DiamondRock Hospitality Company Reports Second Quarter 2015 Results And Increases Full Year Guidance To Reflect Key West Acquisition

Aug 07, 2015, 08:30 ET from DiamondRock Hospitality Company

BETHESDA, Md., Aug. 7, 2015 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 29 premium hotels in the United States, today announced results of operations for the quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Pro Forma RevPAR: Pro Forma RevPAR was $184.50, an increase of 6.0% from the comparable period of 2014 and a new record for the Company.
  • Pro Forma Hotel Adjusted EBITDA Margin: Pro Forma Hotel Adjusted EBITDA margin was 34.56%, an increase of 166 basis points from 2014.
  • Pro Forma Hotel Adjusted EBITDA: Pro Forma Hotel Adjusted EBITDA was $85.4 million, an increase of 11.3% from 2014.
  • Adjusted EBITDA: Adjusted EBITDA was $81.1 million, an increase of 14.3% from 2014.
  • Adjusted FFO: Adjusted FFO was $61.5 million and Adjusted FFO per diluted share was $0.31.
  • Key West Acquisition: The Company acquired the 184-suite Sheraton Suites Key West for $94.0 million on June 30, 2015.
  • Financing Activity: The Company refinanced the Renaissance Worthington in April 2015 with a new 10-year $85.0 million mortgage loan that bears interest at a fixed rate of 3.66%.  The Company also repaid the $56.2 million mortgage loan secured by the Frenchman's Reef & Morning Star Marriott Beach Resort in May 2015.
  • Dividends: The Company declared a dividend of $0.125 per share during the second quarter, which was paid on July 14, 2015.

Recent Developments

  • Hotel Refinancing: The Company refinanced the JW Marriott Denver at Cherry Creek in July 2015 with a new 10-year $65 million mortgage loan bearing interest at a fixed rate of 4.33%.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "Our second quarter results were strong and consistent with our expectations.  We were particularly pleased that our RevPAR growth exceeded the upper upscale industry average and that we achieved a record profit margin for the Company as result of our focused asset management initiatives. Additionally, the execution of our external growth strategy also drove shareholder value with an accretive acquisition in Key West, the highest RevPAR market in the United States."

Operating Results     

Discussions of "Pro Forma" assumes the Company owned each of its 29 hotels since January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, since the hotel opened for business on September 1, 2014.  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."

 

For the quarter ended June 30, 2015, the Company reported the following:

Second Quarter

2015

2014

Change

Pro Forma ADR

$220.97

$209.21

5.6

%

Pro Forma Occupancy

83.5

%

83.1

%

0.4 percentage points

Pro Forma RevPAR

$184.50

$174.13

6.0

%

Pro Forma Hotel Adjusted EBITDA Margin

34.56

%

32.90

%

166 basis points

Adjusted EBITDA

$81.1 million

$70.9 million

$10.2 million

Adjusted FFO

$61.5 million

$51.9 million

$9.6 million

Adjusted FFO per diluted share

$0.31

$0.26

$0.05

 

For the six months ended June 30, 2015, the Company reported the following:

Year To Date

2015

2014

Change

Pro Forma ADR

$212.01

$201.92

5.0

%

Pro Forma Occupancy

79.8

%

78.4

%

1.4 percentage points

Pro Forma RevPAR

$169.09

$158.26

6.8

%

Pro Forma Hotel Adjusted EBITDA Margin

30.67

%

29.13

%

154 basis points

Adjusted EBITDA

$129.6 million

$108.2 million

$21.4 million

Adjusted FFO

$99.2 million

$81.4 million

$17.8 million

Adjusted FFO per diluted share

$0.49

$0.41

$0.08

 

Key West Hotel Acquisition

The Company acquired the 184-suite Sheraton Suites Key West, located in Key West, Florida for $94.0 million on June 30, 2015. The purchase price represents a 12.8 multiple on forecasted 2015 Hotel Adjusted EBITDA.  The hotel will continue to be managed by Ocean Properties, a leading third party manager that operates six hotels in Key West.  The Company believes that there is upside in its investment by repositioning the Hotel over the next year into an all-suites, independent, boutique resort. The Company expects to improve the hotel's profit margins by approximately 500 basis points and expects the hotel to generate approximately $9.5 to $10.0 million of annual Hotel Adjusted EBITDA upon stabilization as an independent hotel.

Hotel Financing Activity

In April 2015, the Company refinanced the Renaissance Worthington with a new $85.0 million mortgage loan. The new loan has a term of 10 years and a fixed interest rate of 3.66%.  The new loan is interest-only for the first two years after which principal will amortize on a 30-year schedule. The hotel was previously encumbered by a $52.6 million mortgage loan bearing interest at a fixed rate of 5.4%.

In May 2015, the Company repaid the mortgage loan secured by the Frenchman's Reef & Morning Star Marriott Beach Resort. The loan had an outstanding principal balance of $56.2 million and a fixed interest rate of 5.44%.

In July 2015, the Company refinanced the JW Marriott Denver at Cherry Creek with a new $65.0 million mortgage loan. The new loan has a term of 10 years and a fixed interest rate of 4.33%. The new loan is interest-only for the first year after which principal will amortize on a 30-year schedule. The hotel was previously encumbered by a $38.1 million mortgage loan bearing interest at a fixed rate of 6.47%.

Westin Boston Expansion Option Update

In connection with the 2007 acquisition of the Westin Boston Waterfront Hotel, the Company assumed an option to acquire a leasehold interest in a parcel of land adjacent to the hotel with development rights to expand the hotel. During the quarter ended June 30, 2015, the Company decided not to exercise this option. As a result, the Company recorded a non-cash impairment charge of approximately $9.6 million, which represented a write-off of the favorable lease asset and other assets related to the option.

Capital Expenditures

The Company spent approximately $32.2 million on capital improvements during the six months ended June 30, 2015, primarily related to the addition of 41 rooms at the Hilton Boston Downtown and the first phase of guest room renovation at the Chicago Marriott Downtown.

