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Chesapeake Lodging Trust Reports Fourth Quarter Results

ANNAPOLIS, Md.--(BUSINESS WIRE)--Feb. 18, 2016-- Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended December 31, 2015.

HIGHLIGHTS

  • RevPAR: 3.8% pro forma increase for the hotel portfolio over the same period in 2014.
  • Adjusted Hotel EBITDA Margin: 240 basis point pro forma increase to 32.7% for the hotel portfolio over the same period in 2014.
  • Adjusted Hotel EBITDA: $47.8 million.
  • Adjusted Corporate EBITDA: $42.8 million.
  • Adjusted FFO: $30.7 million or $0.52 per diluted common share.


CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months and year ended December 31, 2015 and 2014 (in millions, except share and per share amounts):

           
Three Months Ended December 31, Year Ended December 31,
2015       2014 2015       2014
Total revenue $ 146.2 $ 123.5 $ 582.6 $ 478.0
 
Net income available to common shareholders $ 12.3 $ 6.4 $ 57.8 $ 51.3
Net income per diluted common share $ 0.21 $ 0.12 $ 0.99 $ 1.00
 
Adjusted Hotel EBITDA $ 47.8 $ 37.7 $ 190.6 $ 154.0
 
Adjusted Corporate EBITDA $ 42.8 $ 33.7 $ 172.5 $ 138.4
 
AFFO available to common shareholders $ 30.7 $ 24.0 $ 127.8 $ 100.4
AFFO per diluted common share $ 0.52 $ 0.44 $ 2.21 $ 1.97
 
Weighted-average number of diluted common shares outstanding 59,027,852 54,262,749 57,926,399 50,890,861
 

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared using the following key operating metrics: occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin. The Trust uses the term "pro forma" to refer to metrics that include, or comparisons of metrics that are based on, the operating results of hotels under previous ownership for either a portion of or the entire period. As of December 31, 2015, the Trust owned 22 hotels. Since two of its hotels owned as of December 31, 2015 were acquired during 2015 and another one was acquired in October 2014, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three months and year ended December 31, 2015 and 2014.

Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three months and year ended December 31, 2015 and 2014 (in thousands, except for ADR and RevPAR):

           
Three Months Ended December 31, Year Ended December 31,
2015       2014(1)       Change 2015(1)       2014(1)       Change
Pro forma Occupancy 79.0 % 75.2 % 380 bps 81.3 % 79.4 % 190 bps
Pro forma ADR $ 222.41 $ 225.11 (1.2)% $ 228.70 $ 221.44 3.3%
Pro forma RevPAR $ 175.68 $ 169.29 3.8% $ 185.88 $ 175.87 5.7%
 
Pro forma Adjusted Hotel EBITDA $ 47,763 $ 42,668 11.9% $ 197,393 $ 180,113 9.6%
Pro forma Adjusted Hotel EBITDA Margin 32.7 % 30.3 % 240 bps 32.7 % 31.4 % 130 bps
 
__________

(1)

 

Includes results of operations for certain hotels prior to their acquisition by the Trust.

 

Hotel EBITDA, Adjusted Hotel EBITDA, Adjusted Hotel EBITDA Margin, Corporate EBITDA, Adjusted Corporate EBITDA, FFO, FFO available to common shareholders and AFFO available to common shareholders are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. See the discussion included in this press release for information regarding these non-GAAP financial measures.

CAPITAL MARKETS ACTIVITY

The Trust has not sold any common shares under its continuous at-the-market (ATM) program or repurchased any common shares under its share repurchase program during 2015 and through February 18, 2016.

DIVIDENDS

On October 15, 2015, the Trust paid dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2015. On December 17, 2015, the Trust declared dividends in the amounts of $0.40 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of December 31, 2015. Both dividends were paid on January 15, 2016.

