RLJ Lodging Trust (NYSE: RLJ) today reported results for the three months ended March 31, 2019.
Highlights
- Pro forma RevPAR increased 1.3%, driven by a Pro forma ADR increase of 2.0%
- Net income of $28.3 million
- Pro forma Consolidated Hotel EBITDA of $120.5 million, an increase of 0.6% over the prior year
- Pro forma Hotel EBITDA Margin of 30.2%
- Adjusted FFO of $82.6 million, an increase of 1.4% over the prior year
- Repurchased 0.6 million common shares since the beginning of the year for $10.8 million at an average price of $17.53
- Refinanced approximately $381 million of debt subsequent to quarter-end, reducing interest rates, extending maturities, and adding flexibility
“We are pleased with our solid performance this quarter, which underscores the targeted capital investments we made last year in markets and assets that are positioned for outsized growth in 2019 and beyond. Our asset management team successfully implemented cost containment initiatives to mitigate the significant cost pressures that we are seeing, which aided in our ability to outperform our bottom line expectations,” commented Leslie D. Hale, President and Chief Executive Officer. “In addition to achieving solid results, we prudently allocated capital through highly accretive share repurchases, further strengthened our balance sheet, and made progress on our strategic initiative to sell our non-core hotels. All of these initiatives have positioned RLJ to achieve our key 2019 strategic priorities.”
The prefix “Pro forma”, as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude any hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. Explanations of EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release.
Pro forma RevPAR growth for the first quarter was 1.3%. The Company's top performing markets were Atlanta, Northern California, and Louisville with Pro forma RevPAR growth of 20.9%, 15.5%, and 13.5%, respectively. The Company's RevPAR growth was impacted by approximately 25 basis points from the government shutdown and 60 basis points from current year renovation disruption. Additionally, excluding Denver, which experienced softness in the quarter, Pro forma RevPAR growth was 1.8%.
Adjusted EBITDA for the first quarter was $111.5 million, a decrease of $4.2 million from the comparable period in 2018. Adjusted EBITDA for the comparable period in the prior year included $4.8 million from seven sold hotels. Normalizing for the impact of asset sales, Adjusted EBITDA would have increased by $0.6 million from the comparable period in 2018.
Interest expense for the first quarter was $20.1 million, a decrease of $8.6 million from the comparable period in 2018, primarily due to the prior year redemption of the senior secured notes and the repayment of the Knickerbocker mortgage. First quarter interest expense includes a unrealized gain of $2.3 million related to interest rate hedges that were specifically assigned to debt that was repaid in 2019. Please refer to the financial tables for a reconciliation of net interest expense.
Financial and Operating Highlights
| ($ in thousands, except ADR, RevPAR, and per share amounts) | ||||||||
| (unaudited) | ||||||||
| For the three months ended March 31, | ||||||||
| 2019 | 2018 | Change | ||||||
| Operational Overview: | ||||||||
| Pro forma ADR | $175.32 | $171.87 | 2.0% | |||||
| Pro forma Occupancy | 74.8% | 75.3% | (0.7)% | |||||
| Pro forma RevPAR | $131.19 | $129.51 | 1.3% | |||||
| Financial Overview: | ||||||||
| Total Revenues | $399,267 | $429,593 | (7.1)% | |||||
| Pro forma Revenue | $398,849 | $390,499 | 2.1% | |||||
| Net Income | $28,331 | $23,894 | 18.6% | |||||
| Pro forma Hotel EBITDA | $120,473 | $119,761 | 0.6% | |||||
| Pro forma Hotel EBITDA Margin | 30.2% | 30.7% | -46 bps | |||||
| Adjusted EBITDA (1) | $111,546 | $115,793 | (3.7)% | |||||
| Adjusted FFO | $82,639 | $81,470 | 1.4% | |||||
| Adjusted FFO Per Diluted Common Share and Unit | $0.48 | $0.47 | 2.1% | |||||
| Note: | ||
| (1) | For the three months ended March 31, 2018, the seven sold hotels in 2018 contributed $4.8 million to Adjusted EBITDA | |
Share Repurchases
Year-to-date, the Company has repurchased 0.6 million shares of its common stock for $10.8 million at an average price per share of $17.53. The Company's share buyback program has remaining capacity of $249.6 million.
Balance Sheet
As of March 31, 2019, the Company had $241.5 million of unrestricted cash on its balance sheet, $460.0 million available on its revolving credit facility, and $2.2 billion of debt outstanding.
The Company’s ratio of net debt to Adjusted EBITDA for the trailing twelve-month period ended March 31, 2019, was 3.8x.
Dividends
The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the first quarter. The dividend was paid on April 15, 2019, to shareholders of record as of March 29, 2019.
The Company's Board of Trustees declared a preferred dividend of $0.4875 on its Series A cumulative convertible preferred shares. The dividend was paid on April 30, 2019, to shareholders of record as of March 29, 2019.
Subsequent Events
In April 2019, the Company refinanced approximately $381 million of secured debt, which reduced borrowing costs, extended maturities (including extensions), and improved non-financial terms. These included the following:
- New $200.0 million five-year floating rate mortgage loan maturing April 2024
- New $96.0 million seven-year floating rate mortgage loan maturing April 2026
- Amended and restated $85.0 million seven-year floating rate mortgage loan maturing April 2026
The Company utilized proceeds from the two new loans to repay its $150.0 million secured loan maturing in October 2021 and approximately $140 million secured loan maturing in March 2022.
