DiamondRock Hospitality Company Reports Second Quarter 2016 Results

BETHESDA, Md., Aug. 5, 2016 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") DRH, a lodging-focused real estate investment trust that owns a portfolio of 26 premium hotels in the United States, today announced results of operations for the quarter ended June 30, 2016.

Second Quarter 2016 Highlights

  • Net Income: Net income was $44.2 million and earnings per diluted share was $0.22.
  • Comparable RevPAR: RevPAR was $197.52, a 0.8% increase from the comparable period of 2015.
  • Comparable Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 35.85%, an increase of 11 basis points from the comparable period of 2015.
  • Adjusted EBITDA: Adjusted EBITDA was $84.1 million, an increase of 3.7% from 2015.
  • Adjusted FFO: Adjusted FFO was $63.1 million and Adjusted FFO per diluted share was $0.31.
  • Credit Facility: The Company amended its senior unsecured revolving credit facility, increasing the capacity to $300 million, decreasing pricing and extending the maturity date to May 2020.
  • Term Loan: The Company closed on a new five-year $100 million senior unsecured term loan.
  • Courtyard Fifth Avenue Loan Repayment: The Company repaid the $48.1 million mortgage loan secured by the Courtyard Fifth Avenue.
  • Hotel Dispositions: The Company sold the Orlando Airport Marriott for proceeds of approximately $67 million and the Hilton Minneapolis for proceeds of approximately $143 million.
  • Dividends: The Company declared a dividend of $0.125 per share during the second quarter, which was paid on July 12, 2016.

Recent Developments

  • Hotel Disposition: The Company sold the Hilton Garden Inn Chelsea/New York City for proceeds of approximately $65 million on July 7, 2016.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "The Company has successfully executed on our strategic priority of increasing liquidity and financial flexibility, with $400 million in financing activity and approximately $275 million in hotel dispositions in recent months. We expect to end the year with over $200 million in corporate cash, no outstanding borrowings on our credit facility and a net debt to Adjusted EBITDA ratio of 2.7 times. We are well positioned to deploy capital opportunistically in response to future market dislocations, including through share repurchases. During the second quarter, our team and operators were highly effective in identifying cost efficiencies that resulted in an impressive Hotel Adjusted EBITDA margin of 36 percent. The continued benefit of these same initiatives enables the Company to maintain Adjusted EBITDA and Adjusted FFO guidance despite our more cautious outlook for revenue growth on weaker business travel trends."

Operating Results      

Please see "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDA," "Adjusted EBITDA," "Hotel Adjusted EBITDA Margin," "FFO" and "Adjusted FFO"and a reconciliation of these measures to net income. Comparable operating results include our 2015 acquisitions for all periods presented and exclude our 2016 dispositions for all periods presented. See "Reconciliation of Comparable Operating Results" attached to this press release for a reconciliation to historical amounts.

For the quarter ended June 30, 2016, the Company reported the following:


Second Quarter  



2016


2015

Change

Comparable Operating Results (1) (2)





ADR

$231.31



$232.75


-0.6

%

Occupancy

85.4

%


84.2

%

1.2 percentage points


RevPAR

$197.52



$195.98


0.8

%

Revenues

$232.5 million



$229.6 million


1.2

%

Hotel Adjusted EBITDA Margin

35.85

%


35.74

%

11 basis points







Actual Operating Results





Revenues

$256.7 million



$249.8 million


2.8

%

Net income

$44.2 million



$24.8 million


$19.4 million


Earnings per diluted share

$0.22



$0.12


$0.10


Adjusted EBITDA

$84.1 million



$81.1 million


$3.0 million


Adjusted FFO

$63.1 million



$61.5 million


$1.6 million


Adjusted FFO per diluted share

$0.31



$0.31


$0.00


 

(1) 

The amounts for all periods presented exclude the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.

(2) 

The 2015 amounts include pre-acquisition operating results for the Sheraton Suites Key West from April 1, 2015 to June 29, 2015 in order to reflect the period in 2015 comparable to our ownership period in 2016. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.

 

For the six months ended June 30, 2016, the Company reported the following:


Year to Date



2016


2015

Change

Comparable Operating Results (1)(2)





ADR

$224.26



$222.90


0.6

%

Occupancy

79.3

%


80.3

%

-1.0 percentage points


RevPAR

$177.81



$179.05


-0.7

%

Revenues

$424.5 million



$424.9 million


-0.1

%

Hotel Adjusted EBITDA Margin

31.88

%


31.64

%

24 basis points







Actual Operating Results





Revenues

$469.7 million



$458.7 million


2.4

%

Net income

$61.0 million



$35.5 million


$25.5 million


Earnings per diluted share

$0.30



$0.18


$0.12


Adjusted EBITDA

$134.5 million



$129.6 million


$4.9 million


Adjusted FFO

$105.9 million



$99.2 million


$6.7 million


Adjusted FFO per diluted share

$0.52



$0.49


$0.03


 

(1)

The amounts for all periods presented exclude the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.

(2) 

The 2015 amounts include pre-acquisition operating results for the Shorebreak Hotel from January 1, 2015 to February 5, 2015 and Sheraton Suites Key West from January 1, 2015 to June 29, 2015 in order to reflect the period in 2015 comparable to our ownership period in 2016. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.

Hotel Dispositions

As previously announced, the Company has sold three hotels in 2016 for total consideration of approximately $275 million.

  • Orlando Airport Marriott: On June 8, 2016, the Company sold the 485-room Orlando Airport Marriott for total consideration of approximately $67 million, which included payment for the hotel's replacement reserve, and recognized a pre-tax gain of $3.4 million.
  • Hilton Minneapolis: On June 30, 2016, the Company sold the 821-room Hilton Minneapolis for total consideration of approximately $143 million and recognized a gain of pre-tax $4.7 million.
  • Hilton Garden Inn Chelsea / New York City: On July 7, 2016, the Company sold the 169-room Hilton Garden Inn Chelsea July 7, 2016 for $65 million. The Company expects to record a gain on the sale of the hotel.

Financing Activity

On May 3, 2016, the Company amended its senior unsecured revolving credit facility to increase the capacity to $300 million, decrease pricing and extend the maturity date to May 2020. The new facility also includes an accordion feature to expand up to $600 million, subject to lender consent.  The interest rate on the new facility is based on a pricing grid ranging from 150 to 225 basis points over LIBOR, based on the Company's leverage ratio. The interest rate is currently 150 basis points over LIBOR.  The Company also lowered the unused facility fees and modified certain financial covenants.

On May 3, 2016, the Company also entered into a new five-year $100 million senior unsecured term loan. The interest rate on the term loan is based on a pricing grid ranging from 145 to 220 basis points over LIBOR, based on the Company's leverage ratio.   The interest rate is currently 145 basis points over LIBOR.  The proceeds were used to repay $55 million of borrowings outstanding on its senior unsecured credit facility as well as the repayment of the $48.1 mortgage loan secured by the Courtyard Manhattan Fifth Avenue.

Capital Expenditures

The Company spent approximately $54.1 million on capital improvements during the six months ended June 30, 2016, primarily related to the second phase of the Chicago Marriott Downtown renovation, the first phase of the renovation of The Gwen and the Worthington Renaissance guest room renovation.  As a result of the three dispositions and fewer planned renovations by the end of 2016, the Company is lowering its anticipated capital expenditures to $135 million. Previously, the Company expected to spend approximately $150 million on capital improvements at its hotels in 2016.  Significant projects in 2016 include:

  • The Gwen, a Luxury Collection Hotel: The Company rebranded the Conrad Chicago to Starwood's Luxury Collection on September 1, 2015. The renovation work associated with the brand conversion will be completed in two phases. The first phase, consisting of the lobby, rooftop bar and other public spaces, was completed in May 2016. The second phase of the renovation, consisting of the guest rooms, is expected to be completed during the seasonally slow winter season beginning in late 2016.
  • Chicago Marriott Downtown: The second and largest phase of the multi-year renovation was completed early in the second quarter. This phase included the upgrade of approximately 460 rooms and a new state-of-the-art fitness center. The remaining guest rooms will be renovated during the seasonally slow winter months over the next two years.
  • The Lodge at Sonoma: The Company expects to renovate the guest rooms at the hotel during the seasonally slow period during late 2016 and early 2017.
  • Charleston Renaissance: The Company expects to renovate the guest rooms at the hotel commencing in the fourth quarter of 2016.
  • Worthington Renaissance: The Company has commenced the guest room renovation at the hotel and expects to complete the project by the end of 2016.