2016 OUTLOOK

The Trust reaffirms its previously provided first quarter and full year 2016 outlook as follows (in millions, except RevPAR and per share amounts):

           

First Quarter
2016 Outlook

Full Year
2016 Outlook
Low       High Low       High
CONSOLIDATED:
 
Net income available to common shareholders $ 3.4 $ 5.1 $ 72.9 $ 78.6
Net income per diluted common share $ 0.06 $ 0.09 $ 1.24 $ 1.34
 
Adjusted Corporate EBITDA $ 31.2 $ 32.7 $ 193.6 $ 200.1
 
AFFO available to common shareholders $ 21.8 $ 23.6 $ 147.1 $ 152.8
AFFO per diluted common share $ 0.37 $ 0.40 $ 2.50 $ 2.60
 
Corporate cash general and administrative expense $ 2.8 $ 3.0 $ 10.0 $ 10.8
Corporate non-cash general and administrative expense $ 2.3 $ 2.3 $ 9.4 $ 9.4
 
Weighted-average number of diluted common shares outstanding 59.2 59.2 58.9 58.9
 
HOTEL PORTFOLIO:
 
RevPAR $ 164.00 $ 167.00 $ 195.00 $ 199.00
Pro forma RevPAR increase over 2015(1) 6.0 % 8.0 % 5.0 % 7.0 %
Adjusted Hotel EBITDA $ 36.3 $ 38.0 $ 213.0 $ 220.3
Adjusted Hotel EBITDA Margin 26.9 % 27.6 % 33.7 % 34.2 %
Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1) 200 bps 275 bps 100 bps 150 bps
 
_____________

(1)

 

The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust.

 

The Trust’s 2016 outlook assumes no acquisitions, dispositions, or financing transactions beyond the refinance of the Hyatt Regency Boston mortgage loan and the Courtyard Washington Capitol Hill/Navy Yard mortgage loan, which are prepayable without penalty on April 6, 2016 and August 1, 2016, respectively. See the accompanying financial tables for quarterly pro forma hotel operating results for the hotel portfolio for 2015.

“We are off to a strong start in 2016 with RevPAR growth of over 9.0% in January. We continue to see solid trends on the group side of our business, which in turn has helped compression with transient booking thus far,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “We expect the remainder of the quarter to exhibit continued strong growth and as a result, we are reaffirming the first quarter and full year outlook we provided earlier this year.”

NON-GAAP FINANCIAL MEASURES

The Trust reports the following eight non-GAAP financial measures that it believes are useful to investors as key measures of its operating performance: (1) Hotel EBITDA, (2) Adjusted Hotel EBITDA, (3) Adjusted Hotel EBITDA Margin, (4) Corporate EBITDA, (5) Adjusted Corporate EBITDA, (6) FFO, (7) FFO available to common shareholders and (8) AFFO available to common shareholders. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are included in the accompanying financial tables.

Hotel EBITDAHotel EBITDA is defined as net income before interest, income taxes, depreciation and amortization, air rights amortization, corporate general and administrative, and hotel acquisition costs. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust’s hotel operating performance, excluding the impact of the Trust’s capital structure (primarily interest), the Trust’s asset base (primarily depreciation and amortization), and the Trust’s corporate-level expenses (corporate general and administrative and hotel acquisition costs).

Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for non-cash amortization of intangible assets and liabilities, including ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Hotel EBITDA provides investors with another useful financial measure to evaluate the Trust’s hotel operating performance, excluding the effect of these non-cash items.

Adjusted Hotel EBITDA MarginAdjusted Hotel EBITDA Margin is defined as Adjusted Hotel EBITDA as a percentage of total revenues. The Trust believes that Adjusted Hotel EBITDA Margin provides investors another useful financial measure to evaluate the Trust’s hotel operating performance.

Corporate EBITDA – Corporate EBITDA is defined as net income before interest, income taxes, and depreciation and amortization. The Trust believes that Corporate EBITDA provides investors a useful financial measure to evaluate the Trust’s operating performance, excluding the impact of the Trust’s capital structure (primarily interest expense) and the Trust’s asset base (primarily depreciation and amortization).

