BETHESDA, Md.–RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the quarter and year ended December 31, 2016.
Full Year Highlights
- Net income decreased 8.4% to $201.3 million
- Pro forma RevPAR increased 1.1%, driven by a Pro forma ADR increase of 1.1%
- Pro forma Hotel EBITDA Margin of 36.3%
- Pro forma Consolidated Hotel EBITDA increased 4.1% to $400.3 million
- Adjusted FFO increased 2.5% to $332.7 million
- Sold two New York City hotels for $285.8 million and two non-core hotels for $15.7 million
- Refinanced over $1.0 billion of debt; extended maturities, improved pricing, and enhanced financial covenants
- Distributed an aggregate cash dividend of $1.32 per share
- Repurchased $13.3 million of common shares at an average price per share of $21.73
Fourth Quarter Highlights
- Net income increased 2.0% to $75.8 million
- Pro forma RevPAR decreased 0.3%, Pro forma ADR decreased 0.2%, and Pro forma Occupancy decreased 0.1%
- Pro forma Hotel EBITDA Margin increased 10 basis points to 35.2%
- Pro forma Consolidated Hotel EBITDA increased 1.3% to $90.9 million
“Our performance continues to demonstrate the advantages of owning a diversified portfolio, backed by a strong and liquid balance sheet, with a seasoned and disciplined management team,” commented Ross H. Bierkan, President and Chief Executive Officer. “Our upscale, focused-service and compact full-service model continues to generate high margins and significant free cash flow. While we recognize there are headwinds and macro uncertainties, we are confident that we are well positioned to take advantage of any upside in lodging fundamentals.”
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, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release.
Net income for the quarter ended December 31, 2016, increased $1.5 million to $75.8 million, representing a 2.0% increase over the comparable period in 2015. For the year ended December 31, 2016, net income decreased $18.5 million to $201.3 million, representing an 8.4% decrease over the comparable period in 2015.
Pro forma RevPAR for the quarter ended December 31, 2016, decreased 0.3% over the comparable period in 2015, driven by a Pro forma ADR decrease of 0.2%, and a Pro forma Occupancy decrease of 0.1%. The Company's top performing markets were Washington, D.C., Southern California, and Atlanta, with RevPAR growth of 12.4%, 8.8%, and 8.1%, respectively. For the year ended December 31, 2016, Pro forma RevPAR increased 1.1% over the comparable period in 2015, driven by a Pro forma ADR increase of 1.1%. Excluding Houston and New York City, which experienced softness during the year, Pro forma RevPAR growth was 2.5%.
Pro forma Hotel EBITDA Margin for the quarter ended December 31, 2016, increased 10 basis points over the comparable period in 2015 to 35.2%. For the year ended December 31, 2016, Pro forma Hotel EBITDA Margin decreased 21 basis points over the comparable period in 2015 to 36.3%.
Pro forma Consolidated Hotel EBITDA includes the results of non-comparable hotels. For the quarter ended December 31, 2016, Pro forma Consolidated Hotel EBITDA increased $1.2 million to $90.9 million, representing a 1.3% increase over the comparable period in 2015. For the year ended December 31, 2016, Pro forma Consolidated Hotel EBITDA increased $15.9 million to $400.3 million, representing a 4.1% increase over the comparable period in 2015.
Note: Pro forma Consolidated Hotel EBITDA excludes $4.0 million and $16.1 million of Hotel EBITDA for the quarter and year ended December 31, 2016, respectively, for hotels sold in 2016.
Adjusted FFO for the quarter ended December 31, 2016, decreased $0.4 million to $74.4 million, representing a 0.5% decrease over the comparable period in 2015. For the year ended December 31, 2016, Adjusted FFO increased $8.0 million to $332.7 million, representing a 2.5% increase over the comparable period in 2015.
Adjusted FFO per common share and unit-diluted for the quarter ended December 31, 2016, was $0.60, unchanged from the comparable period in 2015. Adjusted FFO per common share and unit-diluted for the year ended December 31, 2016, was $2.67, representing a 6.8% increase over the comparable period in 2015.
Adjusted EBITDA for the quarter ended December 31, 2016, decreased $0.8 million to $89.0 million, representing a 0.9% decrease over the comparable period in 2015. For the year ended December 31, 2016, Adjusted EBITDA increased $12.3 million to $392.4 million, representing a 3.2% increase over the comparable period in 2015.
Non-recurring items and other adjustments which were noteworthy for the quarter ended December 31, 2016, included a $46.1 million gain from the sale of three hotels.
Non-recurring items are included in net income 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 quarters and years ended December 31, 2016 and 2015.
Net cash flow from operating activities for the year ended December 31, 2016, totaled $331.4 million, compared to $328.9 million for the comparable period in 2015.
Dispositions
During the year ended December 31, 2016, the Company sold four hotels for approximately $301.5 million:
- On February 22, 2016, the Company sold a non-core hotel, the 62-room Holiday Inn Express Merrillville in Merrillville, IN, for $2.9 million.
- On November 30, 2016, the Company sold a non-core hotel, the 119-room SpringHill Suites Bakersfield in Bakersfield, CA, for $12.9 million.
- On December 5, 2016, the Company sold the 298-room Hilton Garden Inn New York 35th Street and the 280-room Hilton New York Fashion District in New York, NY, for $285.8 million.
Balance Sheet
During the year ended December 31, 2016, the Company successfully refinanced over $1.0 billion of 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 upsized the loan 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.
- On April 22, 2016, the Company amended and restated its $400.0 million term loan originally maturing in 2018. The transaction enhanced financial covenants, extended the final maturity to 2021, and improved pricing by an average of 21 basis points.
- The Company also amended and restated its revolving credit facility. The transaction enhanced financial covenants, extended the final maturity from 2017 to 2021, increased the borrowing capacity by an additional $100.0 million to $400.0 million, and improved pricing by an average of 26 basis points.
As of December 31, 2016, the Company had $456.7 million of unrestricted cash on its balance sheet, $400.0 million available on its revolving credit facility, and $1.6 billion of debt outstanding. The Company’s ratio of net debt to Adjusted EBITDA, pro forma for recent dispositions, for the year ended December 31, 2016, was 3.0 times.
Dividends
The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the fourth quarter. The dividend was paid on January 13, 2017, to shareholders of record as of December 30, 2016.
For the year ended December 31, 2016, the Company distributed a total dividend of $1.32 per common share of beneficial interest.
Share Repurchase Program
For the year ended December 31, 2016, the Company repurchased 0.6 million common shares for $13.3 million at an average price per share of $21.73.
To view full financial release and corresponding tables please click the PDF icon or visit: http://investor.rljlodgingtrust.com/phoenix.zhtml?c=243028&p=irol-irhome
