ANNAPOLIS, Md.--Feb. 20, 2014-- Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended December 31, 2013.

HIGHLIGHTS

  • Pro Forma RevPAR: 4.8% increase for comparable 19-hotel portfolio over the same period in 2012 (7.1% increase excluding the W Chicago – Lakeshore).
  • Pro Forma Adjusted Hotel EBITDA Margin: 110 basis point increase for comparable 19-hotel portfolio over the same period in 2012.
  • Dividends: Increased first quarter 2014 dividend by 15.4% to $0.30 per common share (4.6% annualized yield based on the closing price of the Trust's common shares on February 19, 2014).

"We are encouraged by the strong performance of our hotel portfolio during the fourth quarter despite the impact of the government shutdown that occurred in October," said James L. Francis, Chesapeake Lodging Trust's President and Chief Executive Officer. "We saw lodging demand re-accelerate towards the end of 2013 and we continue to see positive trends in hotel fundamentals as we begin 2014, giving us confidence to increase our quarterly dividend by 15%."

Mr. Francis continued, "Our comprehensive renovation at the W Chicago – Lakeshore is progressing well and we continue to expect that it will be completed in the second quarter and within the budgeted cost. We are also very excited about the upcoming conversions of our hotel on 31st Street in midtown Manhattan to the Hyatt brand and our W New Orleans to the Le Meridien brand. We believe these projects will create tremendous value for our shareholders and provide outsized growth for our hotel portfolio starting later this year."

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months and year ended December 31, 2013 (in millions, except share and per share amounts):

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(1) Includes results of operations of 20 hotels for the full period.

(2) Includes results of operations of 14 hotels for the full period and one hotel for part of the period.

(3) Includes results of operations of 15 hotels for the full period and five hotels for part of the period.

(4) Includes results of operations of 11 hotels for the full period and four hotels for part of the period.

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared. Included in the following table are comparisons, on a pro forma basis, of occupancy, average daily rate (ADR), room revenue per available room (RevPAR), Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin, the key operating metrics that management uses to assess the performance of its hotels. The key operating metrics include the hotel operating results of 19 of the Trust's 20 hotels owned as of December 31, 2013. The key operating metrics do not include operating results for the Hyatt Place New York Midtown South, as the hotel does not have comparable prior year operating results given it was newly developed in 2013. The following is a summary of the key operating metrics for the three months and year ended December 31, 2013 (in thousands, except pro forma ADR and pro forma RevPAR):

Pro forma RevPAR increase for the fourth quarter 2013 was negatively impacted by displacement from a comprehensive renovation at the 520-room W Chicago – Lakeshore. Excluding the W Chicago – Lakeshore, pro forma RevPAR increase for the fourth quarter of 2013 was 7.1%.

Funds from operations (FFO), FFO available to common shareholders, Adjusted FFO (AFFO) available to common shareholders, net income before interest, income taxes, and depreciation and amortization (Corporate EBITDA), Adjusted Corporate EBITDA, Hotel EBITDA, Adjusted Hotel EBITDA and Adjusted Hotel EBITDA Margin 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.

MAJOR REPOSITIONINGS

The comprehensive renovation at the 520-room W Chicago – Lakeshore, which commenced in the third quarter of 2013, is progressing in accordance with our budgeted cost of $38.0 million and scheduled completion in the second quarter of 2014.

The Trust continues to expect that the comprehensive renovation at the 410-room W New Orleans to reposition the hotel to the Le Meridien brand will cost approximately $29.0 million, commence in the second quarter of 2014, and be completed in the fourth quarter of 2014.

On February 5, 2014, the Trust announced that it had entered into a franchise agreement with a Hyatt affiliate to convert the 122-room Holiday Inn New York City Midtown – 31st Street to the Hyatt Herald Square. Conversion of the hotel is expected to occur following the completion of a comprehensive renovation, which the Trust expects will cost approximately $6.0 million. The hotel will be closed throughout the renovation, which is expected to commence and be completed in the third quarter of 2014.

CAPITAL MARKETS ACTIVITY

During the fourth quarter 2013, the Trust issued and sold 854,800 common shares at an average price of $23.64 per share under its continuous at-the-market (ATM) program, generating net proceeds of $19.9 million after deducting sales commissions and offering costs.

DIVIDENDS

On October 15, 2013, the Trust paid dividends in the amounts of $0.26 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2013. On December 16, 2013, the Trust declared dividends in the amounts of $0.26 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of December 31, 2013. Both dividends were paid on January 15, 2014.

On February 20, 2014, the Trust declared dividends in the amounts of $0.30 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of March 31, 2014. The dividends will be paid on April 15, 2014.

2014 OUTLOOK

The Trust reaffirms its previously provided full year 2014 outlook and is incorporating its first quarter 2014 outlook as follows (in millions, except pro forma RevPAR and per share amounts):

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(1) Excludes the W Chicago – Lakeshore, the W New Orleans, and the Holiday Inn New York City Midtown – 31st Street, as these hotels will be undergoing comprehensive renovations during 2014.

(2) The comparable 2013 period includes operating results for certain hotels prior to their acquisition by the Trust in 2013.

The Trust's 2014 outlook assumes no additional acquisitions, dispositions, or financing transactions. See the accompanying financial tables for quarterly pro forma hotel operating results for the 17-hotel and 20-hotel portfolios for 2013.

NON-GAAP FINANCIAL MEASURES

The Trust reports the following eight non-GAAP financial measures that it believes are useful to investors as key measures of its operating performance: (1) FFO, (2) FFO available to common shareholders, (3) AFFO available to common shareholders, (4) Corporate EBITDA, (5) Adjusted Corporate EBITDA, (6) Hotel EBITDA, (7) Adjusted Hotel EBITDA and (8) Adjusted Hotel EBITDA Margin. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are included in the accompanying financial tables.

FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust's operating performance.

FFO available to common shareholders – The Trust reduces FFO for preferred share dividends and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust's operating performance after taking into account the interests of holders of the Trust's preferred shares and unvested time-based awards.

AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT's definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

Corporate EBITDA – Corporate EBITDA is defined as net income before interest, income taxes, and depreciation and amortization. The Trust believes that Corporate EBITDA provides investors a useful financial measure to evaluate the Trust's operating performance, excluding the impact of the Trust's capital structure (primarily interest expense) and the Trust's asset base (primarily depreciation and amortization).

Adjusted Corporate EBITDA – The Trust further adjusts Corporate EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

Hotel EBITDA – Hotel EBITDA is defined as total revenues less total hotel operating expenses. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust's hotel operating performance.

Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for non-cash amortization of intangible assets and liabilities, including ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Hotel EBITDA provides investors with another useful financial measure to evaluate the Trust's hotel operating performance.

Adjusted Hotel EBITDA Margin – Adjusted Hotel EBITDA Margin is defined as Adjusted Hotel EBITDA as a percentage of total revenues. The Trust believes that Adjusted Hotel EBITDA Margin provides investors another useful financial measure to evaluate the Trust's hotel operating performance.

To view all tables corresponding to this release please visit:

http://www.chesapeakelodgingtrust.com/phoenix.zhtml?c=233098&p=irol-newsArticle&ID=1902072&highlight=

About Chesapeake Lodging Trust

Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 20 hotels with an aggregate of 5,932 rooms in eight states and the District of Columbia. Additional information can be found on the Trust's website at www.chesapeakelodgingtrust.com.

Contact: Douglas W. Vicari

410-972-4142

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