Balance Sheet

As of June 30, 2016, the Company had $166.5 million of unrestricted cash on hand and approximately $0.9 billion of total debt, which consisted of property-specific mortgage debt and $100.0 million of borrowings on its term loan. The Company expects to end the year with over $200 million in unrestricted cash, approximately $0.9 billion of total debt and no outstanding borrowings on its senior unsecured credit facility

Share Repurchase Program

The Company's Board of Directors authorized a $150 million share repurchase program during 2015. Repurchases under this program will be made in open market or privately negotiated transactions from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The Company has not repurchased any shares of its common stock since the program started.

Dividends

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

Outlook and Guidance

The Company is providing annual guidance for 2016, but does not undertake to update it for any developments in its business.  Achievement of the anticipated results is subject to the risks disclosed in the Company's filings with the U.S. Securities and Exchange Commission.  Comparable RevPAR assumes that all of the Company's 26 hotels were owned since January 1, 2015.

The Company is updating its full year 2016 Adjusted EBITDA and Adjusted FFO guidance to reflect the dispositions of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea. The Company now expects modestly lower travel demand for the remainder of 2016, particularly in the transient segment. Based on this outlook, the Company now expects flat to 1 percent of RevPAR growth for the full year 2016. This level of portfolio RevPAR growth, combined with the continuing implementation of cost containment measures, is expected to generate Adjusted EBITDA and Adjusted FFO in the prior guidance range.

 


Previous Guidance

Reduction for Dispositions

Current Guidance


Metric

Low End

High End

Low End

High End



Comparable RevPAR Growth

 

2 percent

4 percent


0 percent

1 percent


Adjusted EBITDA

 

$265 million

$278 million

$15 million

$250 million

$263 million


Adjusted FFO

 

$211 million

$221 million

$12 million

$199 million

$209 million


Adjusted FFO per share

(based on 201.8 million shares)

 

$1.04 per share

$1.09 per share

$0.05 per share

$0.99 per share

$1.04 per share











 

The Company expects approximately 24.5% to 25.5% of its full year 2016 Adjusted EBITDA to be earned during the third quarter of 2016.

If any of the foregoing estimates and assumptions prove to be inaccurate, actual results, including the guidance, may vary from the amounts shown above.

Selected Quarterly Comparable Operating Information

The following table is presented to provide investors with selected quarterly comparable operating information for 2015 and 2016 year-to-date.  The operating information is for the Company's 26 hotels currently owned and assumes each of the hotels were owned since January 1, 2015.


Quarter 1, 2015

Quarter 2, 2015

Quarter 3, 2015

Quarter 4, 2015

Full Year 2015

ADR

$

211.89


$

232.75


$

223.34


$

227.67


$

224.17


Occupancy

76.4

%

84.2

%

83.4

%

77.0

%

80.3

%

RevPAR

$

161.88


$

195.98


$

186.31


$

175.30


$

179.94


Revenues (in thousands)

$

195,263


$

229,647


$

214,144


$

208,741


$

847,795


Hotel Adjusted EBITDA (in thousands)

$

52,351


$

82,072


$

68,300


$

65,624


$

268,347


        % of full Year

19.5

%

30.6

%

25.5

%

24.4

%

100.0

%

Hotel Adjusted EBITDA Margin

26.81

%

35.74

%

31.89

%

31.44

%

31.65

%

Available Rooms

845,504


857,479


867,904


867,468


3,438,355


 


Quarter 1, 2016

Quarter 2, 2016

YTD 2016



ADR

$

216.03


$

231.31


$

224.26




Occupancy

73.2

%

85.4

%

79.3

%



RevPAR

$

158.08


$

197.52


$

177.81




Revenues (in thousands)

$

192,034


$

232,500


$

424,534




Hotel Adjusted EBITDA (in thousands)

$

51,968


$

83,362


$

135,330




Hotel Adjusted EBITDA Margin

27.06

%

35.85

%

31.88

%



Available Rooms

858,039


858,767


1,716,806




Earnings Call

The Company will host a conference call to discuss its second quarter results on Friday, August 5, 2016, at 9:00 a.m. Eastern Time (ET).  To participate in the live call, investors are invited to dial 888-310-1786 (for domestic callers) or 330-863-3357 (for international callers).  The participant passcode is 44940565. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company's website at www.drhc.com or www.earnings.com. A replay of the webcast will also be archived on the website for one week.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations.  The Company owns 26 premium quality hotels with over 9,400 rooms. The Company has strategically positioned its hotels to be operated both under leading global brands such as Hilton, Marriott, and Westin and boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results.  Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made.  These risks include, but are not limited to: national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

 

 

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)



June 30, 2016


December 31, 2015

ASSETS




Property and equipment, net

$

2,641,298



$

2,882,176


Assets held for sale

62,035




Restricted cash

45,644



59,339


Due from hotel managers

90,839



86,698


Favorable lease assets, net

18,138



23,955


Prepaid and other assets (1)

52,494



46,758


Cash and cash equivalents

166,548



213,584


Total assets

$

3,076,996



$

3,312,510


LIABILITIES AND STOCKHOLDERS' EQUITY




Liabilities:




Mortgage debt, net of unamortized debt issuance costs

$

825,995



$

1,169,749


Term loan, net of unamortized debt issuance costs

99,299




Senior unsecured credit facility




Total debt

925,294



1,169,749






Deferred income related to key money, net

21,485



23,568


Unfavorable contract liabilities, net

73,601



74,657


Deferred ground rent

77,572



70,153


Due to hotel managers

59,579



65,350


Dividends declared and unpaid

25,583



25,599


Liabilities of assets held for sale

1,137




Accounts payable and accrued expenses (2)

54,981



58,829


Total other liabilities

313,938



318,156


Stockholders' Equity:




Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and outstanding




Common stock, $0.01 par value; 400,000,000 shares authorized; 200,888,710 and 200,741,777 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively

2,009



2,007


Additional paid-in capital

2,059,760



2,056,878


Accumulated deficit

(224,005)



(234,280)


Total stockholders' equity

1,837,764



1,824,605


Total liabilities and stockholders' equity

$

3,076,996



$

3,312,510


 

(1)

Includes $34.0 million of deferred tax assets, $9.7 million and $7.6 million of prepaid expenses, and $8.8 million and $5.2 million of other assets as of June 30, 2016 and December 31, 2015, respectively.



(2)

Includes $21.2 million of deferred tax liabilities, $12.0 million and $13.3 million of accrued property taxes, $6.2 million and $11.6 million of accrued capital expenditures, and $15.6 million and $12.7 million of other accrued liabilities as of June 30, 2016 and December 31, 2015, respectively.

