ANNAPOLIS,
Md.--(BUSINESS WIRE)--Jul. 31, 2012-- Chesapeake Lodging Trust
(NYSE:CHSP), a lodging real estate investment trust (REIT), reported
today its financial results for the quarter ended June 30, 2012.
HIGHLIGHTS
- Pro Forma
RevPAR – 9.7% increase for comparable 10-hotel portfolio
over the same period in 2011.
- Pro
Forma Adjusted Hotel EBITDA Margin– 240 basis
point increase for comparable 10-hotel portfolio over the same period
in 2011.
- Acquisitions
– Subsequent to quarter end, entered into a
definitive agreement to acquire a full-service hotel located in San Diego, California
for $62 million.
- Preferred
share offering – Subsequent to quarter end, successfully
completed a $125 million preferred share offering.
- Financings
– Subsequent to quarter end, closed on $130
million of secured financings taking further advantage of the
attractive interest rate environment.
“We delivered another exceptional quarter of hotel operating
performance, with industry-leading RevPAR growth and hotel EBITDA
margin expansion,” said James L. Francis, Chesapeake
Lodging Trust’s President and Chief Executive Officer. “Our hotel
portfolio achieved over 83% occupancy in the second quarter which
enabled our operators to aggressively increase room rates.”
“We were very pleased with the execution and pricing of the $125
million preferred share offering that closed in mid-July,” said
Douglas W. Vicari, Chesapeake Lodging Trust’s Executive Vice President
and Chief Financial Officer. “With the additional capital raised
through the preferred offering and given our targeted leverage levels,
we expect our total investment in hotel real estate to reach $1.25
billion.”
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial
results for the three and six months ended June 30, 2012
(in millions, except per share amounts):
|
|
Three months ended |
|
Six
months ended |
|
|
June 30, |
|
June 30, |
|
|
2012(1) |
|
2011(2) |
|
2012(3) |
|
2011(2) |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
67.0 |
|
$ |
40.3 |
|
$ |
117.3 |
|
$ |
64.3 |
|
|
|
|
|
|
|
|
|
Net income
available to common shareholders |
|
$ |
9.0 |
|
$ |
2.0 |
|
$ |
8.2 |
|
$ |
0.2 |
Net income per
diluted share |
|
$ |
0.28 |
|
$ |
0.06 |
|
$ |
0.26 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
FFO available to
common shareholders |
|
$ |
15.7 |
|
$ |
5.7 |
|
$ |
21.4 |
|
$ |
7.0 |
FFO per diluted
share |
|
$ |
0.49 |
|
$ |
0.18 |
|
$ |
0.67 |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
AFFO available
to common shareholders |
|
$ |
15.9 |
|
$ |
9.6 |
|
$ |
22.0 |
|
$ |
11.2 |
AFFO per diluted
share |
|
$ |
0.50 |
|
$ |
0.30 |
|
$ |
0.69 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
Corporate EBITDA
|
|
$ |
22.3 |
|
$ |
8.5 |
|
$ |
31.5 |
|
$ |
10.8 |
|
|
|
|
|
|
|
|
|
Adjusted
Corporate EBITDA |
|
$ |
22.5 |
|
$ |
12.3 |
|
$ |
32.1 |
|
$ |
15.0 |
|
|
|
|
|
|
|
|
|
(1) |
|
Includes results
of operations of 12 hotels for the full period. |
(2) |
|
Includes results
of operations of five hotels for the full period and four hotels for
part of the period. |
(3) |
|
Includes results
of operations of 11 hotels for the full period and one hotel 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 of, on a pro forma basis,
occupancy, ADR, 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 10 of the Trust’s 12 hotels owned as of June 30, 2012.
The key operating metrics do not include operating results for the Holiday
Inn New York City Midtown – 31st Street, as the hotel
opened for business on January 19, 2012, and the Hotel
Adagio, as the hotel was under renovation during the period.
