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DiamondRock Hospitality Reports 4th Qtr and Full 2012 Results:
Qrtly. Net Income of $16.6 million up Compared to Net Income of
$4.9 million for Same 2011 Period.; Qrtly. RevPAR Increased 3.9%


Hotel Operating Statistics

BETHESDA, Md., Feb. 28, 2013- DiamondRock Hospitality Company (the "Company") (NYSE: DRH) today announced results of operations for its fourth fiscal quarter and full year ended December 31, 2012. The Company is a lodging-focused real estate investment trust that owns a portfolio of 27 premium hotels in the United States. The Company also announced a 6% increase to its quarterly dividend commencing with the first quarter 2013.

2012 Transactions

  • Hotel Acquisitions: The Company successfully completed the acquisition of five hotels for approximately $525 million during 2012.
  • Hotel Dispositions: The Company sold four non-core hotels during 2012 for total proceeds of over $300 million.
  • Equity Raises: The Company raised approximately $275 million through offerings of its common stock in July 2012.
  • Credit Facility: The Company amended and restated its $200 million senior unsecured revolving credit facility to lower its borrowing rate, increase its financial flexibility and extend the term for one year.
  • Hotel Financings: The Company closed on a $170 million loan secured by the Lexington Hotel New York and a $74 million loan secured by the Westin Washington D.C. City Center during 2012.
  • Dividends: The Company declared four quarterly dividends totaling $0.32 per share during 2012 and returned approximately $56 million to shareholders.

2012 Operating Results

  • Pro Forma Revenue: The Company's Pro Forma Revenue was $802.4 million, an increase of 7.2% from the comparable period in 2011.
  • Pro Forma RevPAR: The Company's Pro Forma RevPAR was $134.36, an increase of 5.3% from the comparable period in 2011.
  • Pro Forma Hotel Adjusted EBITDA Margin: The Company's Pro Forma Hotel Adjusted EBITDA margin was 27.18%, an increase of 87 basis points from the comparable period in 2011.
  • Adjusted EBITDA: The Company's Adjusted EBITDA was $189.7 million, an increase of 17.0% over the comparable period in 2011.
  • Adjusted FFO: The Company's Adjusted FFO was $140.2 million and Adjusted FFO per diluted share was $0.78.

Fourth Quarter 2012 Highlights

  • Pro Forma Revenue: The Company's Pro Forma Revenue was $267.8 million, an increase of 6.6% from the comparable period in 2011.
  • Pro Forma RevPAR: The Company's Pro Forma RevPAR was $138.24, an increase of 3.9% from the comparable period in 2011.
  • Pro Forma Hotel Adjusted EBITDA Margin: The Company's Pro Forma Hotel Adjusted EBITDA margin was 28.90%, an increase of 105 basis points from the comparable period in 2011.
  • Adjusted EBITDA: The Company's Adjusted EBITDA was $72.3 million.
  • Adjusted FFO: The Company's Adjusted FFO was $56.5 million and Adjusted FFO per diluted share was $0.29.
  • Dividends: The Company declared a quarterly dividend of $0.08 per share during the fourth quarter.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "Our fourth quarter operating results were above our expectations, and we are pleased with the continued repositioning of our portfolio in 2012, including our entry into San Francisco with the accretive acquisition of the Hotel Rex. We also continued to strengthen our balance sheet through the amendment of our credit facility and by entering into attractive secured financing. We enter 2013 with attractive industry fundamentals, a strong balance sheet and numerous upside opportunities through our repositioning projects. We are also pleased to increase our quarterly dividend for 2013."

Operating Results

Please see "Certain Definitions" and "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDA," "Adjusted EBITDA," "Hotel Adjusted EBITDA Margin," "FFO" and "Adjusted FFO." The discussions of "Pro Forma" operating results assume all of the Company's 27 hotels were owned since January 1, 2011.

For the full year 2012, the Company reported the following:


Full Year 2012

Full Year 2011

Change

Pro Forma ADR

$175.43

$168.61

4.0%

Pro Forma Occupancy

76.6%

75.7%

0.9 percentage points

Pro Forma RevPAR

$134.36

$127.61

5.3%

Pro Forma Rooms Revenue

$568.8 million

$531.6 million

7.0%

Pro Forma Revenue

$802.4 million

$748.6 million

7.2%

Pro Forma Hotel Adjusted EBITDA Margins

27.18%

26.31%

87 basis points

Adjusted EBITDA

$189.7 million

$162.1 million

17.0%

Adjusted FFO

$140.2 million

$103.6 million

$36.6 million

Adjusted FFO per diluted share

$0.78

$0.62

$0.16

Net Loss

($16.6 million)

($7.7 million)

($8.9 million)

Loss per diluted share

($0.09)

($0.05)

($0.04)

Diluted Weighted Average Shares

180.8 million

166.7 million


For the fourth quarter beginning September 8, 2012 and ending December 31, 2012, the Company reported the following:


Fiscal Q4 2012

Fiscal Q4 2011

Change

Pro Forma ADR

$185.02

$178.55

3.6%

Pro Forma Occupancy

74.7%

74.5%

0.2 percentage points

Pro Forma RevPAR

$138.24

$133.03

3.9%

Pro Forma Rooms Revenue

$189.2 million

$178.2 million

6.2%

Pro Forma Revenue

$267.8 million

$251.4 million

6.6%

Pro Forma Hotel Adjusted EBITDA Margins

28.90%

27.85%

105 basis points

Adjusted EBITDA

$72.3 million

$60.5 million

19.5%

Adjusted FFO

$56.5 million

$40.0 million

$16.5 million

Adjusted FFO per diluted share

$0.29

$0.24

$0.05

Net Income

$16.6 million

$4.9 million

$11.7 million

Earnings per diluted share

$0.09

$0.03

$0.06

Diluted Weighted Average Shares

195.6 million

168.2 million


Appointment of Chief Operating Officer

Robert Tanenbaum will join the Company on April 1, 2013 and will be appointed as Chief Operating Officer and Executive Vice President, Asset Management no later than May 1, 2013. Mr. Tanenbaum will lead the Company's asset management efforts and will report directly to Mark W. Brugger, President and Chief Executive Officer. Mr. Tanenbaum brings over 20 years of experience in the hospitality industry to the Company. Most recently he was the Principal of Madison Hotel Advisors, LLC, which he founded in 2004 and whose clients include Goldman Sachs' Whitehall Funds and Equity Group Investments. Prior to founding Madison Hotel Advisors, LLC, he was a Vice President of Asset Management with Host Hotels & Resorts from 1996 to 2004. His experience prior to that includes PKF Consulting in San Francisco, CA and Four Seasons Hotels in Chicago, IL and Maui, HI. Additionally, Mr. Tanenbaum is an active member of the Hospitality Asset Managers Association and is a graduate of the Pennsylvania State University with a Bachelor of Science degree in Hotel Restaurant and Institutional Management.

Capital Expenditures

2012 - The Company continued to invest in its portfolio by spending approximately $49.3 million on capital improvements during 2012. Of that amount, approximately $23.4 million was funded from corporate cash and the balance from restricted cash reserves held by hotel managers. The most significant projects for 2012 included the following:

  • Conrad Chicago: The Company added 4,100 square feet of new meeting space in 2012 and expects to reposition the food and beverage outlets and re-concept the hotel lobby during the first quarter of 2013.
  • Renaissance Worthington: The Company substantially completed a comprehensive restoration of the concrete facade of the hotel.
  • Marriott Atlanta Alpharetta: The Company completed a renovation of the guest rooms at the hotel.
  • Frenchman's Reef: The Company renovated the premium Morning Star guest rooms during the fourth quarter of 2012 and completed a renovation of the boat dock in early 2013.

