DiamondRock Hospitality Company Reports Second Quarter 2017 Results

Raises 2017 Outlook

BETHESDA, Md., Aug. 7, 2017 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") DRH, a lodging-focused real estate investment trust that owns a portfolio of 28 premium hotels in the United States, today announced results of operations for the quarter ended June 30, 2017.

Second Quarter 2017 Highlights

  • Net Income: Net income was $36.6 million and earnings per diluted share was $0.18.
  • Comparable RevPAR: RevPAR was $203.21, a 2.0% increase from the comparable period of 2016.
  • Comparable Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 34.62%, a decrease of 96 basis points from the comparable period of 2016. Comparable hotel operating expenses increased approximately 2.7% from 2016, which was primarily due to property taxes. Excluding property taxes, the comparable hotel operating expense increase was 0.4% and Hotel Adjusted EBITDA margin increased 51 basis points.
  • Adjusted EBITDA: Adjusted EBITDA was $77.6 million, a decrease of $6.5 million from 2016.
  • Adjusted FFO: Adjusted FFO was $63.6 million and Adjusted FFO per diluted share was $0.32.
  • Term Loan: On April 26, 2017, the Company closed on a new five-year $200 million unsecured term loan.
  • Mortgage Loan Repayment: On April 26, 2017, the Company prepaid the $170.4 million mortgage loan secured by the Lexington Hotel New York with the proceeds from the new term loan.
  • Dividends: The Company declared a dividend of $0.125 per share during the second quarter, which was paid on July 12, 2017.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company stated, "We are pleased with our second quarter results and the ability to raise our full year guidance. Our second quarter results benefited from our asset management team's strong execution in limiting total hotel expense growth, excluding property taxes, to less than 1%. As we look forward, with approximately $150 million of cash on hand, no borrowings on our $300 million credit facility and most of our hotels unencumbered by debt, DiamondRock is poised to be opportunistic."

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 2017 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, 2017, the Company reported the following:


Second Quarter



2017


2016

Change

Comparable Operating Results (1)





ADR

$239.00



$233.36


2.4

%

Occupancy

85.0

%


85.4

%

-0.4 percentage points

RevPAR

$203.21



$199.22


2.0

%

Revenues

$243.3 million


$240.4 million

1.2

%

Hotel Adjusted EBITDA Margin

34.62

%


35.58

%

-96 basis points






Actual Operating Results (2)





Revenues

$243.3 million


$256.7 million

-5.2

%

Net income

$36.6 million


$44.2 million

-$7.6 million

Earnings per diluted share

$0.18



$0.22


-$0.04


Adjusted EBITDA

$77.6 million


$84.1 million

-$6.5 million

Adjusted FFO

$63.6 million


$63.1 million

$0.5 million

Adjusted FFO per diluted share

$0.32



$0.31


$0.01










(1)  Comparable operating results include pre-acquisition operating results for Sedona L'Auberge and Sedona Orchards Inn from April 1, 2016 to June 30, 2016. The pre-acquisition operating results were obtained from the seller of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.  Additionally, 2016 amounts exclude the operating results of the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.


(2) Actual operating results for 2016 include the operating results of the three hotels sold during 2016 for the Company's respective ownership periods.

 

For the six months ended June 30, 2017, the Company reported the following:


Year to Date



2017


2016

Change

Comparable Operating Results (1)





ADR

$229.55



$225.97


1.6

%

Occupancy

79.6

%


79.2

%

0.4 percentage points

RevPAR

$182.66



$179.06


2.0

%

Revenues

$442.9 million


$437.8 million

1.2

%

Hotel Adjusted EBITDA Margin

31.09

%


31.59

%

-50 basis points






Actual Operating Results (2)





Revenues

$439.5 million


$469.7 million

-6.4

%

Net income

$45.5 million


$61.0 million

-$15.5 million

Earnings per diluted share

$0.23



$0.30


-$0.07


Adjusted EBITDA

$124.9 million


$134.5 million

-$9.6 million

Adjusted FFO

$100.2 million


$105.9 million

-$5.7 million

Adjusted FFO per diluted share

$0.50



$0.52


-$0.02










(1)  Comparable operating results include pre-acquisition operating results for Sedona L'Auberge and Sedona Orchards Inn from January 1, 2017 to February 27, 2017 and January 1, 2016 to June 30, 2016. The pre-acquisition operating results were obtained from the seller of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.  Additionally, 2016 amounts exclude the three hotels sold during 2016: Orlando Airport Marriott, Hilton Minneapolis and Hilton Garden Inn Chelsea.


(2) Actual operating results for 2016 include the operating results of the three hotels sold during 2016 for the Company's respective ownership periods.

Financing Activity

On April 26, 2017, the Company entered into a new five-year $200 million 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 prepay the $170.4 million mortgage loan secured by the Lexington Hotel New York and for general corporate purposes.

Capital Expenditures

The Company spent approximately $60.4 million on capital improvements during the six months ended June 30, 2017, primarily related to the third phase of the Chicago Marriott Downtown renovation and guest room renovations at the Gwen, Worthington Renaissance, Charleston Renaissance, and The Lodge at Sonoma. The Company expects to spend between $110 million and $120 million on capital improvements at its hotels in 2017.  Significant projects include the following:

  • Chicago Marriott Downtown: The Company has completed the third phase of the multi-year renovation, which included the upgrade renovation of approximately 340 guest rooms. The Company expects to renovate the final 258 of 1,200 guest rooms during late 2017 with completion in early 2018.
  • The Gwen: The Company completed the renovation of the hotel's 311 guest rooms in April 2017.
  • Worthington Renaissance: The Company completed the renovation of the hotel's 504 guest rooms in January 2017.
  • Charleston Renaissance: The Company completed the renovation of the hotel's 166 guest rooms in February 2017.
  • The Lodge at Sonoma: The Company completed the renovation of the hotel's 182 guest rooms in April 2017.