Outlook
The Company's full-year outlook includes all hotels owned as of May 8, 2019. Potential future acquisitions, dispositions, financing, or share repurchases are not incorporated into the Company's outlook below and could result in a material change to the Company's outlook. For the full year 2019, the Company is updating its outlook to incorporate first quarter results.
| Outlook as of February 28, 2019 | Current Outlook | Variance at Midpoint | |||||
| Pro forma RevPAR growth | 0.0% to +2.0% | 0.0% to +2.0% | - | ||||
| Pro forma Hotel EBITDA Margin | 31.6% to 32.6% | 31.8% to 32.6% | 10 bps | ||||
| Pro forma Consolidated Hotel EBITDA | $522.0M to $552.0M | $527.0M to $552.0M | $2.5M | ||||
| Corporate Cash General & Administrative | $35.0M to $36.0M | $35.0M to $36.0M | - | ||||
| Adjusted EBITDA | $487.0M to $517.0M | $492.0M to $517.0M | $2.5M | ||||
| Adjusted FFO per Diluted Share and Unit | $2.15 to $2.30 | $2.18 to $2.30 | $0.015 |
Additionally, key assumptions underlying the Company's full year 2019 outlook include:
- Net interest expense of $88 million to $90 million, which excludes the impact of unrealized gains or losses related to interest rate hedges
- Capital expenditures related to renovations in the range of $90 million to $110 million and approximately 40 bps to 50 bps of renovation related RevPAR disruption
- Cash income tax expense of $3 million to $4 million
- Diluted weighted-average common shares and units of 173.7 million, assuming no additional share repurchases
For the second quarter 2019, the Company anticipates Pro forma Consolidated Hotel EBITDA and Adjusted EBITDA to be between 28.75% and 29.75% of the Company's full year 2019 outlook, calculated at the midpoint of the respective outlook range.
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio consists of 150 hotels with approximately 28,600 rooms located in 25 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.
RLJ Lodging Trust
Non-GAAP and Accounting Commentary
Non-Generally Accepted Accounting Principles (“Non-GAAP”) Financial Measures
The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre, (5) Adjusted EBITDA, (6) Hotel EBITDA, and (7) Hotel EBITDA Margin. These Non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of its operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, and Hotel EBITDA Margin as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company.
Funds From Operations (“FFO”)
The Company calculates Funds from Operations (“FFO”) in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company believes that the presentation of FFO provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between real estate investment trusts (“REITs”), even though FFO does not represent an amount that accrues directly to common shareholders.
The Company’s calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing the Company to non-REITs. The Company presents FFO attributable to common shareholders, which includes unitholders of limited partnership interest (“OP units”) in RLJ Lodging Trust, L.P., the Company’s operating partnership, because the OP units are redeemable for common shares of the Company. The Company believes it is meaningful for the investor to understand FFO attributable to all common shares and OP units.
EBITDA and EBITDAre
Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) is defined as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sales of assets; and (3) depreciation and amortization. The Company considers EBITDA useful to an investor in evaluating and facilitating comparisons of its operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions.
In addition to EBITDA, the Company presents EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss (calculated in accordance with GAAP) excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated partnerships and joint ventures. The Company believes that the presentation of EBITDAre provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between REITs.
Adjustments to FFO and EBITDAre
The Company adjusts FFO, EBITDA, and EBITDAre for certain items that the Company considers either outside the normal course of operations or extraordinary. The Company believes that Adjusted FFO, Adjusted EBITDA, and Adjusted EBITDAre provide useful supplemental information to investors regarding its ongoing operating performance that, when considered with net income or loss, FFO, EBITDA, and EBITDAre, are beneficial to an investor’s understanding of its operating performance. The Company adjusts FFO, EBITDA, and EBITDAre for the following items:
- Transaction Costs: The Company excludes transaction costs expensed during the period.
- Non-Cash Expenses: The Company excludes the effect of certain non-cash items such as the amortization of share-based compensation and non-cash income taxes.
- Other Non-Operational Expenses: The Company excludes the effect of certain non-operational expenses representing income and expenses outside of the normal course of operations
The Company previously presented Adjusted EBITDA with adjustments for noncontrolling interests in consolidated joint ventures. The rationale for including 100% of Adjusted EBITDA for consolidated joint ventures with noncontrolling interests is that the full amount of any debt of these consolidated joint ventures is reported in our consolidated balance sheet and metrics using debt to EBITDA provide a better understanding of the Company’s leverage. This is also consistent with NAREIT’s definition of EBITDAre.
Hotel EBITDA and Hotel EBITDA Margin
With respect to Consolidated Hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses and certain non-cash items provides a more complete understanding of the operating results over which individual hotels and operators have direct control. The Company believes property-level results provide investors with supplemental information about the ongoing operational performance of the Company’s hotels and the effectiveness of its third-party management companies.
Pro forma Consolidated Hotel EBITDA includes prior ownership information provided by the sellers of the hotels for periods prior to our acquisition of the hotels, which has not been audited and excludes results from sold hotels as applicable. Pro forma Hotel EBITDA and Pro forma Hotel EBITDA Margin exclude the results of any non-comparable hotels that were under renovation or not open for the entirety of the comparable periods. The following is a summary of pro forma hotel adjustments:
Pro forma adjustments: Acquired hotels
For the three months ended March 31, 2019 and 2018, respectively, no hotels were acquired.