The Company continues to expect to spend approximately $85 million on capital improvements at its hotels in 2015.  Significant projects include the following:

  • Hilton Boston Downtown: The Company completed a return on investment project at the hotel to create an incremental 41 guest rooms and upgrade additional guest rooms, which created over 90 premium rooms.
  • Chicago Marriott Downtown: The Company commenced a multi-year guest room renovation at the hotel. Marriott is contributing to the cost of the renovation through an amendment to the hotel's management agreement to reduce management fees for the remaining term of the agreement. The amendment is expected to reduce management fees by approximately $1.8 million in 2015. The first phase of the guest room renovation, which consisted of 140 rooms, including all 25 suites, was successfully completed during the first quarter of 2015.  The Company also added Marriott's new prototype F&B grab-and-go outlet in the hotel's lobby. The second phase of the guest room renovation will be completed during the seasonally slow winter months over the next three years and is not expected to result in material disruption.
  • The Lodge at Sonoma: The Company expects to renovate the guest rooms at the hotel during the seasonally slow winter months of late 2015 and early 2016.
  • Luxury Collection Hotel Chicago: The Company is rebranding the hotel currently known as the Conrad Chicago to Starwood's Luxury Collection during the third quarter.  The renovation work associated with the brand conversion will take place over the next two seasonally slow winter seasons. The Company is currently finalizing the cost estimate of this project.

Balance Sheet

As of June 30, 2015, the Company had $84.1 million of unrestricted cash on hand and approximately $1.1 billion of total debt, which consisted of property-specific mortgage debt and $90.0 million outstanding on the Company's $200.0 million senior unsecured credit facility.  Subsequent to June 30, 2015, the Company repaid $50.0 million of borrowings and currently has $40.0 million outstanding on its senior unsecured credit facility.

ATM Equity Offering Program

The Company did not sell any shares under its $200 million at-the-market ("ATM") equity offering program during the second quarter. The Company currently has $128.3 million remaining under the ATM program.

Dividends

The Company's Board of Directors declared a quarterly dividend of $0.125 per share to stockholders of record as of June 30, 2015.  The dividend was paid on July 14, 2015.

Outlook and Guidance

The Company has provided full year and third quarter guidance for 2015, 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.  Pro Forma RevPAR and Pro Forma Hotel Adjusted EBITDA margin growth assume that all of the Company's 29 hotels were owned since January 1, 2014 but excludes the Hilton Garden Inn Times Square Central until September 1, 2015, since the hotel opened on September 1, 2014.

 

The Company is increasing its full year 2015 guidance to incorporate the acquisition of Sheraton Suites Key West, as follows:

Previous Guidance

Current Guidance

Metric

Low End

High End

Low End

High End

Pro Forma RevPAR Growth

6 percent

7 percent

6 percent

7 percent

Pro Forma Hotel Adjusted EBITDA Margin Growth

100 basis points

150 basis points

125 basis points

175 basis points

Adjusted EBITDA

$264 million

$274 million

$266.5 million

$276.5 million

Adjusted FFO

$201 million

$206 million

$202 million

$208 million

Adjusted FFO per share

(based on 201.2 million shares)

$1.00 per share

$1.02 per share

$1.00 per share

$1.03 per share

 

In addition, the Company expects income tax expense of $11.4 million to $15.4 million, interest expense of approximately $53 million and corporate expenses of approximately $24 million for the full year 2015.

The Company expects the following for the third quarter of 2015:

  • Pro Forma RevPAR growth of 3 percent to 5 percent;
  • Adjusted EBITDA to range from 26 percent to 26.5 percent of full year 2015 Adjusted EBITDA; and
  • Income tax expense of $2.5 million to $3.5 million, which assumes the Company receives the extension of the income tax agreement with the U.S. Virgin Islands related to the Frenchman's Reef & Morning Star Marriott Beach Resort during the third quarter.

 

The following table is presented to provide investors with selected quarterly Pro Forma operating information for 2014.  The operating information assumes that all of the Company's 29 hotels were owned since January 1, 2014, with the exception of the Hilton Garden Inn Times Square Central, which opened for business on September 1, 2014.

Quarter 1, 2014

Quarter 2, 2014

Quarter 3, 2014

Quarter 4, 2014

Full Year 2014

ADR

$

193.57

$

209.21

$

207.26

$

215.08

$

206.58

Occupancy

73.5

%

83.1

%

83.5

%

75.9

%

79.0

%

RevPAR

$

142.22

$

174.13

$

173.07

$

163.21

$

163.26

Revenues (in thousands)

$

196,962

$

233,298

$

227,547

$

224,153

$

881,960

Hotel Adjusted EBITDA (in thousands)

$

48,562

$

76,755

$

70,771

$

67,535

$

263,623

        % of full Year

18.4

%

29.1

%

26.8

%

25.7

%

100.0

%

Hotel Adjusted EBITDA Margin

24.66

%

32.90

%

31.10

%

30.13

%

29.89

%

Available Rooms

952,830

963,417

982,464

999,948

3,898,659

Earnings Call

The Company will host a conference call to discuss its second quarter results on Friday, August 7, 2015, at 10:00 a.m. Eastern Time (ET).  To participate in the live call, investors are invited to dial 888-310-1786 (for domestic callers) or 330-863-3357 (for international callers).  The participant passcode is 75900668. 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 week.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations.  The Company owns 29 premium quality hotels with over 10,900 rooms. The Company has strategically positioned its hotels to be operated both under leading global brands such as Hilton, Marriott, and Westin and boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, 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; the ability to extend the income tax agreement, 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.

 

 

DIAMONDROCK HOSPITALITY COMPANY 

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

June 30, 2015

December 31, 2014

                                           ASSETS

(unaudited)

Property and equipment, net

$

2,896,383

$

2,764,393

Deferred financing costs, net

7,751

8,023

Restricted cash

60,203

74,730

Due from hotel managers

100,323

79,827

Favorable lease assets, net

24,171

34,274

Prepaid and other assets (1)

54,314

52,739

Cash and cash equivalents

84,123

144,365

Total assets

$

3,227,268

$

3,158,351

                LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgage debt

$

1,007,326

$

1,038,330

Senior unsecured credit facility

90,000

Total debt

1,097,326

1,038,330

Deferred income related to key money, net

21,027

21,561

Unfavorable contract liabilities, net

75,613

76,220

Due to hotel managers

66,965

59,169

Dividends declared and unpaid

25,479

20,922

Accounts payable and accrued expenses (2)

118,786

113,162

Total other liabilities

307,870

291,034

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; 200,735,245 and 199,964,041 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

2,007

2,000

Additional paid-in capital

2,053,938

2,045,755

Accumulated deficit

(233,873)

(218,768)

Total stockholders' equity

1,822,072

1,828,987

Total liabilities and stockholders' equity

$

3,227,268

$

3,158,351

(1) Includes $40.5 million of deferred tax assets, $9.8 million of prepaid expenses and $4.0 million of other assets as of June 30, 2015.

