DiamondRock Hospitality Company Reports Third Quarter 2015 Results

Issues Updated 2015 Outlook

Announces $150 Million Share Repurchase Program

Nov 05, 2015, 16:05 ET from DiamondRock Hospitality Company

BETHESDA, Md., Nov. 5, 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 September 30, 2015.

Third Quarter 2015 Highlights

  • Pro Forma RevPAR: Pro Forma RevPAR was $176.92, an increase of 2.2% from the comparable period of 2014.
  • Pro Forma Hotel Adjusted EBITDA Margin: Pro Forma Hotel Adjusted EBITDA margin was 31.49%, an increase of 39 basis points from 2014.
  • Pro Forma Hotel Adjusted EBITDA: Pro Forma Hotel Adjusted EBITDA was $73.8 million, an increase of 4.3% from 2014.
  • Adjusted EBITDA: Adjusted EBITDA was $69.3 million, an increase of 3.7% from 2014.
  • Adjusted FFO: Adjusted FFO was $52.3 million and Adjusted FFO per diluted share was $0.26.
  • 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%.
  • Hotel Brand Conversion:  On September 1, 2015, the hotel formerly known as the Conrad Chicago converted to Starwood's Luxury Collection as The Gwen, a Luxury Collection Hotel.
  • Dividends: The Company declared a dividend of $0.125 per share during the third quarter, which was paid on October 13, 2015.

Recent Developments

  • Share Repurchase Program: On November 4, 2015, the Company's Board of Directors authorized a $150 million share repurchase program.
  • Westin Boston Financing: On October 27, 2015, the Company entered into a new $205 million mortgage loan secured by the Westin Boston Waterfront Hotel. The mortgage loan has a term of 10 years and bears interest at a fixed rate of 4.36%.
  • Orlando Loan Prepayment:  On October 9, 2015, the Company prepaid the $55.3 million mortgage loan secured by the Orlando Airport Marriott.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "In a challenging environment during the third quarter our asset management shined with our portfolio, achieving 74% profit flow-through and 39 basis points of Hotel Adjusted EBITDA margin growth on modest revenue growth. Additionally, we also successfully completed our strategic objective to address near-term debt maturities and lower borrowing costs. Our 2015 financing activity will result in annual interest expense savings of approximately $8 million."

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 from January 1, 2015 to August 31, 2015, 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 September 30, 2015, the Company reported the following:

Third Quarter

2015

2014

Change

Pro Forma ADR

$213.93

$207.26

3.2

%

Pro Forma Occupancy

82.7

%

83.5

%

-0.8 percentage points

Pro Forma RevPAR

$176.92

$173.07

2.2

%

Pro Forma Revenues

$234.4 million

$227.5 million

3.0

%

Pro Forma Hotel Adjusted EBITDA Margin

31.49

%

31.10

%

39 basis points

Adjusted EBITDA

$69.3 million

$66.8 million

$2.5 million

Adjusted FFO

$52.3 million

$48.3 million

$4.0 million

Adjusted FFO per diluted share

$0.26

$0.25

$0.01

The Company's operating results for the third quarter were negatively impacted by several items, as follows:

  • The disruption during the period leading up to and after the conversion of the Conrad Chicago to The Gwen, a Luxury Collection Hotel, was approximately $1.0 million higher than the Company had factored into its Adjusted EBITDA guidance. The disruption reduced the Company's Pro Forma RevPAR growth by approximately 80 basis points and Pro Forma Hotel Adjusted EBITDA margin growth by approximately 50 basis points. The Company expects the disruption to continue in the fourth quarter, and this is incorporated into its updated guidance. Notwithstanding the incremental conversion disruption, the Company continues to expect the hotel to meet its multi-year underwriting.
  • The Company received a new property tax assessment for the Chicago Marriott, which was significantly higher than the Company forecasted. The increased assessment resulted in property taxes during the third quarter that were approximately $1.1 million above forecast. The property tax adjustment reduced the Company's Pro Forma Hotel Adjusted EBITDA margin growth by approximately 47 basis points. The Company is currently appealing the property tax assessment.
  • The Company received a 15-year extension of the income tax agreement with the U.S. Virgin Islands (USVI) related to the Frenchman's Reef & Morning Star Marriott Beach Resort early in the fourth quarter. The Company's third quarter income tax provision was approximately $1.1 million above prior guidance, which assumed the extension would be received during the third quarter. Although the extension is retroactive to February, the Company is required to record the adjustment to its income tax provision to reflect the reduced tax rate during the fourth quarter.

For the nine months ended September 30, 2015, the Company reported the following:

Year To Date

2015

2014

Change

Pro Forma ADR

$212.58

$203.81

4.3

%

Pro Forma Occupancy

80.8

%

80.1

%

0.7 percentage points

Pro Forma RevPAR

$171.75

$163.28

5.2

%

Pro Forma Revenues

$693.1 million

$657.8 million

5.4%

Pro Forma Hotel Adjusted EBITDA Margin

30.95

%

29.81

%

114 basis points

Adjusted EBITDA

$198.9 million

$175.0 million

$23.9 million

Adjusted FFO

$151.5 million

$129.7 million

$21.8 million

Adjusted FFO per diluted share

$0.75

$0.66

$0.09

Hotel Financing Activity

On July 1, 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 with a fixed interest rate of 6.47%.

On October 9, 2015, the Company prepaid the $55.3 million mortgage loan secured by the Orlando Airport Marriott. The prepayment will save approximately $0.7 million of interest expense during the fourth quarter, which was factored into the Company's prior guidance.

On October 27, 2015, the Company entered into a new $205 million mortgage loan secured by the Westin Boston Waterfront Hotel. The new loan has a term of 10 years, a fixed interest rate of 4.36% and will amortize on a 30-year schedule. The proceeds from the loan will be utilized to prepay the approximately $200 million mortgage loan secured by the Chicago Marriott in early 2016. The lower interest rate on the new loan is expected to save the Company over $3.0 million in annual interest expense beginning in 2016.