 

 

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Revenues:








Rooms

$

186,113



$

181,563



$

335,556



$

326,199


Food and beverage

57,407



56,073



107,781



108,406


Other

13,144



12,165



26,361



24,084


Total revenues

256,664



249,801



469,698



458,689


Operating Expenses:








Rooms

43,257



41,993



81,971



80,457


Food and beverage

35,265



35,355



68,615



70,901


Management fees

8,772



8,903



15,381



15,103


Other hotel expenses

79,524



77,546



158,453



154,052


Depreciation and amortization

25,005



25,574



50,126



49,911


Hotel acquisition costs



260





492


Corporate expenses

6,736



6,331



12,736



11,741


Impairment losses



9,675





10,461


Total operating expenses, net

198,559



205,637



387,282



393,118


Operating profit

58,105



44,164



82,416



65,571










Interest and other income, net

(68)



(227)



(118)



(354)


Interest expense

11,074



12,838



22,738



26,056


Gain on sales of hotel properties

(8,121)





(8,121)




Total other expenses, net

2,885



12,611



14,499



25,702


Income before income taxes

55,220



31,553



67,917



39,869


Income tax expense

(11,045)



(6,731)



(6,964)



(4,405)


Net income

$

44,175



$

24,822



$

60,953



$

35,464


Earnings per share:








Basic earnings per share

$

0.22



$

0.12



$

0.30



$

0.18


Diluted earnings per share

$

0.22



$

0.12



$

0.30



$

0.18










Weighted-average number of common shares outstanding:








Basic

201,273,767



200,830,064



201,133,321


200,738,301

Diluted

201,827,384



201,142,747



201,768,451


201,115,115

 

Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, Adjusted EBITDA, Hotel EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP.  EBITDA, Adjusted EBITDA, Hotel EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.

Use and Limitations of Non-GAAP Financial Measures

Our management and Board of Directors use EBITDA, Adjusted EBITDA, Hotel EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

EBITDA and FFO

EBITDA represents net income excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from our operating results. In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA as one measure in determining the value of hotel acquisitions and dispositions.

The Company computes FFO in accordance with standards established by NAREIT, which defines FFO as net income determined in accordance with GAAP, excluding gains or losses from sales of properties and impairment losses, plus depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets.  The Company also uses FFO as one measure in assessing its operating results.

Adjustments to EBITDA and FFO

We adjust EBITDA and FFO 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 and Adjusted FFO, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor's complete understanding of our operating performance.  We adjust EBITDA and FFO for the following items:

  • Non-Cash Ground Rent: We exclude the non-cash expense incurred from the straight line recognition of rent from our ground lease obligations and the non-cash amortization of our favorable lease assets. We exclude these non-cash items because they do not reflect the underlying operating performance of our hotels.
  • Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of favorable and unfavorable contract assets recorded in conjunction with certain acquisitions because the non-cash amortization does not reflect the underlying operating performance of our hotels.
  • Cumulative Effect of a Change in Accounting Principle: Infrequently, the Financial Accounting Standards Board (FASB) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these adjustments because they do not reflect the underlying performance of the Company for that 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 we believe these gains or losses do not accurately reflect the underlying performance of the Company.
  • Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these costs do not reflect the underlying performance of the Company or our hotels.
  • Severance Costs: We exclude corporate severance costs and severance costs at out hotels related to lease terminations because we believe these costs do not reflect the underlying performance of the Company or our hotels.
  • Hotel Manager Transition Costs: We exclude the transition costs associated with a change in hotel manager because we believe these costs do not reflect the underlying performance of our hotels. During the three and six months ended June 30, 2015, we excluded the transition costs associated with the change of hotel managers in connection with the acquisitions of the Westin Fort Lauderdale and the Shorebreak Hotel.
  • Other Items: From time to time we incur costs or realize gains that we do not believe reflect the underlying performance of the Company or our hotels. Such items may include, but are not limited to, hotel pre-opening costs, lease preparation costs, contract termination fees, gains or losses from legal settlements, bargain purchase gains and gains from insurance proceeds.

In addition, to derive Adjusted EBITDA we exclude gains or losses on dispositions and impairment losses because we believe that including them in EBITDA does not reflect the ongoing performance of our hotels. Additionally, the gains or losses on dispositions and impairment losses represent either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.

In addition, to derive Adjusted FFO we exclude any fair value adjustments to debt instruments.

The following tables are reconciliations of our GAAP net income to EBITDA and Adjusted EBITDA (in thousands):    


Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Net income

$

44,175



$

24,822



$

60,953



$

35,464


Interest expense

11,074



12,838



22,738



26,056


Income tax expense

11,045



6,731



6,964



4,405


Real estate related depreciation and amortization

25,005



25,574



50,126



49,911


EBITDA

91,299



69,965



140,781



115,836


Non-cash ground rent

1,328



1,479



2,662



2,987


Non-cash amortization of favorable and unfavorable contract liabilities, net

(478)



(374)



(956)



(727)


Impairment losses



9,675





10,461


Gain on sale of hotel properties

(8,121)





(8,121)




Severance costs (1)

119





119




Hotel acquisition costs



260





492


Hotel manager transition costs (2)



66





534


Adjusted EBITDA

$

84,147



$

81,071



$

134,485



$

129,583


 

(1)

Classified as corporate expenses on the consolidated statements of operations.



(2)

Classified as other hotel expenses on the consolidated statements of operations.

 

 


Full Year 2016 Guidance


Low End


High End

Net income

$

106,881



$

117,881


Interest expense

43,000



42,500


Income tax expense

9,500



13,000


Real estate related depreciation and amortization

98,000



97,000


EBITDA

257,381



270,381


Non-cash ground rent

4,800



4,800


Non-cash amortization of favorable and unfavorable contracts, net

(1,800)



(1,800)


Gain on sale of hotel properties

(10,500)



(10,500)


Severance costs

119



119


Adjusted EBITDA

$

250,000



$

263,000


 

The following tables are reconciliations of our GAAP net income to FFO and Adjusted FFO (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,










2016


2015


2016


2015

Net income

$

44,175



$

24,822



$

60,953



$

35,464


Real estate related depreciation and amortization

25,005



25,574



50,126



49,911


Gain on sales of hotel properties, net of income tax

(7,010)





(7,010)




Impairment losses



9,675





10,461


FFO

62,170



60,071



104,069



95,836


Non-cash ground rent

1,328



1,479



2,662



2,987


Non-cash amortization of favorable and unfavorable contract liabilities, net

(478)



(374)



(956)



(727)


Hotel acquisition costs



260





492


Hotel manager transition costs (2)



66





534


Severance costs (1)

119





119




Fair value adjustments to debt instruments

4



(14)



18



66


Adjusted FFO

$

63,143



$

61,488



$

105,912



$

99,188


Adjusted FFO per diluted share

$

0.31



$

0.31



$

0.52



$

0.49


 

(1)  

Classified as corporate expenses on the consolidated statements of operations.



(2)  

Classified as other hotel expenses on the consolidated statements of operations.

 

 


Full Year 2016 Guidance


Low End


High End

Net income

$

106,881



$

117,881


Real estate related depreciation and amortization

98,000



97,000


Gain on sales of hotel properties, net of income tax

(9,000)



(9,000)


FFO

195,881



205,881


Non-cash ground rent

4,800



4,800


Non-cash amortization of favorable and unfavorable contract liabilities, net

(1,800)



(1,800)


Severance costs

119



119


Adjusted FFO

$

199,000



$

209,000


Adjusted FFO per diluted share

$

0.99



$

1.04


 

Hotel EBITDA and Hotel Adjusted EBITDA

In this release, when we discuss "Hotel Adjusted EBITDA," we exclude from Hotel EBITDA the non-cash expense incurred by the hotels due to the straight lining of the rent from our ground lease obligations, the non-cash amortization of our favorable and unfavorable contracts, and certain other items as described above.  Hotel EBITDA represents hotel net income 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.