(2)  Includes $67.5 million of deferred ground rent, $17.2 million of deferred tax liabilities, $15.9 million of accrued property taxes, $5.0 million  of accrued capital expenditures and $13.2 million of other accrued liabilities as of June 30, 2015.

 

 

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Revenues:

Rooms

$

181,563

$

165,088

$

326,199

$

294,824

Food and beverage

56,073

52,182

108,406

100,793

Other

12,165

12,664

24,084

24,401

Total revenues

249,801

229,934

458,689

420,018

Operating Expenses:

Rooms

41,993

41,143

80,457

79,248

Food and beverage

35,355

34,693

70,901

69,193

Management fees

8,903

8,459

15,103

13,752

Other hotel expenses

77,546

72,393

154,052

144,869

Depreciation and amortization

25,574

25,126

49,911

50,249

Impairment losses

9,675

10,461

Hotel acquisition costs

260

492

Corporate expenses

6,331

4,690

11,741

9,878

Gain on insurance proceeds

(608)

(1,271)

Gain on litigation settlement, net

(10,999)

(10,999)

Total operating expenses

205,637

174,897

393,118

354,919

Operating profit

44,164

55,037

65,571

65,099

Interest income

(60)

(957)

(150)

(2,609)

Interest expense

12,838

14,600

26,056

29,125

Other income, net

(167)

(204)

Gain on sale of hotel property

(1,290)

(1,290)

Gain on prepayment of note receivable

(13,550)

(13,550)

Total other expenses (income), net

12,611

(1,197)

25,702

11,676

Income before income taxes

31,553

56,234

39,869

53,423

Income tax (expense) benefit

(6,731)

(4,318)

(4,405)

2,530

Net income

$

24,822

$

51,916

$

35,464

$

55,953

Earnings per share:

Basic earnings per share

$

0.12

$

0.27

$

0.18

$

0.29

Diluted earnings per share

$

0.12

$

0.26

$

0.18

$

0.29

Weighted-average number of common shares outstanding:

Basic

200,830,064

195,776,924

200,738,301

195,700,864

Diluted

201,142,747

196,246,718

201,115,115

196,217,724

 

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 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 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 EBITDA and FFO 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 the straight line recognition of 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 favorable and unfavorable contract assets and liabilities recorded in conjunction with certain acquisitions.  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 our actual performance for that period.
  • Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses 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:  We exclude the gain from the prepayment of the loan in 2014.
  • Other Non-Cash and /or Unusual Items:  From time to time we incur costs or realize gains that we do not believe reflect the underlying performance of the Company.  Such items include, but are not limited to, hotel pre-opening costs, hotel manager transition costs, contract termination fees, severance costs, gains or losses from legal settlements, bargain purchase gains, and insurance proceeds.

In addition, to derive Adjusted EBITDA we exclude gains or losses on dispositions and impairment losses because we believe that including them in EBITDA does not reflect the ongoing performance of our hotels. Additionally, the gains or losses 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 any fair market value adjustments to the Company's interest rate cap agreement.

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

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Net income

$

24,822

$

51,916

$

35,464

$

55,953

Interest expense

12,838

14,600

26,056

29,125

Income tax expense (benefit)

6,731

4,318

4,405

(2,530)

Real estate related depreciation and amortization

25,574

25,126

49,911

50,249

EBITDA

69,965

95,960

115,836

132,797

Non-cash ground rent

1,479

1,596

2,987

3,292

Non-cash amortization of favorable and unfavorable contract liabilities, net

(374)

(353)

(727)

(705)

Impairment losses

9,675

10,461

Gain on insurance proceeds

(608)

(1,271)

Gain on sale of hotel property

(1,290)

(1,290)

Gain on litigation settlement (1)

(10,999)

(10,999)

Gain on prepayment of note receivable

(13,550)

(13,550)

Reversal of previously recognized Allerton income

(162)

(453)

Hotel acquisition costs

260

45

492

81

Hotel manager transition and pre-opening costs (2)

66

272

534

286

Adjusted EBITDA

$

81,071

$

70,911

$

129,583

$

108,188

(1)       Includes $14.0 million of settlement proceeds, net of a $1.2 million contingency fee paid to our legal counsel and $1.8 million of legal fees and other costs incurred over the course of the legal proceedings.  The $1.8 million of legal fees and other costs were previously recorded as corporate expenses and the repayment of those costs through the settlement proceeds is recorded as a reduction of corporate expenses.

(2)       Classified as other hotel expenses on the consolidated statements of operations.

 

 

Full Year 2015 Guidance

Low End

High End

Net income

$

85,839

$

92,839

Interest expense

53,000

53,000

Income tax expense

11,400

15,400

Real estate related depreciation and amortization

100,000

99,000

EBITDA

250,239

260,239

Non-cash ground rent

5,700

5,700

Non-cash amortization of favorable and unfavorable contracts, net

(1,400)

(1,400)

Impairment losses

10,461

10,461

Hotel acquisition costs

500

500

Hotel manager transition and pre-opening costs

1,000

1,000

Adjusted EBITDA

$

266,500

$

276,500

 

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

Three Months Ended June 30,

Six Months Ended  June 30,

2015

2014

2015

2014

Net income

$

24,822

$

51,916

$

35,464

$

55,953

Real estate related depreciation and amortization

25,574

25,126

49,911

50,249

Gain on sale of hotel property

(1,290)

(1,290)

Impairment losses

9,675

10,461

FFO

60,071

75,752

95,836

104,912

Non-cash ground rent

1,479

1,596

2,987

3,292

Non-cash amortization of favorable and unfavorable contract liabilities, net

(374)

(353)

(727)

(705)

Gain on insurance proceeds

(608)

(1,271)

Gain on litigation settlement (1)

(10,999)

(10,999)

Gain on prepayment of note receivable

(13,550)

(13,550)

Hotel acquisition costs

260

45

492

81

Hotel manager transition and pre-opening costs (2)

66

272

534

286

Reversal of previously recognized Allerton income

(162)

(453)

Fair value adjustments to debt instruments

(14)

(90)

66

(175)

Adjusted FFO

$

61,488

$

51,903

$

99,188

$

81,418

Adjusted FFO per diluted share

$

0.31

$

0.26

$

0.49

$

0.41

(1)       Includes $14.0 million of settlement proceeds, net of a $1.2 million contingency fee paid to our legal counsel and $1.8 million of legal fees and other costs incurred over the course of the legal proceedings.  The $1.8 million of legal fees and other costs were previously recorded as corporate expenses and the repayment of those costs through the settlement proceeds is recorded as a reduction of corporate expenses.