Capital Expenditures

The Company spent approximately $46.1 million on capital improvements during the nine months ended September 30, 2015, which includes the following significant projects::

  • 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 Company is also in the planning stages of additional significant projects, which include the following:

  • The Lodge at Sonoma: The Company expects to renovate the guest rooms at the hotel during the seasonally slow months during 2016 and 2017.
  • The Gwen, a Luxury Collection: The Company rebranded the Conrad Chicago to Starwood's Luxury Collection on September 1, 2015. The renovation work associated with the brand conversion is expected to cost approximately $25 million and take place over the next two seasonally slow winter seasons with no material disruption.

Balance Sheet

As of September 30, 2015, the Company had $62.0 million of unrestricted cash on hand and approximately $1.1 billion of total debt, which consisted of property-specific mortgage debt and $25.0 million outstanding on the Company's $200.0 million senior unsecured credit facility.  There are currently no outstanding borrowings 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 third quarter. The Company currently has $128.3 million remaining under the ATM program. The Company does not expect to utilize the program at this time, but believes it is appropriate to have the program in place.

Share Repurchase Program

On November 4, 2015, the Company's Board of Directors authorized a $150 million share repurchase program. Repurchases under this program will be made in open market or privately negotiated transactions from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The Company has not repurchased any shares of its common stock since the program started.

Dividends

The Company's Board of Directors declared a quarterly dividend of $0.125 per share to stockholders of record as of September 30, 2015.  The dividend was paid on October 13, 2015.

Outlook and Guidance

The Company has provided full year and fourth 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 updating its full year 2015 guidance to incorporate the disruption related to The Gwen conversion, as well as the impact of the higher than expected property taxes at the Chicago Marriott.

Previous Guidance

Revised Guidance

Metric

Low End

High End

Low End

High End

Pro Forma RevPAR Growth

6 percent

7 percent

4.25 percent

5.0 percent

Adjusted EBITDA

$266.5 million

$276.5 million

$264 million

$269 million

Adjusted FFO

$202 million

$208 million

$201 million

$205 million

Adjusted FFO per share

(based on 201.2 million shares)

$1.00 per share

$1.03 per share

$1.00 per share

$1.02 per share

The full year guidance range above implies Pro Forma Hotel Adjusted EBITDA margin growth above 100 basis points and reflects income tax expense of $10.4 million to $11.9 million, interest expense of approximately $52 million and corporate expenses of approximately $24 million.

Selected Quarterly Pro Forma Operating Information

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

$

215.07

$

206.58

Occupancy

73.5

%

83.1

%

83.5

%

75.9

%

79.0

%

RevPAR

$

142.22

$

174.13

$

173.07

$

163.19

$

163.26

Revenues (in thousands)

$

196,962

$

233,298

$

227,547

$

224,114

$

881,921

Hotel Adjusted EBITDA (in thousands)

$

48,562

$

76,755

$

70,771

$

67,493

$

263,581

        % of full Year

18.4

%

29.1

%

26.8

%

25.7

%

100.0

%

Hotel Adjusted EBITDA Margin

24.66

%

32.90

%

31.10

%

30.12

%

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 third quarter results on Friday, November 6, 2015, at 9:00 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 38457420. 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; 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)

September 30, 2015

December 31, 2014

ASSETS

(unaudited)

Property and equipment, net

$

2,885,190

$

2,764,393

Deferred financing costs, net

7,574

8,023

Restricted cash

55,656

74,730

Due from hotel managers

102,222

79,827

Favorable lease assets, net

24,057

34,274

Prepaid and other assets (1)

53,671

52,739

Cash and cash equivalents

61,977

144,365

Total assets

$

3,190,347

$

3,158,351

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Mortgage debt

$

1,031,198

$

1,038,330

Senior unsecured credit facility

25,000

Total debt

1,056,198

1,038,330

Deferred income related to key money, net

20,722

21,561

Unfavorable contract liabilities, net

75,135

76,220

Due to hotel managers

68,399

59,169

Dividends declared and unpaid

25,540

20,922

Accounts payable and accrued expenses (2)

121,600

113,162

Total other liabilities

311,396

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;          200,741,777 and 199,964,041 shares issued and outstanding at          September 30, 2015 and December 31, 2014, respectively

2,007

2,000

Additional paid-in capital

2,055,467

2,045,755

Accumulated deficit

(234,721)

(218,768)

Total stockholders' equity

1,822,753

1,828,987

Total liabilities and stockholders' equity

$

3,190,347

$

3,158,351

(1) Includes $40.5 million of deferred tax assets, $8.5 million of prepaid expenses and $4.7 million of other assets as of September 30, 2015.

(2)  Includes $68.8 million of deferred ground rent, $17.2 million of deferred tax liabilities, $12.5 million of accrued property taxes, $5.2 million of accrued capital expenditures and $17.9 million of other accrued liabilities as of September 30, 2015.

 

 

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Revenues:

Rooms

$

178,529

$

171,047

$

504,729

$

465,871

Food and beverage

47,256

45,504

155,662

146,297

Other

12,717

12,666

36,801

37,067

Total revenues

238,502

229,217

697,192

649,235

Operating Expenses:

Rooms

42,415

42,534

122,872

121,783

Food and beverage

32,143

32,662

103,044

101,855

Management fees

7,562

8,330

22,665

22,083

Other hotel expenses

83,358

75,180

237,410

220,335

Depreciation and amortization

25,107

25,327

75,018

75,576

Impairment losses

10,461

Hotel acquisition costs

453

1,198

945

1,279

Corporate expenses

6,048

6,368

17,790

15,878

Gain on insurance proceeds

(554)

(1,825)

Gain on litigation settlement, net

(10,999)

Total operating expenses, net

197,086

191,045

590,205

545,965

Operating profit

41,416

38,172

106,987

103,270

Interest income

(35)

(156)

(185)

(2,766)

Interest expense

12,907

14,691

38,963

43,816

Other income, net

(91)

(50)

(295)

(50)

Loss (gain) on sale of hotel property

40

(1,251)

Gain on hotel property acquisition

(23,894)

