,125,499)
Depreciation and amortization 7,369,396 16,072,526
------------------- ------------------
EBITDA $ 12,037,767 $ 16,698,417
================== ==================
Forecast Full Year 2005
--------------------------------------
Low End High End
------------------- ------------------
Net loss $ (10,336,250) $ (8,336,250)
Interest expense 17,400,000 17,400,000
Income tax benefit (1,750,000) (1,750,000)
Depreciation and amortization 27,800,000 27,800,000
------------------- ------------------
EBITDA $ 33,113,750 $ 35,113,750
================== ==================
Management also evaluates our performance by reviewing Adjusted
EBITDA because the Company believes that the exclusion of certain
additional recurring and non-recurring items described below provides
useful supplemental information regarding our ongoing operating
performance and that the presentation of Adjusted EBITDA, when
combined with the primary GAAP presentation of net income, is
beneficial to a complete understanding of our operating performance.
We adjust EBITDA for the following items, which may occur in any
period, and refer to this measure as Adjusted EBITDA:
-- Non-Cash Ground Rent: We exclude the non-cash expense incurred
from straight lining the rent from our ground lease
obligations and the non-cash amortization of our favorable
lease asset.
-- The impact of fully vested irrevocable commitments to issue
382,500 shares of stock to our five senior executive officers
made in connection with the initial public offering and
expensed in the second quarter. These were grants and do not
reflect the underlying performance of the Company.
-- Cumulative effect of a change in accounting principle --
Infrequently, the Financial Accounting Standards Board (FASB)
promulgates new accounting standards that require the
consolidated statement of operations to reflect the cumulative
effect of a change in accounting principle. We exclude these
one-time adjustments because they do not reflect our actual
performance for that period.
-- Impairment Losses -- We exclude the effect of impairment
losses recorded because we believe that including them in
EBITDA is not consistent with reflecting the ongoing
performance of our remaining assets. In addition, we believe
that impairment charges are similar to gains (losses) on
dispositions and depreciation expense, both of which are also
excluded from EBITDA.
Historical
--------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9, 2005 September 9, 2005
------------------- ------------------
EBITDA $ 12,037,767 $ 16,698,417
Non-cash ground rent 1,730,168 4,910,278
Initial public offering stock
grants -- 3,736,250
------------------ -----------------
Adjusted EBITDA $ 13,767,935 $ 25,344,945
================== =================
Forecast Full Year 2005
--------------------------------------
Low End High End
------------------- ------------------
EBITDA $ 33,113,750 $ 35,113,750
Non-cash ground rent 7,150,000 7,150,000
Initial public offering stock
grants 3,736,250 3,736,250
------------------ -----------------
Adjusted EBITDA $ 44,000,000 $ 46,000,000
================== =================
We compute FFO in accordance with standards established by NAREIT,
which defines FFO as net income (loss) (determined in accordance with
GAAP), excluding gains (losses) from sales of property, plus
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures (which are calculated to reflect FFO
on the same basis). We believe that the presentation of FFO provides
useful information to investors regarding our operating performance
because it is a measure of our operations without regard to specified
non-cash items, such as real estate depreciation and amortization and
gain or loss on sale of assets. We also use FFO as one measure in
determining our results after taking into account the impact of our
capital structure.
Historical
--------------------------------------
Fiscal Quarter Period from
Ended January 1, 2005 to
September 9, 2005 September 9, 2005
------------------ -------------------
Net income (loss) $ 2,196,468 $ (8,889,598)
Real estate related
depreciation and amortization 7,369,396 16,072,526
----------------- ------------------
FFO $ 9,565,864 $ 7,182,928
================= ==================
FFO per Share (Basic and
Diluted) $ 0.19 $ 0.21
================= ==================
Forecast Full Year 2005
--------------------------------------
Low End High End
------------------ -------------------
Net loss $ (10,336,250) $ (8,336,250)
Real estate related
depreciation and amortization 27,800,000 27,800,000
------------------ -----------------
FFO $ 17,463,750 $ 19,463,750
================== =================
Management also evaluates our performance by reviewing Adjusted
FFO because the Company believes that the exclusion of certain
additional recurring and non-recurring items described below provides
useful supplemental information regarding our ongoing operating
performance and that the presentation of Adjusted FFO, when combined
with the primary GAAP presentation of net income, is beneficial to a
complete understanding of our operating performance. We adjust FFO for
the following items, which may occur in any period, and refer to this
measure as Adjusted FFO:
-- Non-Cash Ground Rent: We exclude the non-cash expense incurred
from straight lining the rent from our ground lease
obligations and the non-cash amortization of our favorable
lease asset.
-- The impact of fully vested irrevocable commitments to issue
382,500 shares of stock to our five senior executive officers
made in connection with the initial public offering and
expensed in the second quarter. The impact of these grants do
not reflect the underlying performance of the Company.
-- Cumulative effect of a change in accounting principle --
Infrequently, the Financial Accounting Standards Board (FASB)
promulgates new accounting standards that require the
consolidated statement of operations to reflect the cumulative
effect of a change in accounting principle. We exclude these
one-time adjustments because they do not reflect our actual
performance for that period.
-- Impairment Losses -- We exclude the effect of impairment
losses recorded because we believe that including them in
EBITDA is not consistent with reflecting the ongoing
performance of our remaining assets. In addition, we believe
that impairment charges are similar to gains (losses) on
dispositions and depreciation expense, both of which are also
excluded from EBITDA.
Historical
---------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9 , 2005 September 9 , 2005
------------------- -------------------
FFO $ 9,565,864 $ 7,182,928
Non-cash ground rent 1,730,168 4,910,278
Initial public offering stock
grants -- 3,736,250
------------------ ------------------
Adjusted FFO $ 11,296,032 $ 15,829,456
================== ==================
Adjusted FFO per Share (Basic
and Diluted) $ 0.22 $ 0.47
================== ==================
Forecast Full Year 2005
--------------------------------------
Low End High End
------------------ -----------------
FFO $ 17,463,750 $ 19,463,750
Non-cash ground rent 7,150,000 7,150,000
Initial public offering stock
grants 3,736,250 3,736,250
------------------ -----------------
Adjusted FFO $ 28,350,000 $ 30,350,000
================== =================
Certain Definitions
In this supplemental, when we discuss the "twelve hotels" we are
discussing all of our hotels except SpringHill Suites Buckhead
(Atlanta) and the Oak Brook Hills Marriott Resort and when we discuss
the "fourteen hotels" we are discussing all of our hotels. We exclude
the two hotels from our discussion to enable our investors to compare
our performance on a same store basis with the guidance we provided at
the end of the second quarter. We excluded the SpringHill Suites
Buckhead from our prior guidance as it had been open only since July
2005 and has no comparable period in the prior year. We excluded the
Oak Brook Hills Marriott Resort because the Company excluded the
results in certain guidance provided when the Company released second
quarter results. At that time, the Company had not completed its audit
of the property and the hotel was undergoing a brand conversion.