2013 - The Company expects to spend approximately $140 million for capital improvements in 2013 and early 2014. A description of the most significant planned capital projects are as follows:

  • Lexington Hotel New York: In connection with executing the rebranding strategy at the Lexington Hotel, the Company has begun a comprehensive renovation of the hotel, including the lobby, corridors, guest rooms and guest bathrooms. The current estimated renovation cost is $40 million to $45 million and is expected to be completed during the third quarter of 2013.
  • Manhattan Courtyards: The Company is currently renovating the guest rooms and guest bathrooms at the Courtyard Manhattan/Midtown East and Courtyard Manhattan/Fifth Avenue. The renovation scope at the Courtyard Midtown East also includes the public space and the addition of five new guest rooms. The renovations will be substantially complete during the first half of 2013.
  • Westin Washington D.C.: The Company expects to undertake a comprehensive renovation during 2013 to reposition the hotel to capture higher-rated business, leisure and group customers. The renovation scope will touch every aspect of the guest experience, including the guest rooms, corridors, meeting space and the lobby.
  • Westin San Diego: The Company expects to undertake a comprehensive renovation beginning in late 2013 of the guestrooms, corridors, lobby, public areas, and meeting space.
  • Hilton Boston Downtown: The Company expects to undertake a renovation of the guestrooms, corridors, public areas, and meeting space in 2014.
  • Hilton Burlington: The Company expects to undertake renovations of the corridors and guestrooms in 2014.

The Company expects renovation disruption of $10 to $12 million of Hotel Adjusted EBITDA during the year ended December 31, 2013 as a result of these projects. This disruption has been factored into the Company's outlook for 2013 detailed below.

2013 Reporting Calendar Change

In 2013, the Company will report its quarterly results of operations on a calendar quarter basis. Historically, the Company reported its quarterly results of operations based on the fiscal calendar used by Marriott International. Since the Company is not changing its fiscal year, its financial information will not be restated in its quarterly filings with the U.S. Securities and Exchange Commission. The following table highlights the changes in the Company's reporting calendar.

Quarter

2012 Old Calendar

2013 Calendar

1st

Marriott

January 1 – March 23

All

January 1 – March 31


Non-Marriott

January 1 – February 28



2nd

Marriott

March 24 – June 15

All

April 1 – June 30


Non-Marriott

March 1 – May 31



3rd

Marriott

June 16 – September 7

All

July 1 – September 30


Non-Marriott

June 1 – August 31



4th

Marriott

September 8 – December 31

All

October 1 – December 31


Non-Marriott

September 1 – December 31



The Company's 2013 quarterly results will not be directly comparable to its 2012 results, since Marriott International will not provide restated 2012 operating statements. Instead, in comparing 2013 quarterly results to 2012 results, the Company will (i) use the non-Marriott 2012 results on a calendar quarter basis and (ii) use Marriott 2012 results as follows:

  • The first quarter of 2012 will include Marriott operating results from January 1 to March 23.
  • The second quarter of 2012 will include Marriott operating results from March 24 to June 15.
  • The third quarter of 2012 will include Marriott operating results from June 16 to October 5.
  • The fourth quarter of 2012 will include the Marriott operating results from October 6 to December 31.

The following table reallocates selected 2012 quarterly pro forma operating information as described above into the 2013 reporting calendar.


Quarter 1, 2012

Quarter 2, 2012

Quarter 3, 2012

Quarter 4, 2012

RevPAR

$ 117.09

$ 146.48

$ 139.56

$ 133.36

Revenues (in thousands)

$ 167,026

$ 210,809

$ 228,371

$ 196,005

Hotel Adjusted EBITDA (in thousands)

$ 35,685

$ 64,564

$ 63,776

$ 54,085

% of Full Year

16.4%

29.6%

29.2%

24.8%

Hotel Adjusted EBITDA Margin

21.36%

30.63%

27.93%

27.59%

Available Rooms

1,004,405

1,010,443

1,184,252

1,034,027

Dividends

The Company's Board of Directors declared a quarterly dividend of $0.08 per share to stockholders of record as of December 31, 2012. The dividend was paid on January 10, 2013. The Company increased its quarterly dividend for 2013 by 6% and its Board of Directors declared a quarterly dividend of $0.085 per share for stockholders of record as of March 31, 2013. The dividend will be paid on April 12, 2013.

Outlook and Guidance

The Company is providing annual guidance for 2013, but does not undertake to update it for any developments in its business. Achievement of the anticipated results is subject to the risks disclosed in the Company's filings with the U.S. Securities and Exchange Commission. The Company's 2013 RevPAR guidance assumes all of the Company's 27 hotels were owned since January 1, 2012.

Based on its outlook, the Company expects the following full year 2013 results:

Metric

Pre-Renovation Guidance

Renovation Disruption

2013 Guidance

Pro Forma RevPAR Growth

4 percent to 6 percent

3 percent

1 percent to 3 percent

Adjusted EBITDA

$207 million to $215 million

$10 million to $12 million

$195 million to $205 million

Adjusted FFO

$146 million to $152 million

$7 million to $8 million

$138 million to $145 million

Adjusted FFO per share
(based on 195.9 million shares)

$0.75 to $0.78

$0.04 to $0.05

$0.70 to $0.74

Earnings Call

The Company will host a conference call to discuss its fourth quarter and full year results on Friday, March 1, 2013, at 10:00 a.m. Eastern Time (ET). To participate in the live call, investors are invited to dial 866-825-3209 (for domestic callers) or 617-213-8061 (for international callers). The participant passcode is 85514453. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company's website at www.drhc.com or www.earnings.com. A replay of the webcast will also be archived on the website for one year.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of premium hotel properties. The Company owns 27 premium hotels with approximately 11,600 rooms and holds one senior mortgage loan. The Company's hotels are generally operated under globally recognized brands such as Hilton, Marriott, and Westin. For further information, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results. 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: national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; risks associated with the development of a hotel by a third-party developer; risks associated with the rebranding of the Lexington Hotel New York; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company 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 the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

Reporting Periods for Statement of Operations

The results reported in the Company's consolidated statements of operations are based on results of its hotels reported by hotel managers. The Company's hotel managers use different reporting periods. Marriott International, the manager of most of the Company's hotels, uses a fiscal year ending on the Friday closest to December 31 and reports 12 weeks of operations for the first three quarters and 16 or 17 weeks for the fourth quarter of the year for its domestic managed hotels. In contrast, Marriott International for its non-domestic hotels (including Frenchman's Reef), Davidson Hotel Company, manager of the Hilton Boston, Vail Resorts, manager of the Vail Marriott, Hilton Hotels Corporation, manager of the Conrad Chicago and the Hilton Minneapolis, Westin Hotel Management, L.P., manager of the Westin Boston Waterfront, Alliance Hospitality Management, manager of the Hilton Garden Inn Chelsea, Sage Hospitality, manager of the JW Marriott Denver Cherry Creek and the Courtyard Denver, Highgate Hotels, manager of the Lexington Hotel, Interstate Hotels and Resorts, manager of the Westin Washington D.C., the Westin San Diego and the Hilton Burlington, and Joie de Vivre Hospitality, LLC, manager of the Hotel Rex report results on a monthly basis (collectively, the "monthly-reporting hotels). Additionally, the Company, as a REIT, is required by U.S. federal tax laws to report results on a calendar year basis. As a result, the Company has adopted the reporting periods used by Marriott International for its domestic hotels, except that the fiscal year always ends on December 31 to comply with REIT rules. The first three fiscal quarters end on the same day as Marriott International's fiscal quarters but the fourth quarter ends on December 31 and full year results, as reported in the statement of operations, always include the same number of days as the calendar year.