(23,894)

Gain on prepayment of note receivable

(13,550)

Total other expenses (income), net

12,781

(9,369)

38,483

2,305

Income before income taxes

28,635

47,541

68,504

100,965

Income tax expense

(4,171)

(3,733)

(8,576)

(1,203)

Net income

$

24,464

$

43,808

$

59,928

$

99,762

Earnings per share:

Basic earnings per share

$

0.12

$

0.22

$

0.30

$

0.51

Diluted earnings per share

$

0.12

$

0.22

$

0.30

$

0.51

Weighted-average number of common shares outstanding:

Basic

200,852,072

195,796,772

200,776,641

195,733,185

Diluted

201,167,659

196,434,773

201,124,091

196,341,317

 

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, lease preparation 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 September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income

$

24,464

$

43,808

$

59,928

$

99,762

Interest expense

12,907

14,691

38,963

43,816

Income tax expense

4,171

3,733

8,576

1,203

Real estate related depreciation and amortization

25,107

25,327

75,018

75,576

EBITDA

66,649

87,559

182,485

220,357

Non-cash ground rent

1,467

1,588

4,454

4,880

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

(407)

(353)

(1,134)

(1,058)

Impairment losses

10,461

Gain on insurance proceeds

(554)

(1,825)

Gain on hotel property acquisition

(23,894)

(23,894)

Loss on early extinguishment of debt

61

61

Loss (gain) on sale of hotel property

40

(1,251)

Gain on litigation settlement (1)

(10,999)

Gain on prepayment of note receivable

(13,550)

Reversal of previously recognized Allerton income

(453)

Hotel acquisition costs

453

1,198

945

1,279

Hotel manager transition and pre-opening costs (2)

754

381

1,287

667

Severance costs (3)

428

788

428

788

Adjusted EBITDA

$

69,344

$

66,814

$

198,926

$

175,002

(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.

(3)

Amounts recognized in 2015 are classified as other hotel expenses on the consolidated statements of operations.  Amounts recognized in 2014 are classified as corporate expenses on the consolidated statements of operations.

 

Full Year 2015 Guidance

Low End

High End

Net income

$

82,679

$

86,679

Interest expense

52,500

52,000

Income tax expense

10,400

11,900

Real estate related depreciation and amortization

100,000

100,000

EBITDA

245,579

250,579

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

Severance costs

428

428

Lease preparation costs

1,000

1,000

Hotel acquisition costs

945

945

Hotel manager transition and pre-opening costs

1,287

1,287

Adjusted EBITDA

$

264,000

$

269,000

 

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

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income

$

24,464

$

43,808

$

59,928

$

99,762

Real estate related depreciation and amortization

25,107

25,327

75,018

75,576

Loss (gain) on sale of hotel property

40

(1,251)

Impairment losses

10,461

FFO

49,571

69,175

145,407

174,087

Non-cash ground rent

1,467

1,588

4,454

4,880

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

(407)

(353)

(1,134)

(1,058)

Gain on insurance proceeds

(554)

(1,825)

Gain on hotel property acquisition

(23,894)

(23,894)

Loss on early extinguishment of debt

61

61

Gain on litigation settlement (1)

(10,999)

Gain on prepayment of note receivable

(13,550)

Hotel acquisition costs

453

1,198

945

1,279

Hotel manager transition and pre-opening costs (2)

754

381

1,287

667

Reversal of previously recognized Allerton income

(453)

Severance costs (3)

428

788

428

788

Fair value adjustments to debt instruments

49

(90)

115

(265)

Adjusted FFO

$

52,315

$

48,300

$

151,502

$

129,718

Adjusted FFO per diluted share

$

0.26

$

0.25

$

0.75

$

0.66

(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.

(3)      

Amounts recognized in 2015 are classified as other hotel expenses on the consolidated statements of operations.  Amounts recognized in 2014 are classified as corporate expenses on the consolidated statements of operations.

 

Full Year 2015 Guidance

Low End

High End

Net income

$

82,679

$

86,679

Real estate related depreciation and amortization

100,000

100,000

Impairment losses

10,461

10,461

FFO

193,140

197,140

Non-cash ground rent

5,700

5,700

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

(1,400)

(1,400)

Severance costs

428

428

Lease preparation costs

1,000

1,000

Hotel acquisition costs

945

945

Hotel manager transition and pre-opening costs

1,287

1,287

Fair value adjustments to debt instruments

(100)

(100)

Adjusted FFO

$

201,000

$

205,000

Adjusted FFO per diluted share

$

1.00

$

1.02

 

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 September 30,

Nine Months Ended September 30,

2015

2014

% Change

2015

2014

% Change

ADR

$

213.93

$

207.26

3.2

%

$

212.58

$

203.81

4.3

%

Occupancy

82.7

%

83.5

%

(0.8)

%

80.8

%

80.1

%

0.7

%

RevPAR

$

176.92

$

173.07

2.2

%

$

171.75

$

163.28

5.2

%

Revenues:

Rooms

$

174,467

$

170,034

2.6

%

$

498,929

$

473,302

5.4

%

Food and beverage

47,256

45,361

4.2

%

156,980

148,576

5.7

%

Other

12,662

12,154

4.2

%

37,148

35,928

3.4

%

Total revenues

$

234,385

$

227,549

3.0

%

$

693,057

$

657,806

5.4

%

Operating Expenses:

Rooms departmental expenses

$

41,543

$

41,616

(0.2)

%

$

121,490

$

119,571

1.6

%

Food and beverage departmental expenses

32,142

32,496

(1.1)

%

104,045

102,333

1.7

%

Other direct departmental

4,362

4,635

(5.9)

%

13,107

14,576

(10.1)

%

General and administrative

18,297

17,423

5.0

%

53,884

50,772

6.1

%

Utilities

7,077

7,374

(4.0)

%

20,933

21,381

(2.1)

%

Repairs and maintenance

9,279

9,338

(0.6)

%

27,380

27,750

(1.3)