In this release, when we discuss "Hotel Adjusted EBITDA", we
exclude from Hotel EBITDA the non-cash expense incurred by the hotel
due to the straight lining of the rent from our ground lease
obligations and the non-cash amortization of our favorable lease
asset. Hotel EBITDA represents hotel net income (loss) excluding: (1)
interest expense; (2) income taxes; and (3) depreciation and
amortization. Hotel Adjusted EBITDA margins are calculated as Hotel
Adjusted EBITDA divided by total hotel revenues.
DiamondRock Hospitality Company
Pro Forma Financial Information for the Fiscal Quarters Ended
September 9, 2005 and September 10, 2004 and the Periods from January
3, 2004 to September 10, 2004 and January 1, 2005 to September 9, 2005
The acquired properties are included in our results of operations
from the respective dates of acquisition. The following unaudited pro
forma results of operations reflect these transactions as if each had
occurred on the first day of the fiscal period presented. In our
opinion, all significant adjustments necessary to reflect the effects
of the acquisitions have been made; however, a preliminary allocation
of the purchase price to land and buildings was made, and we will
finalize the allocation after all information is obtained.
Fiscal Fiscal Period from Period from
Quarter Quarter January 1, January 3,
Ended Ended 2005 to 2004 to
September 9, September September 9, September
2005 10, 2004 2005 10, 2004
------------------------- ---------------------------
Revenues $72,515,200 $68,265,825 $226,125,395 $210,289,146
Hotel level
expenses 57,712,154 55,115,445 172,088,221 165,435,239
Depreciation and
amortization 7,949,197 7,634,092 24,173,933 23,328,370
Corporate
expenses 2,452,887 2,200,000 10,399,626 6,400,000
Interest
expenses, net 4,049,953 4,747,736 12,986,275 14,324,860
Income tax
benefit 1,949,897 907,570 2,706,346 4,946,017
------------------------- --------------------------
Net income
(loss) $ 2,300,906 $ (523,878) $ 9,183,686 $ 5,746,694
========================= ===========================
EBITDA $13,004,360 $10,950,380 $ 44,852,576 $ 38,453,907
========================= ===========================
Adjusted EBITDA $14,801,109 $12,747,129 $ 53,842,257 $ 43,707,338
========================= ===========================
FFO $10,250,103 $ 7,110,214 $ 33,357,619 $ 29,075,064
========================= ===========================
Adjusted FFO $12,046,852 $ 8,906,963 $ 42,347,300 $ 34,328,495
========================= ===========================
CONTACT: DiamondRock Hospitality Company
Mark W. Brugger, 240-744-1150
Exhibit 99.2
DiamondRock Hospitality Company
Supplemental Information
Third Quarter 2005
DiamondRock Hospitality Company
Supplemental Information
Third Quarter 2005
TABLE OF CONTENTS
PAGE
--------------
CORPORATE INFORMATION
The Company 3
Board of Directors and Executive Officers 4
Equity Research Coverage 5
FINANCIAL HIGHLIGHTS
Capitalization 6
Condensed Consolidated Statements of Operations 7
Condensed Consolidated Balance Sheets 8
Condensed Conslidated Statements of Cash Flows 9 - 10
Non-GAAP Financial Measures 11 - 14
Pro Forma Financial Information 15
Debt Summary 16
PORTFOLIO DATA
Portfolio Summary at September 9, 2005 17
Selected Financial and Operating Information by Property 18 - 22
Supplemental Information
Third Quarter 2005
------------------
CORPORATE INFORMATION
The Company
DiamondRock Hospitality Company is a self-advised real estate company that owns,
acquires and invests in upper upscale and upscale hotel properties located
primarily in North America. To a lesser extent, we may invest, on a selective
basis, in premium limited service and extended stay hotel properties in urban
locations. We began operations in July 2004 when we completed a private
placement of our common stock. As of the end of the fiscal quarter, we owned
fourteen hotels, comprising 5,633 rooms, located in the following markets:
Atlanta, Georgia (2 hotels), Fort Worth, Texas, Lexington, Kentucky, Los Angeles
(2 hotels), New York City (2 hotels), Northern California, Oak Brook, Illinois,
Salt Lake City, Washington D.C., St. Thomas, U.S. Virgin Islands, and Vail,
Colorado and for purchase prices aggregating approximately $847.7 million
(including pre-funded capital improvement restricted cash).
Our senior management team has extensive experience and a broad network of
relationships in the hotel industry, which we believe provides us with ongoing
access to hotel property investment opportunities and enables us to quickly
identify and consummate acquisitions. We also have an investment sourcing
relationship with Marriott International, a leading worldwide hotel brand,
franchise and management company. We believe that our ability to implement our
business strategies is greatly enhanced by the continuing source of additional
acquisition opportunities generated by this relationship, as many of the
properties that Marriott brings to our attention are offered to us through "off
market" transactions, meaning that they are not made generally available to
other hospitality companies.
We began operations in July 2004 and became a public reporting company in May
2005. We are listed on the New York Stock Exchange under the symbol "DRH".
Fiscal Year End:
December 31
Number of Full-Time Employees:
14
Corporate Headquarters:
6903 Rockledge Drive, Suite 800
Bethesda, MD 20817
(240) 744-1150
Mark Brugger
Chief Financial Officer
(240) 744-1150
Page 3
Supplemental Information
Third Quarter 2005
------------------
Board of Directors and Executive Officers
William W. McCarten
Chairman of the Board, Chief Executive Officer and Director
John L. Williams
President, Chief Operating Officer and Director
Daniel J. Altobello
Director and Chairman of the Compensation Committee
W. Robert Grafton
Lead Director and Chairman of the Audit Committee
Maureen L. McAvey
Director
Gilbert T. Ray
Director and Chairman of the Nominating and Corporate Governance Committee
Mark W. Brugger
Executive Vice President, Chief Financial Officer and Treasurer
Michael D. Schecter
General Counsel and Corporate Secretary
Sean M. Mahoney
Chief Accounting Officer and Corporate Controller
Page 4
Supplemental Information
Third Quarter 2005
------------------
Equity Research Coverage
Firm Analyst Telephone
- ---------------------------------- ----------------------- -----------------
Citigroup Smith Barney Michael Rietbrock (212) 816-7777
Friedman, Billings, Ramsey, & Co. Gustavo Sarago (703) 469-1042
JMP Securities William C. Marks (415) 835-8944
Wachovia Securities Jeffrey J. Donnelly (617) 603-4262
DiamondRock Hospitality is followed by the analysts listed above. Please note
that any opinions, estimates or forecasts regarding DiamondRock Hospitality's
performance made by these analysts are theirs alone and do not represent
opinions, forecasts or predictions of DiamondRock Hospitality or its management.