Two consequences of the reporting cycle the Company has adopted are: (1) quarterly start dates will usually differ between years, except for the first quarter which always commences on January 1, and (2) the first and fourth quarters of operations and year-to-date operations may not include the same number of days as reflected in prior years.

While the reporting calendar the Company adopted is more closely aligned with the reporting calendar used by the manager of most of its properties, one final consequence of the calendar is the Company is unable to report any results for the monthly-reporting hotels for the month of operations that ends after its fiscal quarter-end because none of the managers of these hotels make mid-month results available. As a result, the quarterly results of operations include results from these hotels as follows: first quarter (January and February), second quarter (March to May), third quarter (June to August) and fourth quarter (September to December). While this does not affect full-year results, it does affect the reporting of quarterly results.

Beginning in 2013, the Company will report its quarterly results of operations on a calendar quarter basis.

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED BALANCE SHEETS

As of December 31, 2012 and 2011

(in thousands, except share and per share amounts)



2012


2011





ASSETS




Property and equipment, at cost

$

3,131,175



$

2,667,682


Less: accumulated depreciation

(519,721)



(433,178)



2,611,454



2,234,504


Assets held for sale



263,399


Deferred financing costs, net

9,724



5,869


Restricted cash

76,131



53,871


Due from hotel managers

68,532



50,728


Note receivable

53,792



54,788


Favorable lease assets, net

40,972



43,285


Prepaid and other assets

73,814



65,900


Cash and cash equivalents

9,623



26,291


Total assets

$

2,944,042



$

2,798,635


LIABILITIES AND STOCKHOLDERS' EQUITY




Liabilities:




Mortgage debt

$

968,731



$

762,933


Mortgage debt of assets held for sale



180,000


Senior unsecured credit facility

20,000



100,000


Total debt

988,731



1,042,933






Deferred income related to key money, net

24,362



24,593


Unfavorable contract liabilities, net

80,043



81,914


Due to hotel managers

51,003



41,676


Liabilities of assets held for sale



3,805


Dividends declared and unpaid

15,911



13,594


Accounts payable and accrued expenses

88,879



87,963


Total other liabilities

260,198



253,545


Stockholders' Equity:




Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares
issued and outstanding




Common stock, $0.01 par value; 400,000,000 shares authorized;
195,145,707 and 167,502,359 shares issued and outstanding at
December 31, 2012 and December 31, 2011, respectively

1,951



1,675


Additional paid-in capital

1,976,200



1,708,427


Accumulated deficit

(283,038)



(207,945)


Total stockholders' equity

1,695,113



1,502,157


Total liabilities and stockholders' equity

$

2,944,042



$

2,798,635




DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS


(in thousands, except share and per share amounts)



Fiscal Quarter Ended December 31,


Year Ended December 31,






2012


2011


2012


2011




(Unaudited)


(Unaudited)





Revenues:








Rooms

$

188,070



$

153,005



$

526,113



$

431,219


Food and beverage

62,971



54,364



180,387



159,744


Other

15,360



10,772



43,147



31,213


Total revenues

266,401



218,141



749,647



622,176


Operating Expenses:








Rooms

47,643



40,743



140,029



115,786


Food and beverage

43,207



37,852



128,938



114,029


Management fees

9,603



8,143



24,915



21,631


Other hotel expenses

90,815



75,584



261,947



221,471


Depreciation and amortization

37,350



28,206



100,152



85,376


Impairment losses





30,844




Hotel acquisition costs

245



(84)



10,591



2,521


Corporate expenses

5,383



6,346



21,095



21,247


Total operating expenses

234,246



196,790



718,511



582,061


Operating income

32,155



21,351



31,136



40,115


Other Expenses (Income):








Interest income

(29)



(33)



(307)



(614)


Interest expense

17,061



15,292



53,771



45,406


Gain on early extinguishment of debt





(144)




Total other expenses

17,032



15,259



53,320



44,792


Income (Loss) from continuing
operations before income taxes

15,123



6,092



(22,184)



(4,677)


Income tax benefit (expense)

1,166



(1,675)



6,158



(3,322)


Income (Loss) from continuing operations

16,289



4,417



(16,026)



(7,999)


Income (Loss) from discontinued operations, net of income taxes

339



520



(566)



321


Net income (loss)

$

16,628



$

4,937



$

(16,592)



$

(7,678)


Earnings (Loss) per share:








Continuing operations

$

0.09



$

0.03



$

(0.09)



$

(0.05)


Discontinued operations

0.00



0.00



(0.00)



(0.00)


Basic and diluted earnings (loss) per share

$

0.09



$

0.03



$

(0.09)



$

(0.05)


Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. EBITDA, Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.

EBITDA and FFO

EBITDA represents net (loss) income excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from our operating results. In addition, covenants included in our indebtedness use EBITDA as a measure of financial compliance. We also use EBITDA as one measure in determining the value of hotel acquisitions and dispositions.

The Company computes FFO in accordance with standards established by NAREIT, which defines FFO as net (loss) income determined in accordance with GAAP, excluding gains or losses from sales of properties and impairment losses, plus depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets. The Company also uses FFO as one measure in assessing its results.

Adjustments to EBITDA and FFO

We adjust FFO and EBITDA when evaluating our performance because we believe that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor's complete understanding of our operating performance. We adjust EBITDA and FFO for the following items:

  • Non-Cash Ground Rent: We exclude the non-cash expense incurred from straight lining the rent from our ground lease obligations and the non-cash amortization of our favorable lease assets.
  • Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of the favorable management contract assets recorded in conjunction with our acquisitions of the Westin Washington D.C. City Center, Westin San Diego, and Hilton Burlington and the unfavorable contract liabilities recorded in conjunction with our acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York. The amortization of the favorable and unfavorable contracts does not reflect the underlying operating performance of our hotels.
  • Cumulative Effect of a Change in Accounting Principle: Infrequently, the Financial Accounting Standards Board (FASB) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these one-time adjustments because they do not reflect its actual performance for that period.
  • Gains from Early Extinguishment of Debt: We exclude the effect of gains recorded on the early extinguishment of debt because we believe they do not accurately reflect the underlying performance of the Company.
  • Acquisition Costs: We exclude acquisition transaction costs expensed during the period because we believe they do not reflect the underlying performance of the Company.
  • Allerton Loan: In 2010 and 2011, we included cash payments received on the senior loan secured by the Allerton Hotel in Adjusted EBITDA and Adjusted FFO. GAAP requires us to record the cash received from the borrower as a reduction of our basis in the mortgage loan due to the uncertainty over the timing and amount of cash payments on the loan. In 2012, due to the uncertainty of the timing of the bankruptcy resolution, we excluded both cash interest payments received from the borrower and the legal costs incurred as a result of the bankruptcy proceedings from our calculation of Adjusted EBITDA and Adjusted FFO. We have not adjusted our 2011 Adjusted EBITDA and Adjusted FFO calculations to reflect this change in presentation. Beginning in 2013, we will begin to record interest income on the loan as a result of the settlement of the bankruptcy proceedings, which will be included in the calculation of EBITDA and FFO. We will reduce Adjusted EBITDA and Adjusted FFO for the cash payments previously recognized in 2010 and 2011, which will be amortized over the term of the new loan.
  • Other Non-Cash and/or Unusual Items: We exclude the effect of certain non-cash and/or unusual items because we believe they do not reflect the underlying performance of the Company. In 2012, we excluded the franchise termination fee paid to Radisson because we believe that including it does not reflect the ongoing performance of the hotel. In 2013, we will exclude the severance costs related to the retirement of our President and Chief Operating Officer.

