RLJ Lodging Trust Q4 & Full Year 2013 Results Report Net Income $27.4M & Pro Forma RevPar Up 7.2%
February 27, 2014 7:56am
- Full year Pro forma RevPAR increased 7.2%
- Acquired more than $200 million of assets in high-growth markets in 2013
February 26, 2014 - BETHESDA, Md.--RLJ Lodging Trust (the "Company") (NYSE: RLJ) today reported results for the quarter and year ended December 31, 2013.
Full Year Highlights
Fourth Quarter Highlights
"2013 was another excellent year for RLJ as we continued to execute our growth strategy," commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. "Our well-diversified portfolio once again delivered industry leading RevPAR growth, which resulted in a cumulative growth of more than 22% over the past three years. Furthermore, we entered into new dynamic markets and strengthened our fortress balance sheet with the successful completion of our first follow-on equity raise and comprehensive refinancing. Our efforts have positioned us for significant long-term growth."
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 non-comparable hotels that were not open for operation or closed for renovations 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 quarter ended December 31, 2013, increased 3.9% over the comparable period in 2012, driven by a Pro forma ADR increase of 1.0% and a Pro forma Occupancy increase of 2.8%. Among the Company's top six markets, the best performers in the quarter were Denver and Houston which experienced RevPAR growth of 13.4% and 11.4%, respectively. For the year ended December 31, 2013, Pro forma RevPAR increased 7.2% over the comparable period in 2012, driven by a Pro forma ADR increase of 4.4% and a Pro forma Occupancy increase of 2.6%.
Pro forma Hotel EBITDA Margin for the quarter ended December 31, 2013, decreased 101 basis points over the comparable period in 2012 to 33.4%, adjusted for the non-comparable Courtyard Waikiki Beach ground rent. For the year ended December 31, 2013, Pro forma Hotel EBITDA Margin increased 47 basis points over the comparable period in 2012 to 34.5%, adjusted for the non-comparable Courtyard Waikiki Beach ground rent.
Pro forma Consolidated Hotel EBITDA includes the results of non-comparable hotels. For the quarter ended December 31, 2013, Pro forma Consolidated Hotel EBITDA increased $0.1 million to $81.5 million, representing a 0.2% increase over the comparable period in 2012. For the year ended December 31, 2013, Pro forma Consolidated Hotel EBITDA increased $25.7 million to $339.3 million, representing an 8.2% increase over the comparable period in 2012.
Adjusted EBITDA for the quarter ended December 31, 2013, increased $6.3 million to $77.0 million, representing an 8.9% increase over the comparable period in 2012. For the year ended December 31, 2013, Adjusted EBITDA increased $43.4 million to $311.1 million, representing an increase of 16.2% over the comparable period in 2012.
Adjusted FFO for the quarter ended December 31, 2013, increased $11.9 million to $62.7 million, representing a 23.5% increase over the comparable period in 2012. For the year ended December 31, 2013, Adjusted FFO increased $61.0 million to $246.6 million, representing a 32.9% increase over the comparable period in 2012.
Adjusted FFO per diluted share and unit for the quarter and year ended December 31, 2013, was $0.51 and $2.06, respectively, based on the Company's diluted weighted-average common shares and units outstanding of 123.4 million and 119.6 million for each period, respectively.
Non-recurring items for the year ended December 31, 2013, include a gain of $4.9 million related to the acquisition of Residence Inn Atlanta Midtown Historic through a foreclosure sale, a gain of $3.3 million related to the extinguishment of indebtedness on the Courtyard Goshen, a gain of $2.4 million related to the extinguishment of indebtedness on the SpringHill Suites Southfield, a gain of $2.1 million related to the sale of Fairfield Inn & Suites Memphis, $1.0 million related to accelerated amortization of deferred financing fees, and $0.1 million of accelerated deferred management fees related to the disposed assets.
Non-recurring items are included in net income attributable to common shareholders but have been excluded from Adjusted EBITDA and Adjusted FFO, as applicable. A complete listing is provided in the Non-GAAP reconciliation tables for the quarter and year ended December 31, 2013 and 2012.
Net income attributable to common shareholders for the quarter ended December 31, 2013, was $27.4 million compared to $13.7 million in the comparable period in 2012. For the year ended December 31, 2013, net income attributable to common shareholders was $112.9 million compared to $41.3 million in the comparable period in 2012.
Net cash flow from operating activities for the year ended December 31, 2013, totaled $251.4 million compared to $176.1 million for the comparable period in 2012.
For the year ended December 31, 2013, the Company acquired five hotels and two hotel conversion opportunities for a gross purchase price of $213.3 million: the Humble Oil Building complex which consists of two hotels and one apartment building, the 399-room Courtyard Waikiki Beach, the 150-room Vantaggio Suites Cosmo, the 78-room Residence Inn Atlanta Midtown Historic, and the 106-room SpringHill Suites Portland Hillsboro.