(2)       Classified as other hotel expenses on the consolidated statements of operations.

 

 

Full Year 2015 Guidance

Low End

High End

Net income

$

85,839

$

92,839

Real estate related depreciation and amortization

100,000

99,000

Impairment losses

10,461

10,461

FFO

196,300

202,300

Non-cash ground rent

5,700

5,700

Non-cash amortization of favorable and unfavorable contract liabilities, net

(1,400)

(1,400)

Hotel acquisition costs

500

500

Hotel manager transition and pre-opening costs

1,000

1,000

Fair value adjustments to debt instruments

(100)

(100)

Adjusted FFO

$

202,000

$

208,000

Adjusted FFO per diluted share

$

1.00

$

1.03

 

 

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 and other contracts, and the non-cash amortization of our unfavorable contract liabilities. 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

HOTEL OPERATING DATA

Schedule of Property Level Results - Pro Forma (1)

(unaudited and in thousands)      

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

% Change

2015

2014

% Change

ADR

$

220.97

$

209.21

5.6

%

$

212.01

$

201.92

5.0

%

Occupancy

83.5%

83.1%

0.4

%

79.8%

78.4%

1.4

%

RevPAR

$

184.50

$

174.13

6.0

%

$

169.09

$

158.26

6.8

%

Revenues:

Rooms

$

178,231

$

167,756

6.2

%

$

324,462

$

303,268

7.0

%

Food and beverage

56,571

53,251

6.2

%

109,725

103,215

6.3

%

Other

12,375

12,289

0.7

%

24,565

23,782

3.3

%

Total revenues

$

247,177

$

233,296

5.9

%

$

458,752

$

430,265

6.6

%

Operating Expenses:

Rooms departmental expenses

$

41,463

$

40,666

2.0

%

$

79,950

$

77,955

2.6

%

Food and beverage departmental expenses

35,714

35,228

1.4

%

71,902

69,837

3.0

%

Other direct departmental

4,286

4,717

(9.1)

%

8,804

9,941

(11.4)

%

General and administrative

18,139

17,177

5.6

%

35,607

33,349

6.8

%

Utilities

6,586

6,586

%

13,856

14,007

(1.1)

%

Repairs and maintenance

8,945

9,245

(3.2)

%

18,101

18,412

(1.7)

%

Sales and marketing

16,844

15,393

9.4

%

32,077

28,938

10.8

%

Franchise fees

5,043

4,109

22.7

%

9,902

7,819

26.6

%

Base management fees

6,235

5,749

8.5

%

11,448

10,773

6.3

%

Incentive management fees

2,649

2,814

(5.9)

%

3,695

3,379

9.4

%

Property taxes

10,406

9,497

9.6

%

21,416

19,841

7.9

%

Ground rent

3,796

3,754

1.1

%

7,578

7,496

1.1

%

Other fixed expenses

2,750

2,834

(3.0)

%

5,971

5,666

5.4

%

Hotel manager transition and pre-opening costs

66

272

(75.7)

%

534

286

86.7

%

Total hotel operating expenses

162,922

158,041

3.1

%

320,841

307,699

4.3

%

Hotel EBITDA

$

84,255

$

75,255

12.0

%

$

137,911

$

122,566

12.5

%

Non-cash ground rent

1,479

1,580

(6.4)

%

2,987

3,169

(5.7)

%

Non-cash amortization of unfavorable contract liabilities

(364)

(352)

3.4

%

(732)

(704)

4.0

%

Hotel manager transition and pre-opening costs (2)

66

272

(75.7)

%

534

286

86.7

%

Hotel Adjusted EBITDA

$

85,436

$

76,755

11.3

%

$

140,700

$

125,317

12.3

%

(1)  Pro forma assumes the Company owned each of its 29 hotels since January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, since the hotel opened for business on September 1, 2014.

(2)  Classified as other hotel expenses on the consolidated statements of operations.

 

 

Market Capitalization as of June 30, 2015

(in thousands)

Enterprise Value

Common equity capitalization (at June 30, 2015 closing price of $12.81/share)

$

2,578,938

Consolidated debt

1,097,326

Cash and cash equivalents

(84,123)

Total enterprise value

$

3,592,141

Share Reconciliation

Common shares outstanding

200,735

Unvested restricted stock held by management and employees

475

Share grants under deferred compensation plan held by directors

112

Combined shares outstanding

201,322

 

Debt Summary as of June 30, 2015

(dollars in thousands)

Property

Interest Rate

Term

Outstanding Principal

Maturity

JW Marriott Denver at Cherry Creek (1)

6.47%

Fixed

$

38,055

July 2015

Orlando Airport Marriott

5.68%

Fixed

55,475

January 2016

Chicago Marriott Downtown Magnificent Mile

5.98%

Fixed

203,449

April 2016

Courtyard Manhattan / Fifth Avenue

6.48%

Fixed

48,640

June 2016

Marriott Salt Lake City Downtown

4.25%

Fixed

60,734

November 2020

Hilton Minneapolis

5.46%

Fixed

91,789

May 2021

Westin Washington D.C. City Center

3.99%

Fixed

69,711

January 2023

The Lodge at Sonoma, a Renaissance Resort & Spa

3.96%

Fixed

29,819

April 2023

Westin San Diego

3.94%

Fixed

68,286

April 2023

Courtyard Manhattan / Midtown East

4.40%

Fixed

86,000

August 2024

Renaissance Worthington

3.66%

Fixed

85,000

May 2025

Total Weighted-Average Interest Fixed Rate Debt

5.10%

$

836,958

Lexington Hotel New York

LIBOR + 2.25

Variable

170,368

October 2017 (2)

Total mortgage debt

$

1,007,326

Senior unsecured credit facility

LIBOR + 1.75

Variable

90,000

January 2017 (3)

Total debt

$

1,097,326

Total Weighted-Average Interest Rate

4.43%

 

(1)

The loan was repaid on July 1, 2015, at which time we entered into a new $65 million mortgage loan with a fixed rate of 4.33%.  The new loan matures in 2025 and is interest-only for the first year, after which principal will amortize on a 30-year schedule.

(2)

The loan may be extended for two additional one-year terms subject to the satisfaction of certain conditions and the payment of an extension fee.

(3)

The credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.      