Balance Sheet

As of June 30, 2017, the Company had $149.6 million of unrestricted cash on hand and approximately $943.7 million of total debt, which consisted of property-specific mortgage debt and $300.0 million of unsecured term loans. The Company has no outstanding borrowings on its $300 million senior unsecured credit facility and 20 of its 28 hotels are unencumbered by debt.

Dividends

The Company's Board of Directors declared a quarterly dividend of $0.125 per share to stockholders of record as of June 30, 2017.  The dividend was paid on July 12, 2017.

Guidance

The Company is providing updated annual guidance for 2017, 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 28 hotels were owned since January 1, 2016.

The Company is raising its 2017 guidance and expects the full year 2017 results to be as follows:


Previous Guidance

Revised Guidance

Change at
Midpoint


Metric

Low End

High End

Low End

High End



Comparable RevPAR Growth

-1.0 percent

1.0 percent

1.0 percent

2.0 percent

+ 150 bps









Adjusted EBITDA

$238.5 million

$251.5 million

$245 million

$253 million

+ $4 million









Adjusted FFO

$193 million

$203 million

$196 million

$203 million

+ $1.5 million









Adjusted FFO per share (based 
     on 201.5 million shares)

$0.96 per share

$1.01 per share

$0.97 per share

$1.01 per share

+ $0.005 per
share


The full year guidance range above reflects expected income tax expense of $10 to $12 million, expected interest expense of $38 million to $39 million and expected corporate expenses of $25 million.

The Company expects approximately 25% to 26% of its full year 2017 Adjusted EBITDA and 24.5% to 25.5% of its full year 2017 Adjusted FFO to be earned during the third quarter of 2017.

Selected Quarterly Comparable Operating Information

The following table is presented to provide investors with selected quarterly comparable operating information for 2016.  The operating information includes our 2017 acquisitions and excludes our 2016 dispositions for all periods presented.


Quarter 1, 2016

Quarter 2, 2016

Quarter 3, 2016

Quarter 4, 2016

Full Year 2016

ADR

$

217.33


$

233.36


$

224.91


$

232.89


$

227.35


Occupancy

73.1

%

85.4

%

84.0

%

76.1

%

79.6

%

RevPAR

$

158.88


$

199.22


$

188.88


$

177.20


$

181.06


Revenues (in thousands)

$

197,395


$

240,366


$

226,957


$

214,765


$

879,483


Hotel Adjusted EBITDA (in thousands)

$

52,775


$

85,525


$

71,997


$

67,070


$

277,367


        % of full Year

19.0

%

30.8

%

26.0

%

24.2

%

100.0

%

Hotel Adjusted EBITDA Margin

26.74

%

35.58

%

31.72

%

31.23

%

31.54

%

Available Rooms

871,689


872,417


882,004


883,016


3,509,126


Earnings Call

The Company will host a conference call to discuss its second quarter results on Tuesday, August 8, 2017, at 9:00 a.m. Eastern Time (ET).  To participate in the live call, investors are invited to dial 844-287-6622 (for domestic callers) or 530-379-4559 (for international callers).  The participant passcode is 47618518. 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 28 premium quality hotels with over 9,600 rooms. The Company has strategically positioned its hotels to be operated both under leading global brand families such as Hilton and Marriott as well as unique boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results.  Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made.  These risks include, but are not limited to: 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)



June 30, 2017


December 31, 2016

ASSETS

(unaudited)



Property and equipment, net

$

2,739,193



$

2,646,676


Restricted cash

41,481



46,069


Due from hotel managers

99,150



77,928


Favorable lease assets, net

26,902



18,013


Prepaid and other assets (1)

40,640



37,682


Cash and cash equivalents

149,645



243,095


Total assets

$

3,097,011



$

3,069,463


LIABILITIES AND STOCKHOLDERS' EQUITY




Liabilities:




Mortgage debt, net of unamortized debt issuance costs

$

645,798



$

821,167


Term loan, net of unamortized debt issuance costs

297,922



99,372


Senior unsecured credit facility




Total debt

943,720



920,539






Deferred income related to key money, net

19,025



20,067


Unfavorable contract liabilities, net

71,690



72,646


Deferred ground rent

83,576



80,509


Due to hotel managers

63,774



58,294


Dividends declared and unpaid

25,548



25,567


Accounts payable and accrued expenses (2)

54,936



55,054


Total other liabilities

318,549



312,137


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; 200,305,232 and 
     200,200,902 shares issued and outstanding at June 30, 2017 and December 31, 
     2016, respectively

2,003



2,002


Additional paid-in capital

2,058,380



2,055,365


Accumulated deficit

(225,641)



(220,580)


Total stockholders' equity

1,834,742



1,836,787


Total liabilities and stockholders' equity

$

3,097,011



$

3,069,463



(1)

Includes $23.1 million of deferred tax assets, $9.4 million and $6.0 million of prepaid expenses, and $8.1 million and $8.6 million of other assets as of June 30, 2017 and December 31, 2016, respectively.


(2)

 Includes $20.5 million of deferred tax liabilities, $15.2 million and $12.1 million of accrued property taxes, $5.1 million and $10.8 million of accrued capital expenditures, and $14.1 million and $11.7 million of other accrued liabilities as of June 30, 2017 and December 31, 2016, 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,


2017


2016


2017


2016

Revenues:








Rooms

$

177,483



$

186,113



$

315,315



$

335,556


Food and beverage

52,762



57,407



97,540



107,781


Other

13,027



13,144



26,627



26,361


Total revenues

243,272



256,664



439,482



469,698


Operating Expenses:








Rooms

41,565



43,257



78,466



81,971


Food and beverage

33,064



35,265



62,530



68,615


Management fees

6,949



8,772



12,961



15,381


Other hotel expenses

78,608



79,524



150,267



158,453


Depreciation and amortization

25,585



25,005



49,948



50,126


Hotel acquisition costs

22





2,273




Corporate expenses

6,828



6,736



13,090



12,736


Total operating expenses, net

192,621



198,559



369,535



387,282


Operating profit

50,651



58,105



69,947



82,416










Interest and other income, net

(192)