DiamondRock Hospitality does not by its reference here imply its endorsement of,
or concurrence with, such information, conclusions or recommendations.
Page 5
Supplemental Information
Third Quarter 2005
------------------
Capitalization
Capitalization September 9, 2005
- -------------------------------------------------------------------- --------------------
Common shares outstanding per balance sheet 50,819,864
Unvested restricted stock held by management and employees 738,000
Share grants under deferred compensation plan held by corporate
officers 383,608
--------------------
Combined shares outstanding 51,941,472
Common stock price at September 9, 2005 $ 11.70
--------------------
Common equity capitalization $ 607,715,222
Consolidated debt 366,013,177
Cash and cash equivalents (9,968,037)
--------------------
Total enterprise value $ 963,760,362
====================
Dividend Per Share
- --------------------------------------------------------------------
Common dividend declared (holders of record on September 9, 2005) $ 0.1725
====================
Share Reconciliation
- --------------------------------------------------------------------
Common shares outstanding, held by third parties 46,199,293
Common shares outstanding, held by Marriott International 4,428,571
Common shares outstanding, held by management and directors 192,000
--------------------
Subtotal 50,819,864
Unvested restricted stock held by management and employees 738,000
Share grants under deferred compensation plan held by corporate
officers 383,608
--------------------
Combined shares outstanding 51,941,472
====================
Page 6
Supplemental Information
Third Quarter 2005
------------------
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Quarter Ended September 9, 2005, the Period
from January 1, 2005 to September 9, 2005, and the Fiscal Quarter Ended
September 10, 2004 and Period from May 6, 2004 (Incorporation)
to September 10, 2004
Period from Fiscal Quarter Ended
Fiscal Quarter January 1, September 10, 2004
Ended 2005 to and Period from May 6,
September 9, 2005 September 9, 2005 2004 (Incorporation) to
September 10, 2004
(Unaudited) (Unaudited) (Unaudited)
Rooms $ 43,007,699 $ 85,509,567 $ -
Food and beverage 17,607,225 31,812,477 -
Other 4,792,077 7,949,454 -
----------------- --------------------------------------------
Total revenues 65,407,001 125,271,498 -
----------------- -------------------------------------------
Operating Expenses:
Rooms 10,853,919 21,439,976 -
Food and beverage 13,658,368 24,420,522 -
Management fees 2,171,128 4,280,139 -
Other hotel expenses 24,887,133 49,247,846 -
Depreciation and amortization 7,369,396 16,072,526 9,168
Corporate expenses 2,452,887 10,399,626 1,715,699
----------------- -------------------------------------------
Total operating expenses 61,392,831 125,860,635 1,724,867
----------------- --------------------------------------------
Operating profit (loss) 4,014,170 (589,137) (1,724,867)
----------------- -------------------------------------------
Other Expenses (Income):
Interest income (654,201) (1,215,028) (452,300)
Interest expense 4,156,249 10,640,988 -
----------------- -------------------------------------------
Total other expenses/(income) 3,502,048 9,425,960 (452,300)
----------------- --------------------------------------------
Income (loss) before income taxes 512,122 (10,015,097) (1,272,567)
Income tax benefit 1,684,346 1,125,499 552,294
----------------- -------------------------------------------
Net income (loss) $ 2,196,468 $ (8,889,598) $ (720,273)
================= ===========================================
Earnings (loss) per share:
Basic and diluted $ 0.04 $ (0.27) $ (0.05)
================= ===========================================
Page 7
Supplemental Information
Third Quarter 2005
------------------
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 9, 2005 and December 31, 2004
ASSETS
September 9,
2005 December 31, 2004
---------------- -----------------
(Unaudited)
Property and equipment, at cost $ 811,084,017 $ 286,727,306
Less: accumulated depreciation (17,300,783) (1,084,867)
---------------- -----------------
793,783,234 285,642,439
Deferred financing costs, net 2,925,759 1,344,378
Restricted cash 33,035,939 17,482,515
Due from hotel managers 34,543,143 2,626,262
Favorable lease asset, net 12,214,838 -
Purchase deposits and pre-acquisition costs - 3,272,219
Prepaid and other assets 4,464,554 4,340,259
Cash and cash equivalents 9,968,037 76,983,107
---------------- -----------------
Total assets $ 890,935,504 $ 391,691,179
================ =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Debt, at face amount $ 363,181,035 $ 177,827,573
Debt premium 2,832,142 2,944,237
---------------- -----------------
Total debt 366,013,177 180,771,810
Deferred income related to key money, net 6,383,518 2,490,385
Unfavorable lease liability, net 5,426,955 5,776,946
Due to hotel managers 21,649,144 3,985,795
Dividends declared and unpaid 8,893,732 -
Accounts payable and accrued expenses 12,270,323 3,078,825
---------------- -----------------
Total other liabilities 54,623,672 15,331,951
---------------- -----------------
Shareholders' Equity:
Preferred stock, $.01 par value; 10,000,000 shares
authorized; no shares issued and outstanding - -
Common stock, $.01 par value; 100,000,000 shares
authorized; 50,819,864 and 21,020,100 shares issued
and outstanding at September 9, 2005 and December 31,
2004, respectively 508,199 210,201
Additional paid-in capital 491,450,709 197,494,842
Accumulated deficit (21,660,253) (2,117,625)
---------------- -----------------
Total shareholders' equity 470,298,655 195,587,418
---------------- -----------------
Total liabilities and shareholders' equity $ 890,935,504 $ 391,691,179
================ =================
Page 8
Supplemental Information
Third Quarter 2005
------------------
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period from January 1, 2005 to September 9, 2005
and the Period from May 6, 2004 (Incorporation)
to September 10, 2004
Period from
May 6, 2004
Period from (Incorporation)
January 1, 2005 to to September 10,
September 9, 2005 2004
----------------------------------------
Cash flows from operating activities: (Unaudited) (Unaudited)
Net loss $ (8,889,598) $ (720,273)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Real estate depreciation 16,072,526 9,167
Corporate asset depreciation as corporate expenses 75,166
