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Chesapeake Lodging Trust Reports Second Quarter Results; Pro Forma RevPAR Increased 9.7% And Pro Forma Adjusted Hotel EBITDA Margin Increased 240 Basis Points

Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended June 30, 2012.

HIGHLIGHTS

  • Pro Forma RevPAR – 9.7% increase for comparable 10-hotel portfolio over the same period in 2011.
  • Pro Forma Adjusted Hotel EBITDA Margin – 240 basis point increase for comparable 10-hotel portfolio over the same period in 2011.
  • Acquisitions – Subsequent to quarter end, entered into a definitive agreement to acquire a full-service hotel located in San Diego, California for $62 million.
  • Preferred share offering – Subsequent to quarter end, successfully completed a $125 million preferred share offering.
  • Financings – Subsequent to quarter end, closed on $130 million of secured financings taking further advantage of the attractive interest rate environment.

“We delivered another exceptional quarter of hotel operating performance, with industry-leading RevPAR growth and hotel EBITDA margin expansion,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “Our hotel portfolio achieved over 83% occupancy in the second quarter which enabled our operators to aggressively increase room rates.”

“We were very pleased with the execution and pricing of the $125 million preferred share offering that closed in mid-July,” said Douglas W. Vicari, Chesapeake Lodging Trust’s Executive Vice President and Chief Financial Officer. “With the additional capital raised through the preferred offering and given our targeted leverage levels, we expect our total investment in hotel real estate to reach $1.25 billion.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three and six months ended June 30, 2012 (in millions, except per share amounts):

  Three months ended   Six months ended
June 30, June 30,
2012 (1)   2011 (2) 2012 (3)   2011 (2)
 
Total revenue $ 67.0 $ 40.3 $ 117.3 $ 64.3
 
Net income available to common shareholders $ 9.0 $ 2.0 $ 8.2 $ 0.2
Net income per diluted share $ 0.28 $ 0.06 $ 0.26 $ 0.01
 
FFO available to common shareholders $ 15.7 $ 5.7 $ 21.4 $ 7.0
FFO per diluted share $ 0.49 $ 0.18 $ 0.67 $ 0.26
 
AFFO available to common shareholders $ 15.9 $ 9.6 $ 22.0 $ 11.2
AFFO per diluted share $ 0.50 $ 0.30 $ 0.69 $ 0.41
 
Corporate EBITDA $ 22.3 $ 8.5 $ 31.5 $ 10.8
 
Adjusted Corporate EBITDA $ 22.5 $ 12.3 $ 32.1 $ 15.0
 
(1)   Includes results of operations of 12 hotels for the full period.
(2) Includes results of operations of five hotels for the full period and four hotels for part of the period.
(3) Includes results of operations of 11 hotels for the full period and one hotel for part of the period.
 

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared. Included in the following table are comparisons of, on a pro forma basis, occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin, the key operating metrics that management uses to assess the performance of its hotels. The key operating metrics include the hotel operating results of 10 of the Trust’s 12 hotels owned as of June 30, 2012. The key operating metrics do not include operating results for the Holiday Inn New York City Midtown – 31 st Street, as the hotel opened for business on January 19, 2012, and the Hotel Adagio, as the hotel was under renovation during the period. The following is a summary of the key operating metrics for the three and six months ended June 30, 2012 (in thousands, except pro forma ADR and pro forma RevPAR):

  Three months ended   Six months ended
June 30, June 30,
2012   2011   Change 2012   2011   Change
 
Pro forma occupancy 83.2% 82.7% 50 bps 78.1% 75.6% 250 bps
Pro forma ADR $ 199.12 $ 182.57 9.1% $ 184.90 $ 172.72 7.1%
Pro forma RevPAR $ 165.64 $ 151.05 9.7% $ 144.43 $ 130.52 10.7%
 
Pro forma Adjusted Hotel EBITDA $ 23,906 $ 20,887 14.5% $ 36,104 $ 30,101 19.9%
Pro forma Adjusted Hotel EBITDA Margin 37.9% 35.5% 240 bps 32.7% 29.7% 300 bps
 

Funds from operations (FFO), Adjusted FFO (AFFO), net income before interest, income taxes, and depreciation and amortization (Corporate EBITDA), Adjusted Corporate EBITDA, Hotel EBITDA, Adjusted Hotel EBITDA and Adjusted Hotel EBITDA Margin 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.

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