%

Sales and marketing

16,286

15,294

6.5

%

48,363

44,232

9.3

%

Franchise fees

5,644

4,671

20.8

%

15,545

12,490

24.5

%

Base management fees

5,795

5,664

2.3

%

17,242

16,437

4.9

%

Incentive management fees

1,610

2,495

(35.5)

%

5,360

5,874

(8.8)

%

Property taxes

12,922

10,318

25.2

%

34,338

30,159

13.9

%

Ground rent

3,797

3,759

1.0

%

11,375

11,255

1.1

%

Other fixed expenses

2,884

2,926

(1.4)

%

8,819

8,582

2.8

%

Severance costs

428

100.0

%

428

100.0

%

Hotel manager transition and pre-opening costs

754

381

97.9

%

1,287

667

93.0

%

Total hotel operating expenses

162,820

158,390

2.8

%

483,596

466,079

3.8

%

Hotel EBITDA

$

71,565

$

69,159

3.5

%

$

209,461

$

191,727

9.2

%

Non-cash ground rent

1,479

1,588

(6.9)

%

4,466

4,757

(6.1)

%

Non-cash amortization of unfavorable contract liabilities

(407)

(353)

15.3

%

(1,139)

(1,058)

7.7

%

Severance costs

428

100.0

%

428

100.0

%

Hotel manager transition and pre-opening costs (2)

754

381

97.9

%

1,287

667

93.0

%

Hotel Adjusted EBITDA

$

73,819

$

70,775

4.3

%

$

214,503

$

196,093

9.4

%

(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 from January 1, 2015 to August 31, 2015, 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 September 30, 2015

(in thousands)

Enterprise Value

Common equity capitalization (at September 30, 2015 closing price of $11.05/share)

$

2,224,694

Consolidated debt

1,056,198

Cash and cash equivalents

(61,977)

Total enterprise value

$

3,218,915

Share Reconciliation

Common shares outstanding

200,742

Unvested restricted stock held by management and employees

475

Share grants under deferred compensation plan held by directors

113

Combined shares outstanding

201,330

 

Debt Summary as of November 5, 2015

(dollars in thousands)

Property

Interest Rate

Term

Outstanding Principal

Maturity

Chicago Marriott Downtown Magnificent Mile (1)

5.98%

Fixed

202,297

April 2016

Courtyard Manhattan / Fifth Avenue

6.48%

Fixed

48,420

June 2016

Marriott Salt Lake City Downtown

4.25%

Fixed

60,121

November 2020

Hilton Minneapolis

5.46%

Fixed

90,851

May 2021

Westin Washington D.C. City Center

3.99%

Fixed

69,090

January 2023

The Lodge at Sonoma, a Renaissance Resort & Spa

3.96%

Fixed

29,583

April 2023

Westin San Diego

3.94%

Fixed

67,850

April 2023

Courtyard Manhattan / Midtown East

4.40%

Fixed

86,000

August 2024

Renaissance Worthington

3.66%

Fixed

85,000

May 2025

JW Marriott Denver at Cherry Creek

4.33%

Fixed

65,000

July 2025

Westin Boston Waterfront Hotel

4.36%

Fixed

205,000

November 2025

Total Weighted-Average Interest Fixed Rate Debt

4.82%

$

1,009,212

Lexington Hotel New York

LIBOR + 2.25

Variable

170,368

October 2017 (2)

Total mortgage debt

$

1,179,580

Senior unsecured credit facility

LIBOR + 1.75

Variable

January 2017 (3)

Total debt

$

1,179,580

Total Weighted-Average Interest Rate excluding Chicago Marriott Downtown Magnificent Mile

4.16%

(1)

The lender was notified in October 2015 that the loan will be prepaid in January 2016, three months prior to the scheduled maturity date.

(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 – Third Quarter

ADR

Occupancy

RevPAR

Hotel Adjusted EBITDA Margin

3Q 2015

3Q 2014

B/(W)

3Q 2015

3Q 2014

B/(W)

3Q 2015

3Q 2014

B/(W)

3Q 2015

3Q 2014

B/(W)

Atlanta Alpharetta Marriott

$

162.26

$

162.47

(0.1)

%

78.4

%

72.9

%

5.5

%

$

127.24

$

118.52

7.4

%

38.98

%

35.25

%

373 bps

Bethesda Marriott Suites

$

153.53

$

157.01

(2.2)

%

67.2

%

64.9

%

2.3

%

$

103.14

$

101.85

1.3

%

19.89

%

18.68

%

121 bps

Boston Westin

$

248.93

$

232.34

7.1

%

87.7

%

87.2

%

0.5

%

$

218.41

$

202.52

7.8

%

34.24

%

31.74

%

250 bps

Hilton Boston Downtown

$

312.36

$

287.81

8.5

%

95.4

%

95.7

%

(0.3)

%

$

298.02

$

275.46

8.2

%

45.54

%

41.93

%

361 bps

Hilton Burlington

$

212.95

$

209.97

1.4

%

88.1

%

88.5

%

(0.4)

%

$

187.53

$

185.80

0.9

%

49.30

%

50.21

%

-91 bps

Renaissance Charleston

$

203.53

$

197.16

3.2

%

89.2

%

90.0

%

(0.8)

%

$

181.55

$

177.36

2.4

%

33.89

%

30.52

%

337 bps

Hilton Garden Inn Chelsea

$

250.83

$

233.09

7.6

%

98.7

%

94.7

%

4.0

%

$

247.68

$

220.68

12.2

%

40.50

%

37.56

%

294 bps

Chicago Marriott

$

227.50

$

217.76

4.5

%

84.2

%

87.1

%

(2.9)

%

$

191.66

$

189.64

1.1

%

28.68

%

28.81

%

-13 bps

Chicago Gwen

$

233.64

$

243.90

(4.2)

%

77.0

%

89.4

%

(12.4)

%

$

179.79

$

217.94

(17.5)

%

30.92

%

44.26

%

-1334 bps

Courtyard Denver Downtown

$

215.61

$

196.97

9.5

%

84.6

%

88.1

%

(3.5)