Non-cash straight line ground rent 4,839,677 -
Non-cash financing costs as interest 1,100,820 -
Market value adjustment to interest rate caps (11,402) -
Amortization of favorable lease asset 70,601 -
Amortization of debt premium and unfavorable lease
liability (209,835) -
Amortization of deferred income (106,867) -
Stock-based compensation 5,582,077 645,000
Income tax benefit (1,125,499) (552,294)
Changes in assets and liabilities:
Prepaid expenses and other assets 1,012,604 (204,170)
Due to/from hotel managers (11,837,240) -
Accounts payable and accrued expenses 4,069,073 388,914
----------------------------------------
Net cash provided by (used in) operating activities 10,642,103 (433,656)
----------------------------------------
Cash flows from investing activities:
Hotel acquisitions (530,905,343) (81,302)
Hotel capital expenditures (9,646,244) -
Receipt of deferred key money 4,000,000 -
Cash paid for restricted cash at acquisition (17,740,652) -
Purchase deposits and pre-acquisition costs - (1,096,221)
----------------------------------------
Net cash used in investing activities (554,292,239) (1,177,523)
----------------------------------------
Cash flows from financing activities:
Proceeds from mortgage debt 246,500,000 -
Draws on senior secured credit facility 5,000,000 -
Repayments of mortgage debt (56,948,685) -
Scheduled mortgage debt principal payments (2,146,538) -
Payment of financing costs (2,682,201) -
Proceeds from sale of common stock 291,799,785 197,376,548
Payment of dividends (1,680,656) -
Payment of costs related to sale of common stock (3,206,639) (1,028,588)
----------------------------------------
Net cash provided by financing activities 476,635,066 196,347,960
----------------------------------------
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Page 9
Supplemental Information
Third Quarter 2005
------------------
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued) For the Period from January 1, 2005 to September 9,
2005 and the Period from May 6, 2004
(Incorporation) to September 10, 2004
Period from
May 6, 2004
Period from (Incorporation)
January 1, 2005 to to September 10,
September 9, 2005 2004
Net (decrease) increase in cash and cash
equivalents (67,015,070) 194,736,781
Cash and cash equivalents, beginning of period 76,983,107 -
----------------------------------------
Cash and cash equivalents, end of period $ 9,968,037 $ 194,736,781
========================================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 9,283,715 $ -
========================================
Cash paid for income taxes $ 1,114,363 $ -
========================================
Non-Cash Investing and Financing Activities:
Repayments of mortgage debt with restricted cash $ 7,051,315 $ -
========================================
Page 10
Supplemental Information
Third Quarter 2005
------------------
Non-GAAP Financial Measures
We use the following four non-GAAP financial measures that we believe are
useful to investors as key measures of our operating performance: (1) EBITDA (2)
Adjusted EBITDA, (3) FFO and (4) Adjusted FFO.
EBITDA represents net income (loss) excluding: (1) interest expense; (2)
provision for income taxes, including income taxes applicable to sale of assets;
and (3) depreciation and amortization. We believe EBITDA is useful to an
investor in evaluating our operating performance because it helps investors
evaluate and compare the results of our operations from period to period by
removing the impact of our capital structure (primarily interest expense) and
our asset base (primarily depreciation and amortization) from our operating
results. We also use EBITDA as one measure in determining the value of hotel
acquisitions and dispositions.
Historical
-------------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9, 2005 September 9, 2005
--------------------- --------------------
Net income (loss) $ 2,196,468 $ (8,889,598)
Interest expense 4,156,249 10,640,988
Income tax benefit (1,684,346) (1,125,499)
Depreciation and amortization 7,369,396 16,072,526
--------------------- --------------------
EBITDA $ 12,037,767 $ 16,698,417
===================== ====================
Forecast Full Year 2005
-------------------------------------------
Low End High End
--------------------- --------------------
Net loss $ (10,336,250) $ (8,336,250)
Interest expense 17,400,000 17,400,000
Income tax benefit (1,750,000) (1,750,000)
Depreciation and amortization 27,800,000 27,800,000
--------------------- --------------------
EBITDA $ 33,113,750 $ 35,113,750
===================== ====================
Page 11
Supplemental Information
Third Quarter 2005
------------------
Management also evaluates our performance by reviewing Adjusted EBITDA
because the Company believes that the exclusion of certain additional recurring
and non-recurring items described below provides useful supplemental information
regarding our ongoing operating performance and that the presentation of
Adjusted EBITDA, when combined with the primary GAAP presentation of net income,
is beneficial to a complete understanding of our operating performance. We
adjust EBITDA for the following items, which may occur in any period, and refer
to this measure as Adjusted EBITDA:
o Non-Cash Ground Rent: We exclude the non-cash expense incurred from
straight lining the rent from our ground lease obligations and the
non-cash amortization of our favorable lease asset.
o The impact of fully vested irrevocable commitments to issue 382,500
shares of stock to our five senior executive officers made in
connection with the initial public offering and expensed in the second
quarter. These were grants and do not reflect the underlying
performance of the Company.
o Cumulative effect of a change in accounting principle -- Infrequently,
the Financial Accounting Standards Board (FASB) promulgates new
accounting standards that require the consolidated statement of
operations to reflect the cumulative effect of a change in accounting
principle. We exclude these one-time adjustments because they do not
reflect our actual performance for that period.
o Impairment Losses -- We exclude the effect of impairment losses
recorded because we believe that including them in EBITDA is not
consistent with reflecting the ongoing performance of our remaining
assets. In addition, we believe that impairment charges are similar to
gains (losses) on dispositions and depreciation expense, both of which
are also excluded from EBITDA.