Pro forma adjustments: Sold hotels
For the three months ended March 31, 2019, no hotels were sold. For the three months ended March 31, 2018, pro forma adjustments included the following hotels:
- Embassy Suites Boston - Marlborough sold in February 2018
- Sheraton Philadelphia Society Hill Hotel sold in March 2018
- Embassy Suites Napa Valley sold in July 2018
- DoubleTree Columbia sold in August 2018
- The Vinoy Renaissance St. Petersburg Resort & Golf Club sold in August 2018
- DoubleTree by Hilton Burlington Vermont sold in September 2018
- Holiday Inn San Francisco - Fisherman's Wharf sold in October 2018
| RLJ Lodging Trust Consolidated Balance Sheets (Amounts in thousands, except share and per share data) (unaudited) | ||||||||||
| March 31, 2019 | December 31, 2018 | |||||||||
| Assets | ||||||||||
| Investment in hotel properties, net | $ | 5,355,545 | $ | 5,378,651 | ||||||
| Investment in unconsolidated joint ventures | 21,952 | 22,279 | ||||||||
| Cash and cash equivalents | 241,481 | 320,147 | ||||||||
| Restricted cash reserves | 54,217 | 64,695 | ||||||||
| Hotel and other receivables, net of allowance of $353 and $598, respectively | 67,605 | 52,115 | ||||||||
| Lease right-of-use assets | 149,492 | — | ||||||||
| Deferred income tax asset, net | 46,114 | 47,395 | ||||||||
| Intangible assets, net | 5,143 | 52,448 | ||||||||
| Prepaid expense and other assets | 58,981 | 67,367 | ||||||||
| Total assets | $ | 6,000,530 | $ | 6,005,097 | ||||||
| Liabilities and Equity | ||||||||||
| Debt, net | $ | 2,200,146 | $ | 2,202,676 | ||||||
| Accounts payable and other liabilities | 169,398 | 203,833 | ||||||||
| Deferred income tax liability | 2,766 | 2,766 | ||||||||
| Advance deposits and deferred revenue | 30,133 | 25,411 | ||||||||
| Lease liabilities | 124,146 | — | ||||||||
| Accrued interest | 15,124 | 7,913 | ||||||||
| Distributions payable | 65,595 | 65,557 | ||||||||
| Total liabilities | 2,607,308 | 2,508,156 | ||||||||
| Equity | ||||||||||
| Shareholders’ equity: | ||||||||||
| Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized | ||||||||||
| Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2019 and December 31, 2018 | 366,936 | 366,936 | ||||||||
| Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 173,667,027 and 174,019,616 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 1,737 | 1,740 | ||||||||
| Additional paid-in capital | 3,187,285 | 3,195,381 | ||||||||
| Accumulated other comprehensive (loss) income | (191 | ) | 16,195 | |||||||
| Distributions in excess of net earnings | (187,092 | ) | (150,476 | ) | ||||||
| Total shareholders’ equity | 3,368,675 | 3,429,776 | ||||||||
| Noncontrolling interest: | ||||||||||
| Noncontrolling interest in consolidated joint ventures | 13,861 | 11,908 | ||||||||
| Noncontrolling interest in the Operating Partnership | 10,686 | 10,827 | ||||||||
| Total noncontrolling interest | 24,547 | 22,735 | ||||||||
| Preferred equity in a consolidated joint venture, liquidation value of $45,544 at December 31, 2018 | — | 44,430 | ||||||||
| Total equity | 3,393,222 | 3,496,941 | ||||||||
| Total liabilities and equity | $ | 6,000,530 | $ | 6,005,097 | ||||||
| Note: |
| The corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q. |
| RLJ Lodging Trust Consolidated Statements of Operations (Amounts in thousands, except share and per share data) (unaudited) | |||||||||
| For the three months ended March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Revenues | |||||||||
| Operating revenues | |||||||||
| Room revenue | $ | 337,670 | $ | 357,645 | |||||
| Food and beverage revenue | 44,246 | 52,195 | |||||||
| Other revenue | 17,351 | 19,753 | |||||||
| Total revenues | $ | 399,267 | $ | 429,593 | |||||
| Expenses | |||||||||
| Operating expenses | |||||||||
| Room expense | $ | 84,188 | $ | 89,969 | |||||
| Food and beverage expense | 34,209 | 41,263 | |||||||
| Management and franchise fee expense | 34,118 | 35,676 | |||||||
| Other operating expense | 97,118 | 106,123 | |||||||
| Total property operating expenses | 249,633 | 273,031 | |||||||
| Depreciation and amortization | 58,403 | 61,408 | |||||||
| Property tax, insurance and other | 30,597 | 34,499 | |||||||
| General and administrative | 11,160 | 10,913 | |||||||
| Transaction costs | 559 | 1,672 | |||||||
| Total operating expenses | 350,352 | 381,523 | |||||||
| Other income | 274 | 1,093 | |||||||
| Interest income | 1,171 | 1,230 | |||||||