On March 19, 2013, the Company acquired the historic Humble Oil Building complex in downtown Houston for a purchase price of $79.5 million, or approximately $151,000 per key based on a combined forward room count of 528 keys. The Humble Oil Building is a three-tower complex which consists of a 191-room Courtyard Houston Downtown Convention Center, a 171-room Residence Inn Houston Downtown Convention Center, and an 82-unit apartment tower which is currently undergoing a conversion to a 166-room SpringHill Suites.
On June 17, 2013, the Company acquired the 399-room Courtyard Waikiki Beach for a purchase price of $75.3 million, or approximately $189,000 per key.
On June 21, 2013, the Company acquired the 150-room Vantaggio Suites Cosmo for a purchase price of $29.5 million, or approximately $197,000 per key. The hotel is currently closed for a $19.0 million multi-phase conversion to a Courtyard by Marriott that includes increasing the number of rooms at the hotel.
On August 6, 2013, the Company acquired the 78-room Residence Inn Atlanta Midtown Historic. The Company purchased a mortgage loan collateralized by the hotel for approximately $5.0 million in November 2009. The Company initiated and successfully acquired the asset through a foreclosure sale after the borrower defaulted on the loan. The hotel is currently closed and undergoing a comprehensive renovation.
On October 8, 2013, the Company acquired the 106-room SpringHill Suites Portland Hillsboro for a purchase price of $24.0 million, or approximately $226,000 per key.
During the year, the Company also disposed of three hotels. On May 30, 2013, the Company transferred title of the SpringHill Suites Southfield to its lenders pursuant to a deed in lieu of foreclosure and on August 28, 2013, the Courtyard Goshen was transferred to an affiliate of its lender through a foreclosure auction.
On November 18, 2013, the Company sold the Fairfield Inn & Suites Memphis for $2.5 million.
Subsequent to year end, in February the Company announced that it had entered into a definitive purchase and sale agreement to acquire a portfolio of 10 hotels totaling 1,560 rooms consisting of Hyatt, Hyatt Place and Hyatt House branded hotels for a purchase price of approximately $313.0 million. The Company also announced the sale of a portfolio of 11 hotels for approximately $85.0 million.
In March 2013, the Company completed its first follow-on equity offering with net proceeds of approximately $327.5 million. The offering was upsized by approximately 20% and the underwriters' option to purchase additional common shares was fully exercised.
In September 2013, the Company completed a comprehensive refinancing of approximately $565.0 million of secured debt using proceeds from a new $350.0 million five-year term loan, a $100.0 million expansion of the Company's existing seven-year term loan, and a $150.0 million secured debt financing. The Company also executed interest rate swaps on the new floating rate debt to minimize risks of future interest rate fluctuations. As a result of this comprehensive refinancing, the Company expects to realize approximately $10.0 million of interest expense savings in 2014.
As of December 31, 2013, the Company had $332.2 million of unrestricted cash on its balance sheet, $300.0 million available on its revolving credit facility, and $1.4 billion of debt outstanding. The Company's ratio of net debt to Adjusted EBITDA for the trailing twelve month period was 3.4 times.
The Company's Board of Trustees declared a cash dividend of $0.205 and a special dividend of $0.035 per common share of beneficial interest in the fourth quarter. The dividend was paid on January 15, 2014, to shareholders of record as of December 31, 2013.
For the year ended December 31, 2013, the Company distributed a total dividend of $0.855 per common share of beneficial interest, representing an increase of approximately 22% over the prior year's annual distribution.
The Company's outlook excludes recent hotel sales and does not include the pending acquisition of 10 hotels from Hyatt. The outlook excludes potential future acquisitions and dispositions, which could result in a material change to the Company's outlook. The 2014 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 assume the hotels were owned since January 1, 2013. For the full year 2014, the Company anticipates:
(1) Results exclude one non-comparable hotel: the Residence Inn Atlanta Midtown Historic, which is closed for renovations.
The Company will conduct its quarterly analyst and investor conference call on February 27, 2014, at 11:00 a.m. (Eastern Time). The conference call can be accessed by dialing (877) 705-6003 or (201) 493-6725 for international participants and requesting RLJ Lodging Trust's fourth quarter earnings conference call. Additionally, a live webcast of the conference call will be available through the Company's website at http://rljlodgingtrust.com. A replay of the conference call webcast will be archived and available online through the Investor Relations section of the Company's website.
To view all corresponding table and supplemental data please visit: http://investor.rljlodgingtrust.com/phoenix.zhtml?c=243028&p=irol-news&nyo=0
Tags: rlj lodging trust,
q4 2013 results
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust focused on acquiring premium-branded, focused-service and compact full-service hotels. The Company owns 138 properties, comprised of 136 hotels with approximately 21,100 rooms and two planned hotel conversions, located in 21 states and the District of Columbia.
Contact: Leslie D. Hale
Chief Financial Officer
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