Historical
------------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9 , 2005 September 9 , 2005
-------------------- --------------------
EBITDA $ 12,037,767 $ 16,698,417
Non-cash ground rent 1,730,168 4,910,278
Initial public offering stock grants -- 3,736,250
-------------------- --------------------
Adjusted EBITDA $ 13,767,935 $ 25,344,945
==================== ====================
Forecast Full Year 2005
------------------------------------------
Low End High End
-------------------- --------------------
EBITDA $ 33,113,750 $ 35,113,750
Non-cash ground rent 7,150,000 7,150,000
Initial public offering stock grants 3,736,250 3,736,250
-------------------- --------------------
Adjusted EBITDA $ 44,000,000 $ 46,000,000
==================== ====================
Page 12
Supplemental Information
Third Quarter 2005
------------------
We compute FFO in accordance with standards established by NAREIT, which
defines FFO as net income (loss) (determined in accordance with GAAP), excluding
gains (losses) from sales of property, plus depreciation and amortization and
after adjustments for unconsolidated partnerships and joint ventures (which are
calculated to reflect FFO on the same basis). We believe that the presentation
of FFO provides useful information to investors regarding our operating
performance because it is a measure of our operations without regard to
specified non-cash items, such as real estate depreciation and amortization and
gain or loss on sale of assets. We also use FFO as one measure in determining
our results after taking into account the impact of our capital structure.
Historical
-----------------------------------------
Fiscal Quarter Period from
Ended January 1, 2005 to
September 9, 2005 September 9, 2005
------------------- -------------------
Net income (loss) $ 2,196,468 $ (8,889,598)
Real estate related depreciation and
amortization 7,369,396 16,072,526
------------------- -------------------
FFO $ 9,565,864 $ 7,182,928
=================== ===================
FFO per Share (Basic and Diluted) $ 0.19 $ 0.21
=================== ===================
Forecast Full Year 2005
-----------------------------------------
Low End High End
------------------- -------------------
Net loss $ (10,336,250) $ (8,336,250)
Real estate related depreciation and
amortization 27,800,000 27,800,000
------------------- -------------------
FFO $ 17,463,750 $ 19,463,750
=================== ===================
Management also evaluates our performance by reviewing Adjusted FFO because
the Company believes that the exclusion of certain additional recurring and
non-recurring items described below provides useful supplemental information
regarding our ongoing operating performance and that the presentation of
Adjusted FFO, when combined with the primary GAAP presentation of net income, is
beneficial to a complete understanding of our operating performance. We adjust
FFO for the following items, which may occur in any period, and refer to this
measure as Adjusted FFO:
o Non-Cash Ground Rent: We exclude the non-cash expense incurred from
straight lining the rent from our ground lease obligations and the
non-cash amortization of our favorable lease asset.
o The impact of fully vested irrevocable commitments to issue 382,500
shares of stock to our five senior executive officers made in
connection with the initial public offering and expensed in the second
quarter. The impact of these grants do not reflect the underlying
performance of the Company.
o Cumulative effect of a change in accounting principle -- Infrequently,
the Financial Accounting Standards Board (FASB) promulgates new
accounting standards that require the consolidated statement of
operations to reflect the cumulative effect of a change in accounting
principle. We exclude these one-time adjustments because they do not
reflect our actual performance for that period.
Page 13
Supplemental Information
Third Quarter 2005
------------------
o Impairment Losses -- We exclude the effect of impairment losses
recorded because we believe that including them in EBITDA is not
consistent with reflecting the ongoing performance of our remaining
assets. In addition, we believe that impairment charges are similar to
gains (losses) on dispositions and depreciation expense, both of which
are also excluded from EBITDA.
Historical
-------------------------------------------
Fiscal Period from
Quarter Ended January 1, 2005 to
September 9 , 2005 September 9 , 2005
-------------------- --------------------
FFO $ 9,565,864 $ 7,182,928
Non-cash ground rent 1,730,168 4,910,278
Initial public offering stock grants -- 3,736,250
-------------------- --------------------
Adjusted FFO $ 11,296,032 $ 15,829,456
==================== ====================
Adjusted FFO per Share (Basic and Diluted) $ 0.22 $ 0.47
==================== ====================
Forecast Full Year 2005
-------------------------------------------
Low End High End
-------------------- --------------------
FFO $ 17,463,750 $ 19,463,750
Non-cash ground rent 7,150,000 7,150,000
Initial public offering stock grants 3,736,250 3,736,250
-------------------- --------------------
Adjusted FFO $ 28,350,000 $ 30,350,000
==================== ====================
Certain Definitions
In this supplemental, when we discuss the "twelve hotels" we are discussing all
of our hotels except SpringHill Suites Buckhead (Atlanta) and the Oak Brook
Hills Marriott Resort and when we discuss the "fourteen hotels" we are
discussing all of our hotels. We exclude the two hotels from our discussion to
enable our investors to compare our performance on a same store basis with the
guidance we provided at the end of the second quarter. We excluded the
SpringHill Suites Buckhead from our prior guidance as it had been open only
since July 2005 and has no comparable period in the prior year. We excluded the
Oak Brook Hills Marriott Resort because the Company excluded the results in
certain guidance provided when the Company released second quarter results. At
that time, the Company had not completed its audit of the property and the hotel
was undergoing a brand conversion.
In this release, when we discuss "Hotel Adjusted EBITDA", we exclude from Hotel
EBITDA the non-cash expense incurred by the hotel due to the straight lining of
the rent from our ground lease obligations and the non-cash amortization of our
favorable lease asset. Hotel EBITDA represents hotel net income (loss)
excluding: (1) interest expense; (2) income taxes; and (3) depreciation and
amortization. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted
EBITDA divided by total hotel revenues.
Page 14
Supplemental Information
Third Quarter 2005
------------------
DiamondRock Hospitality Company
Pro Forma Financial Information for the Fiscal Quarters Ended September
9, 2005 and September 10, 2004 and the Periods from January 3, 2004
to September 10, 2004 and January 1, 2005 to September 9, 2005
The acquired properties are included in our results of operations from the
respective dates of acquisition. The following unaudited pro forma results
of operations reflect these transactions as if each had occurred on the first
day of the fiscal period presented. In our opinion, all significant adjustments
necessary to reflect the effects of the acquisitions have been made; however, a
preliminary allocation of the purchase price to land and buildings was made, and
we will finalize the allocation after all information is obtained.
