ANNAPOLIS, Md.–Feb. 22, 2017– Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended December 31, 2016.
HIGHLIGHTS
- RevPAR: 0.6% decrease for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA Margin: 230 basis point decrease to 30.4% for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA: $44.1 million.
- Adjusted Corporate EBITDA: $39.0 million.
- Net income available to common shareholders: $9.7 million or $0.16 per diluted common share.
- Adjusted FFO: $28.4 million or $0.48 per diluted common share.
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three months and year ended December 31, 2016 and 2015 (in millions, except share and per share amounts):
Three Months Ended December 31, Year Ended December 31, 2016 2015 2016 2015 Total revenue $ 145.1 $ 146.2 $ 619.7 $ 582.6 Net income available to common shareholders $ 9.7 $ 12.3 $ 67.0 $ 57.8 Net income per diluted common share $ 0.16 $ 0.21 $ 1.13 $ 0.99 Adjusted Hotel EBITDA $ 44.1 $ 47.8 $ 203.7 $ 190.6 Adjusted Corporate EBITDA $ 39.0 $ 42.8 $ 184.5 $ 172.5 AFFO available to common shareholders $ 28.4 $ 30.7 $ 140.4 $ 127.8 AFFO per diluted common share $ 0.48 $ 0.52 $ 2.39 $ 2.21 Weighted-average number of diluted common shares outstanding 58,737,275 59,027,852 58,717,647 57,926,399
HOTEL OPERATING RESULTS
Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared using the following key operating metrics: occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin. The Trust uses the term "pro forma" to refer to metrics that include, or comparisons of metrics that are based on, the operating results of hotels under previous ownership for either a portion of or the entire period. As of December 31, 2016, the Trust owned 22 hotels. Since two of its hotels owned as of December 31, 2016 were acquired during 2015, the key operating metrics below reflect the pro forma operating results for those hotels for the year ended December 31, 2015.
Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three months and year ended December 31, 2016 and 2015 (in thousands, except for ADR and RevPAR):
Three Months Ended December 31, Year Ended December 31, 2016 2015 Change 2016
2015(1)
Change Occupancy 79.8 % 79.0 % 80 bps 83.9 % 81.3 % 260 bps ADR $ 218.68 $ 222.41 (1.7)% $ 226.68 $ 228.70 (0.9)% RevPAR $ 174.56 $ 175.68 (0.6)% $ 190.12 $ 185.88 2.3% Adjusted Hotel EBITDA $ 44,050 $ 47,763 (7.8)% $ 203,681 $ 197,393 3.2% Adjusted Hotel EBITDA Margin 30.4 % 32.7 % (230) bps 32.9 % 32.7 % 20 bps
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(1) Includes results of operations for certain hotels prior to their acquisition by the Trust.
Hotel EBITDA, Adjusted Hotel EBITDA, Adjusted Hotel EBITDA Margin, Corporate EBITDA, Adjusted Corporate EBITDA, FFO, FFO available to common shareholders and AFFO available to common shareholders are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. See the discussion included in this press release for information regarding these non-GAAP financial measures.
CAPITAL MARKETS ACTIVITY
The Trust has not sold any common shares under its continuous at-the-market (ATM) program or repurchased any common shares under its share repurchase program during 2016 and through February 22, 2017.
DIVIDENDS
On October 14, 2016, the Trust paid dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2016. On December 15, 2016, the Trust declared dividends in the amounts of $0.40 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of December 30, 2016. Both dividends were paid on January 13, 2017.
