“We’ve continued to improve our already high-quality portfolio with acquisitions in key markets and by commencing value-creating projects like the work we are doing at Park Central and WestHouse in New York City.”
“Furthermore, we have substantially reduced our cost of debt from 5.2 percent in 2011 to 4.3 percent in 2012 by executing on two term loans with very attractive interest rates.”
Full Year 2012 Highlights
- RevPAR: RevPAR increased 4.6 percent to $160.38, as a result of a 4.0 percent increase in ADR to $202.82 and a 0.5 percent increase in occupancy to 79.1 percent. In 2012, the Company achieved its highest-ever reported ADR and RevPAR, while achieving its highest-ever reported occupancy for the second year in a row.
- RevPAR excluding Washington, DC: Excluding Washington, DC, RevPAR for 2012 increased 6.0 percent, comprised of a 5.3 percent improvement in ADR and a 0.7 percent increase in occupancy.
- Hotel EBITDA Margin: The Company’s hotel EBITDA margin was 32.1 percent, which was its highest-ever reported margin and represents an improvement of 113 basis points compared to 2011.
- Adjusted EBITDA: The Company’s adjusted EBITDA was $263.2 million, an increase of 28.8 percent over 2011.
- Adjusted FFO: The Company generated adjusted FFO of $179.3 million, or $2.08 per diluted share/unit, compared to $127.7 million or $1.57 per diluted share/unit during 2011. Adjusted FFO per share/unit increased 32.5 percent.
- Acquisitions: The Company invested $458.1 million to acquire three properties and the mezzanine loan secured by two Santa Monica, California hotels during 2012 bringing the three-year acquisition investment total to $1.5 billion. The 2012 acquisitions include the following:
- Hotel Palomar in Washington, DC for $143.8 million on March 8;
- The mezzanine loan secured by Shutters on the Beach and Hotel Casa Del Mar in Santa Monica, California for $67.4 million on July 13. The Company purchased the debt instrument for 93.6 percent of the $72.0 million face value of the loan;
- L’Auberge Del Mar in Del Mar, California for $76.9 million on December 6; and
- The majority interest in The Liberty Hotel in Boston, Massachusetts in a transaction valued at $170.0 million on December 28.
- Capital Markets: The Company completed several capital markets initiatives during 2012 including the following:
- Throughout 2012, the Company sold 2,359,108 common shares under its ATM program at an average net price of $27.11 per share for net proceeds of $64.0 million;
- On March 30, 2012, the Company retired $59.6 million of mortgage debt secured by Hilton San Diego Gaslamp Quarter using proceeds from its senior unsecured credit facility;
- On May 16, 2012, the Company entered into a new $177.5 million unsecured loan with a seven-year term maturing on May 16, 2019. The term loan was swapped to a fixed interest rate for the full seven-year term. The term loan’s interest rate will be 3.87 percent when the Company’s leverage ratio is between 4.0 and 4.75 times;
- On May 21, 2012, the Company redeemed all 7.5% Series D Cumulative Redeemable Preferred Shares and 8.0% Series E Cumulative Redeemable Preferred Shares. Total combined redemption value for the Series D and E Preferred Shares was approximately $166.8 million; and
- On August 2, 2012, the Company entered into a new $300.0 million unsecured loan with a five-year term maturing on August 2, 2017, including a one-year extension subject to certain conditions. The term loan was swapped to a fixed interest rate for the full five-year term. The term loan's interest rate will be 2.68 percent when the Company's leverage ratio is between 4.0 and 4.75 times.
- On December 19, 2012, the Company sold 9,200,000 common shares of beneficial interest, including the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $23.70 per share, resulting in net proceeds of $209.1 million.
- The Company’s cost of debt was reduced from 5.2 percent in 2011 to 4.3 percent in 2012. Also, the cost of debt and preferred was reduced from 6.0 percent in 2011 to 4.9 percent in 2012.
- Capital Investments: The Company invested $67.9 million of capital in its hotels throughout the year, completing the 33-room expansion and renovation of Hotel Amarano Burbank and the renovations of The Liaison Capitol Hill in Washington, DC, Le Parc Suite Hotel and Le Montrose Suite Hotel in West Hollywood and The Hotel Roger Williams in New York. The Company’s capital investments also include the commencement of the renovation of the Park Central Hotel and WestHouse in Manhattan and Hotel Monaco San Francisco.
Balance SheetAs of December 31, 2012, the Company had total outstanding debt of $1.25 billion, including $153.0 million outstanding on its senior unsecured credit facility. Total net debt to trailing 12 month Corporate EBITDA (as defined in the Company’s senior unsecured credit facility) was 4.2 times as of December 31, 2012 and its fixed charge coverage ratio was 3.0 times. For the fourth quarter, the Company’s weighted average interest rate was 4.3 percent. As of December 31, 2012, the Company had $52.5 million of cash and cash equivalents on its balance sheet and capacity of $619.7 million available on its credit facilities.