(68)



(551)



(118)


Interest expense

9,585



11,074



19,098



22,738


Loss on early extinguishment of debt

274





274




Gain on sales of hotel properties



(8,121)





(8,121)


Total other expenses, net

9,667



2,885



18,821



14,499


Income before income taxes

40,984



55,220



51,126



67,917


Income tax expense

(4,389)



(11,045)



(5,644)



(6,964)


Net income

$

36,595



$

44,175



$

45,482



$

60,953


Earnings per share:








Basic earnings per share

$

0.18



$

0.22



$

0.23



$

0.30


Diluted earnings per share

$

0.18



$

0.22



$

0.23



$

0.30










Weighted-average number of common shares

outstanding:








Basic

200,810,323



201,273,767



200,732,639



201,133,321

Diluted

201,741,394



201,827,384



201,729,516



201,768,451

 

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.

Hotel EBITDA

Hotel EBITDA represents net income excluding:  (1) interest expense, (2) income taxes, (3) depreciation and amortization, (4) corporate general and administrative expenses (shown as corporate expenses on the consolidated statements of operations), and (5) hotel acquisition costs. We believe that Hotel EBITDA provides our investors a useful financial measure to evaluate our hotel operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily depreciation and amortization), and our corporate-level expenses (corporate expenses and hotel acquisition costs).  With respect to Hotel EBITDA, we believe that excluding the effect of corporate-level expenses provides a more complete understanding of the operating results over which individual hotels and third-party management companies have direct control.  We believe property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis.

Adjustments to EBITDA, FFO and Hotel EBITDA

We adjust EBITDA, FFO and Hotel EBITDA when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA, Adjusted FFO and Hotel Adjusted EBIDTA when combined with GAAP net income, EBITDA, FFO and Hotel EBITDA, is beneficial to an investor's complete understanding of our consolidated and property-level operating performance.  Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues.

We adjust EBITDA, FFO and Hotel EBITDA 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 actual rent amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.
  • Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of favorable and unfavorable contracts recorded in conjunction with certain acquisitions because the non-cash amortization is based on historical cost accounting and is of lesser significance in evaluating our actual performance for that period.
  • 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, which include the accounting impact from prior periods, because they do not reflect the Company's actual underlying performance for the current period.
  • Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company's capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels.
  • Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels.
  • Severance Costs: We exclude corporate severance costs incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels.
  • Hotel Manager Transition Costs: We exclude the transition costs associated with a change in hotel manager because we believe these costs do not reflect the ongoing performance of the Company or our hotels.
  • Other Items: From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to the following: pre-opening costs incurred with newly developed hotels; lease preparation costs incurred to prepare vacant space for marketing; management or franchise contract termination fees; gains or losses from legal settlements; bargain purchase gains incurred upon acquisition of a hotel; 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 are based on historical cost accounting and 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.  We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.

Reconciliations of Non-GAAP Measures

EBITDA and Adjusted EBITDA

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,


2017


2016


2017


2016

Net income

$

36,595



$

44,175



$

45,482



$

60,953


Interest expense

9,585



11,074



19,098



22,738


Income tax expense

4,389



11,045



5,644



6,964


Real estate related depreciation and amortization

25,585



25,005



49,948



50,126


EBITDA

76,154



91,299



120,172



140,781


Non-cash ground rent

1,614



1,328



3,164



2,662


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

(478)



(478)



(956)



(956)


Hotel acquisition costs

22





2,273




Loss on early extinguishment of debt

274





274




Gain on sale of hotel properties



(8,121)





(8,121)


Severance costs (1)



119





119


Adjusted EBITDA

$

77,586



$

84,147



$

124,927



$

134,485



(1)  Classified as corporate expenses on the consolidated statements of operations.

 

 


Full Year 2017 Guidance


Low End


High End

Net income

$

87,053



$

95,053


Interest expense

39,000



38,000


Income tax expense

10,000



12,000


Real estate related depreciation and amortization

102,000



101,000


EBITDA

238,053



246,053


Non-cash ground rent

6,300



6,300


Non-cash amortization of favorable and unfavorable contracts, net

(1,900)



(1,900)


Acquisition costs

2,273



2,273


Loss on early extinguishment of debt

274



274


Adjusted EBITDA

$

245,000



$

253,000


 

Hotel EBITDA and Hotel Adjusted EBITDA

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


Three Months Ended June 30,


Six Months Ended June 30,


2017


2016


2017


2016

Net income

$

36,595



$

44,175



$

45,482



$

60,953


Interest expense

9,585



11,074



19,098



22,738


Income tax expense (benefit)

4,389



11,045



5,644



6,964


Real estate related depreciation and amortization

25,585



25,005



49,948



50,126


EBITDA

76,154



91,299



120,172



140,781


Corporate expenses

6,828



6,736



13,090



12,736


Interest and other income, net

(192)



(68)



(551)



(118)


Hotel acquisition costs

22





2,273




Loss on early extinguishment of debt

274





274




Gain on sale of hotel properties



(8,121)





(8,121)


Hotel EBITDA

83,086



89,846



135,258



145,278


Non-cash ground rent

1,614



1,328



3,164



2,662


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

(478)



(478)



(956)



(956)


Hotel Adjusted EBITDA

$

84,222



$

90,696



$

137,466



$

146,984


 

FFO and Adjusted FFO

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


Three Months Ended June 30,


Six Months Ended June 30,










2017


2016


2017


2016

Net income

$

36,595



$

44,175



$

45,482



$

60,953


Real estate related depreciation and amortization

25,585



25,005



49,948



50,126


Gain on sales of hotel properties, net of income tax



(7,010)





(7,010)


FFO

62,180



62,170



95,430



104,069


Non-cash ground rent

1,614



1,328



3,164



2,662


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

(478)



(478)



(956)



(956)


Hotel acquisition costs

22





2,273




Loss on early extinguishment of debt

274





274




Severance costs (1)



119





119


Fair value adjustments to debt instruments



4





18


Adjusted FFO

$

63,612



$

63,143



$

100,185



$

105,912


Adjusted FFO per diluted share

$

0.32



$

0.31



$

0.50



$

0.52



 (1)  Classified as corporate expenses on the consolidated statements of operations.