| Interest expense | (20,062 | ) | (28,701 | ) | |||||
| Loss on sale of hotel properties, net | — | (3,734 | ) | ||||||
| Gain on extinguishment of indebtedness, net | — | 7,659 | |||||||
| Income before equity in loss from unconsolidated joint ventures | 30,298 | 25,617 | |||||||
| Equity in loss from unconsolidated joint ventures | (381 | ) | (381 | ) | |||||
| Income before income tax expense | 29,917 | 25,236 | |||||||
| Income tax expense | (1,586 | ) | (1,342 | ) | |||||
| Net income | 28,331 | 23,894 | |||||||
| Net loss (income) attributable to noncontrolling interests: | |||||||||
| Noncontrolling interest in consolidated joint ventures | 353 | 234 | |||||||
| Noncontrolling interest in the Operating Partnership | (92 | ) | (73 | ) | |||||
| Preferred distributions - consolidated joint venture | (186 | ) | (366 | ) | |||||
| Redemption of preferred equity - consolidated joint venture | (1,153 | ) | — | ||||||
| Net income attributable to RLJ | 27,253 | 23,689 | |||||||
| Preferred dividends | (6,279 | ) | (6,279 | ) | |||||
| Net income attributable to common shareholders | $ | 20,974 | $ | 17,410 | |||||
| Basic per common share data: | |||||||||
| Net income per share attributable to common shareholders | $ | 0.12 | $ | 0.10 | |||||
| Weighted-average number of common shares | 172,796,998 | 174,193,671 | |||||||
| Diluted per common share data: | |||||||||
| Net income per share attributable to common shareholders | $ | 0.12 | $ | 0.10 | |||||
| Weighted-average number of common shares | 172,856,230 | 174,268,815 | |||||||
| Note: |
| The Statements of Comprehensive Income and corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q. |
| RLJ Lodging Trust Reconciliation of Non-GAAP Measures (Amounts in thousands, except per share data) (unaudited)
| |||||||||||
| Funds from Operations (FFO) Attributable to Common Shareholders and Unitholders | |||||||||||
| For the three months ended March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Net income | $ | 28,331 | $ | 23,894 | |||||||
| Preferred dividends | (6,279 | ) | (6,279 | ) | |||||||
| Preferred distributions - consolidated joint venture | (186 | ) | (366 | ) | |||||||
| Redemption of preferred equity - consolidated joint venture | (1,153 | ) | — | ||||||||
| Depreciation and amortization | 58,403 | 61,408 | |||||||||
| Loss on sale of hotel properties, net | — | 3,734 | |||||||||
| Noncontrolling interest in consolidated joint ventures | 353 | 234 | |||||||||
| Adjustments related to consolidated joint ventures (1) | (74 | ) | (75 | ) | |||||||
| Adjustments related to unconsolidated joint ventures (2) | 694 | 668 | |||||||||
| FFO | 80,089 | 83,218 | |||||||||
| Transaction costs | 559 | 1,672 | |||||||||
| Gain on extinguishment of indebtedness, net | — | (7,659 | ) | ||||||||
| Amortization of share-based compensation | 2,725 | 2,514 | |||||||||
| Non-cash income tax expense | 1,281 | 1,103 | |||||||||
| Other (income) expenses (3) | (2,015 | ) | 622 | ||||||||
| Adjusted FFO | $ | 82,639 | $ | 81,470 | |||||||
| Adjusted FFO per common share and unit-basic | $ | 0.48 | $ | 0.47 | |||||||
| Adjusted FFO per common share and unit-diluted | $ | 0.48 | $ | 0.47 | |||||||
| Basic weighted-average common shares and units outstanding (4) | 173,570 | 174,968 | |||||||||
| Diluted weighted-average common shares and units outstanding (4) | 173,629 | 175,043 | |||||||||
| Note: | ||
| (1) | Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint ventures. | |
| (2) | Includes our ownership interest of the depreciation and amortization expense of the unconsolidated joint ventures. | |
| (3) | Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, activist shareholder costs, and an unrealized gain on certain discontinued cash flow hedges. | |
| (4) | Includes 0.8 million weighted-average operating partnership units for the three month periods ended March 31, 2019 and 2018, respectively. | |
| RLJ Lodging Trust Reconciliation of Non-GAAP Measures (Amounts in thousands) (unaudited)
| |||||||||||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | |||||||||||
| For the three months ended March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Net income | $ | 28,331 | $ | 23,894 | |||||||
| Depreciation and amortization | 58,403 | 61,408 | |||||||||
| Interest expense, net of interest income (1) | 18,891 | 27,471 | |||||||||
| Income tax expense | 1,586 | 1,342 | |||||||||