The following table is a reconciliation of our GAAP net income to Hotel EBITDA and Hotel Adjusted EBITDA (in thousands):

 


Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Net income

$

44,175



$

24,822



$

60,953



$

35,464


Interest expense

11,074



12,838



22,738



26,056


Income tax expense

11,045



6,731



6,964



4,405


Real estate related depreciation and amortization

25,005



25,574



50,126



49,911


EBITDA

91,299



69,965



140,781



115,836


Corporate expenses

6,736



6,331



12,736



11,741


Interest and other income, net

(68)



(227)



(118)



(354)


Hotel acquisition costs



260





492


Gain on sale of hotel properties

(8,121)





(8,121)




Impairment losses



9,675





10,461


Hotel EBITDA

89,846



86,004



145,278



138,176


Non-cash ground rent

1,328



1,479



2,662



2,987


Non-cash amortization of favorable and unfavorable contract liabilities, net

(478)



(374)



(956)



(727)


Hotel manager transition costs



66





534


Hotel Adjusted EBITDA

$

90,696



$

87,175



$

146,984



$

140,970


 

Reconciliation of Comparable Operating Results

The following presents the revenues, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin together with comparable prior year results, which excludes the results for our 2016 dispositions and includes the pre-acquisition results for our 2015 acquisitions (in thousands):

 


Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Revenues

$

256,664



$

249,801



$

469,698



$

458,689


Hotel revenues from prior ownership (1)



4,455





11,537


Hotel revenues from sold hotels (2)

(24,164)



(24,610)



(45,164)



(45,315)


Comparable Revenues

$

232,500



$

229,646



$

424,534



$

424,911










Hotel Adjusted EBITDA

$

90,696



$

87,175



$

146,984



$

140,970


Hotel Adjusted EBITDA from prior ownership (1)



1,822





4,779


Hotel Adjusted EBITDA from sold hotels (2)

(7,334)



(6,925)



(11,654)



(11,326)


Comparable Hotel Adjusted EBITDA

$

83,362



$

82,072



$

135,330



$

134,423










Hotel Adjusted EBITDA Margin

35.34

%


34.90

%


31.29

%


30.73

%

Comparable Hotel Adjusted EBITDA Margin

35.85

%


35.74

%


31.88

%


31.64

%

 

(1) 

Amounts represent the pre-acquisition operating results of the Shorebreak Hotel for the period from January 1, 2015 to February 5, 2015 and the Sheraton Suites Key West for the period from January 1, 2015 to June 29, 2015.  The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.



(2) 

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

 

Comparable Hotel Operating Expenses

The following tables set forth hotel operating expenses for the three and six months ended June 30, 2016 and 2015 for each of the hotels that we owned as of June 30, 2016.  Our GAAP hotel operating expenses for the three and six months ended June 30, 2016 consisted of the line items set forth below (dollars in thousands) under the column titled "As Reported."  The amounts reported in this column include amounts that are not comparable period-over-period. In order to reflect the period in 2015 comparable to our ownership period in 2016, the amounts in the column titled "Adjustments for Acquisitions and Dispositions" represent the pre-acquisition operating results of the Shorebreak Hotel for the period from January 1, 2015 to February 5, 2015 and the Sheraton Suites Key West for the period from January 1, 2015 to June 29, 2015 and exclude the operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea for the time periods presented.  We provide this important supplemental information to our investors because this information provides a useful means for investors to measure our operating performance on a comparative basis.  See the column titled "Comparable."

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP in this release.  They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations at our hotels that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. In particular, we note the pre-acquisition operating results set forth in the column titled "Adjustments for Acquisitions" were obtained from the respective sellers of the hotels during the acquisition due diligence process.  We have made no adjustments to the amounts provided to us by the respective sellers.  The pre-acquisition operating results were not audited or reviewed by our independent auditors.

 

 


As Reported


Adjustments for
Acquisitions/Dispositions


Comparable


Three Months Ended June 30,


Three Months Ended June 30,


2016


2015


% Change


2016


2015


2016


2015


% Change

















Rooms departmental expenses

$

43,257



$

41,993



3.0

%


$

(3,876)



$

(3,242)



$

39,381



$

38,751



1.6

%

Food and beverage departmental expenses

35,265



35,355



(0.3)

%


(4,084)



(3,836)



31,181



31,519



(1.1)

%

Other direct departmental

3,056



4,202



(27.3)

%


(60)



(149)



2,996



4,053



(26.1)

%

General and administrative

20,598



18,574



10.9

%


(2,059)



(1,779)



18,539



16,795



10.4

%

Utilities

6,483



6,541



(0.9)

%


(619)



(526)



5,864



6,015



(2.5)

%

Repairs and maintenance

9,175



8,913



2.9

%


(837)



(673)



8,338



8,240



1.2

%

Sales and marketing

16,931



16,881



0.3

%


(1,901)



(1,988)



15,030



14,893



0.9

%

Franchise fees

5,749



5,228



10.0

%


(344)



26



5,405



5,254



2.9

%

Base management fees

6,296



6,300



(0.1)

%


(678)



(570)



5,618



5,730



(2.0)

%

Incentive management fees

2,476



2,603



(4.9)

%


6





2,482



2,603



(4.6)

%

Property taxes

10,656



10,661



%


(555)



(456)



10,101



10,205



(1.0)

%

Ground rent

3,726



3,811



(2.2)

%


(1,411)



(1,498)



2,315



2,313



0.1

%

Hotel manager transition costs



66



(100.0)

%








66



(100.0)

%

Other fixed expenses

3,150



2,669



18.0

%


(173)



(214)



2,977



2,455



21.3

%

Total hotel operating expenses

$

166,818



$

163,797



1.8

%


$

(16,591)



$

(14,905)



$150,227


$

148,892



0.9

%

 

 


As Reported


Adjustments for
Acquisitions/Dispositions


Comparable


Six Months Ended June 30,


Six Months Ended June 30,


2016


2015


% Change


2016


2015


2016


2015


% Change

















Rooms departmental expenses

$

81,971



$

80,457



1.9

%


$

(7,401)



$

(5,687)



$

74,570



$

74,770



(0.3)

%

Food and beverage departmental expenses

68,615



70,901



(3.2)

%


(8,239)



(7,229)



60,376



63,672



(5.2)

%

Other direct departmental

6,156



8,569



(28.2)

%


(117)



(224)



6,039



8,345



(27.6)

%

General and administrative

40,294



36,087



11.7

%


(4,171)



(3,117)



36,123



32,970



9.6

%

Utilities

13,295



13,711



(3.0)

%


(1,270)



(911)



12,025



12,800



(6.1)

%

Repairs and maintenance

18,491



17,991



2.8

%


(1,720)



(1,297)



16,771



16,694



0.5

%

Sales and marketing

32,615



31,982



2.0

%


(3,782)



(3,667)



28,833



28,315



1.8

%

Franchise fees

11,037



9,977



10.6

%


(573)



318



10,464



10,295



1.6

%

Base management fees

11,612



11,399



1.9

%


(1,271)



(917)



10,341



10,482



(1.3)

%

Incentive management fees

3,769



3,704



1.8

%






3,769



3,704



1.8

%

Property taxes

22,910



21,823



5.0

%


(1,143)



(806)



21,767



21,017



3.6

%

Ground rent

7,525



7,567



(0.6)

%


(2,901)



(2,939)



4,624



4,628



(0.1)

%

Hotel manager transition costs



534



(100.0)

%








534



(100.0)

%

Other fixed expenses

6,130



5,811



5.5

%


(440)



(892)



5,690



4,919



15.7

%

Total hotel operating expenses

$

324,420



$

320,513



1.2

%


$

(33,028)



$

(27,368)



$

291,392



$

293,145



(0.6)

%

 

 

Market Capitalization as of June 30, 2016

(in thousands)

 

Enterprise Value






Common equity capitalization (at June 30, 2016 closing price of $9.03/share)