 

Pro Forma Operating Statistics – Second Quarter

ADR

Occupancy

RevPAR

Hotel Adjusted EBITDA Margin

2Q 2015

2Q 2014

B/(W)

2Q 2015

2Q 2014

B/(W)

2Q 2015

2Q 2014

B/(W)

2Q 2015

2Q 2014

B/(W)

Atlanta Alpharetta Marriott

$

156.63

$

160.85

(2.6)

%

77.9

%

73.9

%

4.0

%

$

122.04

$

118.83

2.7

%

34.07

%

35.49

%

-142 bps

Bethesda Marriott Suites

$

182.77

$

169.79

7.6

%

77.4

%

77.6

%

(0.2)

%

$

141.45

$

131.68

7.4

%

36.40

%

33.70

%

270 bps

Boston Westin

$

261.84

$

244.25

7.2

%

81.7

%

87.1

%

(5.4)

%

$

213.80

$

212.79

0.5

%

36.73

%

34.51

%

222 bps

Hilton Boston Downtown

$

315.17

$

281.25

12.1

%

88.6

%

94.0

%

(5.4)

%

$

279.15

$

264.32

5.6

%

45.92

%

42.31

%

361 bps

Hilton Burlington

$

163.37

$

164.39

(0.6)

%

84.7

%

78.5

%

6.2

%

$

138.40

$

129.06

7.2

%

41.88

%

42.16

%

-28 bps

Renaissance Charleston

$

248.37

$

232.47

6.8

%

95.2

%

95.4

%

(0.2)

%

$

236.43

$

221.86

6.6

%

42.90

%

41.13

%

177 bps

Hilton Garden Inn Chelsea

$

245.59

$

245.18

0.2

%

96.7

%

97.3

%

(0.6)

%

$

237.51

$

238.45

(0.4)

%

34.39

%

45.70

%

-1131 bps

Chicago Marriott

$

245.52

$

228.09

7.6

%

85.0

%

81.6

%

3.4

%

$

208.64

$

186.21

12.0

%

32.91

%

30.03

%

288 bps

Chicago Conrad

$

245.09

$

248.55

(1.4)

%

83.3

%

88.8

%

(5.5)

%

$

204.18

$

220.61

(7.4)

%

37.65

%

40.14

%

-249 bps

Courtyard Denver Downtown

$

207.82

$

192.74

7.8

%

82.6

%

83.5

%

(0.9)

%

$

171.60

$

161.03

6.6

%

49.44

%

51.23

%

-179 bps

Courtyard Fifth Avenue

$

289.68

$

299.58

(3.3)

%

91.7

%

89.7

%

2.0

%

$

265.57

$

268.74

(1.2)

%

30.80

%

31.90

%

-110 bps

Courtyard Midtown East

$

285.21

$

299.12

(4.7)

%

94.3

%

93.4

%

0.9

%

$

268.89

$

279.36

(3.7)

%

38.12

%

38.96

%

-84 bps

Fort Lauderdale Westin

$

172.43

$

174.86

(1.4)

%

84.7

%

81.0

%

3.7

%

$

146.01

$

141.58

3.1

%

29.78

%

19.76

%

1002 bps

Frenchman's Reef

$

242.58

$

218.75

10.9

%

87.4

%

89.4

%

(2.0)

%

$

211.98

$

195.47

8.4

%

25.37

%

22.24

%

313 bps

JW Marriott Denver Cherry Creek

$

281.04

$

260.20

8.0

%

81.3

%

84.2

%

(2.9)

%

$

228.51

$

219.17

4.3

%

36.33

%

33.34

%

299 bps

Inn at Key West

$

210.18

$

205.61

2.2

%

90.6

%

87.5

%

3.1

%

$

190.42

$

179.90

5.8

%

50.25

%

54.43

%

-418 bps

Key West Sheraton Suites

$

235.94

$

220.66

6.9

%

94.6

%

88.6

%

6.0

%

$

223.20

$

195.41

14.2

%

40.10

%

35.47

%

463 bps

Lexington Hotel New York

$

265.83

$

259.45

2.5

%

95.3

%

94.0

%

1.3

%

$

253.42

$

243.98

3.9

%

37.55

%

37.96

%

-41 bps

Hilton Minneapolis

$

157.27

$

153.53

2.4

%

83.9

%

85.8

%

(1.9)

%

$

131.95

$

131.68

0.2

%

27.98

%

31.84

%

-386 bps

Orlando Airport Marriott

$

110.28

$

101.68

8.5

%

75.7

%

79.7

%

(4.0)

%

$

83.46

$

81.03

3.0

%

24.67

%

22.16

%

251 bps

Hotel Rex

$

226.06

$

193.88

16.6

%

90.1

%

89.0

%

1.1

%

$

203.76

$

172.64

18.0

%

37.19

%

33.83

%

336 bps

Salt Lake City Marriott

$

150.61

$

141.95

6.1

%

75.1

%

70.2

%

4.9

%

$

113.10

$

99.71

13.4

%

33.52

%

32.34

%

118 bps

Shorebreak

$

227.09

$

201.89

12.5

%

81.5

%

85.3

%

(3.8)

%

$

185.07

$

172.23

7.5

%

32.74

%

27.44

%

530 bps

The Lodge at Sonoma

$

286.72

$

261.79

9.5

%

84.0

%

86.5

%

(2.5)

%

$

240.84

$

226.35

6.4

%

34.27

%

32.33

%

194 bps

Hilton Garden Inn Times Square Central

$

277.41

N/A

N/A

98.5

%

 N/A

N/A

$

273.37

N/A

N/A

49.34

%

 N/A

N/A

Vail Marriott

$

161.62

$

160.65

0.6

%

52.4

%

48.8

%

3.6

%

$

84.68

$

78.40

8.0

%

8.31

%

7.61

%

70 bps

Westin San Diego

$

185.89

$

163.55

13.7

%

86.4

%

87.4

%

(1.0)

%

$

160.61

$

143.02

12.3

%

32.99

%

32.50

%

49 bps

Westin Washington D.C. City Center

$

257.18

$

213.86

20.3

%

87.3

%

83.5

%

3.8

%

$

224.44

$

178.60

25.7

%

43.07

%

38.29

%

478 bps

Renaissance Worthington

$

184.68

$

176.59

4.6

%

71.2

%

70.0

%

1.2

%

$

131.57

$

123.63

6.4

%

37.53

%

34.60

%

293 bps

Pro Forma Total (1)

$

220.97

$

209.21

5.6

%

83.5

%

83.1

%

0.4

%

$

184.50

$

174.13

6.0

%

34.56

%

32.90

%

166 bps

(1)  Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central (282 rooms), which opened for business on September 1, 2014.