%

$

182.34

$

173.48

5.1

%

50.11

%

50.03

%

8 bps

Courtyard Fifth Avenue

$

278.40

$

291.18

(4.4)

%

90.7

%

93.2

%

(2.5)

%

$

252.47

$

271.29

(6.9)

%

25.57

%

30.30

%

-473 bps

Courtyard Midtown East

$

282.99

$

299.15

(5.4)

%

89.5

%

92.6

%

(3.1)

%

$

253.32

$

276.90

(8.5)

%

33.48

%

34.88

%

-140 bps

Fort Lauderdale Westin

$

136.22

$

132.93

2.5

%

77.8

%

78.0

%

(0.2)

%

$

106.00

$

103.64

2.3

%

20.11

%

2.62

%

1749 bps

Frenchman's Reef

$

181.61

$

182.89

(0.7)

%

75.7

%

79.3

%

(3.6)

%

$

137.56

$

145.09

(5.2)

%

7.97

%

8.00

%

-3 bps

JW Marriott Denver Cherry Creek

$

272.60

$

265.91

2.5

%

87.4

%

86.4

%

1.0

%

$

238.21

$

229.72

3.7

%

36.53

%

35.28

%

125 bps

Inn at Key West

$

179.25

$

167.40

7.1

%

81.0

%

84.5

%

(3.5)

%

$

145.25

$

141.48

2.7

%

37.21

%

38.87

%

-166 bps

Key West Sheraton Suites

$

221.65

$

199.11

11.3

%

80.2

%

78.7

%

1.5

%

$

177.68

$

156.75

13.4

%

34.20

%

25.90

%

830 bps

Lexington Hotel New York

$

266.34

$

251.18

6.0

%

94.4

%

97.4

%

(3.0)

%

$

251.30

$

244.59

2.7

%

29.07

%

37.88

%

-881 bps

Hilton Minneapolis

$

157.21

$

162.15

(3.0)

%

82.2

%

86.0

%

(3.8)

%

$

129.21

$

139.37

(7.3)

%

29.58

%

33.63

%

-405 bps

Orlando Airport Marriott

$

102.71

$

96.30

6.7

%

70.2

%

65.6

%

4.6

%

$

72.12

$

63.18

14.2

%

16.94

%

5.53

%

1141 bps

Hotel Rex

$

260.95

$

250.10

4.3

%

87.2

%

90.5

%

(3.3)

%

$

227.64

$

226.27

0.6

%

42.26

%

44.64

%

-238 bps

Salt Lake City Marriott

$

164.54

$

152.40

8.0

%

73.0

%

71.9

%

1.1

%

$

120.13

$

109.52

9.7

%

35.13

%

33.44

%

169 bps

Shorebreak

$

263.32

$

251.91

4.5

%

83.4

%

87.4

%

(4.0)

%

$

219.65

$

220.19

(0.2)

%

40.68

%

37.20

%

348 bps

The Lodge at Sonoma

$

315.38

$

313.77

0.5

%

92.7

%

90.5

%

2.2

%

$

292.23

$

283.90

2.9

%

35.05

%

36.21

%

-116 bps

Hilton Garden Inn Times Square Central (1)

$

327.81

$

295.52

10.9

%

97.4

%

70.9

%

26.5

%

$

319.28

$

209.59

52.3

%

46.03

%

46.64

%

-61 bps

Vail Marriott

$

172.12

$

163.79

5.1

%

71.6

%

75.4

%

(3.8)

%

$

123.22

$

123.57

(0.3)

%

23.96

%

23.83

%

13 bps

Westin San Diego

$

190.12

$

175.78

8.2

%

90.4

%

87.0

%

3.4

%

$

171.92

$

152.93

12.4

%

33.81

%

33.80

%

1 bps

Westin Washington D.C. City Center

$

188.96

$

199.17

(5.1)

%

85.1

%

85.3

%

(0.2)

%

$

160.78

$

169.90

(5.4)

%

34.43

%

33.01

%

142 bps

Renaissance Worthington

$

175.17

$

171.72

2.0

%

65.2

%

66.8

%

(1.6)

%

$

114.14

$

114.63

(0.4)

%

29.14

%

26.90

%

224 bps

Pro Forma Total (2)

$

213.93

$

207.26

3.2

%

82.7

%

83.5

%

(0.8)

%

$

176.92

$

173.07

2.2

%

31.49

%

31.10

%

39 bps

(1)

The hotel opened for business on September 1, 2014.  Amounts for 2015 include operations from September 1, 2015 to September 30, 2015 to reflect the comparable period of 2014.

(2)

Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central (282 rooms) from July 1, 2015 to August 31, 2015 to reflect the comparable period of 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

$

164.07

$

164.68

(0.4)

%

74.9

%

71.3

%

3.6

%

$

122.89

$

117.47

4.6

%

36.47

%

35.28

%

119 bps

Bethesda Marriott Suites

$

169.30

$

164.29

3.0

%

67.1

%

65.8

%

1.3

%

$

113.62

$

108.10

5.1

%

26.67

%

24.35

%

232 bps

Boston Westin

$

240.01

$

225.22

6.6

%

80.8

%

79.8

%

1.0

%

$

193.90

$

179.79

7.8

%

31.24

%

27.92

%

332 bps

Hilton Boston Downtown

$

286.90

$

253.15

13.3

%

84.9

%

90.9

%

(6.0)

%

$

243.46

$

230.04

5.8

%

39.74

%

36.87

%

287 bps

Hilton Burlington

$

173.28

$

169.51

2.2

%

78.7

%

77.1

%

1.6

%

$

136.36

$

130.75

4.3

%

40.75

%

41.89

%

-114 bps

Renaissance Charleston

$

218.44

$

204.47

6.8

%

90.6

%

91.0

%

(0.4)

%

$

197.92

$

186.07

6.4

%

36.30

%

34.38

%

192 bps

Hilton Garden Inn Chelsea

$

221.78

$

218.42

1.5

%

94.4

%

94.5

%

(0.1)