Adjusted Corporate EBITDA – The Trust further adjusts Corporate EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items, and gains (losses) from sales of real estate, which is a non-recurring item. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges of depreciable real estate, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust’s operating performance.

FFO available to common shareholders – The Trust reduces FFO for preferred share dividends and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust’s operating performance after taking into account the interests of holders of the Trust’s preferred shares and unvested time-based awards.

AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT’s definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

CONFERENCE CALL

The Trust will host a conference call on Thursday, February 18, 2016 at 5:00 p.m. Eastern Time to discuss its financial results. Interested individuals are invited to listen to the call by dialing (877) 683-0303 (U.S./Canadian callers) or (706) 643-5037 (International callers). The conference call ID is 32353126. A simultaneous webcast of the call will be available on the Trust’s website at www.chesapeakelodgingtrust.com. It is recommended that participants call or log on 10 minutes ahead of the scheduled start time to ensure proper connection.

A replay of the conference call will be available two hours after the live call until midnight on February 25, 2016. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 32353126. A webcast replay and transcript of the conference call will be archived and available on the Trust’s website for 12 months.

ABOUT CHESAPEAKE LODGING TRUST

Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 22 hotels with an aggregate of 6,699 rooms in nine states and the District of Columbia. Additional information can be found on the Trust’s website at www.chesapeakelodgingtrust.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts, such as the Trust’s first quarter and full year 2016 outlook. 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: U.S. economic conditions generally and the real estate market and the lodging industry specifically; management and performance of the Trust's hotels; supply and demand for hotel rooms in the Trust's markets; the Trust's competition; the Trust’s ability to continue to satisfy complex rules in order for it to remain a REIT for federal income tax purposes; the effects of any acquisitions, dispositions or financing transactions the Trust may undertake; and other risks and uncertainties associated with the Trust’s business described in its filings with the SEC. Although the Trust believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of February 18, 2016, and the Trust undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Trust’s expectations, except as required by law.

 
CHESAPEAKE LODGING TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
     
 
 
December 31,
2015       2014
 
ASSETS
Property and equipment, net $ 1,926,944 $ 1,580,427
Intangible assets, net 36,414 36,992
Cash and cash equivalents 50,544 29,326
Restricted cash 40,361 43,387
Accounts receivable, net 15,603 13,102
Prepaid expenses and other assets 17,900 10,637
Deferred financing costs, net 6,493   6,064  
Total assets $ 2,094,259   $ 1,719,935  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt $ 776,241 $ 551,723
Accounts payable and accrued expenses 62,683 53,442
Other liabilities 45,778   32,788  
Total liabilities 884,702   637,953  
 
Commitments and contingencies
 

Preferred shares, $.01 par value; 100,000,000 shares authorized;
Series A Cumulative Redeemable Preferred Shares; 5,000,000 shares
issued and outstanding ($127,422 liquidation preference)

50 50

Common shares, $.01 par value; 400,000,000 shares authorized;
59,659,522 shares and 54,818,064 shares issued and outstanding, respectively

597 548
Additional paid-in capital 1,297,877 1,138,391
Cumulative dividends in excess of net income (88,675 ) (57,007 )
Accumulated other comprehensive loss (292 )  
Total shareholders’ equity 1,209,557   1,081,982  
Total liabilities and shareholders’ equity $ 2,094,259   $ 1,719,935  
 
 
SUPPLEMENTAL CREDIT INFORMATION:
Fixed charge coverage ratio(1) 3.04 2.65
Leverage ratio(1) 32.6 % 31.1 %
 
______________
(1)   Calculated as defined under the Trust’s revolving credit facility.
 
 
CHESAPEAKE LODGING TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
           
 
 
Three Months Ended December 31, Year Ended December 31,
2015       2014 2015       2014
(unaudited)
REVENUE
Rooms $ 108,193 $ 93,297 $ 441,141 $ 364,727
Food and beverage 31,139 25,093 117,171 94,307
Other 6,848   5,111   24,312   18,946  
Total revenue 146,180   123,501   582,624   477,980  
 