Period from Period from
Fiscal Fiscal January 1, 2005 January 3, 2004 to
Quarter Ended Quarter Ended to September 9, September 10,
September 9, 2005 September 10, 2004 2005 2004
-------------------------------------- --------------------------------------
Revenues $ 72,515,200 $ 68,265,825 $ 226,125,395 $ 210,289,146
Hotel level expenses 57,712,154 55,115,445 172,088,221 165,435,239
Depreciation and
amortization 7,949,197 7,634,092 24,173,933 23,328,370
Corporate expenses 2,452,887 2,200,000 10,399,626 6,400,000
Interest expenses, net 4,049,953 4,747,736 12,986,275 14,324,860
Income tax benefit 1,949,897 907,570 2,706,346 4,946,017
-------------------------------------- --------------------------------------
Net income (loss) $ 2,300,906 $ (523,878) $ 9,183,686 $ 5,746,694
====================================== ======================================
EBITDA $ 13,004,360 $ 10,950,380 $ 44,852,576 $ 38,453,907
====================================== ======================================
Adjusted EBITDA $ 14,801,109 $ 12,747,129 $ 53,842,257 $ 43,707,338
====================================== ======================================
FFO $ 10,250,103 $ 7,110,214 $ 33,357,619 $ 29,075,064
====================================== ======================================
Adjusted FFO $ 12,046,852 $ 8,906,963 $ 42,347,300 $ 34,328,495
====================================== ======================================
Page 15
Supplemental Information
Third Quarter 2005
------------------
Debt Summary
(dollars in thousands)
Interest Spread to Outstanding
Property Rate LIBOR Principal Maturity
- ------------------------------------------------------ ------------ ------------ -------------- -----------------------------
Courtyard Manhattan / Midtown East 5.195% Fixed $ 44,354 December 2009
Marriott Salt Lake City Downtown 5.500% Fixed 38,290 December 2014
Courtyard Manhattan / Fifth Avenue 6.325% 270bps 23,000 January 2007
Marriott Griffin Gate Resort 5.110% Fixed 30,597 January 2010
Bethesda Marriott Suites 7.690% Fixed 19,440 February 2023
Marriott Los Angeles Airport 5.300% Fixed 82,600 June 2015
Marriott Frenchman's Reef & Morning Star Beach Resort 5.440% Fixed 62,500 July 2015
Renaissance Worthington 5.400% Fixed 57,400 June 2015
Credit Facility Borrowings (as of September 9, 2005) 5.120% 145bps 5,000 July 2008
--------------
Total Debt (excluding Debt Premium) 5.52% (weighted average) 363,181 8.35 yrs. (weighted average)
==============
Fixed Interest Rate Debt to Total Debt 92.3%
Page 16
Supplemental Information
Third Quarter 2005
------------------
PORTFOLIO DATA
Portfolio Summary at September 9, 2005
% of
Property Location Rooms Total
- ------------------------------------------------------ ----------------------------- --------- --------
Marriott Los Angeles Airport Los Angeles, CA 1,004 18%
Salt Lake City Marriott Downtown Salt Lake City, UT 510 9%
Frenchman's Reef & Morning Star Marriott Beach Resort St. Thomas, U.S. Virgin Islands 504 9%
Renaissance Worthington Fort Worth, TX 504 9%
Torrance Marriott Los Angeles County, CA 487 9%
Marriott Griffin Gate Resort Lexington, KY 408 7%
Oak Brook Hills Resort & Conference Center Oak Brook, IL 384 7%
Vail Marriott Mountain Resort & Spa Vail, CO 346 6%
Marriott Atlanta Alpharetta Alpharetta, GA 318 6%
Courtyard Manhattan / Midtown East New York, NY 307 5%
Bethesda Marriott Suites Bethesda, MD 274 5%
SpringHill Suites Buckhead Atlanta, GA 220 4%
Courtyard Manhattan / Fifth Avenue New York, NY 185 3%
The Lodge at Sonoma, a Renaissance Resort & Spa Sonoma, CA 182 3%
--------- --------
Total Portfolio as of September 9, 2005 5,633 100%
========= ========
Page 17
Supplemental Information
Third Quarter 2005
------------------
Selected Financial and Operating Information by Property
Properties Owned as of September 9, 2005
(in thousands, except selected operating information)
The following tables present, except where noted, selected financial and
operating information by property for the fiscal quarter ended September 9,
2005, the period from January 1, 2005 to September 9, 2005, and the comparable
periods during 2004. Where relevant, the data is pro forma as it assumes that
the hotels were owned by the Company for the entire reporting periods of 2005
and 2004. Hotel Adjusted EBITDA reflects property net operating income excluding
corporate expenses, the non-cash expense incurred from straight lining the rent
from our ground lease obligations (where applicable), interest expense and
depreciation and amortization.
Fiscal Third Quarter Year-to-Date
------------------------------------------ -----------------------------------------
Ended Sept. Ended Sept. % Change Ended Sept. Ended Sept.
9, 2005 10, 2004 9, 2005 10, 2004 % Change
------------------------------------------ -----------------------------------------
MARRIOTT ATLANTA ALPHARETTA
- ---------------------------
Average Occupancy 57.8% 58.4% (-0.6 pts) 60.4% 60.6% (-0.2 pts)
ADR $ 132.22 $ 121.38 8.9% $ 132.92 $ 121.48 9.4%
RevPAR $ 76.44 $ 70.88 7.8% $ 80.27 $ 73.60 9.1%
Total Revenues $ 2,911 $ 2,816 3.3% $ 9,611 $ 8,814 9.0%
Net Income / (Loss) $ 446 $ 471 $ 1,973 $ 1,591
Plus: Depreciation $ 330 $ 304 $ 943 $ 912
--------------------------- ----------------------------
Hotel Adjusted EBITDA $ 776 $ 775 0.1% $ 2,916 $ 2,503 16.5%
=========================== ============================
BETHESDA MARRIOTT SUITES
- ------------------------
Average Occupancy 86.0% 73.1% 12.9 pts 77.2% 74.1% 3.1 pts
ADR $ 142.70 $ 153.53 (7.0%) $ 159.29 $ 154.60 3.0%
RevPAR $ 122.77 $ 112.20 9.4% $ 122.92 $ 114.56 7.3%
Total Revenues $ 3,761 $ 3,545 6.1% $ 11,164 $ 10,642 4.9%
Net Income / (Loss) $ (1,414) $ (1,362) $ (4,125) $ (4,111)
Plus: Depreciation $ 542 $ 530 $ 1,621 $ 1,591
Plus: Interest Expense $ 375 $ 317 $ 1,067 $ 951
Plus: Non-Cash Ground Rent $ 1,517 $ 1,517 $ 4,550 $ 4,550
--------------------------- ----------------------------
Hotel Adjusted EBITDA $ 1,020 $ 1,002 1.8% $ 3,113 $ 2,981 4.4%
=========================== ============================
Page 18
Supplemental Information
Third Quarter 2005
------------------
Fiscal Third Quarter Year-to-Date
------------------------------------------ -----------------------------------------
Ended Sept. Ended Sept. % Change Ended Sept. Ended Sept.