%

$

209.44

$

206.36

1.5

%

31.22

%

38.01

%

-679 bps

Chicago Marriott

$

219.01

$

206.30

6.2

%

75.6

%

75.7

%

(0.1)

%

$

165.49

$

156.08

6.0

%

23.74

%

23.32

%

42 bps

Chicago Gwen

$

220.65

$

222.81

(1.0)

%

74.6

%

83.4

%

(8.8)

%

$

164.56

$

185.77

(11.4)

%

26.41

%

34.29

%

-788 bps

Courtyard Denver Downtown

$

204.66

$

188.15

8.8

%

80.8

%

84.3

%

(3.5)

%

$

165.31

$

158.70

4.2

%

47.78

%

48.40

%

-62 bps

Courtyard Fifth Avenue

$

261.65

$

271.59

(3.7)

%

88.8

%

89.2

%

(0.4)

%

$

232.22

$

242.36

(4.2)

%

21.17

%

24.33

%

-316 bps

Courtyard Midtown East

$

260.63

$

274.68

(5.1)

%

89.7

%

90.8

%

(1.1)

%

$

233.68

$

249.50

(6.3)

%

29.73

%

32.17

%

-244 bps

Fort Lauderdale Westin

$

182.12

$

181.37

0.4

%

86.4

%

83.3

%

3.1

%

$

157.31

$

151.15

4.1

%

32.88

%

22.55

%

1033 bps

Frenchman's Reef

$

255.49

$

245.64

4.0

%

84.2

%

86.6

%

(2.4)

%

$

215.07

$

212.78

1.1

%

24.83

%

24.48

%

35 bps

JW Marriott Denver Cherry Creek

$

271.88

$

254.60

6.8

%

80.9

%

83.3

%

(2.4)

%

$

219.84

$

212.11

3.6

%

33.72

%

32.84

%

88 bps

Inn at Key West

$

226.21

$

209.88

7.8

%

88.6

%

89.1

%

(0.5)

%

$

200.40

$

186.99

7.2

%

52.28

%

53.94

%

-166 bps

Key West Sheraton Suites

$

258.07

$

239.78

7.6

%

91.1

%

87.9

%

3.2

%

$

235.11

$

210.84

11.5

%

43.04

%

38.22

%

482 bps

Lexington Hotel New York

$

238.68

$

235.04

1.5

%

92.9

%

90.8

%

2.1

%

$

221.81

$

213.43

3.9

%

26.43

%

30.28

%

-385 bps

Hilton Minneapolis

$

147.36

$

147.18

0.1

%

77.6

%

76.3

%

1.3

%

$

114.34

$

112.26

1.9

%

23.38

%

26.24

%

-286 bps

Orlando Airport Marriott

$

119.41

$

107.50

11.1

%

78.5

%

78.6

%

(0.1)

%

$

93.74

$

84.53

10.9

%

29.29

%

23.64

%

565 bps

Hotel Rex

$

238.66

$

210.61

13.3

%

85.2

%

86.0

%

(0.8)

%

$

203.23

$

181.07

12.2

%

36.83

%

35.43

%

140 bps

Salt Lake City Marriott

$

158.13

$

147.13

7.5

%

73.8

%

69.8

%

4.0

%

$

116.67

$

102.68

13.6

%

34.44

%

32.16

%

228 bps

Shorebreak

$

232.71

$

214.51

8.5

%

81.4

%

83.6

%

(2.2)

%

$

189.35

$

179.24

5.6

%

32.06

%

29.56

%

250 bps

The Lodge at Sonoma

$

276.28

$

268.86

2.8

%

83.9

%

78.7

%

5.2

%

$

231.66

$

211.58

9.5

%

29.18

%

28.54

%

64 bps

Hilton Garden Inn Times Square Central (1)

$

327.81

$

295.52

10.9

%

97.4

%

70.9

%

26.5

%

$

319.28

$

209.59

52.3

%

46.03

%

46.64

%

-61 bps

Vail Marriott

$

261.69

$

249.56

4.9

%

71.8

%

70.3

%

1.5

%

$

187.77

$

175.39

7.1

%

36.39

%

35.11

%

128 bps

Westin San Diego

$

187.95

$

167.86

12.0

%

86.0

%

85.5

%

0.5

%

$

161.73

$

143.53

12.7

%

34.10

%

32.33

%

177 bps

Westin Washington D.C. City Center

$

215.77

$

206.31

4.6

%

82.8

%

74.5

%

8.3

%

$

178.60

$

153.65

16.2

%

35.86

%

31.21

%

465 bps

Renaissance Worthington

$

181.28

$

176.00

3.0

%

70.3

%

69.6

%

0.7

%

$

127.47

$

122.46

4.1

%

35.48

%

32.76

%

272 bps

Pro Forma Total (2)

$

212.58

$

203.81

4.3

%

80.8

%

80.1

%

0.7

%

$

171.75

$

163.28

5.2

%

30.95

%

29.81

%

114 bps

(1)

The hotel opened for business on September 1, 2014.  Amounts for 2015 include operations from September 1, 2015 to September 30, 2015 to reflect the comparable period of 2014.

(2)

Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central (282 rooms) from January 1, 2015 to August 31, 2015 to reflect the comparable period of 2014.