$

1,823,898

Consolidated debt


925,294

Cash and cash equivalents


(166,548)

Total enterprise value


$

2,582,644

Share Reconciliation






Common shares outstanding


200,889

Unvested restricted stock held by management and employees


685

Share grants under deferred compensation plan


408

Combined shares outstanding


201,982

 

 

Debt Summary as of June 30, 2016

(dollars in thousands)

 

Property


Interest Rate


Term


Outstanding
Principal


Maturity

Marriott Salt Lake City Downtown


4.25%


Fixed


$

59,234


November 2020

Westin Washington D.C. City Center


3.99%


Fixed


67,822


January 2023

The Lodge at Sonoma, a Renaissance Resort & Spa


3.96%


Fixed


29,242


April 2023

Westin San Diego


3.94%


Fixed


66,959


April 2023

Courtyard Manhattan / Midtown East


4.40%


Fixed


86,000


August 2024

Renaissance Worthington


3.66%


Fixed


85,000


May 2025

JW Marriott Denver at Cherry Creek


4.33%


Fixed


65,000


July 2025

Westin Boston Waterfront Hotel


4.36%


Fixed


203,115


November 2025

Lexington Hotel New York


LIBOR + 2.25(1)


Variable


170,368


October 2017 (2)

     Debt issuance costs, net






(6,745)



Total mortgage debt, net of unamortized debt issuance costs






$

825,995












Senior unsecured term loan


LIBOR + 1.45(3)


Variable


100,000


May 2021

     Debt issuance costs, net






(701)



Senior unsecured term loan, net of unamortized debt issuance costs




$

99,299












Senior unsecured credit facility


LIBOR + 1.50(4)


Variable



May 2020 (5)










Total debt, net of unamortized debt issuance costs






$

925,294












Weighted-average interest rate of fixed rate debt


4.22%







Total weighted-average interest rate


3.71%







 

(1)

The interest rate as of June 30, 2016 was 2.71%.



(2)

May be extended for two additional one-year terms subject to the satisfaction of certain conditions, including a debt yield based on trailing 12-month hotel cash flows equal to or greater than 13%, and the payment of an extension fee.  The debt yield as of June 30, 2016 was approximately 6.4%.



(3)

The interest rate as of June 30, 2016 was 1.90%.



(4)

The interest rate as of June 30, 2016 was 1.97%.



(5)

May be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.

 

 


Operating Statistics – Second Quarter



ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin



2Q 2016

2Q 2015

B/(W)


2Q 2016

2Q 2015

B/(W)


2Q 2016

2Q 2015

B/(W)


2Q 2016

2Q 2015

B/(W)

Atlanta Alpharetta Marriott


$

171.07


$

156.63


9.2

%


77.6

%

77.9

%

(0.3)

%


$

132.78


$

122.04


8.8

%


35.89

%

34.07

%

182 bps

Bethesda Marriott Suites


$

182.79


$

182.77


%


84.6

%

77.4

%

7.2

%


$

154.63


$

141.45


9.3

%


38.02

%

36.40

%

162 bps

Boston Westin


$

264.70


$

261.84


1.1

%


87.1

%

81.7

%

5.4

%


$

230.60


$

213.80


7.9

%


38.18

%

36.73

%

145 bps

Hilton Boston Downtown


$

308.62


$

315.17


(2.1)

%


93.9

%

88.6

%

5.3

%


$

289.82


$

279.15


3.8

%


46.20

%

45.92

%

28 bps

Hilton Burlington


$

178.81


$

163.37


9.5

%


85.0

%

84.7

%

0.3

%


$

152.06


$

138.40


9.9

%


43.29

%

41.88

%

141 bps

Renaissance Charleston


$

253.81


$

248.37


2.2

%


94.0

%

95.2

%

(1.2)

%


$

238.64


$

236.43


0.9

%


46.54

%

42.90

%

364 bps

Hilton Garden Inn Chelsea


$

242.12


$

245.59


(1.4)

%


99.0

%

96.7

%

2.3

%


$

239.60


$

237.51


0.9

%


35.55

%

34.39

%

116 bps

Chicago Marriott


$

243.58


$

245.52


(0.8)

%


83.3

%

85.0

%

(1.7)

%


$

202.88


$

208.64


(2.8)

%


38.66

%

32.91

%

575 bps

Chicago Gwen


$

225.43


$

245.09


(8.0)

%


86.2

%

83.3

%

2.9

%


$

194.28


$

204.18


(4.8)

%


37.79

%

37.65

%

14 bps

Courtyard Denver Downtown


$

211.62


$

207.82


1.8

%


84.6

%

82.6

%

2.0

%


$

178.98


$

171.60


4.3

%


52.39

%

49.44

%

295 bps

Courtyard Fifth Avenue


$

270.48


$

289.68


(6.6)

%


92.3

%

91.7

%

0.6

%


$

249.74


$

265.57


(6.0)

%


25.45

%

30.80

%

-535 bps

Courtyard Midtown East


$

272.85


$

285.21


(4.3)

%


95.0

%

94.3

%

0.7

%


$

259.21


$

268.89


(3.6)

%


35.43

%

38.12

%

-269 bps

Fort Lauderdale Westin


$

190.41


$

172.43


10.4

%


93.6

%

84.7

%

8.9

%


$

178.22


$

146.01


22.1

%


38.47

%

29.78

%

869 bps

Frenchman's Reef


$

233.85


$

242.58


(3.6)

%


87.2

%

87.4

%

(0.2)

%


$

204.03


$

211.98


(3.8)

%


23.19

%

25.37

%

-218 bps

JW Marriott Denver Cherry Creek


$

277.31


$

281.04


(1.3)

%


81.4

%

81.3

%

0.1

%


$

225.81


$

228.51


(1.2)

%


38.66

%

36.33

%

233 bps

Inn at Key West


$

189.50


$

210.18


(9.8)

%


85.7

%

90.6

%

(4.9)

%


$

162.37


$

190.42


(14.7)

%


45.26

%

50.25

%

-499 bps

Sheraton Suites Key West(1)


$

239.78


$

235.94


1.6

%


90.8

%

94.6

%

(3.8)

%


$

217.77


$

223.20


(2.4)

%


43.13

%

40.10

%

303 bps

Lexington Hotel New York


$

249.39


$

265.83


(6.2)

%


95.2

%

95.3

%

(0.1)

%


$

237.36


$

253.42


(6.3)

%


23.53

%

37.55

%

-1402 bps

Hilton Minneapolis(2)


$

169.82


$

157.18


8.0

%


78.5

%

83.9

%

(5.4)

%


$

133.29


$

131.82


1.1

%


30.87

%

27.94

%

293 bps

Orlando Airport Marriott(3)


$

110.43


$

110.45


%


81.2

%

77.6

%

3.6

%


$

89.63


$

85.70


4.6

%


24.93

%

25.97

%

-104 bps

Hotel Rex


$

228.36


$

226.42


0.9

%


87.7

%

90.0

%

(2.3)

%


$

200.28


$

203.76


(1.7)

%


36.89

%

37.19

%

-30 bps

Salt Lake City Marriott


$

152.89


$

150.61


1.5

%


74.0

%

75.1

%

(1.1)

%


$

113.09


$

113.10


%


35.33

%

33.52

%

181 bps

Shorebreak


$

221.47


$

227.09


(2.5)

%


82.7

%

81.5

%

1.2

%


$

183.09


$

185.07


(1.1)

%


33.80

%

32.74

%

106 bps

The Lodge at Sonoma


$

312.21


$

286.72


8.9

%


82.5

%

84.0

%

(1.5)

%


$

257.49


$

240.84


6.9

%


32.57

%

34.27

%

-170 bps

Hilton Garden Inn Times Square Central


$

259.62


$

277.41


(6.4)