The following is a summary of the key operating metrics for the three
and six months ended June 30, 2012 (in thousands,
except pro forma ADR and pro forma RevPAR):
|
|
Three months ended |
|
Six
months ended |
|
|
June 30, |
|
June 30, |
|
|
2012 |
|
2011 |
|
Change |
|
2012 |
|
2011 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
occupancy |
|
|
83.2% |
|
|
82.7% |
|
50 bps |
|
|
78.1% |
|
|
75.6% |
|
250 bps |
Pro forma ADR |
|
$ |
199.12 |
|
$ |
182.57 |
|
9.1% |
|
$ |
184.90 |
|
$ |
172.72 |
|
7.1% |
Pro forma RevPAR
|
|
$ |
165.64 |
|
$ |
151.05 |
|
9.7% |
|
$ |
144.43 |
|
$ |
130.52 |
|
10.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
Adjusted Hotel EBITDA |
|
$ |
23,906 |
|
$ |
20,887 |
|
14.5% |
|
$ |
36,104 |
|
$ |
30,101 |
|
19.9% |
Pro forma
Adjusted Hotel EBITDA Margin |
|
|
37.9% |
|
|
35.5% |
|
240 bps |
|
|
32.7% |
|
|
29.7% |
|
300 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations (FFO), Adjusted FFO (AFFO), 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.
DIVIDENDS
On April 13, 2012, the Trust paid a dividend
of $0.22 per share to its common shareholders of record
as of March 31, 2012. On May 25, 2012,
the Trust declared a dividend in the amount of $0.22
per share payable to its common shareholders of record as of June
30, 2012. The dividend was paid on July 13, 2012.
POST-QUARTER ACTIVITY
On July 3, 2012, the Trust closed on a $60.0
million two-year term loan. The loan was provided by Wells
Fargo Bank, N.A., and subject to certain customary conditions, provides
for three one-year extensions. At the initial closing, $25.0 million
was advanced by the lender and is secured by the 122-room Holiday Inn
New York City Midtown – 31st Street. The remaining $35.0
million is expected to be advanced by the lender upon closing on the
acquisition of the Hyatt Place New York Midtown South and satisfaction
of certain customary closing conditions. Following that subsequent
closing, the entire $60.0 million principal amount of the loan will be
secured by both hotels. The loan bears interest equal to LIBOR, plus
3.25%. Contemporaneous with the closing of the term loan, the Trust
entered into an interest rate swap to effectively fix the interest rate
on the initial $25.0 million advance for the original two-year term at
3.75% per annum. Net proceeds from the initial advance under the loan
were used to repay outstanding borrowings under the Trust’s revolving
credit facility and for general business purposes.
On July 17, 2012, the Trust completed an
underwritten public offering of 5,000,000 of its 7.75% Series A
Cumulative Redeemable Preferred Shares, including 600,000 shares sold
pursuant to the underwriters’ exercise of their over-allotment option.
The Trust generated net proceeds of approximately $120.8 million
after deducting underwriting fees and estimated offering costs. The
Trust used the net proceeds of the offering to repay outstanding
borrowings under the Trust’s revolving credit facility and for general
business purposes.
On July 27, 2012, the Trust closed on a $70.0
million fixed-rate mortgage loan. The loan is secured by the
613-room Denver Marriott City Center and was provided by Western
National Life Insurance Company. The loan has a term of 30 years,
but is callable by the lender after 10 years, and the Trust expects the
lender to call the loan at that time. The loan carries a fixed interest
rate of 4.90% per annum, with principal and interest based on a 30-year
amortization. Proceeds from the loan were used to repay the remaining
outstanding borrowings under the Trust’s revolving credit facility and
for general business purposes.
On July 31, 2012, the Trust announced that it
had entered into a definitive agreement to acquire a full-service hotel
located in San
Diego, California for $62.0 million. The
Trust intends to fund the acquisition with available cash and cash
equivalents and by borrowing under its revolving credit facility. The
Trust expects the acquisition to close in the third quarter 2012,
subject to customary closing conditions, but can give no assurance that
the acquisition will be consummated during that time period, or at all.