                       

 


Full Year 2017 Guidance


Low End


High End

Net income

$

87,053



$

95,053


Real estate related depreciation and amortization

102,000



101,000


FFO

189,053



196,053


Non-cash ground rent

6,300



6,300


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

(1,900)



(1,900)


Acquisition costs

2,273



2,273


Loss on early extinguishment of debt

274



274


Adjusted FFO

$

196,000



$

203,000


Adjusted FFO per diluted share

$

0.97



$

1.01


 

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 includes the pre-acquisition results for our 2017 acquisitions and excludes the results for our 2016 dispositions (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,


2017


2016


2017


2016

Revenues

$

243,272



$

256,664



$

439,482



$

469,698


Hotel revenues from prior ownership (1)



7,866



3,422



13,231


Hotel revenues from sold hotels (2)



(24,164)





(45,164)


Comparable Revenues

$

243,272



$

240,366



$

442,904



$

437,765










Hotel Adjusted EBITDA

$

84,222



$

90,696



$

137,466



$

146,984


Hotel Adjusted EBITDA from prior ownership (1)



2,163



229



2,970


Hotel Adjusted EBITDA from sold hotels (2)



(7,334)





(11,654)


Comparable Hotel Adjusted EBITDA

$

84,222



$

85,525



$

137,695



$

138,300










Hotel Adjusted EBITDA Margin

34.62

%


35.34

%


31.28

%


31.29

%

Comparable Hotel Adjusted EBITDA Margin

34.62

%


35.58

%


31.09

%


31.59

%


(1)

Amounts represent the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from January 1, 2017 to February 27, 2017 and January 1, 2016 to June 30, 2016, respectively.  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 seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.


(2)

Amounts represent the historical operating results of the Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea for their
respective ownership periods.

 

Comparable Hotel Operating Expenses

The following table sets forth hotel operating expenses for the three and six months ended June 30, 2017 and 2016 for each of the hotels that we owned as of June 30, 2017.  Our GAAP hotel operating expenses for the three and six months ended June 30, 2017 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 2017 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 L'Auberge de Sedona and Orchards Inn Sedona for the period from January 1, 2017 to February 27, 2017 and January 1, 2016 to June 30, 2016 and excludes 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,


2017


2016


% Change


2017


2016


2017


2016


% Change

















Rooms departmental expenses

$

41,565



$

43,257



(3.9)

%


$



$

(2,587)



$

41,565



$

40,670



2.2

%

Food and beverage departmental expenses

33,064



35,265



(6.2)

%




(2,052)



33,064



33,213



(0.4)

%

Other direct departmental

3,092



3,056



1.2

%




318



3,092



3,374



(8.4)

%

General and administrative

19,511



20,598



(5.3)

%




(1,360)



19,511



19,238



1.4

%

Utilities

6,079



6,483



(6.2)

%




(466)



6,079



6,017



1.0

%

Repairs and maintenance

8,875



9,175



(3.3)

%




(527)



8,875



8,648



2.6

%

Sales and marketing

15,628



16,931



(7.7)

%




(1,454)



15,628



15,477



1.0

%

Franchise fees

6,015



5,749



4.6

%




(344)



6,015



5,405



11.3

%

Base management fees

5,816



6,296



(7.6)

%




(453)



5,816



5,843



(0.5)

%

Incentive management fees

1,133



2,476



(54.2)

%




6



1,133



2,482



(54.4)

%

Property taxes

13,871



10,656



30.2

%




(485)



13,871



10,171



36.4

%

Ground rent

2,617



3,726



(29.8)

%




(1,411)



2,617



2,315



13.0

%

Insurance

1,644



2,058



(20.1)

%




(66)



1,644



1,992



(17.5)

%

Other fixed expenses

1,276



1,092



16.8

%




25



1,276



1,117



14.2

%

Total hotel operating expenses

$

160,186



$

166,818



(4.0)

%


$



$

(10,856)



$

160,186



$

155,962



2.7

%

 

 


As Reported


Adjustments for
Acquisitions/Dispositions


Comparable


Six Months Ended June 30,


Six Months Ended June 30,


2017


2016


% Change


2017


2016


2017


2016


% Change

















Rooms departmental expenses

$

78,466



$

81,971



(4.3)

%


$

773



$

(5,066)



$

79,239



$

76,905



3.0

%

Food and beverage departmental expenses

62,530



68,615



(8.9)

%


919



(4,678)



63,449



63,937



(0.8)

%

Other direct departmental

6,087



6,156



(1.1)

%


257



584



6,344



6,740



(5.9)

%

General and administrative

37,506



40,294



(6.9)

%


416



(2,892)



37,922



37,402



1.4

%

Utilities

12,139



13,295



(8.7)

%


107



(974)



12,246



12,321



(0.6)

%

Repairs and maintenance

17,560



18,491



(5.0)

%


209



(1,148)



17,769



17,343



2.5

%

Sales and marketing

29,429



32,615



(9.8)

%


263



(2,994)



29,692



29,621



0.2

%

Franchise fees

11,046



11,037



0.1

%




(573)



11,046



10,464



5.6

%

Base management fees

10,360



11,612



(10.8)

%


84



(915)



10,444



10,697



(2.4)

%

Incentive management fees

2,601



3,769



(31.0)

%






2,601



3,769



(31.0)

%

Property taxes

26,101



22,910



13.9

%


82



(1,003)



26,183



21,907



19.5

%

Ground rent

5,130



7,525



(31.8)

%




(2,901)



5,130



4,624



10.9

%

Insurance

3,332



3,848



(13.4)

%


45



(165)



3,377



3,683



(8.3)

%

Other fixed expenses

1,937



2,282



(15.1)

%


41



(10)