%


97.2

%

98.5

%

(1.3)

%


$

252.33


$

273.37


(7.7)

%


35.92

%

49.34

%

-1342 bps

Vail Marriott


$

160.01


$

161.62


(1.0)

%


53.9

%

52.4

%

1.5

%


$

86.21


$

84.68


1.8

%


1.24

%

8.31

%

-707 bps

Westin San Diego


$

187.94


$

185.89


1.1

%


84.5

%

86.4

%

(1.9)

%


$

158.73


$

160.61


(1.2)

%


35.51

%

32.99

%

252 bps

Westin Washington D.C. City Center


$

259.45


$

248.34


4.5

%


91.1

%

90.4

%

0.7

%


$

236.31


$

224.44


5.3

%


45.77

%

43.27

%

250 bps

Renaissance Worthington


$

184.87


$

184.68


0.1

%


75.4

%

71.2

%

4.2

%


$

139.31


$

131.57


5.9

%


39.67

%

37.53

%

214 bps

Total


$

223.35


$

223.50


(0.1)

%


84.9

%

84.2

%

0.7

%


$

189.71


$

188.08


0.9

%


35.34

%

35.09

%

25 bps

Comparable Total(4)


$

231.31


$

232.75


(0.6)

%


85.4

%

84.2

%

1.2

%


$

197.52


$

195.98


0.8

%


35.85

%

35.74

%

11 bps

 

(1)

The hotel was acquired on June 30, 2015.  The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016.

(2) 

The hotel was sold on June 30, 2016.  The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.

(3) 

The hotel was sold on June 8, 2016.  The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.

(4) 

Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.

 

 

Operating Statistics – Year to Date



ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin



YTD 2016

YTD 2015

B/(W)


YTD 2016

YTD 2015

B/(W)


YTD 2016

YTD 2015

B/(W)


YTD 2016

YTD 2015

B/(W)

Atlanta Alpharetta Marriott


$

177.54


$

165.05


7.6

%


73.3

%

73.1

%

0.2

%


$

130.08


$

120.68


7.8

%


35.76

%

35.10

%

66 bps

Bethesda Marriott Suites


$

173.45


$

177.33


(2.2)%



72.6

%

67.1

%

5.5

%


$

125.94


$

118.95


5.9

%


30.34

%

29.62

%

72 bps

Boston Westin


$

236.15


$

234.85


0.6

%


79.2

%

77.3

%

1.9

%


$

186.97


$

181.44


3.0

%


30.59

%

29.63

%

96 bps

Hilton Boston Downtown


$

262.60


$

270.15


(2.8)%



85.3

%

79.1

%

6.2

%


$

224.09


$

213.69


4.9

%


37.82

%

35.42

%

240 bps

Hilton Burlington


$

155.50


$

149.26


4.2

%


76.5

%

73.9

%

2.6

%


$

118.98


$

110.35


7.8

%


35.46

%

34.03

%

143 bps

Renaissance Charleston


$

229.83


$

225.84


1.8

%


90.2

%

91.3

%

(1.1)%



$

207.31


$

206.24


0.5

%


40.85

%

37.35

%

350 bps

Hilton Garden Inn Chelsea


$

203.43


$

205.98


(1.2)%



98.0

%

92.2

%

5.8

%


$

199.35


$

190.00


4.9

%


26.57

%

25.14

%

143 bps

Chicago Marriott


$

217.00


$

213.90


1.4

%


61.8

%

71.1

%

(9.3)%



$

134.20


$

152.18


(11.8)%



21.69

%

20.71

%

98 bps

Chicago Gwen


$

199.94


$

213.82


(6.5)%



70.7

%

73.4

%

(2.7)%



$

141.32


$

156.92


(9.9)%



23.59

%

23.67

%

-8 bps

Courtyard Denver Downtown


$

199.18


$

198.69


0.2

%


80.2

%

78.8

%

1.4

%


$

159.68


$

156.66


1.9

%


47.51

%

46.40

%

111 bps

Courtyard Fifth Avenue


$

240.81


$

252.85


(4.8)%



85.3

%

87.8

%

(2.5)%



$

205.39


$

221.92


(7.4)%



13.74

%

18.63

%

-489 bps

Courtyard Midtown East


$

240.70


$

249.30


(3.4)%



90.2

%

89.7

%

0.5

%


$

217.20


$

223.70


(2.9)%



25.26

%

27.59

%

-233 bps

Fort Lauderdale Westin


$

222.00


$

202.13


9.8

%


95.6

%

90.7

%

4.9

%


$

212.23


$

183.39


15.7

%


43.64

%

36.66

%

698 bps

Frenchman's Reef


$

285.65


$

287.65


(0.7)%



87.5

%

88.5

%

(1.0)%



$

250.05


$

254.47


(1.7)%



30.76

%

29.94

%

82 bps

JW Marriott Denver Cherry Creek


$

267.08


$

271.46


(1.6)%



79.2

%

77.5

%

1.7

%


$

211.54


$

210.50


0.5

%


35.08

%

32.20

%

288 bps

Inn at Key West


$

227.04


$

247.13


(8.1)%



91.1

%

92.4

%

(1.3)%



$

206.82


$

228.44


(9.5)%



50.00

%

57.33

%

-733 bps

Sheraton Suites Key West(1)


$

278.09


$

273.42


1.7

%


93.1

%

96.7

%

(3.6)%



$

259.04


$

264.30


(2.0)%



48.10

%

45.93

%

217 bps

Lexington Hotel New York


$

219.60


$

224.30


(2.1)%



88.1

%

92.2

%

(4.1)%



$

193.42


$

206.81


(6.5)%



11.17

%

24.86

%

-1369 bps

Hilton Minneapolis(2)


$

149.38


$

141.74


5.4

%


69.8

%

75.2

%

(5.4)%



$

104.32


$

106.58


(2.1)%



19.91

%

19.54

%

37 bps

Orlando Airport Marriott(3)


$

129.43


$

128.65


0.6

%


86.8

%

84.6

%

2.2

%


$

112.29


$

108.79


3.2

%


35.81

%

35.31

%

50 bps

Hotel Rex


$

239.01


$

226.91


5.3

%


83.4

%

84.1

%

(0.7)%



$

199.43


$

190.82


4.5

%


36.02

%

33.65

%

237 bps

Salt Lake City Marriott


$

158.77


$

154.92


2.5

%


69.8

%

74.2

%

(4.4)%



$

110.79


$

114.92


(3.6)%



34.78

%

34.07

%

71 bps

Shorebreak(4)


$

218.53


$

216.55


0.9

%


79.1

%

80.3

%

(1.2)%



$

172.92


$

173.95


(0.6)%



29.77

%

27.38

%

239 bps

The Lodge at Sonoma


$

271.24


$

253.07


7.2

%


78.0

%

79.4

%

(1.4)%



$

211.57


$

200.87


5.3

%


26.70

%

25.60

%

110 bps

Hilton Garden Inn Times Square Central


$

221.61


$

230.42


(3.8)%



95.6

%

96.4

%

(0.8)%



$

211.80


$

222.03


(4.6)%



26.95

%

43.78

%

-1683 bps

Vail Marriott


$

317.45


$

307.06


3.4

%


71.6

%

71.8

%

(0.2)%



$

227.15


$

220.58


3.0

%


41.35

%

40.77

%

58 bps

Westin San Diego


$

187.57


$

186.76


0.4

%


84.1

%

83.8

%

0.3

%


$

157.72


$

156.55


0.7

%


37.62

%

34.24

%

338 bps

Westin Washington D.C. City Center


$

235.06


$

230.00


2.2

%


85.7

%

81.6

%

4.1

%


$

201.41


$

187.68


7.3

%


40.49

%

36.42

%

407 bps

Renaissance Worthington


$

183.79


$

184.05


(0.1)%



71.2

%

72.9

%

(1.7)%



$

130.88


$

134.25


(2.5)%



37.10

%

37.99

%

-89 bps

Total


$

214.82


$

212.97


0.9

%


79.2

%

80.3

%

(1.1)%



$

170.05


$

171.00


(0.6)%



31.29

%

31.03

%

26 bps

Comparable Total(5)


$

224.26


$

222.90


0.6

%


79.3

%

80.3

%

(1.0)%



$

177.81


$

179.05


(0.7)%



31.88

%

31.64

%

24 bps

 

(1)

The hotel was acquired on June 30, 2015.  The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016.