As of July 31, 2012, after taking into
consideration the recent preferred share offering and financing
activity, and the pending acquisitions of the hotel in San Diego, California
and the Hyatt Place New York Midtown South, the
Trust had approximately $200 million of remaining
investment capacity based on its targeted leverage levels. The Trust is
currently negotiating to acquire a full-service hotel in the central
business district of a major market for approximately $125
million and expects that the transaction would close in the
third quarter 2012, but can give no assurance that the acquisition will
be consummated during that time period, or at all.
2012 OUTLOOK
The Trust is updating its 2012 outlook to incorporate current
operating trends and fundamentals, the recent preferred share offering
and financing activity, the anticipated acquisition of two hotels in
the third quarter 2012 described above, and the acquisition of the
previously announced Hyatt Place New York Midtown South in the fourth
quarter 2012 (in millions, except per share amounts):
|
|
Updated Guidance |
|
Previous Guidance |
|
|
Low |
|
High |
|
Low |
|
High |
Pro forma RevPAR
increase over 2011(1) |
|
|
8.5% |
|
|
9.5% |
|
|
7.5% |
|
|
9.0% |
Net income
available to common shareholders |
|
$ |
15.8 |
|
$ |
18.2 |
|
$ |
20.5 |
|
$ |
23.1 |
Adjusted Hotel
EBITDA |
|
$ |
88.9 |
|
$ |
91.9 |
|
$ |
83.2 |
|
$ |
86.7 |
AFFO per diluted
share |
|
$ |
1.58 |
|
$ |
1.66 |
|
$ |
1.60 |
|
$ |
1.69 |
|
|
|
|
|
|
|
|
|
(1) For the comparable 10-hotel
portfolio owned as of June 30, 2012.
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES
The Trust reports the following seven non-GAAP financial
measures that it believes are useful to investors as key measures of
its operating performance: (1) FFO, (2) AFFO, (3) Corporate EBITDA, (4)
Adjusted Corporate EBITDA, (5) Hotel EBITDA, (6) Adjusted
Hotel EBITDA and (7) Adjusted Hotel EBITDA Margin.
A reconciliation of these non-GAAP financial measures is 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.
AFFO – The Trust further adjusts FFO 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 unfavorable contract
liabilities. The Trust believes that AFFO 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 unfavorable contract
liabilities. 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 unfavorable contract
liabilities. 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.
CONFERENCE CALL
The Trust will host a conference call on Tuesday,
July 31, 2012 at 5:30 p.m. Eastern Time to
discuss its financial results. Interested individuals are invited to
listen to the call by dialing (877) 683-0303 (U.S./Canadian callers) or
(706) 643-5037 (International callers). The conference call ID is
99008039. A simultaneous webcast of the call will be available on the
Trust’s website at www.chesapeakelodgingtrust.com.
It is recommended that participants call or log on 10 minutes ahead of
the scheduled start time to ensure proper connection.
A replay of the conference call will be available two hours
after the live call until midnight on August 7, 2012.
To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or
(404) 537-3406 (International callers). The conference call ID is
99008039. A webcast replay and transcript of the conference call will
be archived and available on the Trust’s website for 12 months.
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 12 hotels with an aggregate of 3,516 rooms in six states
and the District of
Columbia. Additional information can be found on the Trust’s
website at www.chesapeakelodgingtrust.com.
Note: This press release contains forward-looking
statements within the meaning of federal securities regulations. These
forward-looking statements are identified by their use of terms and
phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “should,” “plan,” “predict,” “project,” “will,”
“continue” and other similar terms and phrases, including references to
assumptions and forecasts, such as the Trust’s expectations regarding
the future Hotel EBITDA and Adjusted
Hotel EBITDA of its existing and to-be-acquired hotels and
the Trust’s 2012 outlook. Such forward-looking statements
include, but are not limited to, the expectation that the acquisitions
described will be consummated and within the anticipated timetables.