In addition, to derive Adjusted EBITDA we exclude gains or losses on dispositions and impairment losses because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our hotels. Additionally, the gain or loss on dispositions and impairment losses represent either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.

In addition, to derive Adjusted FFO we exclude any fair value adjustments to debt instruments. Specifically, we exclude the impact of the non-cash amortization of the debt premium recorded in conjunction with the acquisition of the JW Marriott Denver at Cherry Creek and fair market value adjustments to the Company's interest rate cap agreement.

The following tables are reconciliations of our U.S. GAAP net income (loss) to EBITDA and Adjusted EBITDA (in thousands):


Fiscal Quarter Ended December 31,


Year Ended December 31,



2012


2011


2012


2011







Net income (loss)

$

16,628



$

4,937



$

(16,592)



$

(7,678)



Interest expense (1)

17,061



18,419



56,068



55,507



Income tax (benefit) expense (2)

(1,242)



1,829



(6,046)



2,623



Real estate deprectiation and amortization (3)

37,350



32,389



101,498



99,224



EBITDA

69,797



57,574



134,928



149,676



Non-cash ground rent

2,074



2,118



6,694



6,996



Non-cash amortization of favorable and unfavorable
contracts, net

(357)



(576)



(1,653)



(1,860)



Gain (Loss) on sale of hotel properties

61





(9,479)





Gain on early extinguishment of debt





(144)





Acquisition costs

246



(84)



10,591



2,521



Allerton loan interest payments



1,459





3,163



Allerton loan legal fees

476





2,493





Franchise termination fee





750





Litigation settlement







1,650



Impairment losses (4)




45,534




Adjusted EBITDA

$

72,297



$

60,491



$

189,714



$

162,146




(1) Amounts include interest expense included in discontinued operations as follows: $3.1 million in the fiscal quarter ended December 31, 2011; $2.3 million in the year ended December 31, 2012; and $10.1 million in the year ended December 31, 2011.

(2) Amounts include income tax (expense) benefit included in discontinued operations as follows $0.1 million in the fiscal quarter ended December 31, 2012; ($0.2) million in the fiscal quarter ended December 31, 2011; ($0.1) million in the year ended December 31, 2012; and $0.7 million in the year ended December 31, 2011.

(3) Amounts include depreciation expense included in discontinued operations as follows: $4.2 million in the fiscal quarter ended December 31, 2011; $1.3 million in the year ended December 31, 2012; and $13.8 million in the year ended December 31, 2011.

(4) Amount includes a $14.7 million impairment loss included in discontinued operations.


Guidance


Pre Renovation 2013


Full Year 2013


Low End


High End


Low End


High End

Net income (1)

$

33,558



$

40,558



$

25,558



$

33,558


Interest expense

59,000



58,400



59,000



58,400


Income tax expense (benefit)

1,600



4,200



(2,400)



1,200


Real estate related depreciation and amortization

107,000



106,000



107,000



106,000


EBITDA

201,158



209,158



189,158



199,158


Non-cash ground rent

6,400



6,400



6,400



6,400


Non-cash amortization of favorable and unfavorable
contracts, net

(1,400)



(1,400)



(1,400)



(1,400)


Key money write-off

(860)



(860)



(860)



(860)


Allerton interest income

(1,163)



(1,163)



(1,163)



(1,163)


Severence costs

2,865



2,865



2,865



2,865


Adjusted EBITDA

$

207,000



$

215,000



$

195,000



$

205,000


(1) Net income includes approximately $6.1 million of interest income related to the Allerton loan.

The following tables are reconciliations of our U.S. GAAP net income (loss) to FFO and Adjusted FFO (in thousands):


Fiscal Quarter Ended December 31,


Year Ended December 31,



2012


2011


2012


2011







Net income (loss)

$

16,628



$

4,937



$

(16,592)



$

(7,678)



Real estate related depreciation and amortization(1)

37,350



32,389



101,498



99,224



Impairment losses (2)





45,534





Loss (gain) on sale of hotel properties

61





(9,479)





FFO

54,039



37,326



120,961



91,546



Non-cash ground rent

2,074



2,118



6,694



6,996



Non-cash amortization of favorable and unfavorable
contracts, net

(357)



(576)



(1,653)



(1,860)



Gain on early extinguishment of debt





(144)





Acquisition costs

246



(84)



10,591



2,521



Allerton loan interest payments



1,459





3,163



Allerton loan legal fees

476





2,493





Franchise termination fee





750





Litigation settlement







1,650



Fair value adjustments to debt instruments

(28)



(212)



471



(373)



Adjusted FFO

$

56,450



$

40,031



$

140,163



$

103,643



Adjusted FFO per share

$

0.29



$

0.24



$

0.78



$

0.62




(1) Amounts include depreciation expense included in discontinued operations as follows: $4.2 million in the fiscal quarter ended December 31, 2011; $1.3 million in the year ended December 31, 2012; and $13.8 million in the year ended December 31, 2011.

(2) Amount includes a $14.7 million impairment loss included in discontinued operations.


Guidance


Pre Renovation


Full Year 2013


Low End


High End


Low End


High End

Net income (1)

$

33,558



$

40,558



$

25,558



$

33,558


Real estate related depreciation and amortization

107,000



106,000



107,000



106,000


FFO

140,558



146,558



132,558



139,558


Non-cash ground rent

6,400



6,400



6,400



6,400


Non-cash amortization of favorable and unfavorable
contracts, net

(1,400)



(1,400)



(1,400)



(1,400)


Key money write-off

(860)



(860)



(860)



(860)


Allerton interest income

(1,163)



(1,163)



(1,163)



(1,163)


Severence costs

2,865



2,865



2,865



2,865


Debt premium amortization

(400)



(400)



(400)



(400)


Adjusted FFO

$

146,000



$

152,000



$

138,000



$

145,000


Adjusted FFO per share

$

0.75



$

0.78



$

0.70



$

0.74


(1) Net income includes approximately $6.1 million of interest income related to the Allerton loan.

Use and Limitations of Non-GAAP Financial Measures

Our management and Board of Directors use EBITDA, Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

Certain Definitions

In this release, when we discuss "Hotel Adjusted EBITDA," we exclude from Hotel EBITDA the non-cash expense incurred by the hotels due to the straight lining of the rent from our ground lease obligations, the non-cash amortization of our favorable lease assets, the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with the acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York. Hotel EBITDA represents hotel net income excluding: (1) interest expense; (2) income taxes; and (3) depreciation and amortization. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues. Net debt is calculated as total debt outstanding less unrestricted cash.


