ARLINGTON, Va.–Apr. 25, 2017– Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended March 31, 2017.
HIGHLIGHTS
- RevPAR: 3.6% decrease for the 22-hotel portfolio and 2.5% decrease for the 15-hotel portfolio over the same period in 2016.
- Adjusted Hotel EBITDA Margin: 180 basis point decrease to 26.7% for the 22-hotel portfolio and 130 basis point decrease to 28.4% for the 15-hotel portfolio over the same period in 2016.
- Adjusted Hotel EBITDA: $36.0 million.
- Adjusted Corporate EBITDA: $31.1 million.
- Net income available to common shareholders: $5.6 million or $0.09 per diluted common share.
- Adjusted FFO: $24.2 million or $0.41 per diluted common share.
- Financing: Repaid $125.0 million secured term loan. Subsequent to quarter end, closed on a five-year, $225.0 million unsecured term loan.
“We are pleased with our results for the first quarter which exceeded our expectations earlier in the year, albeit those expectations were tempered by the challenging environment we have been operating in for the last 18 months,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “Although we still have not yet seen a meaningful increase in lodging demand from corporate customers, we remain cautiously optimistic that the current pro-growth political agenda will lead to an uptick in lodging demand in the quarters ahead. Furthermore, we expect to be negatively impacted during 2017 with the temporary closure and expansion of the Moscone Center in San Francisco and as we complete renovations at several of our larger hotels, all of which we strongly believe will enhance shareholder value in the long term. As a result of these short-term headwinds and the continued challenging operating environment, we are maintaining our previously provided full year 2017 outlook.”
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three months ended March 31, 2017 and 2016 (in millions, except share and per share amounts):
Three Months Ended March 31, 2017 2016 Total revenue $ 134.9 $ 140.6 Net income available to common shareholders $ 5.6 $ 7.6 Net income per diluted common share $ 0.09 $ 0.13 Adjusted Hotel EBITDA $ 36.0 $ 40.1 Adjusted Corporate EBITDA $ 31.1 $ 34.8 AFFO available to common shareholders $ 24.2 $ 26.0 AFFO per diluted common share $ 0.41 $ 0.44 Weighted-average number of diluted common shares outstanding 58,995,589 59,247,219
HOTEL OPERATING RESULTS
During 2017, the Trust expects the following seven of its 22 hotels to be negatively impacted as a result of (1) the expected negative impact on lodging demand in San Francisco resulting from the temporary closure and expansion of the Moscone Center and/or (2) significant guestroom renovations undergoing during the year: 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. As such, the Trust is reporting key operating metrics for a 15-hotel portfolio in addition to the 22-hotel portfolio. Included in the following table are comparisons of the key operating metrics for the 22-hotel portfolio and the 15-hotel portfolio for the three months ended March 31, 2017 and 2016 (in thousands, except for ADR and RevPAR):
Three Months Ended March 31, 2017 2016 Change
22-Hotel Portfolio
Occupancy 76.5 % 78.8 % (230) bps ADR $ 214.69 $ 216.28 (0.7)% RevPAR $ 164.16 $ 170.35 (3.6)% Adjusted Hotel EBITDA $ 35,987 $ 40,051 (10.1)% Adjusted Hotel EBITDA Margin 26.7 % 28.5 % (180) bps
15-Hotel Portfolio
Occupancy 78.4 % 78.3 % 10 bps ADR $ 199.50 $ 204.76 (2.6)% RevPAR $ 156.38 $ 160.43 (2.5)% Adjusted Hotel EBITDA $ 21,322 $ 23,091 (7.7)% Adjusted Hotel EBITDA Margin 28.4 % 29.7 % (130) bps
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.
FINANCING ACTIVITY
On March 9, 2017, the Trust repaid at maturity an existing $125.0 million term loan secured by the Royal Palm South Beach Miami, a Tribute Portfolio Resort, with a borrowing under its revolving credit facility.
On April 21, 2017, the Trust closed on a five-year, $225.0 million unsecured term loan provided by a syndicate of banks. The term loan provides for the possibility of future increases, up to a maximum amount borrowed of $375.0 million, in accordance with the terms of the term loan agreement. The loan bears interest equal to LIBOR, plus 1.45% – 2.20% (the spread over LIBOR based on the Trust’s consolidated leverage ratio). Contemporaneous with the closing of the unsecured term loan, the Trust entered into an interest rate swap to fix LIBOR at 1.86% for the five-year term. As of April 25, 2017, the effective interest rate on the unsecured term loan was 3.31%. Proceeds from the term loan were used to repay outstanding borrowings under the revolving credit facility. The term loan agreement contains the same financial covenants as those contained in the Trust's revolving credit facility.
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 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=2264636
