DiamondRock Hospitality Company Reports Second Quarter 2010 Results
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DiamondRock Hospitality Company Reports Second Quarter 2010 Results
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Catégorie : Monde - Économie du secteur
- Chiffres et études
Ceci est un communiqué de presse sélectionné par notre comité éditorial et mis en ligne gratuitement le 28-07-2010
DiamondRock Hospitality Company (the "Company") (NYSE:DRH) today announced results of operations for its second fiscal quarter ended June 18, 2010. The Company is a lodging focused real estate investment trust that owns twenty-one premium hotels in North America and holds a senior loan secured by a premium hotel in Chicago, Illinois.
Mark W. Brugger, Chief Executive Officer of DiamondRock Hospitality Company, stated, "Second quarter results exceeded our internal expectations with particularly strong performance from New York and Chicago. Seven of our hotels recorded double-digit RevPAR increases and half increased average daily rate. Additionally, the Company continued to execute on its acquisition strategy and has committed over a quarter of a billion dollars towards high quality deals. With conservative leverage and a year-end cash balance of approximately $160 million, DiamondRock remains positioned to seize opportunistic acquisitions."
Second Quarter 2010 Highlights
-- Acquisition of Hilton Minneapolis: The Company acquired the 821-room
Hilton Minneapolis in Minneapolis, Minnesota for total consideration
of $156 million.
-- Agreement to Acquire the Renaissance Charleston Historic District: The
Company agreed to acquire the 166-room Renaissance Charleston Historic
District Hotel located in Charleston, South Carolina for $39 million.
-- Acquisition of Allerton Chicago Senior Mortgage: The Company acquired
the $69 million senior mortgage loan secured by the Allerton Hotel in
Chicago, Illinois for an $8.5 million discount to par.
-- New Credit Facility: Subsequent to the end of the second quarter, the
Company agreed to terms for a new $200 million senior unsecured
revolving credit facility.
-- RevPAR: The Company's RevPAR was $116.53, an increase of 6.1 percent
from the comparable period in 2009.
-- Hotel Adjusted EBITDA Margins: The Company's Hotel Adjusted EBITDA
margin was 25.86% an increase of 67 basis points from the comparable
period in 2009.
-- Adjusted EBITDA: The Company's Adjusted EBITDA was $35.8 million.
-- Adjusted FFO: The Company's Adjusted FFO was $21.6 million and
Adjusted FFO per diluted share was $0.16. This reflects income tax
expense of $3.1 million during the second quarter.
-- Successful Equity Raise: During the second quarter the Company
completed a follow-on public offering of its common stock for net
proceeds of $184.8 million.
Operating Results
Please see "Certain Definitions" and "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDA," "Adjusted EBITDA," "Hotel Adjusted EBITDA Margins," "FFO," and "Adjusted FFO."
For the second quarter beginning March 27, 2010 and ended June 18, 2010, the Company reported the following:
-- Revenues of $151.1 million compared to $143.6 million for the
comparable period in 2009.
-- Adjusted EBITDA of $35.8 million compared to $32.6 million for the
comparable period in 2009.
-- Adjusted FFO and Adjusted FFO per diluted share of $21.6 million and
$0.16, respectively, compared to $24.9 million and $0.24,
respectively, for the comparable period in 2009.
-- Net income of $0.8 million (or $0.01 per diluted share) compared to
$2.5 million (or $0.02 per diluted share) for the comparable period in
2009.
RevPAR for the second quarter increased 6.1 percent (from $109.85 to $116.53) from the comparable period in 2009, driven by a 3.7 percentage point increase in occupancy (from 69.0 percent to 72.7 percent) and a 0.6 percent increase in the average daily rate (from $159.30 to $160.29). Hotel Adjusted EBITDA margins increased 67 basis points (from 25.19% to 25.86%) from the comparable period in 2009.
For the period from January 1, 2010 to June 18, 2010, the Company reported the following:
-- Revenues of $264.0 million compared to $262.2 million for the
comparable period in 2009.
-- Adjusted EBITDA of $54.3 million compared to $53.0 million for the
comparable period in 2009.
-- Adjusted FFO and Adjusted FFO per diluted share of $33.6 million and
$0.25, respectively, compared to $39.7 million and $0.41,
respectively, for the comparable period in 2009.