Forward-looking statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors which
may cause the actual results to differ materially from those
anticipated at the time the forward-looking statements are made. These
risks include, but are not limited to: the Trust’s ability to complete
acquisitions; the Trust’s ability to continue to satisfy complex rules
in order for it to remain a REIT for federal income tax purposes; and
other risks and uncertainties associated with the Trust’s business
described in its filings with the SEC. Although the Trust
believes the expectations reflected in such forward-looking statements
are based upon reasonable assumptions, it can give no assurance that
the expectations will be attained or that any deviation will not be
material. All information in this release is as of July 31, 2012,
and the Trust undertakes no obligation to update any forward-looking
statement to conform the statement to actual results or changes in the
Trust’s expectations, except as required by law.
CHESAPEAKE
LODGING TRUST |
|
|
|
|
CONSOLIDATED
BALANCE SHEETS |
|
|
|
|
(in thousands,
except share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, |
|
December 31, |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
Property and
equipment, net |
|
$ |
877,696 |
|
|
$ |
879,224 |
|
Intangible
assets, net |
|
|
39,682 |
|
|
|
39,982 |
|
Cash and cash
equivalents |
|
|
19,908 |
|
|
|
20,960 |
|
Restricted cash |
|
|
17,665 |
|
|
|
15,034 |
|
Accounts
receivable, net |
|
|
11,816 |
|
|
|
6,302 |
|
Prepaid expenses
and other assets |
|
|
13,271 |
|
|
|
4,370 |
|
Deferred
financing costs, net |
|
|
4,479 |
|
|
|
5,266 |
|
Total
assets |
|
$ |
984,517 |
|
|
$ |
971,138 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
Long-term debt |
|
$ |
419,658 |
|
|
$ |
407,736 |
|
Accounts payable
and accrued expenses |
|
|
27,442 |
|
|
|
21,475 |
|
Other
liabilities |
|
|
22,196 |
|
|
|
21,798 |
|
Total
liabilities |
|
|
469,296 |
|
|
|
451,009 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Preferred shares, $.01 par value;
100,000,000 shares authorized; no shares issued and outstanding,
respectively
|
|
|
-
|
|
|
|
- |
|
Common shares, $.01 par value;
400,000,000 shares authorized; 32,133,386 shares and 32,161,620 shares
issued and outstanding, respectively
|
|
|
321 |
|
|
|
322 |
|
Additional
paid-in capital |
|
|
544,804 |
|
|
|
543,861 |
|
Cumulative
dividends in excess of net income |
|
|
(28,804 |
) |
|
|
(22,924 |
) |
Accumulated other comprehensive loss |
|
|
(1,100 |
) |
|
|
(1,130 |
) |
Total
shareholders' equity |
|
|
515,221 |
|
|
|
520,129 |
|
|
|
|
|
|
Total
liabilities and shareholders' equity |
|
$ |
984,517 |
|
|
$ |
971,138 |
|
|
|
|
|
|
CHESAPEAKE
LODGING TRUST |
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
|
|
|
|
|
|
|
(in
thousands, except share and per share data) |
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
Rooms |
|
$ |
51,626 |
|
|
$ |
29,884 |
|
|
$ |
89,762 |
|
|
$ |
47,153 |
|
Food and
beverage |
|
|
13,344 |
|
|
|
9,206 |