(2) 

The hotel was sold on June 30, 2016.  The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.

(3) 

The hotel was sold on June 8, 2016.  The 2015 operating results reflect the period in 2015 comparable to our ownership period in 2016.

(4) 

The hotel was acquired on February 6, 2015.  The 2015 amounts include pre-acquisition operating results in order to reflect the period in 2015 comparable to our ownership period in 2016.

(5) 

Excludes the three hotels sold in 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.

 

 

Hotel Adjusted EBITDA Reconciliation



Second Quarter 2016






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

5,274



$

1,533


$

360


$


$


$

1,893


Bethesda Marriott Suites


$

5,031



$

24


$

356


$


$

1,533


$

1,913


Boston Westin


$

29,014



$

6,655


$

2,199


$

2,283


$

(60)


$

11,077


Hilton Boston Downtown


$

11,314



$

4,032


$

1,195


$


$


$

5,227


Hilton Burlington


$

4,756



$

1,583


$

476


$


$


$

2,059


Renaissance Charleston


$

3,971



$

1,631


$

249


$


$

(32)


$

1,848


Hilton Garden Inn Chelsea


$

3,747



$

1,092


$

240


$


$


$

1,332


Chicago Marriott


$

31,358



$

9,018


$

3,475


$

28


$

(397)


$

12,124


Chicago Gwen


$

7,045



$

1,961


$

701


$


$


$

2,662


Courtyard Denver Downtown


$

3,050



$

1,312


$

286


$


$


$

1,598


Courtyard Fifth Avenue


$

4,374



$

222


$

448


$

391


$

52


$

1,113


Courtyard Midtown East


$

7,872



$

1,112


$

669


$

1,008


$


$

2,789


Fort Lauderdale Westin


$

12,255



$

3,546


$

1,169


$


$


$

4,715


Frenchman's Reef


$

16,963



$

2,330


$

1,604


$


$


$

3,934


JW Marriott Denver Cherry Creek


$

6,523



$

1,288


$

515


$

719


$


$

2,522


Inn at Key West


$

2,026



$

733


$

184


$


$


$

917


Sheraton Suites Key West


$

4,653



$

1,493


$

514


$


$


$

2,007


Lexington Hotel New York


$

16,372



$

(892)


$

3,405


$

1,331


$

8


$

3,852


Minneapolis Hilton


$

15,370



$

2,283


$

1,455


$

1,246


$

(240)


$

4,744


Orlando Airport Marriott


$

5,047



$

1,258


$


$


$


$

1,258


Hotel Rex


$

1,930



$

568


$

144


$


$


$

712


Salt Lake City Marriott


$

7,190



$

1,364


$

517


$

659


$


$

2,540


Shorebreak


$

3,612



$

864


$

372


$


$

(15)


$

1,221


The Lodge at Sonoma


$

6,863



$

1,570


$

366


$

299


$


$

2,235


Hilton Garden Inn Times Square Central


$

6,582



$

1,587


$

777


$


$


$

2,364


Vail Marriott


$

4,847



$

(416)


$

476


$


$


$

60


Westin San Diego


$

8,557



$

1,329


$

1,034


$

676


$


$

3,039


Westin Washington D.C. City Center


$

10,618



$

2,903


$

1,233


$

724


$


$

4,860


Renaissance Worthington


$

10,450



$

2,750


$

585


$

808


$

2


$

4,145


Total


$

256,664



$

54,733


$

25,004


$

10,172


$

851


$

90,696


Less: Sold Hotels(2)


$

(24,164)



$

(4,633)


$

(1,695)


$

(1,246)


$

240


$

(7,334)


Comparable Total


$

232,500



$

50,100


$

23,309


$

8,926


$

1,091


$

83,362


 

(1)

Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations and the non-cash amortization favorable and unfavorable contract liabilities.

(2) 

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

 

 

Hotel Adjusted EBITDA Reconciliation



Second Quarter 2015






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

4,799



$

1,254


$

381


$


$


$

1,635


Bethesda Marriott Suites


$

4,656



$

(213)


$

367


$


$

1,541


$

1,695


Boston Westin


$

26,231



$

7,422


$

2,210


$


$

3


$

9,635


Hilton Boston Downtown


$

10,493



$

3,624


$

1,152


$


$

42


$

4,818


Hilton Burlington


$

4,308



$

1,327


$

454


$


$

23


$

1,804


Renaissance Charleston


$

4,026



$

1,366


$

393


$


$

(32)


$

1,727


Hilton Garden Inn Chelsea


$

3,740



$

924


$

362


$


$


$

1,286


Chicago Marriott


$

32,040



$

5,278


$

2,545


$

3,119


$

(397)


$

10,545


Chicago Gwen


$

8,039



$

2,289


$

738


$


$


$

3,027


Courtyard Denver Downtown


$

2,951



$

1,174


$

285


$


$


$

1,459


Courtyard Fifth Avenue


$

4,507



$

60


$

448


$

828


$

52


$

1,388


Courtyard Midtown East


$

8,041



$

1,373


$

684


$

1,008


$


$

3,065


Fort Lauderdale Westin


$

10,560



$

2,016


$

1,129


$


$


$

3,145


Frenchman's Reef


$

17,234



$

2,390


$

1,608


$

374


$


$

4,372


JW Marriott Denver Cherry Creek


$

6,630



$

1,332


$

523


$

554


$


$

2,409


Inn at Key West


$

2,177



$

920


$

174


$


$


$

1,094


Sheraton Suites Key West


$

111



$

28


$


$


$


$

28


Lexington Hotel New York


$

17,936



$

2,080


$

3,356


$

1,293


$

6


$

6,735


Minneapolis Hilton


$

14,838



$

705


$

2,357


$

1,291


$

(202)


$

4,151


Orlando Airport Marriott


$

6,032



$

110


$

577


$

801


$


$

1,488


Hotel Rex


$

1,952



$

584


$

142


$


$


$

726


Salt Lake City Marriott


$

7,208



$

983


$

758


$

675


$


$

2,416


Shorebreak


$

3,696



$

624


$

522


$


$

64


$

1,210


The Lodge at Sonoma


$

6,901



$

1,684


$

377


$

304


$


$

2,365


Hilton Garden Inn Times Square Central


$

7,124



$

2,827


$

777


$


$

(89)


$

3,515


Vail Marriott


$

4,679



$

(108)


$

497


$


$


$

389


Westin San Diego


$

8,520



$

1,058


$

1,018


$

689


$

46


$

2,811


Westin Washington D.C. City Center


$

9,925



$

2,288


$

1,157


$

743


$

107


$

4,295


Renaissance Worthington


$

10,447



$

2,559


$

585


$

775


$

2


$

3,921


Total


$

249,801



$

47,958


$

25,576


$

12,454


$

1,166


$

87,175


Add: Prior Ownership Results(2)


$

4,455



$

1,309


$

513


$


$


$

1,822


Less: Sold Hotels(3)


$

(24,610)



$

(1,739)


$

(3,296)


$

(2,092)


$

202


$

(6,925)


Comparable Total


$

229,646



$

47,528


$

22,793


$

10,362


$

1,368


$

82,072


 

(1) 

Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization favorable and unfavorable contract liabilities and hotel manager transition costs.