9, 2005 10, 2004 9, 2005 10, 2004 % Change
------------------------------------------ -----------------------------------------
SPRINGHILL SUITES BUCKHEAD
- --------------------------
(This property opened for business on July 1, 2005. The results presented below represent only our period of ownership.)
Average Occupancy 40.3% N/A N/A 40.3% N/A N/A
ADR $ 95.24 N/A N/A $ 95.2 N/A N/A
RevPAR $ 38.34 N/A N/A $ 38.34 N/A N/A
Total Revenues $ 476 N/A N/A $ 476 N/A N/A
Net Income / (Loss) $ (2) N/A N/A $ (2) N/A N/A
Plus: Depreciation $ 157 N/A N/A $ 157 N/A N/A
------------- --------------
Hotel Adjusted EBITDA $ 155 N/A N/A $ 155 N/A N/A
============= ==============
COURTYARD MANHATTAN / FIFTH AVENUE
- ----------------------------------
(This property received the Courtyard brand in January 2005. During the comparable periods of 2004, the property was branded
as a Clarion for a portion of the period and unaffiliated the remainder. The historical results presented here represent the
three months ended August 31, 2005 and 2004, and the eight months ended August 31, 2005 and 2004.)
Average Occupancy 78.1% 94.8% (-16.8 pts) 83.6% 87.9% (-4.3 pts)
ADR $ 188.16 $ 128.78 46.1% $ 185.79 $ 128.13 45.0%
RevPAR $ 146.92 $ 122.14 20.3% $ 155.26 $ 112.57 37.9%
Total Revenues $ 1,639 $ 2,208 (25.8%) $ 6,663 $ 5,414 23.1%
Net Income / (Loss) $ (883) $ (516) $ (1,143) $ (1,774)
Plus: Depreciation $ 502 $ 461 $ 1,507 $ 1,230
Plus: Interest Expense $ 285 $ 441 $ 979 $ 1,176
Plus: Non-Cash Ground Rent $ 72 $ - $ 216 $ -
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ (24) $ 386 (106.2%) $ 1,559 $ 632 146.7%
============= ============= ============== =============
COURTYARD MANHATTAN / MIDTOWN EAST
- ----------------------------------
Average Occupancy 88.2% 89.5% (-1.3 pts) 87.9% 89.0% (-1.1 pts)
ADR $ 211.05 $ 185.53 13.8% $ 206.28 $ 181.23 13.8%
RevPAR $ 186.25 $ 166.09 12.1% $ 181.31 $ 161.36 12.4%
Total Revenues $ 5,038 $ 4,489 12.2% $ 14,767 $ 13,169 12.1%
Net Income / (Loss) $ 833 $ 200 $ 1,615 $ 463
Plus: Depreciation $ 384 $ 661 $ 1,925 $ 1,984
Plus: Interest Expense $ 541 $ 547 $ 1,643 $ 1,642
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,758 $ 1,408 24.9% $ 5,183 $ 4,089 26.8%
============= ============= ============== =============
Page 19
Supplemental Information
Third Quarter 2005
------------------
Fiscal Third Quarter Year-to-Date
------------------------------------------ -----------------------------------------
Ended Sept. Ended Sept. % Change Ended Sept. Ended Sept.
9, 2005 10, 2004 9, 2005 10, 2004 % Change
------------------------------------------ -----------------------------------------
FRENCHMAN'S REEF & MORNING STAR MARRIOTT BEACH RESORT
- -----------------------------------------------------
(This property reports results on a monthly basis. The historical results presented here represent
the three months ended August 31, 2005 and 2004, and the eight months ended August 31, 2005 and
2004.)
Average Occupancy 81.6% 76.3% 5.3 pts 84.0% 78.6% 5.4 pts
ADR $ 161.18 $ 149.65 7.7% $ 206.91 $ 189.95 8.9%
RevPAR $ 131.50 $ 114.17 15.2% $ 173.81 $ 149.38 16.4%
Total Revenues $ 9,933 $ 9,034 10.0% $ 32,811 $ 29,773 10.2%
Net Income / (Loss) $ 13 $ (624) $ 4,990 $ 3,160
Plus: Depreciation $ 906 $ 583 $ 2,083 $ 1,750
Plus: Interest Expense $ 680 $ 791 $ 2,379 $ 2,374
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,599 $ 750 113.2% $ 9,452 $ 7,284 29.8%
============= ============= ============== =============
MARRIOTT GRIFFIN GATE RESORT
- ----------------------------
Average Occupancy 70.7% 76.5% (-5.8 pts) 65.7% 68.2% (-2.5 pts)
ADR $ 117.05 $ 107.61 8.8% $ 118.65 $ 107.51 10.4%
RevPAR $ 82.76 $ 82.32 0.5% $ 77.99 $ 73.37 6.3%
Total Revenues $ 5,758 $ 5,608 2.7% $ 16,078 $ 15,213 5.7%
Net Income / (Loss) $ 509 $ 646 $ 1,211 $ 1,040
Plus: Depreciation $ 485 $ 412 $ 1,444 $ 1,235
Plus: Interest Expense $ 370 $ 370 $ 1,114 $ 1,109
Plus: Non-Cash Ground Rent $ 1 $ - $ 3 $ -
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,365 $ 1,428 (4.4%) $ 3,772 $ 3,384 11.5%
============= ============= ============== =============
MARRIOTT LOS ANGELES AIRPORT
- ----------------------------
Average Occupancy 82.9% 82.5% 0.4 pts 79.1% 80.2% (-1.1 pts)
ADR $ 97.49 $ 91.98 6.0% $ 101.55 $ 96.22 5.5%
RevPAR $ 80.86 $ 75.90 6.5% $ 80.37 $ 77.21 4.1%
Total Revenues $ 11,210 $ 10,694 4.8% $ 34,810 $ 33,553 3.7%
Net Income / (Loss) $ 908 $ 475 $ 2,992 $ 2,484
Plus: Depreciation $ 950 $ 875 $ 2,717 $ 2,626
Plus: Interest Expense $ 969 $ 1,028 $ 3,102 $ 3,084
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 2,827 $ 2,378 18.9% $ 8,811 $ 8,194 7.5%
============= ============= ============== =============
Page 20
Fiscal Third Quarter Year-to-Date
------------------------------------------ -----------------------------------------
Ended Sept. Ended Sept. % Change Ended Sept. Ended Sept.