 

 

Pro Forma Operating Statistics – Year to Date

ADR

Occupancy

RevPAR

Hotel Adjusted EBITDA Margin

YTD 2015

YTD 2014

B/(W)

YTD 2015

YTD 2014

B/(W)

YTD 2015

YTD 2014

B/(W)

YTD 2015

YTD 2014

B/(W)

Atlanta Alpharetta Marriott

$

165.05

$

165.84

(0.5)

%

73.1

%

70.5

%

2.6

%

$

120.67

$

116.93

3.2

%

35.10

%

35.30

%

-20 bps

Bethesda Marriott Suites

$

177.33

$

167.91

5.6

%

67.1

%

66.3

%

0.8

%

$

118.95

$

111.28

6.9

%

29.62

%

26.97

%

265 bps

Boston Westin

$

234.85

$

221.08

6.2

%

77.3

%

76.1

%

1.2

%

$

181.44

$

168.24

7.8

%

29.63

%

25.90

%

373 bps

Hilton Boston Downtown

$

270.15

$

234.08

15.4

%

79.1

%

88.4

%

(9.3)

%

$

213.69

$

206.96

3.3

%

35.42

%

33.51

%

191 bps

Hilton Burlington

$

149.26

$

144.01

3.6

%

73.9

%

71.4

%

2.5

%

$

110.35

$

102.78

7.4

%

34.03

%

34.73

%

-70 bps

Renaissance Charleston

$

225.84

$

208.13

8.5

%

91.3

%

91.5

%

(0.2)

%

$

206.24

$

190.49

8.3

%

37.35

%

36.19

%

116 bps

Hilton Garden Inn Chelsea

$

205.97

$

210.94

(2.4)

%

92.2

%

94.4

%

(2.2)

%

$

190.00

$

199.08

(4.6)

%

25.14

%

38.26

%

-1312 bps

Chicago Marriott

$

213.90

$

199.04

7.5

%

71.1

%

69.8

%

1.3

%

$

152.18

$

139.02

9.5

%

20.71

%

19.81

%

90 bps

Chicago Conrad

$

213.82

$

210.89

1.4

%

73.4

%

80.3

%

(6.9)

%

$

156.92

$

169.42

(7.4)

%

23.67

%

27.56

%

-389 bps

Courtyard Denver Downtown

$

198.69

$

183.36

8.4

%

78.8

%

82.5

%

(3.7)

%

$

156.66

$

151.19

3.6

%

46.40

%

47.41

%

-101 bps

Courtyard Fifth Avenue

$

252.85

$

260.95

(3.1)

%

87.8

%

87.2

%

0.6

%

$

221.92

$

227.66

(2.5)

%

18.63

%

20.70

%

-207 bps

Courtyard Midtown East

$

249.30

$

261.88

(4.8)

%

89.7

%

90.0

%

(0.3)

%

$

223.70

$

235.57

(5.0)

%

27.59

%

30.56

%

-297 bps

Fort Lauderdale Westin

$

202.13

$

203.68

(0.8)

%

90.7

%

86.1

%

4.6

%

$

183.39

$

175.29

4.6

%

36.66

%

28.43

%

823 bps

Frenchman's Reef

$

287.65

$

273.65

5.1

%

88.5

%

90.3

%

(1.8)

%

$

254.47

$

247.18

2.9

%

29.94

%

29.76

%

18 bps

JW Marriott Denver Cherry Creek

$

270.71

$

248.52

8.9

%

77.8

%

81.7

%

(3.9)

%

$

210.50

$

203.16

3.6

%

32.20

%

31.46

%

74 bps

Inn at Key West

$

247.13

$

229.84

7.5

%

92.4

%

91.4

%

1.0

%

$

228.44

$

210.12

8.7

%

57.33

%

59.21

%

-188 bps

Key West Sheraton Suites

$

273.42

$

257.35

6.2

%

96.7

%

92.6

%

4.1

%

$

264.30

$

238.34

10.9

%

46.17

%

42.54

%

363 bps

Lexington Hotel New York

$

224.30

$

225.90

(0.7)

%

92.2

%

87.5

%

4.7

%

$

206.81

$

197.60

4.7

%

24.86

%

25.57

%

-71 bps

Hilton Minneapolis

$

141.89

$

138.01

2.8

%

75.3

%

71.4

%

3.9

%

$

106.78

$

98.48

8.4

%

19.62

%

21.57

%

-195 bps

Orlando Airport Marriott

$

126.62

$

111.88

13.2

%

82.7

%

85.3

%

(2.6)

%

$

104.73

$

95.39

9.8

%

33.92

%

29.83

%

409 bps

Hotel Rex

$

226.72

$

188.90

20.0

%

84.2

%

83.7

%

0.5

%

$

190.82

$

158.09

20.7

%

33.65

%

29.04

%

461 bps

Salt Lake City Marriott

$

154.92

$

144.34

7.3

%

74.2

%

68.7

%

5.5

%

$

114.92

$

99.21

15.8

%

34.07

%

31.49

%

258 bps

Shorebreak

$

216.55

$

194.15

11.5

%

80.3

%

81.6

%

(1.3)

%

$

173.95

$

158.43

9.8

%

26.81

%

24.57

%

224 bps

The Lodge at Sonoma

$

253.07

$

240.46

5.2

%

79.4

%

72.7

%

6.7

%

$

200.87

$

174.83

14.9

%

25.60

%

22.96

%

264 bps

Hilton Garden Inn Times Square Central

$

230.42

N/A

N/A

96.4

%

 N/A

N/A

$

222.03

N/A

N/A

43.78

%

 N/A

N/A

Vail Marriott

$

307.06

$

298.18

3.0

%

71.8

%

67.7

%

4.1

%

$

220.58

$

201.73

9.3

%

40.77

%

39.42

%

135 bps

Westin San Diego

$

186.76

$

163.72

14.1

%

83.8

%

84.7

%

(0.9)

%

$

156.55

$

138.75

12.8

%

34.24

%

31.52

%

272 bps

Westin Washington D.C. City Center

$

234.49

$

210.80

11.2

%

80.0

%

69.0

%

11.0

%

$

187.68

$

145.39

29.1

%

36.32

%

30.16

%

616 bps

Renaissance Worthington

$

184.05

$

178.05

3.4

%

72.9

%

71.0

%

1.9

%

$

134.25

$

126.44

6.2

%

37.99

%

35.26

%

273 bps

Pro Forma Total (1)

$

212.01

$

201.92

5.0

%

79.8

%

78.4

%

1.4

%

$

169.09

$

158.26

6.8

%

30.67

%

29.13

%

154 bps

(1)  Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central (282 rooms), which opened for business on September 1, 2014.