EXPENSES
Hotel operating expenses:
Rooms 25,175 22,515 100,245 84,445
Food and beverage 22,895 19,016 87,625 71,816
Other direct 1,809 2,019 7,109 8,032
Indirect 48,383   42,166   196,523   160,589  
Total hotel operating expenses 98,262 85,716 391,502 324,882
Depreciation and amortization 18,581 14,079 69,743 51,567
Air rights contract amortization 130 130 520 520
Corporate general and administrative 4,952 4,052 18,046 15,557
Hotel acquisition costs   3,562   854   3,622  
Total operating expenses 121,925   107,539   480,665   396,148  
 
Operating income 24,255 15,962 101,959 81,832
 
Interest income 8
Interest expense (8,222 ) (6,880 ) (31,856 ) (27,357 )
Gain on sale of hotel       7,006  
 
Income before income taxes 16,033 9,082 70,103 61,489
 
Income tax expense (1,302 ) (243 ) (2,595 ) (535 )
 
Net income 14,731 8,839 67,508 60,954
 
Preferred share dividends (2,422 ) (2,422 ) (9,688 ) (9,688 )
Net income available to common shareholders $ 12,309   $ 6,417   $ 57,820   $ 51,266  
 
Net income per common share:
Basic $ 0.21 $ 0.12 $ 1.00 $ 1.01
Diluted $ 0.21 $ 0.12 $ 0.99 $ 1.00
 

Weighted-average number of common shares
outstanding:

Basic 58,561,323 53,821,483 57,474,256 50,488,007
Diluted 59,027,852 54,262,749 57,926,399 50,890,861
 
 
CHESAPEAKE LODGING TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
     
 
 
Year Ended December 31,
2015       2014
 
Cash flows from operating activities:
Net income $ 67,508 $ 60,954

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization 69,743 51,567
Air rights contract amortization 520 520
Deferred financing costs amortization 1,882 2,448
Gain on sale of hotel (7,006 )
Share-based compensation 7,644 5,803
Other (834 ) 625
Changes in assets and liabilities:
Accounts receivable, net (679 ) 1,277
Prepaid expenses and other assets (4,101 ) (290 )
Accounts payable and accrued expenses 4,069 3,766
Other liabilities 5,961   (30 )
Net cash provided by operating activities 151,713   119,634  
 
Cash flows from investing activities:
Acquisition of hotels, net of cash acquired (255,249 ) (152,292 )
Disposition of hotel, net of cash sold 31,822
Improvements and additions to hotels (36,782 ) (87,182 )
Change in restricted cash 3,026   (2,164 )
Net cash used in investing activities (289,005 ) (209,816 )
 
Cash flows from financing activities:
Proceeds from sale of common shares, net of underwriting fees 153,962 144,320
Payment of offering costs related to sale of common shares (284 ) (392 )
Borrowings under revolving credit facility 330,000 100,000
Repayments under revolving credit facility (220,000 ) (100,000 )
Proceeds from issuance of mortgage debt 90,000
Scheduled principal payments on mortgage debt (10,271 ) (69,837 )
Payment of deferred financing costs (2,311 ) (2,011 )
Payment of dividends to common shareholders (81,111 ) (58,892 )
Payment of dividends to preferred shareholders (9,688 ) (9,688 )
Repurchase of common shares (1,787 ) (2,705 )
Net cash provided by financing activities 158,510   90,795  
Net increase in cash 21,218 613
Cash and cash equivalents, beginning of period 29,326   28,713  
Cash and cash equivalents, end of period $ 50,544   $ 29,326  
 
 

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share data)

(unaudited)

 
 
The following table reconciles net income to Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three months and year ended December 31, 2015 and 2014:
 
           
Three Months Ended December 31, Year Ended December 31,
2015       2014 2015       2014
Net income $ 14,731 $ 8,839 $ 67,508 $ 60,954