(2) 

Amounts represent the pre-acquisition operating results of the Sheraton Suites Key West for the period from April 1, 2015 to June 29, 2015. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.

(3) 

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

 

 

Hotel Adjusted EBITDA Reconciliation



Year to Date 2016






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

10,491



$

3,034


$

718


$


$


$

3,752


Bethesda Marriott Suites


$

8,341



$

(1,247)


$

713


$


$

3,065


$

2,531


Boston Westin


$

47,338



$

5,626


$

4,402


$

4,574


$

(120)


$

14,482


Hilton Boston Downtown


$

17,902



$

4,339


$

2,424


$


$

8


$

6,771


Hilton Burlington


$

7,553



$

1,735


$

943


$


$


$

2,678


Renaissance Charleston


$

7,070



$

2,451


$

500


$


$

(63)


$

2,888


Hilton Garden Inn Chelsea


$

6,260



$

1,062


$

601


$


$


$

1,663


Chicago Marriott


$

43,734



$

3,421


$

6,416


$

444


$

(795)


$

9,486


Chicago Gwen


$

10,202



$

1,048


$

1,359


$


$


$

2,407


Courtyard Denver Downtown


$

5,504



$

2,043


$

572


$


$


$

2,615


Courtyard Fifth Avenue


$

7,207



$

(1,214)


$

889


$

1,212


$

103


$

990


Courtyard Midtown East


$

13,121



$

(42)


$

1,341


$

2,016


$


$

3,315


Fort Lauderdale Westin


$

27,999



$

9,882


$

2,337


$


$


$

12,219


Frenchman's Reef


$

38,722



$

8,694


$

3,217


$


$


$

11,911


JW Marriott Denver Cherry Creek


$

12,431



$

1,883


$

1,040


$

1,438


$


$

4,361


Inn at Key West


$

4,844



$

2,059


$

363


$


$


$

2,422


Sheraton Suites Key West


$

10,618



$

4,079


$

1,028


$


$


$

5,107


Lexington Hotel New York


$

26,792



$

(6,464)


$

6,772


$

2,670


$

15


$

2,993


Minneapolis Hilton


$

24,788



$

(13)


$

2,917


$

2,514


$

(482)


$

4,936


Orlando Airport Marriott


$

14,116



$

4,482


$

573


$


$


$

5,055


Hotel Rex


$

3,889



$

1,115


$

286


$


$


$

1,401


Salt Lake City Marriott


$

14,403



$

2,626


$

1,062


$

1,322


$


$

5,010


Shorebreak


$

6,926



$

1,344


$

747


$


$

(29)


$

2,062


The Lodge at Sonoma


$

12,338



$

1,962


$

733


$

599


$


$

3,294


Hilton Garden Inn Times Square Central


$

11,083



$

1,433


$

1,554


$


$


$

2,987


Vail Marriott


$

20,262



$

7,423


$

956


$


$


$

8,379


Westin San Diego


$

17,677



$

3,236


$

2,060


$

1,354


$


$

6,650


Westin Washington D.C. City Center


$

18,305



$

3,507


$

2,452


$

1,453


$


$

7,412


Renaissance Worthington


$

19,782



$

4,567


$

1,153


$

1,615


$

4


$

7,339


Total


$

469,698



$

74,071


$

50,128


$

21,211


$

1,706


$

146,984


Less: Sold Hotels(2)


$

(45,164)



$

(5,531)


$

(4,091)


$

(2,514)


$

482


$

(11,654)


Comparable Total


$

424,534



$

68,540


$

46,037


$

18,697


$

2,188


$

135,330


 

(1) 

Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations and the non-cash amortization favorable and unfavorable contract liabilities.

(2) 

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

 

 

Hotel Adjusted EBITDA Reconciliation



Year to Date 2015






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

9,663



$

2,618


$

774


$


$


$

3,392


Bethesda Marriott Suites


$

7,981



$

(1,474)


$

755


$


$

3,083


$

2,364


Boston Westin


$

46,325



$

9,268


$

4,456


$


$

4


$

13,728


Hilton Boston Downtown


$

15,753



$

3,259


$

2,237


$


$

84


$

5,580


Hilton Burlington


$

6,938



$

1,410


$

906


$


$

45


$

2,361


Renaissance Charleston


$

7,176



$

1,959


$

784


$


$

(63)


$

2,680


Hilton Garden Inn Chelsea


$

5,995



$

783


$

724


$


$


$

1,507


Chicago Marriott


$

48,139



$

401


$

4,108


$

6,255


$

(795)


$

9,969


Chicago Gwen


$

12,097



$

1,257


$

1,606


$


$


$

2,863


Courtyard Denver Downtown


$

5,379



$

1,929


$

567


$


$


$

2,496


Courtyard Fifth Avenue


$

7,500



$

(1,252)


$

897


$

1,649


$

103


$

1,397


Courtyard Midtown East


$

13,343



$

306


$

1,369


$

2,006


$


$

3,681


Fort Lauderdale Westin


$

25,715



$

7,020


$

2,256


$


$

151


$

9,427


Frenchman's Reef


$

38,304



$

7,126


$

3,178


$

1,164


$


$

11,468


JW Marriott Denver Cherry Creek


$

12,268



$

1,786


$

1,052


$

1,112


$


$

3,950


Inn at Key West


$

5,036



$

2,541


$

346


$


$


$

2,887


Sheraton Suites Key West (2)


$

111



$

26


$


$


$


$

26


Lexington Hotel New York


$

29,259



$

(2,111)


$

6,685


$

2,663


$

37


$

7,274


Minneapolis Hilton


$

24,607



$

(2,048)


$

4,703


$

2,576


$

(404)


$

4,827


Orlando Airport Marriott


$

14,713



$

2,257


$

1,138


$

1,597


$


$

4,992


Hotel Rex


$

3,667



$

950


$

284


$


$


$

1,234


Salt Lake City Marriott


$

14,643



$

2,148


$

1,495


$

1,346


$


$

4,989


Shorebreak (2)


$

5,690



$

741


$

756


$


$

370


$

1,867


The Lodge at Sonoma


$

12,354



$

1,803


$

753


$

607


$


$

3,163


Hilton Garden Inn Times Square Central


$

11,556



$

3,595


$

1,554


$


$

(90)


$

5,059


Vail Marriott


$

19,260



$

6,871


$

982


$


$


$

7,853


Westin San Diego


$

17,569



$

2,518


$

2,033


$

1,373


$

91


$

6,015


Westin Washington D.C. City Center


$

16,776



$

2,125


$

2,347


$

1,483


$

155


$

6,110


Renaissance Worthington


$

20,872



$

5,266


$

1,165


$

1,495


$

4


$

7,930


Total


$

458,689



$

63,078


$

49,910


$

25,326


$

2,775


$

140,970


Add: Prior Ownership Results(2)


$

11,537



$

3,760


$

1,026


$


$

(7)


$

4,779


Less: Sold Hotels(3)


$

(45,315)



$

(992)


$

(6,565)


$

(4,173)


$

404


$

(11,326)


Comparable Total


$

424,911



$

65,846


$

44,371


$

21,153


$

3,172


$

134,423


 

(1) 

Includes non-cash expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization favorable and unfavorable contract liabilities and manager transition costs.

(2) 

Amounts represent the pre-acquisition operating results of the Sheraton Suites Key West for the period from April 1, 2015 to June 29, 2015. The pre-acquisition operating results were obtained from the respective sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the respective sellers. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.

(3) 

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

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/diamondrock-hospitality-company-reports-second-quarter-2016-results-300309713.html

SOURCE DiamondRock Hospitality Company

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