 

 

Pro Forma Hotel Adjusted EBITDA Reconciliation

Second Quarter 2015

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

4,799

$

1,254

$

381

$

$

$

1,635

Bethesda Marriott Suites

$

4,656

$

(213)

$

367

$

$

1,541

$

1,695

Boston Westin

$

26,231

$

7,422

$

2,210

$

$

3

$

9,635

Hilton Boston Downtown

$

10,493

$

3,624

$

1,152

$

$

42

$

4,818

Hilton Burlington

$

4,308

$

1,327

$

454

$

$

23

$

1,804

Renaissance Charleston

$

4,026

$

1,366

$

393

$

$

(32)

$

1,727

Hilton Garden Inn Chelsea

$

3,740

$

924

$

362

$

$

$

1,286

Chicago Marriott

$

32,040

$

5,278

$

2,545

$

3,119

$

(397)

$

10,545

Chicago Conrad

$

8,039

$

2,289

$

738

$

$

$

3,027

Courtyard Denver Downtown

$

2,951

$

1,174

$

285

$

$

$

1,459

Courtyard Fifth Avenue

$

4,507

$

60

$

448

$

828

$

52

$

1,388

Courtyard Midtown East

$

8,041

$

1,373

$

684

$

1,008

$

$

3,065

Fort Lauderdale Westin

$

10,560

$

2,016

$

1,129

$

$

$

3,145

Frenchman's Reef

$

17,234

$

2,390

$

1,608

$

374

$

$

4,372

JW Marriott Denver Cherry Creek

$

6,630

$

1,332

$

523

$

554

$

$

2,409

Inn at Key West

$

2,177

$

920

$

174

$

$

$

1,094

Key West Sheraton Suites

$

4,566

$

1,318

$

513

$

$

$

1,831

Lexington Hotel New York

$

17,936

$

2,080

$

3,356

$

1,293

$

6

$

6,735

Minneapolis Hilton

$

14,838

$

705

$

2,357

$

1,291

$

(202)

$

4,151

Orlando Airport Marriott

$

6,031

$

110

$

577

$

801

$

$

1,488

Hotel Rex

$

1,952

$

584

$

142

$

$

$

726

Salt Lake City Marriott

$

7,208

$

983

$

758

$

675

$

$

2,416

Shorebreak

$

3,696

$

703

$

522

$

$

(15)

$

1,210

The Lodge at Sonoma

$

6,901

$

1,684

$

377

$

304

$

$

2,365

Hilton Garden Inn Times Square Central

$

7,124

$

2,738

$

777

$

$

$

3,515

Vail Marriott

$

4,679

$

(108)

$

497

$

$

$

389

Westin San Diego

$

8,520

$

1,058

$

1,018

$

689

$

46

$

2,811

Westin Washington D.C. City Center

$

9,971

$

2,348

$

1,157

$

743

$

47

$

4,295

Renaissance Worthington

$

10,447

$

2,559

$

585

$

775

$

2

$

3,921

Pro Forma Total (2)

$

247,177

$

46,560

$

25,312

$

12,454

$

1,116

$

85,436

  (1)   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.

  (2)   Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, which opened for business on September 1, 2014.

 

   

Pro Forma Hotel Adjusted EBITDA Reconciliation

Second Quarter 2014

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

4,581

$

1,219

$

407

$

$

$

1,626

Bethesda Marriott Suites

$

4,413

$

(414)

$

360

$

$

1,541

$

1,487

Boston Westin

$

25,514

$

6,611

$

2,191

$

$

2

$

8,804

Hilton Boston Downtown

$

9,305

$

2,833

$

1,062

$

$

42

$

3,937

Hilton Burlington

$

3,961

$

1,225

$

422

$

$

23

$

1,670

Renaissance Charleston

$

4,075

$

1,300

$

408

$

$

(32)

$

1,676

Hilton Garden Inn Chelsea

$

3,766

$

1,229

$

492

$

$

$

1,721

Chicago Marriott

$

29,534

$

2,820

$

3,255

$

3,192

$

(397)

$

8,870

Chicago Conrad

$

8,188

$

2,322

$

965

$

$

$

3,287

Courtyard Denver Downtown

$

2,754

$

1,137

$

274

$

$

$

1,411

Courtyard Fifth Avenue

$

4,543

$

120

$

439

$

838

$

52

$

1,449

Courtyard Midtown East

$

8,318

$

1,585

$

685

$

971

$

$

3,241

Fort Lauderdale Westin

$

10,894

$

1,058

$

1,095

$

$

$

2,153

Frenchman's Reef

$

16,246

$

1,240

$

1,563

$

810

$

$

3,613

JW Marriott Denver Cherry Creek

$

6,032

$

922

$

517

$

572

$

$

2,011

Inn at Key West

$

1,962

$

906

$

162

$

$

$

1,068

Key West Sheraton Suites

$

3,913

$

875

$

513

$

$

$

1,388

Lexington Hotel New York

$

17,124

$

1,473

$

3,265

$

1,732

$

31

$

6,501

Minneapolis Hilton

$

14,833

$

1,108

$

2,423

$

1,321

$

(129)

$

4,723

Orlando Airport Marriott

$

5,546

$

(184)

$

599

$

814

$

$

1,229

Hotel Rex

$

1,673

$

372

$

194

$

$

$

566

Salt Lake City Marriott

$

6,759

$

750

$

745

$

691

$

$

2,186

Shorebreak

$

3,648

$

536

$

465

$

$

$

1,001

The Lodge at Sonoma

$

6,517

$

1,415

$

382

$

310

$

$

2,107

Vail Marriott

$

4,101

$

(201)

$

513

$

$

$

312

Westin San Diego

$

7,446

$

576

$

1,097

$

701

$

46

$

2,420

Westin Washington D.C. City Center

$

8,093

$

1,042

$

1,249

$

761

$

47

$

3,099

Renaissance Worthington

$

9,557

$

1,924

$

643

$

738

$

2

$

3,307

Pro Forma Total (2)

$

233,296

$

35,799

$

26,385

$

13,451

$

1,228

$

76,755

(1)     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.

(2)      Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, which opened for business on September 1, 2014.