| Adjustments related to unconsolidated joint ventures (2) | 817 | 795 | |||||||||
| EBITDA | 108,028 | 114,910 | |||||||||
| Loss on sale of hotel properties, net | — | 3,734 | |||||||||
| EBITDAre | 108,028 | 118,644 | |||||||||
| Transaction costs | 559 | 1,672 | |||||||||
| Gain on extinguishment of indebtedness, net | — | (7,659 | ) | ||||||||
| Amortization of share-based compensation | 2,725 | 2,514 | |||||||||
| Other expenses, net (3) | 234 | 622 | |||||||||
| Adjusted EBITDA | 111,546 | 115,793 | |||||||||
| General and administrative (4) | 8,426 | 8,294 | |||||||||
| Other corporate adjustments (5) | 501 | 486 | |||||||||
| Consolidated Hotel EBITDA | 120,473 | 124,573 | |||||||||
| Pro forma adjustments - income from sold hotels | — | (4,812 | ) | ||||||||
| Pro forma Consolidated Hotel EBITDA | 120,473 | 119,761 | |||||||||
| Pro forma adjustments - income from non-comparable hotels | — | — | |||||||||
| Pro forma Hotel EBITDA | $ | 120,473 | $ | 119,761 | |||||||
| Note: | ||
| (1) | Includes an unrealized gain of $2.3 million on certain discontinued cash flow hedges related to mortgage debt that was repaid in 2019 for the three months ended March 31, 2019. | |
| (2) | Includes our ownership interest of the interest, depreciation, and amortization expense of the unconsolidated joint ventures. | |
| (3) | Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, and activist shareholder costs. | |
| (4) | Excludes amortization of share-based compensation reflected in Adjusted EBITDA. | |
| (5) | Other corporate adjustments include property-level adjustments and certain revenues and expenses at corporate entities. These items include interest income, amortization of deferred management fees, key money amortization, ground rent amortization, legal fees, revenues and expenses associated with non-hotel properties, income (loss) from unconsolidated entities, internal lease rent expense, and other items. | |
| RLJ Lodging Trust Reconciliation of Non-GAAP Measures (Amounts in thousands) (unaudited)
| |||||||||
| Pro forma Hotel EBITDA Margin | |||||||||
| For the three months ended March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Total revenue | $ | 399,267 | $ | 429,593 | |||||
| Pro forma adjustments - revenue from sold hotels | — | (38,682) | |||||||
| Other corporate adjustments / non-hotel revenue | (418) | (412) | |||||||
| Pro forma Hotel Revenue | $ | 398,849 | $ | 390,499 | |||||
| Pro forma Hotel EBITDA | $ | 120,473 | $ | 119,761 | |||||
| Pro forma Hotel EBITDA Margin | 30.2% | 30.7% | |||||||
| RLJ Lodging Trust Consolidated Debt Summary (Amounts in thousands) (unaudited) | ||||||||||||||||||
| Loan | Base Term (Years) | Maturity (incl. extensions) | Floating / Fixed | Interest Rate (1) | Balance as of March 31, 2019 (2) | Balance as of April 30, 2019 | ||||||||||||
| Secured Debt | ||||||||||||||||||
| Mortgage loan - 4 hotels | 3 | Oct 2021 | Floating (3) | 4.09% | $ | 150,000 | $ | — | ||||||||||
| Mortgage loan - 1 hotel | 10 | Jun 2022 | Fixed | 5.25% | 31,255 | 31,198 | ||||||||||||
| Mortgage loan - 2 hotels | 10 | Oct 2022 | Fixed | 4.95% | 56,756 | 56,651 | ||||||||||||
| Mortgage loan - 1 hotel | 10 | Oct 2022 | Fixed | 4.95% | 32,623 | 32,563 | ||||||||||||
| Mortgage loan - 1 hotel | 10 | Oct 2022 | Fixed | 4.94% | 28,819 | 28,766 | ||||||||||||
| Mortgage loan - 5 hotels | 5 | Mar 2023 | Floating | 4.59% | 85,000 | — | ||||||||||||
| Mortgage loan - 7 hotels | 3 | Apr 2024 | Floating (3)(6) | L + 152 bps | — | 200,000 | ||||||||||||
| Mortgage loan - 3 hotels | 5 | Apr 2026 | Floating (3)(5)(6) | L + 160 bps | — | 96,000 | ||||||||||||
| Mortgage loan - 4 hotels | 5 | Apr 2026 | Floating (6) | L + 160 bps | — | 85,000 | ||||||||||||
| Weighted-Average / Secured Total | 4.56% | $ | 384,453 | $ | 530,178 | |||||||||||||
| Unsecured Debt | ||||||||||||||||||
| Revolver (4) | 4 | Apr 2021 | Floating | 3.99% | $ | 140,000 | $ | — | ||||||||||
| $400 Million Term Loan Maturing 2021 | 5 | Apr 2021 | Floating (3)(5) | 3.11% | 400,000 | 400,000 | ||||||||||||
| $150 Million Term Loan Maturing 2022 | 7 | Jan 2022 | Floating (3) | 3.08% | 150,000 | 150,000 | ||||||||||||
| $400 Million Term Loan Maturing 2023 | 5 | Jan 2023 | Floating (3) | 3.78% | 400,000 | 400,000 | ||||||||||||
| $225 Million Term Loan Maturing 2023 | 5 | Jan 2023 | Floating (3) | 3.78% | 225,000 | 225,000 | ||||||||||||
| Senior Unsecured Notes | 10 | Jun 2025 | Fixed | 6.00% | 475,000 | 475,000 | ||||||||||||