|
|
|
23,811 |
|
|
|
15,087 |
|
Other |
|
|
2,076 |
|
|
|
1,204 |
|
|
|
3,743 |
|
|
|
2,041 |
|
Total
revenue |
|
|
67,046 |
|
|
|
40,294 |
|
|
|
117,316 |
|
|
|
64,281 |
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
Hotel operating
expenses: |
|
|
|
|
|
|
|
|
Rooms |
|
|
10,953 |
|
|
|
6,751 |
|
|
|
20,677 |
|
|
|
11,431 |
|
Food and
beverage |
|
|
9,199 |
|
|
|
6,395 |
|
|
|
17,382 |
|
|
|
11,191 |
|
Other direct |
|
|
930 |
|
|
|
612 |
|
|
|
1,836 |
|
|
|
1,072 |
|
Indirect
|
|
|
20,607 |
|
|
|
11,753 |
|
|
|
39,600 |
|
|
|
20,858 |
|
Total hotel
operating expenses |
|
|
41,689 |
|
|
|
25,511 |
|
|
|
79,495 |
|
|
|
44,552 |
|
Depreciation and
amortization |
|
|
6,677 |
|
|
|
3,767 |
|
|
|
13,207 |
|
|
|
6,751 |
|
Air rights
contract amortization |
|
|
130 |
|
|
|
130 |
|
|
|
260 |
|
|
|
260 |
|
Corporate
general and administrative: |
|
|
|
|
|
|
|
|
Share-based
compensation |
|
|
783 |
|
|
|
801 |
|
|
|
1,565 |
|
|
|
1,459 |
|
Hotel
acquisition costs |
|
|
134 |
|
|
|
3,671 |
|
|
|
443 |
|
|
|
3,917 |
|
Other |
|
|
2,007 |
|
|
|
1,645 |
|
|
|
4,031 |
|
|
|
3,328 |
|
Total
operating expenses |
|
|
51,420 |
|
|
|
35,525 |
|
|
|
99,001 |
|
|
|
60,267 |
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
15,626 |
|
|
|
4,769 |
|
|
|
18,315 |
|
|
|
4,014 |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
19 |
|
|
|
57 |
|
|
|
22 |
|
|
|
124 |
|
Interest
expense |
|
|
(5,106 |
) |
|
|
(1,875 |
) |
|
|
(10,190 |
) |
|
|
(3,902 |
) |
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
|
10,539 |
|
|
|
2,951 |
|
|
|
8,147 |
|
|
|
236 |
|
|
|
|
|
|
|
|
|
|
Income
tax benefit (expense) |
|
|
(1,486 |
) |
|
|
(914 |
) |
|
|
110 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
9,053 |
|
|
$ |
2,037 |
|
|
$ |
8,257 |
|
|
$ |
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,053 |
|
|
$ |
2,037 |
|
|
$ |
8,257 |
|
|
$ |
368 |
|
Less: Dividends
declared on unvested time-based awards |
|
|
(34 |
) |
|
|
(61 |
) |
|
|
(68 |
) |
|
|
(120 |
) |
Less:
Undistributed earnings allocated to unvested time-based awards |
|
|
(10 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
income available to common shareholders |
|
$ |
9,009 |
|
|
$ |
1,976 |
|
|
$ |
8,189 |
|
|
$ |
248 |
|
|
|
|
|
|
|
|
|
|
Net income per
common share - basic and diluted |
|
$ |
0.28 |
|
|
$ |
0.06 |
|
|
$ |
0.26 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common
shares outstanding - basic and diluted
|
|
|
31,910,921 |
|
|
|
31,794,886 |
|
|
|
31,892,431 |
|
|
|
26,993,332 |
|
CHESAPEAKE
LODGING TRUST |
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
|
|
|
(in thousands) |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
Net income |
|
$ |
8,257 |
|
|
$ |
368 |
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and
amortization |
|
|
13,207 |
|
|
|
6,751 |
|
Air rights
contract amortization |
|
|
260 |
|
|
|
260 |
|
Ground lease
asset amortization |
|
|
40 |
|
|
|
- |
|
Deferred
financing costs amortization |
|
|
882 |
|
|
|
1,074 |
|
Premium on
mortgage loan amortization |