DIAMONDROCK HOSPITALITY COMPANY

PRO FORMA HOTEL OPERATING DATA

Schedule of Property Level Results

(in thousands)

(unaudited)



Fiscal Quarter Ended
December 31,



Year Ended December 31,




2012


2011


%
Change


2012


2011


%
Change

Revenues:












Rooms

$ 189,245


$ 178,210


6.2%


$ 568,778


$ 531,641


7.0%

Food and beverage

63,045


60,459


4.3%


187,315


178,421


5.0%

Other

15,546


12,686


22.5%


46,290


38,492


20.3%

Total revenues

267,836


251,355


6.6%


802,383


748,554


7.2%













Operating Expenses:












Rooms departmental expenses

47,912


45,774


4.7%


148,703


137,654


8.0%

Food and beverage departmental expenses

43,276


41,433


4.4%


133,409


126,178


5.7%

Other direct departmental

6,858


6,521


5.2%


21,893


20,651


6.0%

General and administrative

21,192


21,001


0.9%


65,168


62,719


3.9%

Utilities

9,132


9,055


0.9%


28,461


28,375


0.3%

Repairs and maintenance

11,518


11,632


(1.0%)


35,749


35,125


1.8%

Sales and marketing

21,840


20,668


5.7%


67,050


62,820


6.7%

Base management fees

6,914


6,326


9.3%


20,352


18,858


7.9%

Incentive management fees

2,663


2,340


13.8%


5,556


5,205


6.7%

Property taxes

12,073


10,071


19.9%


37,211


34,658


7.4%

Ground rent

4,600


4,503


2.2%


14,603


14,199


2.8%

Other fixed expenses

3,963


3,681


7.7%


11,180


10,656


4.9%

Total hotel operating expenses

191,941


183,005


4.9%


589,335


557,098


5.8%













Hotel EBITDA

75,895


68,350


11.0%


213,048


191,456


11.3%













Non-cash ground rent

1,941


2,067


(6.1%)


6,445


6,908


(6.7%)

Non-cash amortization of
unfavorable contract liabilities

(426)


(426)


0.0%


(1,383)


(1,383)


0.0%













Hotel Adjusted EBITDA

$ 77,410


$ 69,991


10.6%


$ 218,110


$ 196,981


10.7%













NOTE:

The pro forma operating data above includes the operating results for the Company's portfolio of 27 hotels owned as of December 31, 2012 assuming they were owned since January 1, 2011 and excludes the operating results of the four hotels sold during 2012.



Market Capitalization as of December 31, 2012

(in thousands, except per share data)




Enterprise Value






Common equity capitalization (at December 31, 2012 closing price of $9.00/share)


$ 1,762,877

Consolidated debt


988,731

Cash and cash equivalents


(9,623)




Total enterprise value


$ 2,741,985







Share Reconciliation






Common shares outstanding


195,146




Unvested restricted stock held by management and employees


676

Share grants under deferred compensation plan held by directors

53




Combined shares outstanding


195,875


Debt Summary as of December 31, 2012

(dollars in thousands)










Property


Interest Rate


Term


Outstanding Principal


Maturity










Courtyard Manhattan / Midtown East


8.810%


Fixed


$ 41,933


October 2014

Salt Lake City Marriott Downtown


5.500%


Fixed


28,640


January 2015

Courtyard Manhattan / Fifth Avenue


6.480%


Fixed


50,173


June 2016

Los Angeles Airport Marriott


5.300%


Fixed


82,600


July 2015

Frenchman's Reef Marriott

5.440%


Fixed


58,690


August 2015

Renaissance Worthington


5.400%


Fixed


54,700


July 2015

Orlando Airport Marriott


5.680%


Fixed


57,583


January 2016

Chicago Marriott Downtown


5.975%


Fixed


211,477


April 2016

Hilton Minneapolis


5.464%


Fixed


96,901


April 2021

JW Marriott Denver Cherry Creek


6.470%


Fixed


40,761


July 2015

Lexington Hotel New York


LIBOR + 3.00


Variable


170,368


March 2015

Westin Washington D.C. City Center


3.990%


Fixed


74,000


January 2023

Debt premium (1)






905



Total mortgage debt






968,731












Senior unsecured credit facility


LIBOR + 1.90


Variable


20,000


January 2017

Total debt




$ 988,731



(1) Non-cash GAAP adjustment recorded upon the assumption of the JW Marriott Denver at Cherry Creek mortgage debt in 2011.












Pro Forma Operating Statistics – Fourth Quarter (1)




















ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin



4Q 2012

4Q 2011

B/(W)


4Q 2012

4Q 2011

B/(W)


4Q 2012

4Q 2011

B/(W)


4Q 2012

4Q 2011

B/(W)


















Atlanta Alpharetta


$ 140.21

$ 128.67

9.0%


63.6%

67.4%

(3.8%)


$ 89.15

$ 86.78

2.7%


27.29%

27.33%

-4 bps

Bethesda Marriott Suites


$ 171.49

$ 174.97

(2.0%)


63.2%

63.3%

(0.1%)


$ 108.32

$ 110.72

(2.2%)


26.05%

26.68%

-63 bps

Boston Westin (2)


$ 223.12

$ 211.66

5.4%


67.4%

65.7%

1.7%


$ 150.49

$ 139.05

8.2%


26.88%

24.76%

212 bps

Hilton Boston Downtown (2)


$ 231.45

$ 220.66

4.9%


68.5%

75.0%

(6.5%)


$ 158.56

$ 165.55

(4.2%)


30.17%

37.39%

-722 bps

Hilton Burlington (2)


$ 156.25

$ 145.61

7.3%


74.2%

74.5%

(0.3%)


$ 115.94

$ 108.51

6.8%


36.51%

50.17%

-1366 bps

Renaissance Charleston


$ 173.50

$ 164.23

5.6%


85.4%

84.2%

1.2%


$ 148.12

$ 138.28

7.1%


33.36%

29.76%

360 bps

Hilton Garden Inn Chelsea (2)


$ 261.27

$ 248.59

5.1%


98.5%

93.6%

4.9%


$ 257.33

$ 232.61

10.6%


50.73%

51.44%

-71 bps

Chicago Marriott


$ 214.94

$ 204.72

5.0%


78.2%

78.1%

0.1%


$ 168.01

$ 159.83

5.1%


28.65%

30.10%

-145 bps

Chicago Conrad (2)


$ 236.47

$ 219.55

7.7%


82.4%

82.8%

(0.4%)


$ 194.75

$ 181.86

7.1%


34.47%

36.24%

-177 bps

Courtyard Denver Downtown (2)


$ 161.28

$ 148.15

8.9%


83.3%

84.1%

(0.8%)


$ 134.28

$ 124.60

7.8%


44.28%

42.92%

136 bps

Courtyard Fifth Avenue


$ 315.53

$ 295.00

7.0%


96.8%

89.4%

7.4%


$ 305.55

$ 263.70

15.9%


39.70%

33.64%

606 bps

Courtyard Midtown East


$ 312.37

$ 305.03

2.4%


88.8%

84.2%

4.6%


$ 277.54

$ 256.85

8.1%


41.08%

41.44%

-36 bps

Frenchman's Reef (2)


$ 200.04

$ 208.56

(4.1%)


68.8%

78.1%

(9.3%)


$ 137.68

$ 162.94

(15.5%)


8.39%

(24.47%)

3286 bps

JW Marriott Denver Cherry Creek (2)


$ 229.58

$ 226.27

1.5%


79.3%

75.3%

4.0%


$ 182.04

$ 170.35

6.9%


30.70%

30.80%

-10 bps

Los Angeles Airport


$ 107.22

$ 102.98

4.1%


83.9%

80.9%

3.0%


$ 90.00

$ 83.27

8.1%


15.83%

11.18%

465 bps

Hilton Minneapolis (2)


$ 149.81

$ 148.32

1.0%


70.0%

68.6%

1.4%


$ 104.83

$ 101.79

3.0%


28.46%

27.00%

146 bps

Oak Brook Hills


$ 132.72

$ 119.05

11.5%


52.9%

54.0%

(1.1%)


$ 70.19

$ 64.34

9.1%


12.58%

9.96%

262 bps

Orlando Airport Marriott


$ 99.35

$ 96.94

2.5%


68.0%

69.8%

(1.8%)


$ 67.52

$ 67.66

(0.2%)


20.06%

17.94%

212 bps

Hotel Rex (2)