| Weighted-Average / Unsecured Total | 4.18% | $ | 1,790,000 | $ | 1,650,000 | |||||||||||||
| Weighted-Average / Gross Debt | 4.24% | $ | 2,174,453 | $ | 2,180,178 | |||||||||||||
| Note: | ||
| (1) | Interest rates as of March 31, 2019. | |
| (2) | Excludes the impact of fair value adjustments and deferred financing costs. | |
| (3) | The floating interest rate is hedged with an interest rate swap. | |
| (4) | As of March 31, 2019, there was $460.0 million of borrowing capacity on the revolver, which is charged an unused commitment fee of 0.30% annually. | |
| (5) | Reflects an interest rate swap of $93.0 million on the $96.0 million mortgage loan and $350.0 million on the $400.0 million term loan. | |
| (6) | Reflects financing transactions in April 2019. | |
| Schedule of Net Interest Expense (Amounts in thousands) (unaudited) | ||||||||||
| For the three months ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Senior Notes | $ | 5,944 | $ | 10,587 | ||||||
| Revolver and Term Loans | 10,153 | 10,578 | ||||||||
| Mortgage loans | 5,423 | 6,607 | ||||||||
| Amortization of deferred financing costs | 792 | 929 | ||||||||
| Sub-total | $ | 22,312 | $ | 28,701 | ||||||
| Less: Unrealized gain on discontinued cash flow hedges (1) | (2,250 | ) | — | |||||||
| Interest Expense | $ | 20,062 | $ | 28,701 | ||||||
| Less: Interest income | (1,171 | ) | (1,230 | ) | ||||||
| Net Interest Expense | $ | 18,891 | $ | 27,471 | ||||||
| Note: | ||
| (1) | The unrealized gain on discontinued cash flow hedges is excluded from the calculations of Adjusted FFO and Adjusted EBITDA. | |
| RLJ Lodging Trust Pro forma Operating Statistics - Top 60 Assets (unaudited) | ||||||
| Property | City/State | # of Rooms | Pro forma Consolidated Hotel EBITDA | |||
| The Knickerbocker New York | New York, NY | 330 | $13,004 | |||
| Marriott Louisville Downtown | Louisville, KY | 616 | 11,569 | |||
| Wyndham San Diego Bayside | San Diego, CA | 600 | 10,580 | |||
| San Francisco Marriott Union Square | San Francisco, CA | 401 | 9,794 | |||
| Wyndham Boston Beacon Hill | Boston, MA | 304 | 9,403 | |||
| The Mills House Wyndham Grand Hotel | Charleston, SC | 216 | 9,100 | |||
| Embassy Suites San Francisco Airport - Waterfront | Burlingame, CA | 340 | 8,620 | |||
| Courtyard Austin Downtown Convention Center | Austin, TX | 270 | 8,417 | |||
| Embassy Suites Fort Lauderdale 17th Street | Fort Lauderdale, FL | 361 | 8,099 | |||
| Embassy Suites Los Angeles - International Airport South | El Segundo, CA | 349 | 7,948 | |||
| Hilton Myrtle Beach Resort | Myrtle Beach, SC | 385 | 7,869 | |||
| Wyndham New Orleans - French Quarter | New Orleans, LA | 374 | 7,842 | |||
| Embassy Suites Mandalay Beach - Hotel & Resort | Oxnard, CA | 250 | 7,650 | |||
| Courtyard Portland City Center | Portland, OR | 256 | 7,577 | |||
| Embassy Suites San Francisco Airport - South San Francisco | South San Francisco, CA | 312 | 7,573 | |||
| DoubleTree Grand Key Resort | Key West, FL | 216 | 7,549 | |||
| Courtyard San Francisco | San Francisco, CA | 166 | 7,424 | |||
| DoubleTree Metropolitan Hotel New York City | New York, NY | 764 | 7,290 | |||
| Residence Inn Palo Alto Los Altos | Los Altos, CA | 156 | 7,288 | |||
| Embassy Suites Myrtle Beach - Oceanfront Resort | Myrtle Beach, SC | 255 | 7,202 | |||
| Renaissance Pittsburgh Hotel | Pittsburgh, PA | 300 | 6,834 | |||
| Hilton Garden Inn San Francisco Oakland Bay Brg | Emeryville, CA | 278 | 6,777 | |||
| Embassy Suites Deerfield Beach - Resort & Spa | Deerfield Beach, FL | 244 | 6,454 | |||
| Hyatt House Emeryville San Francisco Bay Area | Emeryville, CA | 234 | 6,398 | |||
| Wyndham Santa Monica At the Pier | Santa Monica, CA | 132 | 6,365 | |||
| Courtyard Waikiki Beach | Honolulu, HI | 403 | 6,350 | |||
| Fairfield Inn & Suites Washington DC Downtown | Washington, DC | 198 | 6,132 | |||
| Wyndham Philadelphia Historic District | Philadelphia, PA | 364 | 6,102 | |||
| Hyatt House San Jose Silicon Valley | San Jose, CA | 164 | 6,078 | |||
| Hyatt House Santa Clara | Santa Clara, CA | 150 | 6,008 | |||
| Courtyard Chicago Downtown Magnificent Mile | Chicago, IL | 306 | 5,925 | |||
| Embassy Suites Atlanta - Buckhead | Atlanta, GA | 316 | 5,848 | |||
| Embassy Suites Tampa Downtown Convention Center | Tampa, FL | 360 | 5,706 | |||
| Wyndham Houston - Medical Center Hotel & Suites | Houston, TX | 287 | 5,583 | |||
| Courtyard Charleston Historic District | Charleston, SC | 176 | 5,404 | |||