|
|
(105 |
) |
|
|
- |
|
Unfavorable
contract liability amortization |
|
|
(196 |
) |
|
|
- |
|
Share-based
compensation |
|
|
1,565 |
|
|
|
1,459 |
|
Changes in
assets and liabilities: |
|
|
|
|
Accounts
receivable, net |
|
|
(5,514 |
) |
|
|
(1,828 |
) |
Prepaid expenses
and other assets |
|
|
(714 |
) |
|
|
(272 |
) |
Accounts payable
and accrued expenses |
|
|
5,939 |
|
|
|
4,268 |
|
Other
liabilities |
|
|
23 |
|
|
|
(6 |
) |
Net cash
provided by operating activities |
|
|
23,644 |
|
|
|
12,074 |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Acquisition of
hotels, net of cash acquired |
|
|
-
|
|
|
|
(268,590
|
) |
Deposits on
hotel acquisitions |
|
|
(2,000 |
) |
|
|
(1,000 |
) |
Improvements and
additions to hotels |
|
|
(11,679 |
) |
|
|
(1,019 |
) |
Investment in
hotel construction loan |
|
|
(4,823 |
) |
|
|
-
|
|
Change in
restricted cash |
|
|
(2,631 |
) |
|
|
(3,072 |
) |
Net cash
used in investing activities |
|
|
(21,133 |
) |
|
|
(273,681 |
) |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Proceeds from
sale of common shares, net of underwriting fees |
|
|
-
|
|
|
|
230,291
|
|
Payment of
offering costs related to sale of common shares |
|
|
- |
|
|
|
(481 |
) |
Net borrowings
(repayments) under revolving credit facility |
|
|
13,000 |
|
|
|
(35,000 |
) |
Proceeds from
issuance of mortgage debt |
|
|
- |
|
|
|
95,000 |
|
Scheduled
principal payments on mortgage debt |
|
|
(973 |
) |
|
|
- |
|
Payment of
deferred financing costs |
|
|
(95 |
) |
|
|
(1,656 |
) |
Deposit on loan
application |
|
|
(1,400 |
) |
|
|
- |
|
Payment of
dividends to common shareholders |
|
|
(13,474 |
) |
|
|
(10,097 |
) |
Repurchase of common shares |
|
|
(621 |
) |
|
|
(209 |
) |
Net cash
provided by (used in) financing activities |
|
|
(3,563 |
) |
|
|
277,848 |
|
Net increase
(decrease) in cash |
|
|
(1,052 |
) |
|
|
16,241 |
|
Cash and
cash equivalents, beginning of period |
|
|
20,960 |
|
|
|
10,551 |
|
Cash and
cash equivalents, end of period |
|
$ |
19,908 |
|
|
$ |
26,792 |
|
|
|
|
|
|
CHESAPEAKE
LODGING TRUST |
|
|
|
|
|
|
|
|
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES |
|
|
|
|
|
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles
net income available to common shareholders to FFO and AFFO available
to common shareholders for the three and six months ended June 30, 2012
and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders |
|
$ |
9,009 |
|
|
$ |
1,976 |
|
|
$ |
8,189 |
|
|
$ |
248 |
|
Add: Depreciation and
amortization
|
|
|
6,677 |
|
|
|
3,767 |
|
|
|
13,207 |
|
|
|
6,751 |
|
FFO
available to common shareholders |
|
|
15,686 |
|
|
|
5,743 |
|
|
|
21,396 |
|
|
|
6,999 |
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Hotel acquisition costs |
|
|
134 |
|
|
|
3,671 |
|
|
|
443 |
|
|
|
3,917 |
|
Non-cash amortization(1) |
|
|
60 |
|
|
|
136 |
|
|
|
120 |
|
|
|
271 |
|
AFFO available to common shareholders |
|
$ |
15,880 |
|
|
$ |
9,550 |
|
|
$ |
21,959 |
|
|
$ |
11,187 |
|
|
|
|
|
|
|
|
|
|
|
|
FFO
per common share - basic and diluted |