1,978



2,272



(12.9)

%

Total hotel operating expenses

$

304,224



$

324,420



(6.2)

%


$

3,196



$

(22,735)



$

307,420



$

301,685



1.9

%

 

 

Market Capitalization as of June 30, 2017

(in thousands)

 

Enterprise Value






Common equity capitalization (at June 30, 2017 closing price of $10.95/share)


$

2,206,000

Consolidated debt (face amount)


950,981

Cash and cash equivalents


(149,645)

Total enterprise value


$

3,007,336

Share Reconciliation






Common shares outstanding


200,305

Unvested restricted stock held by management and employees


627

Share grants under deferred compensation plan


529

Combined shares outstanding


201,461

 

 

Debt Summary as of June 30, 2017

(dollars in thousands)

 

Property


Interest Rate


Term


Outstanding
Principal


Maturity

Marriott Salt Lake City Downtown


4.25%


Fixed


$

57,523


November 2020

Westin Washington D.C. City Center


3.99%


Fixed


65,847


January 2023

The Lodge at Sonoma, a Renaissance Resort & Spa


3.96%


Fixed


28,585


April 2023

Westin San Diego


3.94%


Fixed


65,571


April 2023

Courtyard Manhattan / Midtown East


4.40%


Fixed


84,761


August 2024

Renaissance Worthington


3.66%


Fixed


84,878


May 2025

JW Marriott Denver at Cherry Creek


4.33%


Fixed


64,051


July 2025

Westin Boston Waterfront Hotel


4.36%


Fixed


199,765


November 2025

     Debt issuance costs, net






(5,183)



Total mortgage debt, net of unamortized debt issuance costs






$

645,798












Unsecured term loan


LIBOR + 1.45(1)


Variable


100,000


May 2021

Unsecured term loan


LIBOR + 1.45(2)


Variable


200,000


April 2022

     Debt issuance costs, net






(2,078)



Unsecured term loans, net of unamortized debt issuance costs




$

297,922












Senior unsecured credit facility


LIBOR + 1.50


Variable


$


May 2020 (3)










Total debt, net of unamortized debt issuance costs






$

943,720












Weighted-average interest rate of fixed rate debt


4.22%







Total weighted-average interest rate


3.69%









(1)

The interest rate as of June 30, 2017 was 2.51%.

(2)

The interest rate as of June 30, 2017 was 2.50%.

(3)

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 2017

2Q 2016

B/(W)


2Q 2017

2Q 2016

B/(W)


2Q 2017

2Q 2016

B/(W)


2Q 2017

2Q 2016

B/(W)

Atlanta Alpharetta Marriott


$

164.29


$

171.07


(4.0)

%


82.5

%

77.6

%

4.9

%


$

135.61


$

132.78


2.1

%


34.02

%

35.89

%

-187 bps

Bethesda Marriott Suites


$

185.30


$

182.79


1.4

%


83.3

%

84.6

%

(1.3)

%


$

154.42


$

154.63


(0.1)

%


36.02

%

38.02

%

-200 bps

Boston Westin


$

282.66


$

264.70


6.8

%


88.0

%

87.1

%

0.9

%


$

248.75


$

230.60


7.9

%


38.68

%

38.18

%

50 bps

Hilton Boston Downtown


$

327.05


$

308.62


6.0

%


93.6

%

93.9

%

(0.3)

%


$

306.01


$

289.82


5.6

%


47.13

%

46.20

%

93 bps

Hilton Burlington


$

175.89


$

178.81


(1.6)

%


84.4

%

85.0

%

(0.6)

%


$

148.43


$

152.06


(2.4)

%


41.37

%

43.29

%

-192 bps

Renaissance Charleston


$

265.72


$

253.81


4.7

%


92.3

%

94.0

%

(1.7)

%


$

245.23


$

238.64


2.8

%


46.02

%

46.54

%

-52 bps

Chicago Marriott


$

242.44


$

243.58


(0.5)

%


82.2

%

83.3

%

(1.1)

%


$

199.26


$

202.88


(1.8)

%


33.53

%

38.67

%

-514 bps

Chicago Gwen


$

245.87


$

225.43


9.1

%


84.0

%

86.2

%

(2.2)

%


$

206.45


$

194.28


6.3

%


34.10

%

37.79

%

-369 bps

Courtyard Denver Downtown


$

214.81


$

211.62


1.5

%


83.4

%

84.6

%

(1.2)

%


$

179.06


$

178.98


%


51.25

%

52.39

%

-114 bps

Courtyard Fifth Avenue


$

277.10


$

270.48


2.4

%


91.0

%

92.3

%

(1.3)

%


$

252.12


$

249.74


1.0

%


25.26

%

25.45

%

-19 bps

Courtyard Midtown East


$

269.84


$

272.85


(1.1)

%


93.5

%

95.0

%

(1.5)

%


$

252.23


$

259.21


(2.7)

%


33.65

%

35.43

%

-178 bps

Fort Lauderdale Westin


$

186.42


$

190.41


(2.1)

%


84.6

%

93.6

%

(9.0)

%


$

157.79


$

178.22


(11.5)

%


36.65

%

38.47

%

-182 bps

Frenchman's Reef


$

260.47


$

233.85


11.4

%


85.5

%

88.7

%

(3.2)

%


$

222.79


$

207.51


7.4

%


23.59

%

23.19

%

40 bps

JW Marriott Denver Cherry Creek


$

270.82


$

277.31


(2.3)

%


83.2

%

81.4

%

1.8

%


$

225.30


$

225.81


(0.2)

%


35.64

%

38.66

%

-302 bps

Inn at Key West


$

187.05


$

189.50


(1.3)

%


77.0

%

85.7

%

(8.7)

%


$

144.04


$

162.37


(11.3)

%


45.49

%

45.26

%

23 bps

Sheraton Suites Key West


$

242.52


$

239.78


1.1

%


92.6

%

90.8

%

1.8

%


$

224.46


$

217.77


3.1

%


44.98

%

43.13

%

185 bps

Lexington Hotel New York


$

254.99


$

249.39


2.2

%


95.1

%

95.2

%

(0.1)