| Marriott Denver South @ Park Meadows | Lone Tree, CO | 279 | 5,356 | |||
| DoubleTree Suites by Hilton Austin | Austin, TX | 188 | 5,270 | |||
| Embassy Suites Milpitas Silicon Valley | Milpitas, CA | 266 | 5,231 | |||
| Embassy Suites Boston Waltham | Waltham, MA | 275 | 5,226 | |||
| Residence Inn Bethesda Downtown | Bethesda, MD | 188 | 5,089 | |||
| Renaissance Fort Lauderdale Plantation Hotel | Plantation, FL | 250 | 5,063 | |||
| Hyatt House San Diego Sorrento Mesa | San Diego, CA | 193 | 5,037 | |||
| Residence Inn Austin Downtown Convention Center | Austin, TX | 179 | 4,987 | |||
| Hilton Cabana Miami Beach | Miami Beach, FL | 231 | 4,963 | |||
| Embassy Suites Orlando - International Drive South/Convention Center | Orlando, FL | 244 | 4,655 | |||
| Embassy Suites Irvine Orange County | Irvine, CA | 293 | 4,554 | |||
| Homewood Suites Washington DC Downtown | Washington, DC | 175 | 4,501 | |||
| Hilton Garden Inn Los Angeles Hollywood | Los Angeles, CA | 160 | 4,472 | |||
| Hyatt Place Washington DC Downtown K Street | Washington, DC | 164 | 4,208 | |||
| Embassy Suites Dallas - Love Field | Dallas, TX | 248 | 4,149 | |||
| Renaissance Boulder Flatiron Hotel | Broomfield, CO | 232 | 4,041 | |||
| Embassy Suites Los Angeles Downey | Downey, CA | 220 | 3,994 | |||
| Embassy Suites Miami - International Airport | Miami, FL | 318 | 3,879 | |||
| Hyatt Place Fremont Silicon Valley | Fremont, CA | 151 | 3,865 | |||
| Marriott Denver Airport @ Gateway Park | Aurora, CO | 238 | 3,782 | |||
| Wyndham Pittsburgh University Center | Pittsburgh, PA | 251 | 3,747 | |||
| Embassy Suites Phoenix - Biltmore | Phoenix, AZ | 232 | 3,679 | |||
| Residence Inn National Harbor Washington DC | Oxon Hill, MD | 162 | 3,672 | |||
| Embassy Suites Minneapolis - Airport | Bloomington, MN | 310 | 3,560 | |||
| Hilton Garden Inn New Orleans Convention Center | New Orleans, LA | 286 | 3,422 | |||
| Top 60 Assets | 16,566 | 374,164 | ||||
| Other (90 Assets) | 12,031 | 168,218 | ||||
| Total Portfolio | 28,597 | $542,382 | ||||
| Note: For the trailing twelve months ended March 31, 2019. Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. Amounts in thousands, except rooms. The information has not been audited and is presented only for comparison purposes. |
| RLJ Lodging Trust Pro forma Operating Statistics (unaudited) | ||||||||||||||||||||||||||||||||||||||||||
| For the three months ended March 31, 2019 and 2018 | ||||||||||||||||||||||||||||||||||||||||||
| Top Markets | # of Hotels | Occupancy | ADR | RevPAR | ||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Var | 2019 | 2018 | Var | 2019 | 2018 | Var | ||||||||||||||||||||||||||||||||||
| Northern California | 12 | 81.1 | % | 79.1 | % | 2.5 | % | $ | 252.51 | $ | 224.08 | 12.7 | % | $ | 204.85 | $ | 177.30 | 15.5 | % | |||||||||||||||||||||||
| Southern California | 9 | 79.7 | % | 84.0 | % | (5.1 | )% | 173.17 | 172.02 | 0.7 | % | 138.06 | 144.47 | (4.4 | )% | |||||||||||||||||||||||||||
| South Florida | 13 | 89.6 | % | 91.6 | % | (2.2 | )% | 219.65 | 224.98 | (2.4 | )% | 196.77 | 206.18 | (4.6 | )% | |||||||||||||||||||||||||||
| Austin | 14 | 79.9 | % | 76.6 | % | 4.3 | % | 173.99 | 178.24 | (2.4 | )% | 139.02 | 136.58 | 1.8 | % | |||||||||||||||||||||||||||
| New York City | 5 | 81.7 | % | 83.6 | % | (2.2 | )% | 178.67 | 174.62 | 2.3 | % | 146.04 | 145.91 | 0.1 | % | |||||||||||||||||||||||||||
| Washington, DC | 7 | 72.5 | % | 76.7 | % | (5.5 | )% | 182.09 | 178.32 | 2.1 | % | 132.02 | 136.82 | (3.5 | )% | |||||||||||||||||||||||||||
| Denver | 13 | 62.0 | % | 67.6 | % | (8.4 | )% | 126.45 | 129.22 | (2.1 | )% | 78.35 | 87.41 | (10.4 | )% | |||||||||||||||||||||||||||
| Chicago | 14 | 60.4 | % | 59.5 | % | 1.5 | % | 119.71 | 121.87 | (1.8 | )% | 72.28 | 72.49 | (0.3 | )% | |||||||||||||||||||||||||||
| Houston | 11 | 73.0 | % | 73.2 | % | (0.2 | )% | 142.36 | 144.90 | (1.7 | )% | 103.96 | 106.06 | (2.0 | )% | |||||||||||||||||||||||||||
| Louisville | 5 | 63.9 | % | 58.7 | % | 8.9 | % | 146.43 | 140.42 | 4.3 | % | 93.50 | 82.37 | 13.5 | % | |||||||||||||||||||||||||||
| Other | 47 | 73.0 | % | 73.1 | % | 0.0 | % | 162.10 | 159.15 | 1.9 | % | 118.39 | 116.29 | 1.8 | % | |||||||||||||||||||||||||||
| Total | 150 | 74.8 | % | 75.3 | % | (0.7 | )% | $ | 175.32 | $ | 171.87 | 2.0 | % | $ | 131.19 | $ | 129.51 | 1.3 | % | |||||||||||||||||||||||