-- Net loss of $7.5 million (or $0.06 per diluted share) compared to $2.8
million (or $0.03 per diluted share) for the comparable period in
2009.
Year-to-date RevPAR increased 1.7 percent (from $104.53 to $106.31) from the comparable period in 2009, driven by a 2.8 percent increase in occupancy (from 66.4 percent to 69.2 percent) partially offset by a 2.4 percent decrease in the average daily rate (from $157.36 to $153.53). Year-to-date Hotel Adjusted EBITDA margins increased 8 basis points (from 22.96% to 23.04%) from the comparable period in 2009.
Agreement to Acquire the Renaissance Charleston Historic District Hotel
On July 1, 2010, the Company signed a definitive purchase and sale agreement to acquire the 166-room Renaissance Charleston Historic District Hotel (the "Renaissance") located in Charleston, South Carolina. The contractual purchase price of $39 million represents an EBITDA multiple of 11.1 times the Renaissance's 2010 full year forecast of $3.5 million. The hotel is projected to generate approximately $1.3 million of EBITDA during the Company's ownership period in 2010. The "off market" acquisition was sourced through DiamondRock's strategic sourcing relationship with Marriott International. DiamondRock expects the acquisition to be completed during August 2010, subject to the satisfaction of customary closing conditions. The acquisition will be funded with corporate cash.
Hilton Minneapolis Acquisition
On June 17, 2010, the Company acquired the 821-room Hilton Minneapolis in Minneapolis, Minnesota, for total consideration of $156 million. The hotel will remain a Hilton-branded and managed property. The hotel is projected to generate $8.9 million of Adjusted EBITDA during the Company's ownership period in 2010. The post acquisition operating results of the Hilton Minneapolis are not included in the Company's second quarter results due to the hotel reporting on a calendar month and year basis.
Allerton Hotel Mortgage Loan
The Company acquired the entire $69 million senior loan secured by the 443-room Allerton Hotel located on Magnificent Mile in Chicago, Illinois for approximately $60.5 million, a discount of $8.5 million from par value. The senior loan bears interest at rate of LIBOR plus 692 basis points, including 5 percentage points of default interest. The loan matured in January 2010 and is currently in default. The Company continues to pursue the foreclosure proceedings initially filed in April 2010 which would result in DiamondRock owning the hotel. However, no assurance can be given that the foreclosure proceedings will be successful. The matter may be resolved without foreclosure if the borrower repays the senior loan in full.
The Company will include all cash received from the senior loan on the Allerton in its calculations of Adjusted EBITDA and Adjusted FFO. Subsequent to the end of the second fiscal quarter the Company received cash interest payments from the borrower totaling $750,000. The Company's 2010 Adjusted EBITDA and Adjusted FFO guidance assumes $2.5 million of cash received as payment of interest on the Allerton senior loan.
New Line of Credit
The Company has agreed to terms for a new $200 million senior unsecured revolving credit facility with Wells Fargo Bank, N.A. and Bank of America, N.A. serving as co-lead arrangers. The significant terms of the proposed credit facility are as follows:
-- Term: Term of 48 months, including the extension of one year
conditioned upon the payment of applicable fees and satisfaction of
certain conditions.
-- Accordion Feature: Amount of the borrowing capacity can increase to a
maximum amount of $275 million with the lenders' approval.
-- Financial Covenants: The proposed financial covenants including a
maximum leverage ratio of 60%, a minimum fixed charge coverage ratio
that will range from 1.3x to 1.5x during the term of the agreement and
a minimum tangible net worth covenant.
-- Interest Rate: Interest rate spread based on a pricing grid depending
on our leverage ratio. The LIBOR spread ranges from 275 to 375 basis
points over LIBOR, with a LIBOR floor of 1.00%.
-- Unused Fee: The unused facility fee ranges from 50 to 40 basis points
depending on the amount drawn on the facility.
The proposed new credit facility, which will replace the Company's existing credit facility, is subject to lender due diligence, definitive documentation and closing requirements; accordingly, no assurance can be given that this proposed facility will be procured on the terms, including the amount available to be borrowed, described above, or at all.