%


$

242.42


$

237.36


2.1

%


22.94

%

23.53

%

-59 bps

Hotel Rex


$

202.26


$

228.36


(11.4)

%


82.6

%

87.7

%

(5.1)

%


$

167.10


$

200.28


(16.6)

%


29.38

%

36.89

%

-751 bps

Salt Lake City Marriott


$

160.23


$

152.89


4.8

%


80.9

%

74.0

%

6.9

%


$

129.66


$

113.09


14.7

%


38.03

%

35.33

%

270 bps

L'Auberge de Sedona


$

592.67


$

492.58


20.3

%


79.5

%

76.7

%

2.8

%


$

471.14


$

377.80


24.7

%


30.02

%

25.08

%

494 bps

Orchards Inn Sedona


$

245.99


$

216.52


13.6

%


86.3

%

83.5

%

2.8

%


$

212.39


$

180.69


17.5

%


39.21

%

34.16

%

505 bps

Shorebreak


$

224.60


$

221.47


1.4

%


82.6

%

82.7

%

(0.1)

%


$

185.61


$

183.09


1.4

%


23.48

%

33.80

%

-1032 bps

The Lodge at Sonoma


$

329.76


$

312.21


5.6

%


72.7

%

82.5

%

(9.8)

%


$

239.79


$

257.49


(6.9)

%


32.90

%

32.57

%

33 bps

Hilton Garden Inn Times Square Central


$

256.68


$

259.62


(1.1)

%


98.0

%

97.2

%

0.8

%


$

251.46


$

252.33


(0.3)

%


36.26

%

35.92

%

34 bps

Vail Marriott


$

168.86


$

160.01


5.5

%


54.9

%

53.9

%

1.0

%


$

92.75


$

86.21


7.6

%


(5.30)

%

1.24

%

-654 bps

Westin San Diego


$

197.51


$

187.94


5.1

%


85.4

%

84.5

%

0.9

%


$

168.62


$

158.73


6.2

%


38.47

%

35.51

%

296 bps

Westin Washington D.C. City Center


$

250.45


$

259.45


(3.5)

%


90.2

%

91.1

%

(0.9)

%


$

225.85


$

236.31


(4.4)

%


46.69

%

45.77

%

92 bps

Renaissance Worthington


$

183.50


$

184.87


(0.7)

%


78.7

%

75.4

%

3.3

%


$

144.48


$

139.31


3.7

%


39.91

%

39.67

%

24 bps

Comparable Total (1)


$

239.00


$

233.36


2.4

%


85.0

%

85.4

%

(0.4)

%


$

203.21


$

199.22


2.0

%


34.62

%

35.58

%

-96 bps



(1)

Amounts include the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from April 1, 2016 to June 30, 2016 and exclude the three hotels sold in 2016.

 

 

Operating Statistics – Year to Date



ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin



YTD 2017

YTD 2016

B/(W)


YTD 2017

YTD 2016

B/(W)


YTD 2017

YTD 2016

B/(W)


YTD 2017

YTD 2016

B/(W)

Atlanta Alpharetta Marriott


$

171.24


$

177.54


(3.5)

%


76.4

%

73.3

%

3.1

%


$

130.82


$

130.08


0.6

%


33.69

%

35.76

%

-207 bps

Bethesda Marriott Suites


$

178.58


$

173.45


3.0

%


76.7

%

72.6

%

4.1

%


$

137.04


$

125.94


8.8

%


31.62

%

30.34

%

128 bps

Boston Westin


$

250.32


$

236.15


6.0

%


77.8

%

79.2

%

(1.4)

%


$

194.85


$

186.97


4.2

%


31.56

%

30.59

%

97 bps

Hilton Boston Downtown


$

273.08


$

262.60


4.0

%


83.2

%

85.3

%

(2.1)

%


$

227.24


$

224.09


1.4

%


37.03

%

37.82

%

-79 bps

Hilton Burlington


$

152.25


$

155.50


(2.1)

%


75.9

%

76.5

%

(0.6)

%


$

115.56


$

118.98


(2.9)

%


31.65

%

35.46

%

-381 bps

Renaissance Charleston


$

256.02


$

229.83


11.4

%


74.9

%

90.2

%

(15.3)

%


$

191.71


$

207.31


(7.5)

%


36.24

%

40.85

%

-461 bps

Chicago Marriott


$

213.45


$

217.00


(1.6)

%


65.9

%

61.8

%

4.1

%


$

140.71


$

134.20


4.9

%


21.31

%

21.69

%

-38 bps

Chicago Gwen


$

216.58


$

199.94


8.3

%


64.7

%

70.7

%

(6.0)

%


$

140.14


$

141.32


(0.8)

%


20.25

%

23.59

%

-334 bps

Courtyard Denver Downtown


$

202.48


$

199.18


1.7

%


77.4

%

80.2

%

(2.8)

%


$

156.81


$

159.68


(1.8)

%


46.82

%

47.51

%

-69 bps

Courtyard Fifth Avenue


$

239.82


$

240.81


(0.4)

%


87.1

%

85.3

%

1.8

%


$

208.99


$

205.39


1.8

%


12.20

%

13.74

%

-154 bps

Courtyard Midtown East


$

235.75


$

240.70


(2.1)

%


87.7

%

90.2

%

(2.5)

%


$

206.80


$

217.20


(4.8)

%


23.28

%

25.26

%

-198 bps

Fort Lauderdale Westin


$

213.57


$

222.00


(3.8)

%


90.3

%

95.6

%

(5.3)

%


$

192.82


$

212.23


(9.1)

%


41.60

%

43.64

%

-204 bps

Frenchman's Reef


$

306.95


$

285.65


7.5

%


88.2

%

89.0

%

(0.8)

%


$

270.82


$

254.30


6.5

%


30.41

%

30.76

%

-35 bps

JW Marriott Denver Cherry Creek


$

257.69


$

267.08


(3.5)

