ANNAPOLIS, Md.)–Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended June 30, 2016.
HIGHLIGHTS
- RevPAR: 2.2% pro forma increase for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA Margin: 50 basis point pro forma increase to 36.9% for the hotel portfolio over the same period in 2015.
- Adjusted Hotel EBITDA: $62.6 million.
- Adjusted Corporate EBITDA: $57.9 million.
- Net income available to common shareholders: $26.1 million or $0.44 per diluted common share.
- Adjusted FFO: $43.9 million or $0.75 per diluted common share.
- Financings: Prepaid without penalty its previous Hyatt Regency Boston loan and entered into a new $150.0 million, 10-year loan at 4.25%.
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three and six months ended June 30, 2016 and 2015 (in millions, except share and per share amounts):
Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Total revenue $ 169.4 $ 162.1 $ 310.0 $ 271.4 Net income available to common shareholders $ 26.1 $ 21.6 $ 33.8 $ 20.8 Net income per diluted common share $ 0.44 $ 0.36 $ 0.57 $ 0.36 Adjusted Hotel EBITDA $ 62.6 $ 59.4 $ 102.6 $ 84.7 Adjusted Corporate EBITDA $ 57.9 $ 54.9 $ 92.6 $ 75.6 AFFO available to common shareholders $ 43.9 $ 39.8 $ 69.9 $ 54.2 AFFO per diluted common share $ 0.75 $ 0.68 $ 1.19 $ 0.95 Weighted-average number of diluted common shares outstanding 58,864,050 58,956,483 58,836,746 56,783,872
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 June 30, 2016, the Trust owned 22 hotels. Since two of its hotels owned as of June 30, 2016 were acquired during 2015, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three and six months ended June 30, 2015.
Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three and six months ended June 30, 2016 and 2015 (in thousands, except for ADR and RevPAR):
Three Months Ended June 30, Six Months Ended June 30, 2016
2015(1)
Change 2016
2015(1)
Change Occupancy 88.1 % 86.0 % 210 bps 83.4 % 79.1 % 430 bps ADR $ 236.69 $ 237.11 (0.2 )% $ 227.05 $ 227.03 0.0 % RevPAR $ 208.43 $ 203.99 2.2 % $ 189.39 $ 179.52 5.5 % Adjusted Hotel EBITDA $ 62,597 $ 59,875 4.5 % $ 102,648 $ 91,543 12.1 % Adjusted Hotel EBITDA Margin 36.9 % 36.4 % 50 bps 33.1 % 31.4 % 170 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 April 6, 2016, the Trust prepaid without penalty its previous mortgage loan secured by the Hyatt Regency Boston, which had an outstanding principal balance at the time of $88.2 million, with a borrowing under its revolving credit facility. On June 23, 2016, the Trust entered into a new 10-year, $150.0 million, fixed-rate mortgage loan secured by the Hyatt Regency Boston. The loan carries a fixed interest rate of 4.25% per annum, with principal and interest payments based on a 30-year principal amortization. The Trust used the proceeds from the new loan to repay outstanding borrowings under its revolving credit facility.
DISPOSITION ACTIVITY
On April 14, 2016, the Trust sold the separate, five-room villa building and related land parcel at the Hyatt Centric Santa Barbara for a sale price of $2.1 million. The Trust recognized a $0.6 million gain on sale.
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 April 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 March 31, 2016. On May 17, 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 June 30, 2016. Both dividends were paid on July 15, 2016.
2016 OUTLOOK
The Trust is updating its 2016 outlook to incorporate its second quarter results and recent operating trends and fundamentals. The updated outlook assumes no acquisitions, dispositions, or financing transactions beyond the prepayment without penalty of the Courtyard Washington Capitol Hill/Navy Yard mortgage loan on August 1, 2016 (in millions, except RevPAR and per share amounts):
Third Quarter 2016
Outlook Low High CONSOLIDATED: Net income available to common shareholders $ 23.7 $ 25.8 Net income per diluted common share $ 0.40 $ 0.44 Adjusted Corporate EBITDA $ 53.5 $ 55.8 AFFO available to common shareholders $ 42.5 $ 44.6 AFFO per diluted common share $ 0.72 $ 0.76 Corporate cash general and administrative expense $ 2.1 $ 2.3 Corporate non-cash general and administrative expense $ 2.4 $ 2.4 Weighted-average number of diluted common shares outstanding 58.9 58.9 22-HOTEL PORTFOLIO: RevPAR $ 209.00 $ 213.00 RevPAR increase over 2015 0.0 % 2.0 % Adjusted Hotel EBITDA $ 58.0 $ 60.5 Adjusted Hotel EBITDA Margin 35.2 % 36.0 % Adjusted Hotel EBITDA Margin increase over 2015 0 bps 75 bps
Full Year 2016
Updated Outlook Previous Outlook Low High Low High CONSOLIDATED: Net income available to common shareholders $ 69.6 $ 74.6 $ 74.3 $ 80.1 Net income per diluted common share $ 1.18 $ 1.27 $ 1.26 $ 1.36 Adjusted Corporate EBITDA $ 188.0 $ 193.5 $ 193.6 $ 200.1 AFFO available to common shareholders $ 143.7 $ 148.7 $ 148.5 $ 154.3 AFFO per diluted common share $ 2.45 $ 2.53 $ 2.52 $ 2.62 Corporate cash general and administrative expense $ 9.5 $ 10.0 $ 10.0 $ 10.8 Corporate non-cash general and administrative expense $ 9.5 $ 9.5 $ 9.4 $ 9.4 Weighted-average number of diluted common shares outstanding 58.7 58.7 58.9 58.9 22-HOTEL PORTFOLIO: RevPAR $ 191.00 $ 194.00 $ 195.00 $ 199.00 Pro forma RevPAR increase over 2015(1) 3.0 % 4.5 % 5.0 % 7.0 % Adjusted Hotel EBITDA $ 207.0 $ 213.0 $ 213.0 $ 220.3 Adjusted Hotel EBITDA Margin 33.2 % 33.7 % 33.7 % 34.2 % Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1) 50 bps 100 bps 100 bps 150 bps ___________ (1) The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust.
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