2017 OUTLOOK
The Trust's 2017 outlook is as follows (in millions, except RevPAR and per share amounts):
First Quarter Full Year 2017 Outlook 2017 Outlook Low High Low High CONSOLIDATED: Net income available to common shareholders $ 1.3 $ 3.1 $ 42.9 $ 48.9 Net income per diluted common share $ 0.02 $ 0.05 $ 0.73 $ 0.83 Adjusted Corporate EBITDA $ 27.3 $ 28.9 $ 169.3 $ 176.3 AFFO available to common shareholders $ 20.7 $ 22.5 $ 124.2 $ 130.2 AFFO per diluted common share $ 0.35 $ 0.38 $ 2.10 $ 2.20 Corporate cash general and administrative expense $ 2.9 $ 3.1 $ 10.3 $ 11.3 Corporate non-cash general and administrative expense $ 2.1 $ 2.1 $ 7.5 $ 7.5 Weighted-average number of diluted common shares outstanding 59.0 59.0 59.1 59.1 HOTEL PORTFOLIO:
22-Hotel Portfolio
RevPAR $ 159.00 $ 163.00 $ 183.00 $ 187.00 RevPAR change as compared to 2016 (6.5 )% (4.5 )% (3.5 )% (1.5 )% Adjusted Hotel EBITDA $ 32.3 $ 34.0 $ 187.0 $ 195.0 Adjusted Hotel EBITDA Margin 24.7 % 25.5 % 31.2 % 31.9 % Adjusted Hotel EBITDA Margin change as compared to 2016 (375) bps (300) bps (170) bps (100) bps
15-Hotel Portfolio(1)
RevPAR $ 154.00 $ 157.00 $ 185.00 $ 189.00 RevPAR change as compared to 2016 (4.0 )% (2.0 )% (1.0 )% 1.0 % Adjusted Hotel EBITDA $ 19.4 $ 20.4 $ 121.4 $ 126.6 Adjusted Hotel EBITDA Margin 26.4 % 27.2 % 34.3 % 35.0 % Adjusted Hotel EBITDA Margin change as compared to 2016 (325) bps (250) bps (115) bps (40) bps
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(1) Excludes the following seven hotels located in San Francisco and/or undergoing significant guestroom renovations during 2017: Le Meridien San Francisco, JW Marriott San Francisco Union Square, Hyatt Centric Fisherman’s Wharf, Hotel Adagio San Francisco, Autograph Collection, Boston Marriott Newton, Denver Marriott City Center, and Hyatt Regency Mission Bay Spa and Marina.
“Although we are cautiously optimistic for the U.S. lodging industry given the current pro-growth political agenda and the potential for it to lead to a reacceleration in lodging demand growth, we expect 2017 to be a challenging year for our hotel portfolio as a result of actions we are taking to invest in our hotel portfolio for the longer-term along with market specific factors that are expected to negatively impact certain of our hotels,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “We are investing in and undergoing guestroom renovations at four of our hotels that we expect will position them for outperformance in the future, however, in the short-term, we expect operational displacement as work is performed. Furthermore, our hotel portfolio is expected to be negatively impacted in 2017 as a result of the planned temporary closure and expansion of the Moscone Center in San Francisco, where we have our largest concentration of portfolio rooms and EBITDA. We are excited for the expansion of the Moscone Center as it will allow the city to attract larger city wide events and groups in the future, however, with the near-term closure we expect lodging demand in the city to be negatively impacted, particularly from April 2017 to September 2017. Despite the revenue pressures we expect to face as we proceed through 2017, we and our hotel operators are intensely focused on cost containment and reduction measures to minimize the impact to the extent possible.”
The Trust’s 2017 outlook assumes, among other things, balanced U.S. lodging fundamentals with moderate supply growth offset by moderate demand growth resulting from a continuation of U.S. economic growth and trends, including moderate growth in GDP, low levels of unemployment, and stable levels of consumer confidence and corporate profits. The Trust’s 2017 outlook assumes no acquisitions, dispositions, or financing transactions beyond the refinance of the Royal Palm South Beach Miami term loan, which matures on March 9, 2017.
To view full financial release and corresponding tables please click the PDF icon or visit: http://www.chesapeakelodgingtrust.com/phoenix.zhtml?c=233098&p=irol-newsArticle&ID=2248417