$ 189.15

$ 168.21

12.4%


81.4%

79.4%

2.0%


$ 153.89

$ 133.47

15.3%


37.52%

32.61%

491 bps

Salt Lake City Marriott


$ 129.47

$ 127.82

1.3%


67.5%

58.1%

9.4%


$ 87.40

$ 74.23

17.7%


31.22%

24.37%

685 bps

The Lodge at Sonoma


$ 242.15

$ 231.82

4.5%


75.0%

69.3%

5.7%


$ 181.68

$ 160.61

13.1%


26.45%

25.89%

56 bps

Torrance Marriott South Bay


$ 110.41

$ 104.63

5.5%


78.5%

81.3%

(2.8%)


$ 86.69

$ 85.05

1.9%


25.72%

23.82%

190 bps

Vail Marriott (2)


$ 211.51

$ 197.87

6.9%


55.8%

51.7%

4.1%


$ 118.06

$ 102.23

15.5%


18.07%

11.96%

611 bps

Lexington Hotel New York (2)


$ 237.45

$ 241.34

(1.6%)


95.2%

95.8%

(0.6%)


$ 225.97

$ 231.32

(2.3%)


45.28%

44.72%

56 bps

Westin San Diego (2)


$ 144.03

$ 146.21

(1.5%)


76.4%

72.0%

4.4%


$ 110.08

$ 105.29

4.5%


27.45%

31.93%

-448 bps

Westin Washington D.C. City Center (2)


$ 193.93

$ 198.61

(2.4%)


70.3%

74.7%

(4.4%)


$ 136.27

$ 148.33

(8.1%)


31.51%

41.04%

-953 bps

Renaissance Worthington


$ 173.21

$ 151.96

14.0%


64.4%

72.7%

(8.3%)


$ 111.56

$ 110.48

1.0%


31.12%

28.23%

289 bps

Total/Weighted Average


$ 185.02

$ 178.55

3.6%


74.7%

74.5%

0.2%


$ 138.24

$ 133.03

3.9%


28.90%

27.85%

105 bps


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned since January 1, 2011.

(2) The hotel reports results on a monthly basis. The data presented is based upon the Company's reporting calendar for the fourth quarter and includes the months of September through December.












Pro Forma Operating Statistics – Full Year (1)




















ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin



YTD 2012

YTD 2011

B/(W)


YTD 2012

YTD 2011

B/(W)


YTD 2012

YTD 2011

B/(W)


YTD 2012

YTD 2011

B/(W)


















Atlanta Alpharetta


$ 139.59

$ 132.24

5.6%


66.0%

67.8%

(1.8%)


$ 92.11

$ 89.70

2.7%


29.90%

29.21%

69 bps

Bethesda Marriott Suites


$ 166.08

$ 169.54

(2.0%)


64.8%

64.4%

0.4%


$ 107.69

$ 109.20

(1.4%)


26.08%

25.88%

20 bps

Boston Westin


$ 203.85

$ 197.64

3.1%


73.3%

69.7%

3.6%


$ 149.46

$ 137.69

8.5%


23.39%

23.74%

-35 bps

Hilton Boston Downtown


$ 220.59

$ 205.82

7.2%


76.0%

77.6%

(1.6%)


$ 167.68

$ 159.63

5.0%


35.67%

37.01%

-134 bps

Hilton Burlington


$ 156.57

$ 144.23

8.6%


73.8%

69.7%

4.1%


$ 115.55

$ 100.51

15.0%


37.13%

35.79%

134 bps

Renaissance Charleston


$ 180.50

$ 167.50

7.8%


85.1%

84.6%

0.5%


$ 153.58

$ 141.74

8.4%


34.36%

32.28%

208 bps

Hilton Garden Inn Chelsea


$ 217.77

$ 213.29

2.1%


96.1%

92.6%

3.5%


$ 209.30

$ 197.42

6.0%


44.02%

46.10%

-208 bps

Chicago Marriott


$ 200.80

$ 191.48

4.9%


74.1%

72.8%

1.3%


$ 148.78

$ 139.43

6.7%


23.50%

23.89%

-39 bps

Chicago Conrad


$ 213.51

$ 198.14

7.8%


80.2%

83.9%

(3.7%)


$ 171.18

$ 166.33

2.9%


29.52%

30.82%

-130 bps

Courtyard Denver Downtown


$ 159.29

$ 152.56

4.4%


84.6%

80.5%

4.1%


$ 134.83

$ 122.84

9.8%


45.46%

43.11%

235 bps

Courtyard Fifth Avenue


$ 274.04

$ 260.09

5.4%


91.7%

86.9%

4.8%


$ 251.29

$ 226.07

11.2%


30.96%

27.97%

299 bps

Courtyard Midtown East


$ 269.79

$ 262.99

2.6%


86.7%

83.5%

3.2%


$ 233.91

$ 219.68

6.5%


34.59%

34.34%

25 bps

Frenchman's Reef


$ 228.17

$ 229.24

(0.5%)


78.7%

81.8%

(3.1%)


$ 179.48

$ 187.53

(4.3%)


19.51%

(1.20%)

2071 bps

JW Marriott Denver Cherry Creek


$ 227.24

$ 230.21

(1.3%)


76.4%

72.8%

3.6%


$ 173.69

$ 167.59

3.6%


29.72%

29.33%

39 bps

Los Angeles Airport


$ 109.11

$ 104.15

4.8%


86.7%

84.6%

2.1%


$ 94.64

$ 88.12

7.4%


18.49%

15.72%

277 bps

Hilton Minneapolis


$ 143.19

$ 142.22

0.7%


72.6%

73.7%

(1.1%)


$ 103.99

$ 104.87

(0.8%)


27.12%

29.24%

-212 bps

Oak Brook Hills


$ 120.39

$ 115.30

4.4%


56.6%

54.3%

2.3%


$ 68.12

$ 62.64

8.7%


9.69%

9.04%

65 bps

Orlando Airport Marriott


$ 103.82

$ 99.05

4.8%


72.2%

74.9%

(2.7%)


$ 74.97

$ 74.19

1.1%


23.53%

20.83%

270 bps

Hotel Rex


$ 178.93

$ 155.20

15.3%


84.8%

81.3%

3.5%


$ 151.72

$ 126.24

20.2%


36.58%

30.45%

613 bps

Salt Lake City Marriott


$ 134.07

$ 127.40

5.2%


66.4%

59.4%

7.0%


$ 89.07

$ 75.64

17.8%


29.64%

25.10%

454 bps

The Lodge at Sonoma


$ 235.86

$ 217.76

8.3%


72.1%

70.4%

1.7%


$ 170.05

$ 153.32

10.9%


21.81%

18.75%

306 bps

Torrance Marriott South Bay


$ 110.15

$ 105.31

4.6%


82.6%

81.2%

1.4%


$ 90.95

$ 85.46

6.4%


25.62%

24.56%

106 bps

Vail Marriott


$ 225.47

$ 218.23

3.3%


63.7%

61.1%

2.6%


$ 143.72

$ 133.33

7.8%


27.82%

25.41%

241 bps

Lexington Hotel New York


$ 205.70

$ 200.70

2.5%


94.8%

95.5%

(0.7%)


$ 195.01

$ 191.72

1.7%


35.99%

36.90%

-91 bps

Westin San Diego


$ 149.32

$ 144.54

3.3%


79.3%

77.6%

1.7%


$ 118.40

$ 112.19

5.5%


30.04%

32.63%

-259 bps

Westin Washington D.C. City Center


$ 193.77

$ 196.49

(1.4%)


73.2%

76.3%

(3.1%)


$ 141.93

$ 149.99

(5.4%)


34.43%

38.13%

-370 bps

Renaissance Worthington


$ 161.04

$ 157.00

2.6%


68.3%

71.9%

(3.6%)


$ 109.93

$ 112.83

(2.6%)


29.26%

29.79%

-53 bps

Total/Weighted Average


$ 175.43

$ 168.61

4.0%


76.6%

75.7%

0.9%


$ 134.36

$ 127.61

5.3%


27.18%

26.31%

87 bps


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned since January 1, 2011.