 

 

Pro Forma Hotel Adjusted EBITDA Reconciliation

Year to Date 2015

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

9,663

$

2,618

$

774

$

$

$

3,392

Bethesda Marriott Suites

$

7,981

$

(1,474)

$

755

$

$

3,083

$

2,364

Boston Westin

$

46,325

$

9,268

$

4,456

$

$

4

$

13,728

Hilton Boston Downtown

$

15,753

$

3,259

$

2,237

$

$

84

$

5,580

Hilton Burlington

$

6,938

$

1,410

$

906

$

$

45

$

2,361

Renaissance Charleston

$

7,176

$

1,959

$

784

$

$

(63)

$

2,680

Hilton Garden Inn Chelsea

$

5,995

$

783

$

724

$

$

$

1,507

Chicago Marriott

$

48,139

$

401

$

4,108

$

6,255

$

(795)

$

9,969

Chicago Conrad

$

12,097

$

1,257

$

1,606

$

$

$

2,863

Courtyard Denver Downtown

$

5,379

$

1,929

$

567

$

$

$

2,496

Courtyard Fifth Avenue

$

7,500

$

(1,252)

$

897

$

1,649

$

103

$

1,397

Courtyard Midtown East

$

13,343

$

306

$

1,369

$

2,006

$

$

3,681

Fort Lauderdale Westin

$

25,715

$

7,171

$

2,256

$

$

$

9,427

Frenchman's Reef

$

38,304

$

7,126

$

3,178

$

1,164

$

$

11,468

JW Marriott Denver Cherry Creek

$

12,268

$

1,786

$

1,052

$

1,112

$

$

3,950

Inn at Key West

$

5,036

$

2,541

$

346

$

$

$

2,887

Key West Sheraton Suites

$

10,423

$

3,786

$

1,026

$

$

$

4,812

Lexington Hotel New York

$

29,259

$

(2,111)

$

6,685

$

2,663

$

37

$

7,274

Minneapolis Hilton

$

24,607

$

(2,048)

$

4,703

$

2,576

$

(404)

$

4,827

Orlando Airport Marriott

$

14,714

$

2,256

$

1,138

$

1,597

$

$

4,991

Hotel Rex

$

3,667

$

950

$

284

$

$

$

1,234

Salt Lake City Marriott

$

14,643

$

2,148

$

1,495

$

1,346

$

$

4,989

Shorebreak

$

6,950

$

1,136

$

756

$

$

(29)

$

1,863

The Lodge at Sonoma

$

12,354

$

1,803

$

753

$

607

$

$

3,163

Hilton Garden Inn Times Square Central

$

11,556

$

3,505

$

1,554

$

$

$

5,059

Vail Marriott

$

19,260

$

6,871

$

982

$

$

$

7,853

Westin San Diego

$

17,569

$

2,518

$

2,033

$

1,373

$

91

$

6,015

Westin Washington D.C. City Center

$

16,822

$

2,185

$

2,347

$

1,483

$

95

$

6,110

Renaissance Worthington

$

20,872

$

5,266

$

1,165

$

1,495

$

4

$

7,930

Pro Forma Total (2)

$

458,752

$

63,848

$

49,382

$

25,326

$

2,255

$

140,700

  (1)   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.

 (2)   Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, which opened for business on September 1, 2014.

    

 

 

Pro Forma Hotel Adjusted EBITDA Reconciliation

Year to Date 2014

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

9,164

$

2,425

$

810

$

$

$

3,235

Bethesda Marriott Suites

$

7,564

$

(1,774)

$

723

$

$

3,091

$

2,040

Boston Westin

$

41,898

$

6,460

$

4,386

$

$

4

$

10,850

Hilton Boston Downtown

$

14,764

$

2,690

$

2,173

$

$

84

$

4,947

Hilton Burlington

$

6,374

$

1,296

$

873

$

$

45

$

2,214

Renaissance Charleston

$

7,036

$

1,803

$

806

$

$

(63)

$

2,546

Hilton Garden Inn Chelsea

$

6,302

$

1,428

$

983

$

$

$

2,411

Chicago Marriott

$

45,991

$

(2,830)

$

6,370

$

6,364

$

(794)

$

9,110

Chicago Conrad

$

12,751

$

1,599

$

1,915

$

$

$

3,514

Courtyard Denver Downtown

$

5,161

$

1,902

$

545

$

$

$

2,447

Courtyard Fifth Avenue

$

7,662

$

(1,056)

$

869

$

1,670

$

103

$

1,586

Courtyard Midtown East

$

13,987

$

954

$

1,375

$

1,945

$

$

4,274

Fort Lauderdale Westin

$

25,589

$

5,086

$

2,190

$

$

$

7,276

Frenchman's Reef

$

38,594

$

6,794

$

3,077

$

1,615

$

$

11,486

JW Marriott Denver Cherry Creek

$

11,249

$

1,359

$

1,031

$

1,149

$

$

3,539

Inn at Key West

$

4,469

$

2,322

$

324

$

$

$

2,646

Key West Sheraton Suites

$

9,259

$

2,913

$

1,026

$

$

$

3,939

Lexington Hotel New York

$

27,787

$

(2,943)

$

6,526

$

3,460

$

63

$

7,106

Minneapolis Hilton

$

23,474

$

(1,977)

$

4,663

$

2,636

$

(258)

$

5,064

Orlando Airport Marriott

$

12,507

$

883

$

1,226

$

1,622

$

$

3,731

Hotel Rex

$

3,096

$

484

$

415

$

$

$

899

Salt Lake City Marriott

$

13,753

$

1,449

$

1,505

$

1,377

$

$

4,331

Shorebreak

$

6,789

$

738

$

930

$

$

$

1,668

The Lodge at Sonoma

$

10,321

$

988

$

764

$

618

$

$

2,370

Vail Marriott

$

17,588

$

5,894

$

1,040

$

$

$

6,934

Westin San Diego

$

14,719

$

966

$

2,185

$

1,398

$

91

$

4,640

Westin Washington D.C. City Center

$

13,350

$

48

$

2,364

$

1,519

$

95

$

4,026

Renaissance Worthington

$

19,067

$

3,959

$

1,288

$

1,472

$

4

$

6,723

Pro Forma Total (2)

$

430,265

$

43,860

$

52,382

$

26,845

$

2,465

$

125,317

(1)     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.

(2)       Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central, which opened for business on September 1, 2014.

 

 

 

SOURCE DiamondRock Hospitality Company



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