Add:

Interest expense

8,222 6,880 31,856 27,357
Income tax expense 1,302 243 2,595 535
Depreciation and amortization 18,581 14,079 69,743 51,567
Air rights contract amortization 130 130 520 520
Corporate general and administrative 4,952 4,052 18,046 15,557
Hotel acquisition costs 3,562 854 3,622

Less:

Interest income

      (8 )
Hotel EBITDA 47,918 37,785 191,122 160,104
 

Less:

Non-cash amortization(1)

(155 ) (81 ) (571 ) 889
Gain on sale of hotel       (7,006 )
Adjusted Hotel EBITDA 47,763 37,704 190,551 153,987
 

Add:

Prior owner Hotel EBITDA(2)

4,964 6,842 28,219

Less:

Hotel EBITDA of hotel sold(3)

      (2,093 )
Pro forma Adjusted Hotel EBITDA $ 47,763   $ 42,668   $ 197,393   $ 180,113  
 
Total revenue $ 146,180 $ 123,501 $ 582,624 $ 477,980

Add:

Prior owner total revenue(2)

17,341 20,286 100,311

Less:

Total revenue of hotel sold(3)

      (5,166 )
Pro forma total revenue $ 146,180   $ 140,842   $ 602,910   $ 573,125  
 
Pro forma Adjusted Hotel EBITDA Margin 32.7 % 30.3 % 32.7 % 31.4 %
 
_____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
(2) Reflects results of operations for certain hotels prior to our acquisition.
(3) Reflects results of operations for the Courtyard Anaheim at Disneyland Resort which was sold on September 30, 2014.
 
 
The following table reconciles net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months and year ended December 31, 2015 and 2014:
 
   
Three Months Ended December 31, Year Ended December 31,
2015   2014 2015   2014
Net income $ 14,731 $ 8,839 $ 67,508 $ 60,954

Add:

Interest expense

8,222 6,880 31,856 27,357
Income tax expense 1,302 243 2,595 535
Depreciation and amortization 18,581 14,079 69,743 51,567

Less:

Interest income

      (8 )
Corporate EBITDA 42,836 30,041 171,702 140,405
 

Add:

Hotel acquisition costs

3,562 854 3,622

Less:

Non-cash amortization(1)

(25 ) 49 (51 ) 1,408
Gain on sale of hotel       (7,006 )
Adjusted Corporate EBITDA $ 42,811   $ 33,652   $ 172,505   $ 138,429  
 
____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.
 
 
The following table reconciles net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months and year ended December 31, 2015 and 2014:
 
           
Three Months Ended December 31, Year Ended December 31,
2015       2014 2015       2014
Net income $ 14,731 $ 8,839 $ 67,508 $ 60,954

Add:

Depreciation and amortization

18,581 14,079 69,743 51,567

Less: 

Gain on sale of hotel

      (7,006 )
FFO 33,312 22,918 137,251 105,515
 

Less:

Preferred share dividends

(2,422 ) (2,422 ) (9,688 ) (9,688 )
Dividends declared on unvested time-based awards (134 ) (114 ) (560 ) (499 )
Undistributed earnings allocated to unvested time-based awards        
FFO available to common shareholders 30,756 20,382 127,003 95,328
 

Add:

Hotel acquisition costs

3,562 854 3,622
Non-cash amortization(1) (25 ) 49   (51 ) 1,408  
AFFO available to common shareholders $ 30,731   $ 23,993   $ 127,806   $ 100,358  
 
FFO per common share:
Basic $ 0.53 $ 0.38 $ 2.21 $ 1.89
Diluted $ 0.52 $ 0.38 $ 2.19 $ 1.87
 
AFFO per common share:
Basic $ 0.52 $ 0.45 $ 2.22 $ 1.99
Diluted $ 0.52 $ 0.44 $ 2.21 $ 1.97
 