|
$ |
0.49 |
|
|
$ |
0.18 |
|
|
$ |
0.67 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
AFFO
per common share - basic and diluted |
|
$ |
0.50 |
|
|
$ |
0.30 |
|
|
$ |
0.69 |
|
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes non-cash amortization of ground lease asset, deferred
franchise costs, unfavorable contract liability, and air rights
contract. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles
net income to Corporate EBITDA and Adjusted Corporate EBITDA for the
three and six months ended June 30, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
$ |
9,053 |
|
|
$ |
2,037 |
|
|
$ |
8,257 |
|
|
$ |
368 |
|
Add: Depreciation and
amortization
|
|
|
6,677 |
|
|
|
3,767 |
|
|
|
13,207 |
|
|
|
6,751 |
|
Interest expense |
|
|
5,106 |
|
|
|
1,875 |
|
|
|
10,190 |
|
|
|
3,902 |
|
Income tax expense (benefit) |
|
|
1,486 |
|
|
|
914 |
|
|
|
(110 |
) |
|
|
(132 |
) |
Less: Interest income
|
|
|
(19 |
) |
|
|
(57 |
) |
|
|
(22 |
) |
|
|
(124 |
) |
Corporate EBITDA |
|
|
22,303 |
|
|
|
8,536 |
|
|
|
31,522 |
|
|
|
10,765 |
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Hotel acquisition costs |
|
|
134 |
|
|
|
3,671 |
|
|
|
443 |
|
|
|
3,917 |
|
Non-cash amortization(1) |
|
|
60 |
|
|
|
136 |
|
|
|
120 |
|
|
|
271 |
|
Adjusted Corporate EBITDA |
|
$ |
22,497 |
|
|
$ |
12,343 |
|
|
$ |
32,085 |
|
|
$ |
14,953 |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes non-cash amortization of ground lease asset, deferred
franchise costs, unfavorable contract liability, and air rights
contract. |
|
|
|
|
|
|
|
|
|
|
|
The following table calculates
pro forma Hotel EBITDA, Adjusted Hotel EBITDA and Adjusted Hotel EBITDA
Margin for the Trust's comparable 10-hotel portfolio for the three and
six months ended June 30, 2012 and 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
2012 |
|
|
|
2011 |
|
|
|
2012 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
63,100 |
|
|
$ |
58,800 |
|
|
$ |
110,508 |
|
|
$ |
101,497 |
|
Less: Total hotel operating expenses |
|
|
39,124 |
|
|
|
37,919 |
|
|
|
74,264 |
|
|
|
71,407 |
|
Hotel EBITDA |
|
|
23,976 |
|
|
|
20,881 |
|
|
|
36,244 |
|
|
|
30,090 |
|
|
|
|
|
|
|
|
|
|
|
|
Less: Non-cash amortization(1) |
|
|
(70 |
) |
|
|
6 |
|
|
|
(140 |
) |
|
|
11 |
|
Adjusted Hotel EBITDA |
|
$ |
23,906 |
|
|
$ |
20,887 |
|
|
$ |
36,104 |
|
|
$ |
30,101 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Hotel EBITDA Margin |
|
|
37.9 |
% |
|
|
35.5 |
% |
|
|
32.7 |
% |
|
|
29.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes non-cash amortization of ground lease asset, deferred
franchise costs, and unfavorable contract liability. |
|
|
|
|
|
|
|
|
|
|
|
|
The
following table calculates forecasted Hotel EBITDA and Adjusted Hotel
EBITDA for the year ending December 31, 2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31, 2012 |
|
|
|
|
|
|
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
$ |
277,000 |
|
|
$ |
280,500 |
|
Less: Total hotel operating expenses |
|
|
|
|
|
187,820 |
|
|
|
188,320 |