%


78.8

%

79.2

%

(0.4)

%


$

203.12


$

211.54


(4.0)

%


32.26

%

35.08

%

-282 bps

Inn at Key West


$

213.30


$

227.04


(6.1)

%


78.8

%

91.1

%

(12.3)

%


$

168.15


$

206.82


(18.7)

%


51.26

%

50.00

%

126 bps

Sheraton Suites Key West


$

270.15


$

278.09


(2.9)

%


93.0

%

93.1

%

(0.1)

%


$

251.11


$

259.04


(3.1)

%


48.78

%

48.10

%

68 bps

Lexington Hotel New York


$

218.18


$

219.60


(0.6)

%


91.2

%

88.1

%

3.1

%


$

198.91


$

193.42


2.8

%


8.03

%

11.17

%

-314 bps

Hotel Rex


$

224.58


$

239.01


(6.0)

%


79.4

%

83.4

%

(4.0)

%


$

178.34


$

199.43


(10.6)

%


32.30

%

36.02

%

-372 bps

Salt Lake City Marriott


$

165.26


$

158.77


4.1

%


78.9

%

69.8

%

9.1

%


$

130.31


$

110.79


17.6

%


40.86

%

34.78

%

608 bps

L'Auberge de Sedona (1)


$

601.65


$

501.20


20.0

%


80.0

%

76.4

%

3.6

%


$

481.61


$

382.71


25.8

%


30.75

%

26.01

%

474 bps

Orchards Inn Sedona (1)


$

248.99


$

220.22


13.1

%


87.7

%

84.9

%

2.8

%


$

218.26


$

186.91


16.8

%


40.19

%

36.81

%

338 bps

Shorebreak


$

222.24


$

218.53


1.7

%


72.5

%

79.1

%

(6.6)

%


$

161.05


$

172.92


(6.9)

%


20.63

%

29.77

%

-914 bps

The Lodge at Sonoma


$

295.91


$

271.24


9.1

%


57.4

%

78.0

%

(20.6)

%


$

169.74


$

211.57


(19.8)

%


19.01

%

26.70

%

-769 bps

Hilton Garden Inn Times Square Central


$

216.35


$

221.61


(2.4)

%


96.6

%

95.6

%

1.0

%


$

209.01


$

211.80


(1.3)

%


25.29

%

26.95

%

-166 bps

Vail Marriott


$

326.95


$

317.45


3.0

%


73.2

%

71.6

%

1.6

%


$

239.43


$

227.15


5.4

%


39.33

%

41.35

%

-202 bps

Westin San Diego


$

197.50


$

187.57


5.3

%


85.0

%

84.1

%

0.9

%


$

167.87


$

157.72


6.4

%


40.05

%

37.62

%

243 bps

Westin Washington D.C. City Center


$

241.03


$

235.06


2.5

%


86.6

%

85.7

%

0.9

%


$

208.68


$

201.41


3.6

%


43.38

%

40.49

%

289 bps

Renaissance Worthington


$

184.07


$

183.79


0.2

%


78.1

%

71.2

%

6.9

%


$

143.73


$

130.88


9.8

%


39.93

%

37.10

%

283 bps

Total


$

229.16


$

225.89


1.4

%


79.6

%

79.4

%

0.2

%


$

182.48


$

179.27


1.8

%


31.28

%

31.29

%

-1 bps

Comparable Total (2)


$

229.55


$

225.97


1.6

%


79.6

%

79.2

%

0.4

%


$

182.66


$

179.06


2.0

%


31.09

%

31.59

%

-50 bps



(1)      

Hotels were acquired on February 28, 2017. Amounts reflect the operating results these hotels for the period from February 28, 2017 to June 30, 2017 and February 28, 2016 to June 30, 2016, respectively.

(2)      

Amounts include the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from January 1, 2017 to February 27, 2017 and January 1, 2016 to March 31, 2016, respectively, and exclude the three hotels sold in 2016.

 

 

Hotel Adjusted EBITDA Reconciliation



Second Quarter 2017






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

5,291



$

1,415


$

385


$


$


$

1,800


Bethesda Marriott Suites


$

4,991



$

(60)


$

345


$


$

1,513


$

1,798


Boston Westin


$

28,627



$

6,686


$

2,192


$

2,246


$

(51)


$

11,073


Hilton Boston Downtown


$

11,868



$

4,356


$

1,237


$


$


$

5,593


Hilton Burlington


$

4,525



$

1,356


$

516


$


$


$

1,872


Renaissance Charleston


$

4,135



$

1,541


$

394


$


$

(32)


$

1,903


Chicago Marriott


$

31,455



$

7,142


$

3,735


$

68


$

(397)


$

10,548


Chicago Gwen


$

7,959



$

1,640


$

1,074


$


$


$

2,714


Courtyard Denver Downtown


$

3,081



$

1,281


$

298


$


$


$

1,579


Courtyard Fifth Avenue


$

4,411



$

615


$

447


$


$

52


$

1,114


Courtyard Midtown East


$

7,631



$

912


$

660


$

996


$


$

2,568


Fort Lauderdale Westin


$

11,457



$

2,902


$

1,297


$


$


$

4,199


Frenchman's Reef


$

17,178



$

2,420


$

1,633


$


$


$

4,053


JW Marriott Denver Cherry Creek


$

6,426



$

1,073


$

507


$

710


$


$

2,290


Inn at Key West


$

1,796



$

623


$

194


$


$


$

817


Sheraton Suites Key West


$

4,729



$

1,835


$

292


$


$


$

2,127


Lexington Hotel New York


$

16,702



$

(108)


$

3,472


$

460


$

8


$

3,832


Hotel Rex


$

1,593



$

328


$

140


$


$


$

468


Salt Lake City Marriott


$

8,056



$

1,891


$

531


$

642


$


$

3,064


L'Auberge de Sedona


$

6,988



$

1,591


$

507


$


$


$

2,098


Orchards Inn Sedona


$

2,479



$

682


$

234


$


$

56


$

972


Shorebreak


$

3,697



$

437


$

446


$


$

(15)


$

868


The Lodge at Sonoma


$

6,343



$

1,327


$

467


$

293


$


$

2,087


Hilton Garden Inn Times Square Central


$

6,545



$

1,582


$

791


$


$


$

2,373


Vail Marriott


$

4,947



$

(758)


$

496


$


$


$

(262)


Westin San Diego


$

9,096



$

1,749


$

1,088


$

662


$


$

3,499


Westin Washington D.C. City Center


$

10,401



$

2,846


$

1,306


$

704


$


$

4,856


Renaissance Worthington


$

10,865



$

2,626


$

901


$

807


$

2


$

4,336


Total


$

243,272



$

49,930


$

25,585


$

7,588


$

1,136


$

84,222




(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.