| Service Level | # of Hotels | Occupancy | ADR | RevPAR | ||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Var | 2019 | 2018 | Var | 2019 | 2018 | Var | ||||||||||||||||||||||||||||||||||
| Focused-Service | 102 | 72.9 | % | 74.1 | % | (1.6 | )% | $ | 158.97 | $ | 156.87 | 1.3 | % | $ | 115.84 | $ | 116.20 | (0.3 | )% | |||||||||||||||||||||||
| Compact Full-Service | 45 | 78.6 | % | 79.0 | % | (0.5 | )% | 195.14 | 190.27 | 2.6 | % | 153.34 | 150.30 | 2.0 | % | |||||||||||||||||||||||||||
| Full-Service | 3 | 60.0 | % | 53.5 | % | 12.0 | % | 146.31 | 141.45 | 3.4 | % | 87.75 | 75.73 | 15.9 | % | |||||||||||||||||||||||||||
| Total | 150 | 74.8 | % | 75.3 | % | (0.7 | )% | $ | 175.32 | $ | 171.87 | 2.0 | % | $ | 131.19 | $ | 129.51 | 1.3 | % | |||||||||||||||||||||||
| Chain Scale | # of Hotels | Occupancy | ADR | RevPAR | ||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Var | 2019 | 2018 | Var | 2019 | 2018 | Var | ||||||||||||||||||||||||||||||||||
| Upper Upscale | 37 | 75.6 | % | 75.4 | % | 0.2 | % | $ | 196.77 | $ | 191.40 | 2.8 | % | $ | 148.67 | $ | 144.35 | 3.0 | % | |||||||||||||||||||||||
| Upscale | 96 | 74.9 | % | 75.9 | % | (1.3 | )% | 162.96 | 160.73 | 1.4 | % | 122.02 | 121.99 | 0.0 | % | |||||||||||||||||||||||||||
| Upper Midscale | 15 | 72.0 | % | 71.4 | % | 0.9 | % | 150.51 | 150.98 | (0.3 | )% | 108.40 | 107.78 | 0.6 | % | |||||||||||||||||||||||||||
| Other | 2 | 68.5 | % | 70.4 | % | (2.7 | )% | 246.72 | 229.53 | 7.5 | % | 169.06 | 161.63 | 4.6 | % | |||||||||||||||||||||||||||
| Total | 150 | 74.8 | % | 75.3 | % | (0.7 | )% | $ | 175.32 | $ | 171.87 | 2.0 | % | $ | 131.19 | $ | 129.51 | 1.3 | % | |||||||||||||||||||||||
| Flags | # of Hotels | Occupancy | ADR | RevPAR | ||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | Var | 2019 | 2018 | Var | 2019 | 2018 | Var | ||||||||||||||||||||||||||||||||||
| Residence Inn | 29 | 74.4 | % | 75.9 | % | (2.0 | )% | $ | 152.39 | $ | 154.55 | (1.4 | )% | $ | 113.38 | $ | 117.36 | (3.4 | )% | |||||||||||||||||||||||
| Courtyard | 24 | 73.9 | % | 74.6 | % | (0.9 | )% | 159.51 | 157.14 | 1.5 | % | 117.96 | 117.29 | 0.6 | % | |||||||||||||||||||||||||||
| Embassy Suites | 22 | 79.1 | % | 80.1 | % | (1.1 | )% | 195.38 | 191.20 | 2.2 | % | 154.64 | 153.09 | 1.0 | % | |||||||||||||||||||||||||||
| Hyatt House | 11 | 79.2 | % | 81.5 | % | (2.7 | )% | 182.87 | 173.64 | 5.3 | % | 144.91 | 141.47 | 2.4 | % | |||||||||||||||||||||||||||
| Hilton Garden Inn | 8 | 71.3 | % | 73.6 | % | (3.1 | )% | 167.22 | 162.10 | 3.2 | % | 119.23 | 119.31 | (0.1 | )% | |||||||||||||||||||||||||||
| SpringHill Suites | 8 | 59.9 | % | 63.6 | % | (5.9 | )% | 126.70 | 125.60 | 0.9 | % | 75.86 | 79.92 | (5.1 | )% | |||||||||||||||||||||||||||
| Wyndham | 8 | 76.2 | % | 74.2 | % | 2.7 | % | 159.65 | 160.66 | (0.6 | )% | 121.66 | 119.25 | 2.0 | % | |||||||||||||||||||||||||||
| Fairfield Inn & Suites | 7 | 75.4 | % | 72.5 | % | 4.0 | % | 157.78 | 159.73 | (1.2 | )% | 118.93 | 115.81 | 2.7 | % | |||||||||||||||||||||||||||
| Hampton Inn | 7 | 71.6 | % | 74.0 | % | (3.2 | )% | 144.88 | 144.10 | 0.5 | % | 103.73 | 106.59 | (2.7 | )% | |||||||||||||||||||||||||||
| Marriott | 6 | 69.1 | % | 64.8 | % | 6.8 | % | 211.09 | 196.25 | 7.6 | % | 145.94 | 127.09 | 14.8 | % | |||||||||||||||||||||||||||
| DoubleTree | 4 | 88.6 | % | 89.2 | % | (0.7 | )% | 193.89 | 190.67 | 1.7 | % | 171.71 | 170.05 | 1.0 | % | |||||||||||||||||||||||||||
| Renaissance | 3 | 72.4 | % | 73.9 | % | (2.0 | )% | 171.80 | 173.76 | (1.1 | )% | 124.45 | 128.40 | (3.1 | )% | |||||||||||||||||||||||||||
| Hyatt Place | 3 | 70.6 | % | 75.4 | % | (6.4 | )% | 176.52 | 169.51 | 4.1 | % | 124.66 | 127.82 | (2.5 | )% | |||||||||||||||||||||||||||
| Homewood Suites | 2 | 73.2 | % | 66.9 | % | 9.3 | % | 162.76 | 162.11 | 0.4 | % | 119.11 | 108.51 | 9.8 | % | |||||||||||||||||||||||||||
| Hilton | 2 | 60.7 | % | 64.4 | % | (5.7 | )% | 176.50 | 186.11 | (5.2 | )% | 107.13 | 119.83 | (10.6 | )% | |||||||||||||||||||||||||||
| Hyatt | 2 | 81.5 | % | 81.8 | % | (0.4 | )% | 230.02 | 200.37 | 14.8 | % | 187.43 | 163.86 | 14.4 | % | |||||||||||||||||||||||||||
| Other | 4 | 66.9 | % | 65.6 | % | 1.9 | % | 219.90 | 212.29 | 3.6 | % | 147.12 | 139.32 | 5.6 | % | |||||||||||||||||||||||||||
| Total | 150 | 74.8 | % | 75.3 | % | (0.7 | )% | $ | 175.32 | $ | 171.87 | 2.0 | % | $ | 131.19 | $ | 129.51 | 1.3 | % | |||||||||||||||||||||||
| Note: Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. The information has not been audited and is presented only for comparison purposes. |