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RLJ Lodging Trust Reports Third Quarter 2011 Results

RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the quarter ended September 30, 2011.

This press release presents data combining the financial and operating results of the Company’s predecessor entity prior to the consummation of the Company’s initial public offering (“IPO”) and the results of the Company post-IPO. The Company completed its IPO and related formation transactions on May 16, 2011.

Third Quarter Highlights

  • Pro forma RevPAR increased 8.0%, ADR increased 4.5% and occupancy increased 3.3%
  • Pro forma Hotel EBITDA margin increased 109 basis points to 33.8%
  • Declared a quarterly cash dividend of $0.15, or $0.60 on an annualized basis
  • Net income attributable to common shareholders for the quarter ended September 30, 2011, was $31.3 million

“We are very pleased by the overall performance of our portfolio as we continue to demonstrate the resilience of our portfolio and the effectiveness of our asset management team,” commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. “We posted solid results once again and are performing in-line with the expectations we have communicated, despite the uncertain economic times. As we continue to execute on our strategic plan and as we begin to realize the benefits of our recent renovations and conversions, we are confident in our ongoing growth.”

Financial and Operating Results

Pro forma RevPAR, Hotel EBITDA, and Hotel EBITDA margins include hotel results from prior ownership periods and exclude hotels not open for operation or closed for renovations for comparable periods. Actual results for the three and nine months ended September 30, 2011, reflect New York LaGuardia Airport Marriott in discontinued operations. An explanation of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO and Hotel EBITDA, as well as reconciliations of those measures to net income or loss, if applicable, is included at the end of this release.

Pro forma room revenue per available room (“RevPAR”) for the quarter increased 8.0% over the comparable period in 2010, driven by an average daily rate (“ADR”) increase of 4.5% and an occupancy increase of 3.3%. Amongst the Company’s top performers in the quarter were New York and Washington DC/Baltimore, which experienced RevPAR growth of 16.2% and 8.8%, respectively. For the nine months ended September 30, 2011, RevPAR increased 8.4% over the comparable period in 2010.

Pro forma Hotel EBITDA margin for the quarter increased 109 basis points to 33.8%. For the nine months ended September 30, 2011, Hotel EBITDA margin increased 183 basis points to 33.5% over the comparable period in 2010.

Pro forma Hotel EBITDA for the quarter increased $6.5 million to $66.6 million, representing a 10.9% increase over the comparable period in 2010. For the nine months ended September 30, 2011, pro forma Hotel EBITDA, increased $23.0 million to $190.2 million, representing a 13.8% increase over the comparable period in 2010. Pro forma Consolidated Hotel EBITDA, which includes the results of non-comparable hotels, was $66.6 million and $191.1 million for the three and nine months ending September 30, 2011, respectively.

Adjusted EBITDA for the quarter increased $17.3 million to $61.9 million, representing a 38.8% increase over the comparable period in 2010. For the nine months ended September 30, 2011, Adjusted EBITDA increased $62.3 million to $176.7 million, representing a 54.4% increase over the comparable period in 2010.

Adjusted FFO for the quarter was $39.4 million, compared to $22.7 million, in the comparable period in 2010. For the nine months ended September 30, 2011, Adjusted FFO was $104.1 million compared to $49.1 million in the comparable period in 2010.

Non-recurring expenses for the quarter were de minimis. For the nine months ended September 30, 2011, non-recurring expenses include: $10.3 million related to IPO expenses, $4.3 million of expenses associated with the extinguishment of $472.6 million of debt, and $1.4 million of expenses relating to the predecessor entity. These expenses are included in net income, EBITDA and FFO, but have been excluded from Adjusted EBITDA and Adjusted FFO, as applicable.

Net income attributable to common shareholders for the quarter ended September 30, 2011, was $31.3 million, compared to a net loss of $8.5 million in the comparable period in 2010. For the nine months ended September 30, 2011, net income attributable to common shareholders was $12.6 million compared to a net loss attributable to common shareholders of $12.2 million in the comparable period in 2010. The three and nine months ended September 30, 2011, includes $23.5 million of gain associated with the deed in lieu transfer of the New York LaGuardia Airport Marriott. The nine months ended September 30, 2010, include $23.7 million in gains associated with the sale of six hotels.

Net cash flow provided by operating activities totaled $90.6 million for the nine months ended September 30, 2011, compared to $47.0 million for the nine months ended September 30, 2010.

Capital Expenditures

In 2011, the Company authorized renovation projects totaling $115.0 million. The 2011 capital improvement program is largely focused on upgrading and/or repositioning 24 hotels acquired in 2010 and 2011, including seven brand conversions. The balance of the renovations will include brand related upgrades at other select hotels.

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