ANNAPOLIS, Md.–Nov. 1, 2016– Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended September 30, 2016.
HIGHLIGHTS
- RevPAR: 0.7% decrease for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA Margin: 60 basis point decrease to 34.6% for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA: $57.0 million.
- Adjusted Corporate EBITDA: $52.9 million.
- Net income available to common shareholders: $23.5 million or $0.40 per diluted common share.
- Adjusted FFO: $42.1 million or $0.71 per diluted common share.
“Pricing pressure from corporate customers continues to be the primary headwind for our portfolio in the second half of 2016,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “Although our operators have been able to hold occupancy levels at our hotels at historically high levels, ADRs have been pressured more than expected which in turn has impacted our operating results and margins. In addition, our fourth quarter operating results are expected to be negatively impacted by approximately $1.5 million as a result of the Zika virus and Hurricane Matthew in Miami and operational challenges at our hotels in New Orleans, which we are working to correct. Furthermore, management fee waivers received and favorable property tax adjustments recorded at several of our hotels last year totaling $1.5 million negatively impact our margin comparison in the fourth quarter. We and our hotel operators are intensely focused on both revenue management and cost containment and reduction measures to minimize the impact of the current revenue trends we are experiencing.”
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three and nine months ended September 30, 2016 and 2015 (in millions, except share and per share amounts):
Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Total revenue $ 164.5 $ 165.0 $ 474.6 $ 436.4 Net income available to common shareholders $ 23.5 $ 24.8 $ 57.3 $ 45.5 Net income per diluted common share $ 0.40 $ 0.42 $ 0.97 $ 0.78 Adjusted Hotel EBITDA $ 57.0 $ 58.1 $ 159.6 $ 142.8 Adjusted Corporate EBITDA $ 52.9 $ 54.1 $ 145.6 $ 129.7 AFFO available to common shareholders $ 42.1 $ 42.9 $ 112.0 $ 97.1 AFFO per diluted common share $ 0.71 $ 0.73 $ 1.90 $ 1.69 Weighted-average number of diluted common shares outstanding 58,928,433 58,991,087 58,894,529 57,536,971
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 September 30, 2016, the Trust owned 22 hotels. Since two of its hotels owned as of September 30, 2016 were acquired during 2015, the key operating metrics below reflect the pro forma operating results for those hotels for the nine months ended September 30, 2015.
Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three and nine months ended September 30, 2016 and 2015 (in thousands, except for ADR and RevPAR):
Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 Change 2016
2015(1)
Change Occupancy 88.8 % 87.9 % 90 bps 85.2 % 82.0 % 320 bps ADR $ 233.19 $ 237.33 (1.7 )% $ 229.20 $ 230.75 (0.7 )% RevPAR $ 207.12 $ 208.58 (0.7 )% $ 195.34 $ 189.32 3.2 % Adjusted Hotel EBITDA $ 56,983 $ 58,087 (1.9 )% $ 159,631 $ 149,630 6.7 % Adjusted Hotel EBITDA Margin 34.6 % 35.2 % (60) bps 33.6 % 32.8 % 80 bps __________ (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.
FINANCING ACTIVITY
On August 1, 2016, the Trust prepaid without penalty its previous mortgage loan secured by the Courtyard Washington Capitol Hill/Navy Yard, which had an outstanding principal balance at the time of $34.0 million, with a borrowing under its 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 2016.
DIVIDENDS
On July 15, 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 June 30, 2016. On September 19, 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 September 30, 2016. Both dividends were paid on October 14, 2016.
2016 OUTLOOK
The Trust is updating its 2016 outlook to incorporate its third quarter results and recent operating trends and fundamentals. The updated outlook assumes no acquisitions, dispositions, or financing transactions (in millions, except RevPAR and per share amounts):
Fourth Quarter 2016
Outlook Low High CONSOLIDATED: Net income available to common shareholders $ 7.2 $ 9.3 Net income per diluted common share $ 0.12 $ 0.16 Adjusted Corporate EBITDA $ 36.4 $ 38.7 AFFO available to common shareholders $ 26.1 $ 28.2 AFFO per diluted common share $ 0.44 $ 0.48 Corporate cash general and administrative expense $ 2.0 $ 2.2 Corporate non-cash general and administrative expense $ 2.3 $ 2.3 Weighted-average number of diluted common shares outstanding 58.8 58.8 22-HOTEL PORTFOLIO: RevPAR $ 170.00 $ 174.00 RevPAR change as compared to 2015 (3.0 )% (1.0 )% Adjusted Hotel EBITDA $ 40.8 $ 43.3 Adjusted Hotel EBITDA Margin 29.2 % 30.2 % Adjusted Hotel EBITDA Margin change as compared to 2015 (350) bps (250) bps
Full Year 2016
Updated Outlook Previous Outlook Low High Low High CONSOLIDATED: Net income available to common shareholders $ 64.1 $ 66.2 $ 69.6 $ 74.6 Net income per diluted common share $ 1.09 $ 1.13 $ 1.18 $ 1.27 Adjusted Corporate EBITDA $ 182.0 $ 184.3 $ 188.0 $ 193.5 AFFO available to common shareholders $ 138.1 $ 140.2 $ 143.7 $ 148.7 AFFO per diluted common share $ 2.35 $ 2.39 $ 2.45 $ 2.53 Corporate cash general and administrative expense $ 8.9 $ 9.1 $ 9.5 $ 10.0 Corporate non-cash general and administrative expense $ 9.5 $ 9.5 $ 9.5 $ 9.5 Weighted-average number of diluted common shares outstanding 58.7 58.7 58.7 58.7 22-HOTEL PORTFOLIO: RevPAR $ 189.00 $ 190.00 $ 191.00 $ 194.00 Pro forma RevPAR change as compared to 2015(1) 1.7 % 2.2 % 3.0 % 4.5 % Adjusted Hotel EBITDA $ 200.4 $ 202.9 $ 207.0 $ 213.0 Adjusted Hotel EBITDA Margin 32.6 % 32.8 % 33.2 % 33.7 % Pro forma Adjusted Hotel EBITDA Margin change as compared to 2015(1) (10) bps 10 bps 50 bps 100 bps ___________ (1) The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust.
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=2218198