Pro Forma Hotel Adjusted EBITDA Reconciliation












Fourth Quarter 2012 (1)






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments
(2)

Hotel Adjusted EBITDA

Atlanta Alpharetta


$ 4,680


$ 806

$ 471

$ -

$ -

$ 1,277

Bethesda Marriott Suites


$ 4,753


$ (1,343)

$ 637

$ -

$ 1,944

$ 1,238

Boston Westin (3)


$ 24,786


$ 4,043

$ 2,618

$ -

$ 2

$ 6,663

Hilton Boston Downtown (3)


$ 7,696


$ 577

$ 1,745

$ -

$ -

$ 2,322

Hilton Burlington (3)


$ 4,779


$ 686

$ 1,031

$ -

$ 28

$ 1,745

Renaissance Charleston


$ 3,504


$ 735

$ 473

$ -

$ (39)

$ 1,169

Hilton Garden Inn Chelsea (3)


$ 5,468


$ 2,191

$ 583

$ -

$ -

$ 2,774

Chicago Marriott


$ 34,882


$ 2,361

$ 4,087

$ 4,033

$ (487)

$ 9,994

Chicago Conrad (3)


$ 9,599


$ 2,161

$ 1,148

$ -

$ -

$ 3,309

Courtyard Denver Downtown (3)


$ 3,112


$ 1,058

$ 320

$ -

$ -

$ 1,378

Courtyard Fifth Avenue


$ 6,559


$ 1,067

$ 405

$ 1,068

$ 64

$ 2,604

Courtyard Midtown East


$ 10,302


$ 2,263

$ 724

$ 1,245

$ -

$ 4,232

Frenchman's Reef (3)


$ 15,591


$ (1,758)

$ 2,027

$ 1,039

$ -

$ 1,308

JW Marriott Denver Cherry Creek (3)


$ 7,062


$ 812

$ 602

$ 754

$ -

$ 2,168

Los Angeles Airport


$ 16,942


$ (489)

$ 1,765

$ 1,406

$ -

$ 2,682

Minneapolis Hilton (3)


$ 16,537


$ 845

$ 2,363

$ 1,724

$ (226)

$ 4,706

Oak Brook Hills


$ 7,051


$ 466

$ 310

$ -

$ 111

$ 887

Orlando Airport Marriott


$ 5,913


$ (801)

$ 945

$ 1,042

$ -

$ 1,186

Hotel Rex


$ 2,036


$ 490

$ 274

$ -

$ -

$ 764

Salt Lake City Marriott


$ 7,783


$ 992

$ 929

$ 509

$ -

$ 2,430

The Lodge at Sonoma


$ 6,392


$ 1,229

$ 462

$ -

$ -

$ 1,691

Torrance Marriott South Bay


$ 7,169


$ 903

$ 941

$ -

$ -

$ 1,844

Vail Marriott (3)


$ 7,060


$ 538

$ 738

$ -

$ -

$ 1,276

Lexington Hotel New York (3)


$ 20,757


$ 321

$ 6,682

$ 2,351

$ 44

$ 9,398

Westin San Diego (3)


$ 8,336


$ 934

$ 1,298

$ -

$ 56

$ 2,288

Westin Washington D.C. City Center (3)


$ 8,474


$ 1,089

$ 1,523

$ -

$ 58

$ 2,670

Renaissance Worthington


$ 10,613


$ 1,463

$ 888

$ 949

$ 3

$ 3,303

Total


$ 267,836


$ 23,639

$ 35,989

$ 16,120

$ 1,558

$ 77,410


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned since January 1, 2011.

(2) The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities.

(3) The hotel reports results on a monthly basis. The amounts presented are based on the Company's reporting calendar for the fourth quarter and include the months of September through December.



Pro Forma Hotel Adjusted EBITDA Reconciliation



Fourth Quarter 2011 (1)






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments
(2)

Hotel Adjusted EBITDA

Atlanta Alpharetta


$ 4,632


$ 876

$ 390

$ -

$ -

$ 1,266

Bethesda Marriott Suites


$ 4,760


$ (1,301)

$ 643

$ -

$ 1,928

$ 1,270

Boston Westin (3)


$ 22,803


$ 1,640

$ 3,849

$ -

$ 156

$ 5,645

Hilton Boston Downtown (3)


$ 9,003


$ 1,950

$ 1,416

$ -

$ -

$ 3,366

Hilton Burlington (3)


$ 4,618


$ 1,726

$ 563

$ -

$ 28

$ 2,317

Renaissance Charleston


$ 3,233


$ 537

$ 464

$ -

$ (39)

$ 962

Hilton Garden Inn Chelsea (3)


$ 4,930


$ 1,953

$ 583

$ -

$ -

$ 2,536

Chicago Marriott


$ 32,508


$ 2,304

$ 3,982

$ 3,984

$ (486)

$ 9,784

Chicago Conrad (3)


$ 8,952


$ 1,964

$ 1,280

$ -

$ -

$ 3,244

Courtyard Denver Downtown (3)


$ 2,922


$ 500

$ 311

$ 443

$ -

$ 1,254

Courtyard Fifth Avenue


$ 5,589


$ 172

$ 593

$ 1,051

$ 64

$ 1,880

Courtyard Midtown East


$ 9,391


$ 1,949

$ 709

$ 1,234

$ -

$ 3,892

Frenchman's Reef (3)


$ 10,268


$ (5,203)

$ 1,803

$ 887

$ -

$ (2,513)

JW Marriott Denver Cherry Creek (3)


$ 6,902


$ 801

$ 559

$ 766

$ -

$ 2,126

Los Angeles Airport


$ 15,727


$ (1,406)

$ 1,796

$ 1,369

$ -

$ 1,759

Minneapolis Hilton (3)


$ 16,788


$ 828

$ 2,274

$ 1,725

$ (294)

$ 4,533

Oak Brook Hills


$ 6,516


$ (500)

$ 982

$ -

$ 167

$ 649

Orlando Airport Marriott


$ 5,842


$ (977)

$ 997

$ 1,028

$ -

$ 1,048

Hotel Rex


$ 1,748


$ 296

$ 274

$ -

$ -

$ 570

Salt Lake City Marriott


$ 6,418


$ 209

$ 833

$ 522

$ -

$ 1,564

The Lodge at Sonoma


$ 5,512


$ 977

$ 450

$ -

$ -

$ 1,427

Torrance Marriott South Bay


$ 7,036


$ 692

$ 984

$ -

$ -

$ 1,676

Vail Marriott (3)


$ 6,110


$ 5

$ 726

$ -

$ -

$ 731

Lexington Hotel New York (3)


$ 21,275


$ 6,326

$ 3,140

$ 4

$ 44

$ 9,514

Westin San Diego (3)


$ 8,437


$ 1,529

$ 1,109

$ -

$ 56

$ 2,694

Westin Washington D.C. City Center (3)


$ 9,409


$ 2,477

$ 1,326

$ -

$ 58

$ 3,861

Renaissance Worthington


$ 10,026


$ 1,034

$ 855

$ 937

$ 4

$ 2,830

Total


$ 251,355


$ 21,358

$ 32,891

$ 13,950

$ 1,686

$ 69,991


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned as of January 1, 2011.