 

Pro Forma Hotel Adjusted EBITDA Reconciliation

Third Quarter 2015

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

5,282

$

1,674

$

385

$

$

$

2,059

Bethesda Marriott Suites

$

3,479

$

(1,211)

$

362

$

$

1,541

$

692

Boston Westin

$

24,679

$

6,231

$

2,218

$

$

2

$

8,451

Hilton Boston Downtown

$

11,757

$

4,110

$

1,215

$

$

29

$

5,354

Hilton Burlington

$

5,456

$

2,203

$

464

$

$

23

$

2,690

Renaissance Charleston

$

3,101

$

736

$

347

$

$

(32)

$

1,051

Hilton Garden Inn Chelsea

$

3,936

$

1,232

$

362

$

$

$

1,594

Chicago Marriott

$

29,530

$

2,952

$

2,744

$

3,171

$

(397)

$

8,470

Chicago Gwen

$

7,331

$

1,536

$

731

$

$

$

2,267

Courtyard Denver Downtown

$

3,175

$

1,308

$

283

$

$

$

1,591

Courtyard Fifth Avenue

$

4,334

$

(469)

$

450

$

834

$

293

$

1,108

Courtyard Midtown East

$

7,653

$

860

$

683

$

1,019

$

$

2,562

Fort Lauderdale Westin

$

7,604

$

397

$

1,132

$

$

$

1,529

Frenchman's Reef

$

11,625

$

(662)

$

1,589

$

$

$

927

JW Marriott Denver Cherry Creek

$

6,639

$

1,172

$

525

$

728

$

$

2,425

Inn at Key West

$

1,685

$

451

$

176

$

$

$

627

Key West Sheraton Suites

$

3,687

$

749

$

512

$

$

$

1,261

Lexington Hotel New York

$

17,483

$

261

$

3,342

$

1,282

$

197

$

5,082

Minneapolis Hilton

$

14,921

$

1,845

$

1,474

$

1,297

$

(202)

$

4,414

Orlando Airport Marriott

$

5,515

$

(448)

$

575

$

807

$

$

934

Hotel Rex

$

2,158

$

770

$

142

$

$

$

912

Salt Lake City Marriott

$

7,688

$

1,256

$

767

$

678

$

$

2,701

Shorebreak

$

4,233

$

1,520

$

217

$

$

(15)

$

1,722

The Lodge at Sonoma

$

7,495

$

1,950

$

371

$

306

$

$

2,627

Hilton Garden Inn Times Square Central

$

2,744

$

1,004

$

259

$

$

$

1,263

Vail Marriott

$

6,802

$

1,150

$

480

$

$

$

1,630

Westin San Diego

$

8,601

$

1,149

$

1,020

$

693

$

46

$

2,908

Westin Washington D.C. City Center

$

7,471

$

637

$

1,189

$

746

$

$

2,572

Renaissance Worthington

$

8,321

$

1,034

$

575

$

814

$

2

$

2,425

Pro Forma Total (2)

$

234,385

$

35,397

$

24,589

$

12,375

$

1,487

$

73,819

(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, the non-cash amortization of our unfavorable contract liabilities and union severance payments.

(2)

Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central from July 1, 2015 to August 31, 2015.

 

Pro Forma Hotel Adjusted EBITDA Reconciliation

Third Quarter 2014

Plus:

Plus:

Plus:

Equals:

Total Revenues

Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash Adjustments (1)

Hotel Adjusted EBITDA

Atlanta Alpharetta Marriott

$

4,468

$

1,169

$

406

$

$

$

1,575

Bethesda Marriott Suites

$

3,495

$

(1,248)

$

360

$

$

1,541

$

653

Boston Westin

$

22,176

$

4,842

$

2,186

$

$

10

$

7,038

Hilton Boston Downtown

$

9,853

$

3,008

$

1,081

$

$

42

$

4,131

Hilton Burlington

$

5,475

$

2,290

$

436

$

$

23

$

2,749

Renaissance Charleston

$

3,300

$

633

$

406

$

$

(32)

$

1,007

Hilton Garden Inn Chelsea

$

3,517

$

836

$

485

$

$

$

1,321

Chicago Marriott

$

29,390

$

2,574

$

3,074

$

3,218

$

(398)

$

8,468

Chicago Gwen

$

8,605

$

2,848

$

961

$

$

$

3,809

Courtyard Denver Downtown

$

3,018

$

1,231

$

279

$

$

$

1,510

Courtyard Fifth Avenue

$

4,660

$

64

$

452

$

844

$

52

$

1,412

Courtyard Midtown East

$

8,331

$

1,384

$

686

$

836

$

$

2,906

Fort Lauderdale Westin

$

7,554

$

(897)

$

1,095

$

$

$

198

Frenchman's Reef

$

12,376

$

(1,388)

$

1,563

$

815

$

$

990

JW Marriott Denver Cherry Creek

$

6,293

$

1,131

$

521

$

568

$

$

2,220

Inn at Key West

$

1,564

$

518

$

90

$

$

$

608

Key West Sheraton Suites

$

3,247

$

328

$

513

$

$

$

841

Lexington Hotel New York

$

17,219

$

1,470

$

3,274

$

1,748

$

31

$

6,523

Minneapolis Hilton

$

14,846

$

1,390

$

2,403

$

1,328

$

(129)

$

4,992

Orlando Airport Marriott

$

4,264

$

(1,172)

$

588

$

820

$

$

236

Hotel Rex

$

2,146

$

818

$

140

$

$

$

958

Salt Lake City Marriott

$

7,157

$

956

$

743

$

694

$

$

2,393

Shorebreak

$

4,436

$

1,185

$

465

$

$

$

1,650

The Lodge at Sonoma

$

7,507

$

2,016

$

390

$

312

$

$

2,718

Hilton Garden Inn Times Square Central

$

1,786

$

574

$

259

$

$

$

833

Vail Marriott

$

6,719

$

1,093

$

508

$

$

$

1,601

Westin San Diego

$

8,144

$

869

$

1,132

$

706

$

46

$

2,753

Westin Washington D.C. City Center

$

7,826

$

479

$

1,292

$

765

$

47

$

2,583

Renaissance Worthington

$

8,177

$

824

$

631

$

743

$

2

$

2,200

Pro Forma Total (2)

$

227,549

$

29,825

$

26,419

$

13,397

$

1,235

$

70,775

(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.