____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.
 
 
The following table reconciles forecasted net income to Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the three months ending March 31, 2016 and year ending December 31, 2016:
 
           

Three Months Ending
March 31, 2016

Year Ending
December 31, 2016

Low       High Low      

High

Net income $ 5,950 $ 7,700 $ 83,130 $ 88,880

Add:

Interest expense

8,260 8,260 33,510 33,510
Income tax expense (benefit) (1,500 ) (1,700 ) 2,750 3,500
Depreciation and amortization 18,470 18,470 74,290 74,290
Air rights contract amortization 130 130 520 520
Corporate general and administrative 5,100   5,300   19,420   20,170  
Hotel EBITDA 36,410 38,160 213,620 220,870
 

Less: 

Non-cash amortization(1)

(160 ) (160 ) (620 ) (620 )
Adjusted Hotel EBITDA $ 36,250   $ 38,000   $ 213,000   $ 220,250  
 
Total revenue $ 134,900 $ 137,600 $ 631,500 $ 643,500
 
Adjusted Hotel EBITDA Margin 26.9 % 27.6 % 33.7 % 34.2 %
 
_____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
 
 
The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending March 31, 2016 and year ending December 31, 2016:
 
           

Three Months Ending
March 31, 2016

Year Ending
December 31, 2016

Low       High Low       High
Net income $ 5,950 $ 7,700 $ 83,130 $ 88,880

Add:

Interest expense

8,260 8,260 33,510 33,510
Income tax expense (benefit) (1,500 ) (1,700 ) 2,750 3,500
Depreciation and amortization 18,470   18,470   74,290   74,290  
Corporate EBITDA 31,180 32,730 193,680 200,180
 

Less: 

Non-cash amortization(1)

(30 ) (30 ) (100 ) (100 )
Adjusted Corporate EBITDA $ 31,150   $ 32,700   $ 193,580   $ 200,080  
 
____________
(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.
 
 
The following table reconciles forecasted net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ending March 31, 2016 and year ending December 31, 2016:
 
           

Three Months Ending
March 31, 2016

Year Ending
December 31, 2016

Low       High Low       High
Net income $ 5,950 $ 7,700 $ 83,130 $ 88,880

Add:

Depreciation and amortization

18,470   18,470   74,290   74,290  

FFO

24,420 26,170 157,420 163,170
 

Less:

Preferred share dividends

(2,420 ) (2,420 ) (9,690 ) (9,690 )

Dividends declared on unvested time-based awards

(140 ) (140 ) (560 ) (560 )
Undistributed earnings allocated to unvested time-based awards        
FFO available to common shareholders 21,860 23,610 147,170 152,920
 

Less:

Non-cash amortization(1)

(30 ) (30 ) (100 ) (100 )
AFFO available to common shareholders $ 21,830   $ 23,580   $ 147,070   $ 152,820  
 
FFO per common share – basic and diluted $ 0.37 $ 0.40 $ 2.50 $ 2.60
 
AFFO per common share – basic and diluted $ 0.37 $ 0.40 $ 2.50 $ 2.60
 
Weighted-average number of common shares outstanding:
Basic 58,693 58,693 58,765 58,765
Diluted 59,196 59,196 58,860 58,860
 
____________

(1)

 

Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.

 
 

CHESAPEAKE LODGING TRUST

SUPPLEMENTAL HOTEL OPERATING RESULTS

(in thousands, except ADR and RevPAR)

(unaudited)

 
 
 

The following table includes the Trust's 2015 hotel operating results for the hotel portfolio:

           
 
Three Months Ended Year Ended

March 31,
2015

     

June 30,
2015

     

September 30,
2015

     

December 31,
2015

December 31,
2015

HOTEL PORTFOLIO(1):
Occupancy 72.0 % 86.0 % 87.9 % 79.0 % 81.3 %
ADR $ 214.86 $ 237.11 $ 237.33 $ 222.41 $ 228.70
RevPAR $ 154.78 $ 203.99 $ 208.58 $ 175.68 $ 185.88
 