9, 2005 10, 2004 9, 2005 10, 2004 % Change
------------------------------------------ -----------------------------------------
OAK BROOK HILLS MARRIOTT RESORT
- -------------------------------
(This property converted to the Marriott brand in late-July 2005. During the comparable periods of 2004 and early 2005, the
property was unaffiliated. The historical results presented here represent the fiscal quarter beginning July 1 and ending
September 9, 2005 and August 31, 2004, and the eight months ended August 31, 2005 and 2004.)
Average Occupancy 60.6% 56.3% 4.3 pts 53.2% 48.7% 4.5 pts
ADR $ 119.64 $ 121.28 (1.4%) $ 118.27 $ 123.05 (3.9%)
RevPAR $ 72.51 $ 68.32 6.1% $ 62.95 $ 59.96 5.0%
Total Revenues $ 5,731 $ 4,647 23.3% $ 16,834 $ 15,598 7.9%
Net Income / (Loss) $ 592 $ 289 $ 603 $ 13
Plus: Depreciation $ 695 $ 790 $ 2,446 $ 2,371
Plus: Non-Cash Ground Rent $ 138 $ 138 $ 415 $ 415
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,425 $ 1,217 17.1% $ 3,464 $ 2,799 23.8%
============= ============= ============== =============
SALT LAKE CITY MARRIOTT DOWNTOWN
- --------------------------------
Average Occupancy 76.4% 70.4% 5.9 pts 72.3% 68.8% 3.4 pts
ADR $ 116.72 $ 116.97 (0.2%) $ 118.60 $ 116.26 2.0%
RevPAR $ 89.12 $ 82.40 8.2% $ 85.69 $ 80.00 7.1%
Total Revenues $ 5,404 $ 5,302 1.9% $ 16,226 $ 15,475 4.9%
Net Income / (Loss) $ 548 $ 279 $ 1,177 $ 816
Plus: Depreciation $ 563 $ 556 $ 1,689 $ 1,667
Plus: Interest Expense $ 492 $ 499 $ 1,497 $ 1,498
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,603 $ 1,334 20.1% $ 4,363 $ 3,981 9.6%
============= ============= ============== =============
THE LODGE AT SONOMA, A RENAISSANCE RESORT & SPA
- -----------------------------------------------
Average Occupancy 81.6% 76.2% 5.4 pts 71.3% 65.1% 6.2 pts
ADR $ 227.38 $ 207.75 9.4% $ 198.92 $ 184.88 7.6%
RevPAR $ 185.62 $ 158.34 17.2% $ 141.89 $ 120.35 17.9%
Total Revenues $ 4,600 $ 4,133 11.3% $ 11,233 $ 9,828 14.3%
Net Income / (Loss) $ 794 $ 736 $ 573 $ 137
Plus: Depreciation $ 405 $ 408 $ 1,229 $ 1,224
------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,199 $ 1,144 4.8% $ 1,802 $ 1,361 32.4%
============= ============= ============== =============
Page 21
Fiscal Third Quarter Year-to-Date
------------------------------------------- -----------------------------------------
Ended Sept. Ended Sept. % Change Ended Sept. Ended Sept. % Change
9, 2005 10, 2004 9, 2005 10, 2004
-------------- ------------- -------------- -------------- ------------- ------------
TORRANCE MARRIOTT
- -----------------
Average Occupancy 86.1% 82.8% 3.3 pts 82.0% 77.9% 4.1 pts
ADR $ 100.97 $ 98.59 2.4% $ 102.81 $ 99.05 3.8%
RevPAR $ 86.96 $ 81.66 6.5% $ 84.29 $ 77.13 9.3%
Total Revenues $ 4,975 $ 4,780 4.1% $ 15,157 $ 14,083 7.6%
Net Income / (Loss) $ 207 $ 73 $ 424 $ (10)
Plus: Depreciation $ 1,081 $ 1,084 $ 3,302 $ 3,251
-------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 1,288 $ 1,157 11.4% $ 3,726 $ 3,241 15.0%
============== ============= ============== =============
VAIL MARRIOTT MOUNTAIN RESORT & SPA
- -----------------------------------
(This property reports results on a monthly basis. The historical results presented here represent the three months ended
August 31, 2005 and 2004, and the eight months ended August 31, 2005 and 2004.)
Average Occupancy 58.8% 68.2% (-9.4 pts) 63.8% 66.4% (-2.6 pts)
ADR $ 141.08 $ 135.18 4.4% $ 200.02 $ 185.50 7.8%
RevPAR $ 82.97 $ 92.18 (10.0%) $ 127.64 $ 123.22 3.6%
Total Revenues $ 4,229 $ 5,204 (18.7%) $ 16,035 $ 16,042 (0.0%)
Net Income / (Loss) $ (49) $ 320 $ 3,056 $ 2,697
Plus: Depreciation $ 495 $ 578 $ 1,603 $ 1,541
-------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 446 $ 898 (50.3%) $ 4,659 $ 4,238 10.0%
============== ============= ============== =============
RENAISSANCE WORTHINGTON
- -----------------------
Average Occupancy 74.2% 70.0% 4.2 pts 78.3% 75.4% 2.9 pts
ADR $ 141.70 $ 131.85 7.5% $ 148.75 $ 136.40 9.1%
RevPAR $ 105.20 $ 92.30 14.0% $ 116.50 $ 102.81 13.3%
Total Revenues $ 6,841 $ 6,564 4.2% $ 24,249 $ 22,658 7.0%
Net Income / (Loss) $ (126) $ (445) $ 1,821 $ 957
Plus: Depreciation $ 412 $ 637 $ 1,698 $ 1,912
Plus: Interest Expense $ 669 $ 714 $ 2,152 $ 2,143
-------------- ------------- -------------- -------------
Hotel Adjusted EBITDA $ 955 $ 906 5.4% $ 5,671 $ 5,012 13.1%
============== ============= ============== =============
Page 22
