– Completed a comprehensive $1.0 billion refinancing
– Repurchased 0.5 million common shares for $11.3 million
– Pro forma RevPAR increased 2.1%
BETHESDA, Md.–RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the three months ended March 31, 2016.
Highlights
- Pro forma RevPAR increased 2.1%, Pro forma ADR increased 2.1%, and Pro forma Occupancy increased 0.1%
- Pro forma Hotel EBITDA Margin increased 35 basis points to 33.6%
- Pro forma Consolidated Hotel EBITDA increased 7.3% to $92.4 million
- Adjusted FFO increased 5.2% to $70.8 million
- Refinanced $233.5 million of secured debt; extended maturities to 2022 and 2023
- Sold one non-strategic property
- Repurchased 0.5 million common shares for $11.3 million
- Subsequent to quarter end, refinanced $800.0 million of unsecured debt; extended maturities to 2021, improved pricing, and enhanced financial covenants
“Our diversified portfolio and prudent capital allocation continue to yield positive results,” commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. “In addition to another quarter of solid performance, we further bolstered our balance sheet by refinancing $1.0 billion of debt and also enhanced capital returns to our shareholders by continuing to repurchase shares. We remain optimistic about 2016 as we benefit from our shift towards higher growth markets and the ramp up of our recent conversions.”
Financial and Operating Results
Performance metrics such as Occupancy, Average Daily Rate (“ADR”), Revenue Per Available Room (“RevPAR”), Hotel EBITDA, and Hotel EBITDA Margin are Pro forma. The prefix “Pro forma” as defined by the Company, denotes operating results which include results for periods prior to its ownership. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. Explanations of EBITDA, Adjusted EBITDA, Hotel EBITDA, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included at the end of this release.
Pro forma RevPAR for the three months ended March 31, 2016, increased 2.1% over the comparable period in 2015, driven by a Pro forma ADR increase of 2.1%, and a Pro forma Occupancy increase of 0.1%. Excluding Chicago and Houston, which experienced softness in the quarter, Pro forma RevPAR growth was 3.9%. Two of the Company’s markets achieved double-digit RevPAR growth, including Northern California and Southern California, which experienced RevPAR growth of 28.7% and 11.9%, respectively.
Pro forma Hotel EBITDA Margin for the three months ended March 31, 2016, increased 35 basis points over the comparable period in 2015 to 33.6%. Excluding Chicago and Houston, Pro forma Hotel EBITDA Margin increased 82 basis points.
Pro forma Consolidated Hotel EBITDA includes the results of non-comparable hotels. For the three months ended March 31, 2016, Pro forma Consolidated Hotel EBITDA increased $6.3 million to $92.4 million, representing a 7.3% increase over the comparable period in 2015.
Adjusted EBITDA for the three months ended March 31, 2016, increased $4.9 million to $86.0 million, representing a 6.1% increase over the comparable period in 2015.
Adjusted FFO for the three months ended March 31, 2016, increased $3.5 million to $70.8 million, representing a 5.2% increase over the comparable period in 2015.
Adjusted FFO per diluted share and unit for the three months ended March 31, 2016, was $0.57 based on the Company’s diluted weighted-average common shares and units outstanding of 124.9 million.
Non-recurring items which were noteworthy for the three months ended March 31, 2016, included a non-cash deferred tax expense of $1.1 million and $0.7 million of other costs outside the normal course of operations.
Non-recurring items are included in net income attributable to common shareholders but are excluded from Adjusted EBITDA and Adjusted FFO, as applicable. A complete listing of non-recurring items is provided in the Non-GAAP reconciliation tables in this press release for the three months ended March 31, 2016 and 2015.
Net income attributable to common shareholders for the three months ended March 31, 2016, was $25.3 million, compared to $47.9 million for the comparable period in 2015.
Net cash flow from operating activities for the three months ended March 31, 2016, totaled $55.2 million, compared to $44.1 million for the comparable period in 2015.
Balance Sheet
During the three months ended March 31, 2016, the Company successfully refinanced $233.5 million of secured debt.
On March 16, 2016, the Company amended its $74.0 million cross-collateralized, first mortgage non-recourse loan secured by five properties. The transaction increased proceeds to $85.0 million, improved pricing, and extended the final maturity from 2017 to 2023, including extensions.
On March 24, 2016, the Company amended and restated three first mortgage non-recourse loans secured by four properties totaling $148.5 million. The transaction improved pricing and extended the final maturity from 2020 to 2022, including extensions.
As of March 31, 2016, the Company had $126.0 million of unrestricted cash on its balance sheet, $300.0 million available on its Revolver, and $1.6 billion of debt outstanding. The Company’s ratio of net debt to Adjusted EBITDA, pro forma for recent acquisitions and dispositions, for the trailing twelve month period ended March 31, 2016, was 3.8 times.
Dividends
The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the first quarter. The dividend was paid on April 15, 2016, to shareholders of record as of March 31, 2016.
Share Buyback
During the first quarter of 2016, the Company repurchased 0.5 million common shares for $11.3 million at an average price per share of $22.11. As of March 31, 2016, the Company's authorized share buyback program had a remaining capacity of $163.5 million.
Dispositions
On February 22, 2016, the Company sold the 62-room Holiday Inn Express Merrillville in Merrillville, IN for $2.9 million.
Subsequent Events
On April 22, 2016, the Company successfully refinanced $800.0 million of unsecured debt.
The Company amended and restated its $400.0 million 2013 Five-Year Term Loan. The transaction extended the final maturity from 2018 to 2021 and improved pricing by an average of 21 basis points.
The Company also amended and restated its $300.0 million Revolver. Including extensions, the transaction extended the final maturity from 2017 to 2021, increased the capacity to $400.0 million, and improved pricing by an average of 26 basis points.
2016 Outlook
The Company’s outlook remains the same. The outlook excludes potential future acquisitions and dispositions, which could result in a material change to the Company’s outlook. The 2016 outlook is also based on a number of other assumptions, many of which are outside the Company’s control and all of which are subject to change.
Pro forma operating statistics include results for periods prior to the Company's ownership and therefore assumes the hotels were owned since January 1, 2015. Pro forma guidance removes income from hotels that have been sold.
For the full year 2016, the Company anticipates:
Current Outlook Pro forma RevPAR growth (1) 3.0% to 5.0% Pro forma Hotel EBITDA Margin (1) 36.5% to 37.5% Pro forma Consolidated Hotel EBITDA $425.0M to $450.0M Corporate Cash General & Administrative $27.5M to $28.5M
(1) Excludes non-comparable hotels. Properties closed for renovations are considered non-comparable and therefore are excluded for periods in which they are closed.
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