Net income $ 1,552 $ 24,045 $ 27,180 $ 14,731 $ 67,508

Add:

Interest expense

7,179 8,168 8,287 8,222 31,856
Income tax expense (benefit) (3,348 ) 4,340 301 1,302 2,595
Depreciation and amortization 14,927 17,929 18,306 18,581 69,743
Air rights contract amortization 130 130 130 130 520
Corporate general and administrative 4,577 4,498 4,019 4,952 18,046
Hotel acquisition costs 369   466   19     854  
Hotel EBITDA 25,386 59,576 58,242 47,918 191,122
 

Less:

Non-cash amortization(2)

(81 ) (180 ) (155 ) (155 ) (571 )
Adjusted Hotel EBITDA 25,305 59,396 58,087 47,763 190,551
 

Add:

Prior owner Hotel EBITDA(1)

6,363   479       6,842  
Pro forma Adjusted Hotel EBITDA $ 31,668   $ 59,875   $ 58,087   $ 47,763   $ 197,393  
 
Total revenue $ 109,290 $ 162,145 $ 165,009 $ 146,180 $ 582,624

Add:

Prior owner total revenue(1)

18,044   2,242       20,286  
Pro forma total revenue $ 127,334   $ 164,387   $ 165,009   $ 146,180   $ 602,910  
 
Pro forma Adjusted Hotel EBITDA Margin 24.9 % 36.4 % 35.2 % 32.7 % 32.7 %
 
_____________
(1)   The hotel operating results for the three months ended March 31, 2015 and June 30, 2015, and for the year ended December 31, 2015, reflect results of operations for certain hotel(s) prior to their acquisition by the Trust.
(2) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
 
                 

CHESAPEAKE LODGING TRUST

CURRENT HOTEL PORTFOLIO
 
 
 
 
 
 
Hotel   Location Rooms Acquisition Date
1       Hyatt Regency Boston Boston, MA 502 March 18, 2010
2 Hilton Checkers Los Angeles Los Angeles, CA 193 June 1, 2010
3 Boston Marriott Newton Newton, MA 430 July 30, 2010
4

Le Meridien San Francisco

San Francisco, CA 360 December 15, 2010
5 Homewood Suites Seattle Convention Center Seattle, WA 195 May 2, 2011
6 W Chicago – City Center Chicago, IL 403 May 10, 2011
7 Hotel Indigo San Diego Gaslamp Quarter San Diego, CA 210 June 17, 2011
8 Courtyard Washington Capitol Hill/Navy Yard Washington, DC 204 June 30, 2011
9 Hotel Adagio San Francisco, Autograph Collection San Francisco, CA 171 July 8, 2011
10 Denver Marriott City Center Denver, CO 613 October 3, 2011
11 Hyatt Herald Square New York New York, NY 122 December 22, 2011
12 W Chicago – Lakeshore Chicago, IL 520 August 21, 2012
13 Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429 September 7, 2012
14 The Hotel Minneapolis, Autograph Collection Minneapolis, MN 222 October 30, 2012
15 Hyatt Place New York Midtown South New York, NY 185 March 14, 2013
16 W New Orleans – French Quarter New Orleans, LA 97 March 28, 2013
17 Le Meridien New Orleans New Orleans, LA 410 April 25, 2013
18 Hyatt Fisherman’s Wharf San Francisco, CA 316 May 31, 2013
19 Hyatt Santa Barbara Santa Barbara, CA 205 June 27, 2013
20 JW Marriott San Francisco Union Square San Francisco, CA 337 October 1, 2014
21 Royal Palm South Beach Miami, a Tribute Portfolio Resort Miami Beach, FL 393 March 9, 2015
22 Ace Hotel and Theater Downtown Los Angeles Los Angeles, CA 182 April 30, 2015
6,699
 

Source: Chesapeake Lodging Trust

Chesapeake Lodging Trust
Douglas W. Vicari, 410-972-4142