 

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

$

14,945

$

4,292

$

1,159

$

$

$

5,451

Bethesda Marriott Suites

$

11,460

$

(2,685)

$

1,117

$

$

4,624

$

3,056

Boston Westin

$

71,004

$

15,499

$

6,674

$

$

7

$

22,180

Hilton Boston Downtown

$

27,510

$

7,368

$

3,452

$

$

113

$

10,933

Hilton Burlington

$

12,394

$

3,613

$

1,370

$

$

68

$

5,051

Renaissance Charleston

$

10,277

$

2,695

$

1,131

$

$

(95)

$

3,731

Hilton Garden Inn Chelsea

$

9,932

$

2,015

$

1,086

$

$

$

3,101

Chicago Marriott

$

77,669

$

3,352

$

6,852

$

9,425

$

(1,192)

$

18,437

Chicago Gwen

$

19,428

$

2,793

$

2,338

$

$

$

5,131

Courtyard Denver Downtown

$

8,554

$

3,236

$

851

$

$

$

4,087

Courtyard Fifth Avenue

$

11,835

$

(1,721)

$

1,347

$

2,483

$

396

$

2,505

Courtyard Midtown East

$

20,995

$

1,167

$

2,051

$

3,024

$

$

6,242

Fort Lauderdale Westin

$

33,319

$

7,568

$

3,388

$

$

$

10,956

Frenchman's Reef

$

49,929

$

6,464

$

4,767

$

1,164

$

$

12,395

JW Marriott Denver Cherry Creek

$

18,907

$

2,958

$

1,577

$

1,840

$

$

6,375

Inn at Key West

$

6,721

$

2,992

$

522

$

$

$

3,514

Key West Sheraton Suites

$

14,111

$

4,535

$

1,538

$

$

$

6,073

Lexington Hotel New York

$

46,742

$

(1,850)

$

10,027

$

3,945

$

234

$

12,356

Minneapolis Hilton

$

39,529

$

(203)

$

6,177

$

3,874

$

(606)

$

9,242

Orlando Airport Marriott

$

20,229

$

1,808

$

1,714

$

2,404

$

$

5,926

Hotel Rex

$

5,824

$

1,720

$

425

$

$

$

2,145

Salt Lake City Marriott

$

22,331

$

3,404

$

2,262

$

2,025

$

$

7,691

Shorebreak

$

11,183

$

2,656

$

973

$

$

(44)

$

3,585

The Lodge at Sonoma

$

19,849

$

3,754

$

1,124

$

913

$

$

5,791

Hilton Garden Inn Times Square Central

$

2,744

$

1,004

$

259

$

$

$

1,263

Vail Marriott

$

26,062

$

8,021

$

1,462

$

$

$

9,483

Westin San Diego

$

26,170

$

3,667

$

3,053

$

2,066

$

137

$

8,923

Westin Washington D.C. City Center

$

24,212

$

2,823

$

3,536

$

2,229

$

95

$

8,683

Renaissance Worthington

$

29,192

$

6,300

$

1,740

$

2,310

$

6

$

10,356

Pro Forma Total (2)

$

693,057

$

99,245

$

73,972

$

37,702

$

3,743

$

214,503

(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, the non-cash amortization of our unfavorable contract liabilities and union severance payments.

(2)

Assumes all hotels were owned as of January 1, 2014 but excludes the Hilton Garden Inn Times Square Central from January 1, 2015 to August 31, 2015.

 

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

$

13,632

$

3,594

$

1,216

$

$

$

4,810

Bethesda Marriott Suites

$

11,058

$

(3,022)

$

1,083

$

$

4,632

$

2,693

Boston Westin

$

64,074

$

11,302

$

6,571

$

$

14

$

17,887

Hilton Boston Downtown

$

24,617

$

5,699

$

3,253

$

$

125

$

9,077

Hilton Burlington

$

11,849

$

3,586

$

1,309

$

$

68

$

4,963

Renaissance Charleston

$

10,336

$

2,436

$

1,212

$

$

(95)

$

3,553

Hilton Garden Inn Chelsea

$

9,818

$

2,264

$

1,468

$

$

$

3,732

Chicago Marriott

$

75,380

$

(256)

$

9,444

$

9,583

$

(1,192)

$

17,579

Chicago Gwen

$

21,355

$

4,447

$

2,876

$

$

$

7,323

Courtyard Denver Downtown

$

8,178

$

3,134

$

824

$

$

$

3,958

Courtyard Fifth Avenue

$

12,322

$

(992)

$

1,321

$

2,514

$

155

$

2,998

Courtyard Midtown East

$

22,318

$

2,338

$

2,061

$

2,781

$

$

7,180

Fort Lauderdale Westin

$

33,143

$

4,190

$

3,285

$

$

$

7,475

Frenchman's Reef

$

50,970

$

5,406

$

4,641

$

2,430

$

$

12,477

JW Marriott Denver Cherry Creek

$

17,541

$

2,490

$

1,553

$

1,717

$

$

5,760

Inn at Key West

$

6,033

$

2,984

$

270

$

$

$

3,254

Key West Sheraton Suites

$

12,506

$

3,241

$

1,539

$

$

$

4,780

Lexington Hotel New York

$

45,006

$

(1,473)

$

9,799

$

5,208

$

94

$

13,628

Minneapolis Hilton

$

38,320

$

(587)

$

7,066

$

3,964

$

(388)

$

10,055

Orlando Airport Marriott

$

16,770

$

(290)

$

1,814

$

2,441

$

$

3,965

Hotel Rex

$

5,242

$

1,302

$

555

$

$

$

1,857

Salt Lake City Marriott

$

20,910

$

2,405

$

2,248

$

2,071

$

$

6,724

Shorebreak

$

11,224

$

1,923

$

1,395

$

$

$

3,318

The Lodge at Sonoma

$

17,828

$

3,004

$

1,154

$

930

$

$

5,088

Hilton Garden Inn Times Square Central

$

1,786

$

574

$

259

$

$

$

833

Vail Marriott

$

24,307

$

6,986

$

1,548

$

$

$

8,534

Westin San Diego

$

22,863

$

1,834

$

3,317

$

2,104

$

137

$

7,392

Westin Washington D.C. City Center

$

21,176

$

527

$

3,657

$

2,284

$

142

$

6,610

Renaissance Worthington

$

27,244

$

4,783

$

1,920

$

2,215

$

6

$

8,924

Pro Forma Total (2)

$

657,806

$

73,829

$

78,658

$

40,242

$

3,698

$

196,093

(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.

 

SOURCE DiamondRock Hospitality Company



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