 

 

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


$

3,476


$

28


$

(397)


$

12,125


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


$

25,005


$

10,172


$

851


$

90,696


Add: Prior Ownership Results(2)


$

7,866



$

1,197


$

934


$


$

32


$

2,163


Less: Sold Hotels (3)


$

(24,164)



$

(4,633)


$

(1,695)


$

(1,246)


$

240


$

(7,334)


Comparable Total


$

240,366



$

51,297


$

24,244


$

8,926


$

1,123


$

85,525




(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 manger transition costs.

(2)

Amounts represent the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from April 1, 2016 to June 30, 2016.

(3)

Amounts represent the operating results of the three hotels sold in 2016: Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea.

 

 

Hotel Adjusted EBITDA Reconciliation



Year to Date 2017






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Adjustments (1)

Hotel Adjusted

EBITDA

Atlanta Alpharetta Marriott


$

10,306



$

2,702


$

770


$


$


$

3,472


Bethesda Marriott Suites


$

8,922



$

(909)


$

693


$


$

3,037


$

2,821


Boston Westin


$

46,928



$

6,079


$

4,373


$

4,477


$

(120)


$

14,809


Hilton Boston Downtown


$

18,006



$

4,194


$

2,473


$


$


$

6,667


Hilton Burlington


$

7,049



$

1,199


$

1,032


$


$


$

2,231


Renaissance Charleston


$

6,479



$

1,686


$

725


$


$

(63)


$

2,348


Chicago Marriott


$

47,176



$

3,529


$

7,214


$

103


$

(795)


$

10,051


Chicago Gwen


$

10,501



$

197


$

1,929


$


$


$

2,126


Courtyard Denver Downtown


$

5,395



$

1,945


$

581


$


$


$

2,526


Courtyard Fifth Avenue


$

7,306



$

(108)


$

896


$


$

103


$

891


Courtyard Midtown East


$

12,522



$

(391)


$

1,321


$

1,985


$


$

2,915


Fort Lauderdale Westin


$

26,185



$

8,326


$

2,566


$


$


$

10,892


Frenchman's Reef


$

39,034



$

8,580


$

3,290


$


$


$

11,870


JW Marriott Denver Cherry Creek


$

11,577



$

1,304


$

1,015


$

1,416


$


$

3,735


Inn at Key West


$

4,009



$

1,667


$

388


$


$


$

2,055


Sheraton Suites Key West


$

10,225



$

4,409


$

579


$


$


$

4,988


Lexington Hotel New York


$

27,500



$

(6,678)


$

6,942


$

1,927


$

16


$

2,207


Hotel Rex


$

3,468



$

836


$

284


$


$


$

1,120


Salt Lake City Marriott


$

17,287



$

4,734


$

1,049


$

1,281


$


$

7,064


L'Auberge de Sedona


$

9,360



$

2,186


$

692


$


$


$

2,878


Orchards Inn Sedona


$

3,446



$

1,018


$

311


$


$

56


$

1,385


Shorebreak


$

6,229



$

469


$

845


$


$

(29)


$

1,285


The Lodge at Sonoma


$

9,387



$

342


$

858


$

584


$


$

1,784


Hilton Garden Inn Times Square Central


$

10,881



$

1,170


$

1,582


$


$


$

2,752


Vail Marriott


$

21,202



$

7,339


$

999


$


$


$

8,338


Westin San Diego


$

18,534



$

3,907


$

2,196


$

1,320


$


$

7,423


Westin Washington D.C. City Center


$

18,821



$

4,169


$

2,589


$

1,406


$


$

8,164


Renaissance Worthington


$

21,747



$

5,317


$

1,756


$

1,606


$

4


$

8,683


Total


$

439,482



$

69,218


$

49,948


$

16,105


$

2,209


$

137,466


Add: Prior Ownership Results (2)


$

3,422



$

(293)


$

522


$


$


$

229


Comparable Total


$

442,904



$

68,925


$

50,470


$

16,105


$

2,209


$

137,695




(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 manger transition costs.

(2)

Amounts represent the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from January 1, 2017 to February 27, 2017.

 

 

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


$

6,414


$

444


$

(795)


$

9,484


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


$

50,126


$

21,211


$

1,706


$

146,984


Add: Prior Ownership Results(2)


$

13,231



$

1,071


$

1,867


$


$

32


$

2,970


Less: Sold Hotels (3)


$

(45,164)



$

(5,531)


$

(4,091)


$

(2,514)


$

482


$

(11,654)


Comparable Total


$

437,765



$

69,611


$

47,902


$

18,697


$

2,220


$

138,300




(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 manger transition costs.

(2)

Amounts represent the pre-acquisition operating results of the L'Auberge de Sedona and Orchards Inn Sedona for the period from January 1, 2016 to June 30, 2016.

(3)

Amounts represent the operating results of the three hotels sold in 2016: Orlando Airport Marriott, Minneapolis Hilton and Hilton Garden Inn Chelsea.

 

 

View original content:http://www.prnewswire.com/news-releases/diamondrock-hospitality-company-reports-second-quarter-2017-results-300500355.html

SOURCE DiamondRock Hospitality Company

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