August 04, 2014 - 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, 2014.

HIGHLIGHTS

  • RevPAR: 7.0% pro forma increase for the 17-hotel portfolio and 3.4% pro forma increase for the 20-hotel portfolio over the same period in 2013.
  • Adjusted Hotel EBITDA Margin: 250 basis point pro forma increase for the 17-hotel portfolio and 170 basis point pro forma increase for the 20-hotel portfolio over the same period in 2013.
  • Adjusted Hotel EBITDA: $47.1 million.
  • Adjusted Corporate EBITDA: $43.2 million.
  • Adjusted FFO: $31.2 million or $0.64 per diluted common share.
  • Financing: Subsequent to quarter end, refinanced an existing $60.0 million loan, replacing it with a $90.0 million, 10-year loan at 4.30%.

"We are pleased with the performance of our hotel portfolio in the second quarter. Our 17-hotel portfolio achieved an occupancy level of over 87% which allowed our hotel managers to increase daily rates resulting in RevPAR growth at the top end of our guidance range. With the ADR-driven RevPAR growth for the quarter and our continued focus on reducing or limiting increases in expenses, we were able to expand hotel EBITDA margins by 250 basis points, well exceeding our guidance range for the quarter," said James L. Francis, Chesapeake Lodging Trust's President and Chief Executive Officer.

Mr. Francis continued, "We are very proud of the renovated product at our W Chicago – Lakeshore, which we completed in the second quarter on-time and within budget. We have commenced the comprehensive renovations and rebrandings of the former W New Orleans and the former Holiday Inn New York City Midtown – 31st Street, which are scheduled to be completed in the Fall. We expect these three newly renovated hotels will provide outsized growth and add significant value to our overall hotel portfolio."

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three and six months ended June 30, 2014 and 2013 (in millions, except share and per share amounts):

___________

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

(2) Includes results of operations of 17 hotels for the full period and three hotels 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.

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared. 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. Since five of the Trust's hotels owned as of June 30, 2014 were acquired at various times during 2013, the key operating metrics for the 17-hotel portfolio and 20-hotel portfolio reflect the pro forma operating results of three of those hotels for the three months ended June 30, 2013 and five of those hotels for the six months ended June 30, 2013. Included in the following table are comparisons 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, for the three and six months ended June 30, 2014 and 2013 (in thousands, except ADR and RevPAR):

__________

(1) Includes results of operations for certain hotels prior to their acquisition by the Trust.

(2) Excludes the W Chicago – Lakeshore, the Hotel New Orleans Downtown (formerly the W New Orleans), and the Hyatt Herald Square (formerly the Holiday Inn New York City Midtown – 31st Street), as these hotels have undergone or are undergoing comprehensive renovations during 2014.

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.

MAJOR REPOSITIONINGS

The comprehensive renovation at the 520-room W Chicago – Lakeshore, which commenced in the third quarter of 2013, was completed in the second quarter of 2014 with a total expected cost of approximately $38.0 million.

The comprehensive renovation at the former 410-room W New Orleans to reposition the hotel commenced in the second quarter of 2014. In July 2014, the Trust and its hotel manager, Starwood Hotels & Resorts Worldwide, Inc., agreed to remove the W brand from the hotel for the duration of the renovation and rename it the Hotel New Orleans Downtown. The Trust continues to expect the renovation will cost approximately $29.0 million and be completed in the fourth quarter of 2014, at which time the hotel will be re-branded as the Le Meridien New Orleans.

The comprehensive renovation at the former 122-room Holiday Inn New York City Midtown – 31st Street to reposition the hotel as the Hyatt Herald Square commenced in the third quarter of 2014 with the closure of the hotel on August 1, 2014. The Trust expects the renovation to be completed and the hotel to re-open by October 1, 2014 and that the renovation will cost approximately $6.5 million.

CAPITAL MARKETS

The Trust did not sell any common shares under the continuous at-the-market (ATM) program during the second quarter of 2014 and through the date of this release.

DIVIDENDS

On April 15, 2014, the Trust paid 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. On May 16, 2014, the Trust declared dividends in the amounts of $0.30 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of June 30, 2014. Both dividends were paid on July 15, 2014.

FINANCING ACTIVITY

On July 3, 2014, the Trust completed the refinancing of its $60.0 million term loan secured by the Hyatt Herald Square (formerly the Holiday Inn New York City Midtown – 31st Street) and the Hyatt Place New York Midtown South. The term loan was refinanced with a new 10-year, $90.0 million, fixed-rate mortgage loan secured by the two hotels mentioned previously. The loan carries a fixed interest rate of 4.30% per annum and requires interest-only payments for the first two years and principal and interest payments thereafter based on a 30-year principal amortization. Excess proceeds from the refinancing were used to repay outstanding borrowings under the Trust's revolving credit facility.

2014 OUTLOOK

The Trust is updating its 2014 outlook to incorporate its second quarter results, recent operating trends and fundamentals, and the refinancing of the $60.0 million term loan. The updated outlook assumes no additional acquisitions, dispositions, or financing transactions (in millions, except RevPAR and per share amounts):

_____________

(1) Excludes the W Chicago – Lakeshore, the Hotel New Orleans Downtown (formerly the W New Orleans), and the Hyatt Herald Square (formerly the Holiday Inn New York City Midtown – 31st Street), as these hotels have undergone or are undergoing comprehensive renovations during 2014.

___________

(1) Excludes the W Chicago – Lakeshore, the Hotel New Orleans Downtown (formerly the W New Orleans), and the Hyatt Herald Square (formerly the Holiday Inn New York City Midtown – 31st Street), as these hotels have undergone or are undergoing comprehensive renovations during 2014.

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

To view all corresponding tables associated with this release please visit:

http://www.chesapeakelodgingtrust.com/phoenix.zhtml?c=233098&p=irol-newsArticle&ID=1954855&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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