|
Hotel EBITDA |
|
|
|
|
|
89,180 |
|
|
|
92,180 |
|
|
|
|
|
|
|
|
|
|
|
Less: Non-cash amortization(1) |
|
|
|
|
|
(280 |
) |
|
|
(280 |
) |
Adjusted Hotel EBITDA |
|
|
|
|
$ |
88,900 |
|
|
$ |
91,900 |
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes non-cash amortization of ground lease asset, deferred
franchise costs, and unfavorable contract liability. |
|
|
|
|
|
|
|
|
|
|
The following table reconciles
forecasted net income available to common shareholders to FFO and AFFO
available to common shareholders for the year ending December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31, 2012 |
|
|
|
|
|
|
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders |
|
|
|
|
$ |
15,790 |
|
|
$ |
18,240 |
|
Add: Depreciation and amortization |
|
|
|
|
|
29,080 |
|
|
|
29,080 |
|
FFO
available to common shareholders |
|
|
|
|
|
44,870 |
|
|
|
47,320 |
|
|
|
|
|
|
|
|
|
|
|
Add:
Hotel acquisition costs |
|
|
|
|
|
5,300 |
|
|
|
5,300 |
|
Non-cash amortization(1) |
|
|
|
|
|
240 |
|
|
|
240 |
|
AFFO available to common shareholders |
|
|
|
|
$ |
50,410 |
|
|
$ |
52,860 |
|
|
|
|
|
|
|
|
|
|
|
FFO
per diluted common share |
|
|
|
|
$ |
1.41 |
|
|
$ |
1.48 |
|
|
|
|
|
|
|
|
|
|
|
AFFO
per diluted common share |
|
|
|
|
$ |
1.58 |
|
|
$ |
1.66 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of diluted common shares outstanding |
|
|
31,904 |
|
|
|
31,904 |
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes non-cash amortization of ground lease asset, deferred
franchise costs, unfavorable contract liability, and air rights
contract. |
|
CHESAPEAKE
LODGING TRUST |
|
|
|
|
|
|
|
|
CURRENT
HOTEL PORTFOLIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Price |
|
|
Hotel |
|
Location |
|
Rooms |
|
(in millions) |
|
Acquisition Date |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Hyatt Regency
Boston |
|
Boston, MA |
|
502 |
|
$ 112.00 |
|
March 18, 2010 |
2 |
|
Hilton Checkers
Los Angeles |
|
Los Angeles, CA |
|
188 |
|
46.00 |
|
June 1, 2010 |
3 |
|
Courtyard
Anaheim at Disneyland Resort |
|
Anaheim, CA |
|
153 |
|
25.00 |
|
July 30, 2010 |
4 |
|
Boston Marriott
Newton |
|
Newton, MA |
|
430 |
|
77.25 |
|
July 30, 2010 |
5 |
|
Le Meridien San
Francisco |
|
San Francisco,
CA |
|
360 |
|
143.00 |
|
December 15,
2010 |
6 |
|
Homewood Suites
Seattle Convention Center |
|
Seattle, WA |
|
195 |
|
53.00 |
|
May 2, 2011 |
7 |
|
W Chicago - City
Center |
|
Chicago, IL |
|
368 |
|
128.80 |
|
May 10, 2011 |
8 |
|
Hotel Indigo San
Diego Gaslamp Quarter |
|
San Diego, CA |
|
210 |
|
55.50 |
|
June 17, 2011 |
9 |
|
Courtyard
Washington Capitol Hill/Navy Yard |
|
Washington, DC |
|
204 |
|
68.00 |
|
June 30, 2011 |
10
|
|
Hotel Adagio |
|
San Francisco,
CA |
|
171 |
|
42.25 |
|
July 8, 2011 |
11
|
|
Denver Marriott
City Center |
|
Denver, CO |
|
613 |
|
119.00 |
|
October 3, 2011 |
12
|
|
Holiday
Inn New York City Midtown - 31st Street |
|
New
York, NY |
|
122 |
|
52.20 |
|
December
22, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,516 |
|
$ 922.00 |
|
|