(2) The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of our favorable lease assets and the non-cash amortization of our unfavorable contract liabilities.

(3) The hotel reports results on a monthly basis. The amounts presented are based on the Company's reporting calendar for the fourth quarter and include the months of September through December.


Pro Forma Hotel Adjusted EBITDA Reconciliation












Full Year 2012 (1)






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments
(2)

Hotel Adjusted EBITDA

Atlanta Alpharetta


$ 15,340


$ 3,237

$ 1,350

$ -

$ -

$ 4,587

Bethesda Marriott Suites


$ 14,928


$ (4,447)

$ 2,073

$ -

$ 6,267

$ 3,893

Boston Westin


$ 72,755


$ 8,312

$ 8,700

$ -

$ 7

$ 17,019

Hilton Boston Downtown


$ 24,393


$ 3,031

$ 5,671

$ -

$ -

$ 8,702

Hilton Burlington


$ 14,000


$ 1,758

$ 3,349

$ -

$ 91

$ 5,198

Renaissance Charleston


$ 11,379


$ 2,512

$ 1,524

$ -

$ (126)

$ 3,910

Hilton Garden Inn Chelsea


$ 13,387


$ 3,999

$ 1,894

$ -

$ -

$ 5,893

Chicago Marriott


$ 96,735


$ (1,663)

$ 12,978

$ 13,003

$ (1,581)

$ 22,737

Chicago Conrad


$ 25,580


$ 4,083

$ 3,469

$ -

$ -

$ 7,552

Courtyard Denver Downtown


$ 9,393


$ 3,067

$ 1,028

$ 175

$ -

$ 4,270

Courtyard Fifth Avenue


$ 17,202


$ (17)

$ 1,693

$ 3,443

$ 207

$ 5,326

Courtyard Midtown East


$ 27,787


$ 3,291

$ 2,372

$ 3,949

$ -

$ 9,612

Frenchman's Reef


$ 55,752


$ 1,086

$ 6,421

$ 3,372

$ -

$ 10,879

JW Marriott Denver Cherry Creek


$ 20,076


$ 1,686

$ 1,867

$ 2,414

$ -

$ 5,967

Los Angeles Airport


$ 56,728


$ 173

$ 5,800

$ 4,514

$ -

$ 10,487

Minneapolis Hilton


$ 49,075


$ 835

$ 7,622

$ 5,524

$ (671)

$ 13,310

Oak Brook Hills


$ 21,946


$ (863)

$ 2,504

$ -

$ 486

$ 2,127

Orlando Airport Marriott


$ 20,047


$ (1,665)

$ 3,024

$ 3,359

$ -

$ 4,718

Hotel Rex


$ 5,960


$ 1,288

$ 892

$ -

$ -

$ 2,180

Salt Lake City Marriott


$ 24,136


$ 2,613

$ 2,876

$ 1,664

$ -

$ 7,153

The Lodge at Sonoma


$ 18,994


$ 2,637

$ 1,506

$ -

$ -

$ 4,143

Torrance Marriott South Bay


$ 22,759


$ 2,682

$ 3,148

$ -

$ -

$ 5,830

Vail Marriott


$ 25,503


$ 4,731

$ 2,363

$ -

$ -

$ 7,094

Lexington Hotel New York


$ 53,904


$ (1,238)

$ 13,798

$ 6,695

$ 145

$ 19,400

Westin San Diego


$ 26,288


$ 3,499

$ 4,217

$ -

$ 182

$ 7,898

Westin Washington D.C. City Center


$ 26,196


$ 3,879

$ 4,950

$ -

$ 189

$ 9,018

Renaissance Worthington


$ 32,140


$ 3,460

$ 2,871

$ 3,061

$ 11

$ 9,403

Total


$ 802,383


$ 51,966

$ 109,960

$ 51,173

$ 5,207

$ 218,110


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned since January 1, 2011.

(2) The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities.


Pro Forma Hotel Adjusted EBITDA Reconciliation












Full Year 2011 (1)






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments
(2)

Hotel Adjusted EBITDA

Atlanta Alpharetta


$ 15,219


$ 3,195

$ 1,251

$ -

$ -

$ 4,446

Bethesda Marriott Suites


$ 15,092


$ (4,459)

$ 2,094

$ -

$ 6,271

$ 3,906

Boston Westin


$ 66,564


$ 2,808

$ 12,486

$ -

$ 507

$ 15,801

Hilton Boston Downtown


$ 25,826


$ 4,955

$ 4,603

$ -

$ -

$ 9,558

Hilton Burlington


$ 12,505


$ 2,555

$ 1,829

$ -

$ 91

$ 4,475

Renaissance Charleston


$ 10,540


$ 2,060

$ 1,468

$ -

$ (126)

$ 3,402

Hilton Garden Inn Chelsea


$ 12,544


$ 3,918

$ 1,865

$ -

$ -

$ 5,783

Chicago Marriott


$ 90,912


$ (3,081)

$ 13,200

$ 13,182

$ (1,581)

$ 21,720

Chicago Conrad


$ 24,904


$ 2,979

$ 4,697

$ -

$ -

$ 7,676

Courtyard Denver Downtown


$ 8,595


$ 1,122

$ 1,135

$ 1,448

$ -

$ 3,705

Courtyard Fifth Avenue


$ 15,547


$ (1,233)

$ 1,909

$ 3,465

$ 207

$ 4,348

Courtyard Midtown East


$ 26,068


$ 2,658

$ 2,302

$ 3,991

$ -

$ 8,951

Frenchman's Reef


$ 34,367


$ (8,092)

$ 4,705

$ 2,976

$ -

$ (411)

JW Marriott Denver Cherry Creek


$ 19,628


$ 1,464

$ 1,817

$ 2,476

$ -

$ 5,757

Los Angeles Airport


$ 52,726


$ (2,026)

$ 5,816

$ 4,500

$ -

$ 8,290

Minneapolis Hilton


$ 50,769


$ 4,266

$ 7,348

$ 3,998

$ (768)

$ 14,844

Oak Brook Hills


$ 20,471


$ (1,882)

$ 3,191

$ -

$ 542

$ 1,851

Orlando Airport Marriott


$ 19,699


$ (2,549)

$ 3,257

$ 3,395

$ -

$ 4,103

Hotel Rex


$ 4,963


$ 619

$ 892

$ -

$ -

$ 1,511

Salt Lake City Marriott


$ 20,990


$ 806

$ 2,718

$ 1,744

$ -

$ 5,268

The Lodge at Sonoma


$ 16,924


$ 1,750

$ 1,423

$ -

$ -

$ 3,173

Torrance Marriott South Bay


$ 22,093


$ 2,239

$ 3,188

$ -

$ -

$ 5,427

Vail Marriott


$ 23,225


$ 3,647

$ 2,254

$ -

$ -

$ 5,901

Lexington Hotel New York


$ 52,767


$ 9,119

$ 10,189

$ 13

$ 148

$ 19,469

Westin San Diego


$ 25,356


$ 4,487

$ 3,604

$ -

$ 182

$ 8,273

Westin Washington D.C. City Center


$ 28,316


$ 6,298

$ 4,311

$ -

$ 189

$ 10,798

Renaissance Worthington


$ 31,944


$ 3,674

$ 2,732

$ 3,098

$ 11

$ 9,515

Total


$ 748,554


$ 41,297

$ 106,284

$ 44,286

$ 5,673

$ 196,981


(1) The pro forma operating data includes the operating results for the Company's 27 hotels assuming they were owned since January 1, 2011.

(2) The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities.



.
Contact: 
 
Sean Mahoney
+1-240-744-1150
.
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