Follow-On Public Offering
On May 28, 2010, the Company completed a follow-on public offering of our common stock. The Company sold 23,000,000 shares of common stock, including the underwriters' overallotment of 3,000,000 shares, at an offering price of $8.40 per share. The net proceeds, after deduction of offering costs, were approximately $184.8 million.
Balance Sheet
As of the end of the second quarter, the Company has approximately $155.4 million of unrestricted cash on hand and $783.8 million of debt outstanding, which consists solely of fixed rate, property-specific mortgage debt with no near-term maturities. Eleven of the Company's 21 hotels are unencumbered by mortgage debt and the Company's $200 million senior unsecured credit facility is unused.
The Company continues to maintain its straightforward capital structure. As of June 18, 2010, the Company continued to own 100% of its properties directly.
Outlook and Guidance
The Company is providing full year guidance, which is based upon the recent operating forecasts prepared by its hotel operators and also includes anticipated period of ownership results from the Hilton Minneapolis and the Renaissance Charleston, as well as expected cash receipts from the senior loan secured by the Allerton Hotel. The Company is not providing quarterly guidance. Achievement of the anticipated results is subject to the risks disclosed herein and in the Company's filings with the Securities and Exchange Commission.
For the full year 2010, the Company expects:
-- RevPAR growth of 2 percent to 4 percent.
-- Adjusted EBITDA of $132 million to $136 million.
-- Adjusted FFO of $83 million to $85 million, which assumes income tax
expense to range from $3.5 million to $5.5 million.
-- Adjusted FFO per share of $0.57 to $0.59 based on 144.4 million
diluted weighted average shares.
Income Taxes
The full year guidance above reflects an estimated income tax expense of $3.5 million to $5.5 million for the year ended December 31, 2010. The estimated income tax expense increased from the Company's full year guidance provided at the first quarter due to the impact of the acquisitions of the Minneapolis Hilton and the Renaissance Charleston Historic District as well as the tax impact on our improved operating results compared to our first quarter guidance. The guidance also reflects the Company renewing its Economic Development Credits associated with the Frenchman's Reef Marriott, which the Company continues to pursue.
Earnings Call
The Company will host a conference call to discuss its second quarter results on Tuesday, July 27, 2010, at 2:00 pm Eastern Time (ET). To participate in the live call, investors are invited to dial 888-679-8034 (for domestic callers) or 617-213-4847 (for international callers). The participant passcode is 90666795. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company's website at www.drhc.com. A replay of the webcast will also be archived on the website for one year.
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of premium hotel properties. The Company owns 21 hotels with approximately 10,400 rooms and holds the senior loan on a 443-room hotel located in Chicago. The Company also has entered into a definitive purchase and sale agreement to acquire the 166-room Renaissance Charleston Historic District Hotel, which is expected to close in the third quarter, subject to the satisfaction of customary closing conditions. For further information, please visit DiamondRock Hospitality Company's website at www.drhc.com.
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," and other similar terms and phrases, including references to assumptions and forecasts of future results. 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: national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; risks associated with the foreclosure proceedings on the Allerton Hotel; the Company's ability to achieve the returns that it expects from the Hilton Minneapolis, Renaissance Charleston and the Allerton senior loan, including its expectations regarding the projected demand drivers in Minneapolis and Charleston; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company has signed a definitive agreement to purchase the Renaissance Charleston Historic District Hotel, there is a risk that the transaction may not close for a variety of reasons, including the failure of its completion of satisfactory due diligence and the failure to satisfy closing conditions. Although the Company 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 the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
Reporting Periods for Statement of Operations
The results reported in the Company's consolidated statements of operations are based on results of its hotels reported by hotel managers. The Company's hotel managers use different reporting periods. Marriott International, the manager of most of the Company's properties, uses a fiscal year ending on the Friday closest to December 31 and reports twelve weeks of operations for the first three quarters and 16 or 17 weeks for the fourth quarter of the year for its domestic managed hotels. In contrast, Marriott International for its non-domestic hotels (including Frenchman's Reef), Davidson Hotel Company, manager of the Westin Atlanta North, Vail Resorts, manager of the Vail Marriott, Hilton Hotels Corporation, manager of the Conrad Chicago and the Hilton Minneapolis, and Westin Hotel Management, L.P., manager of the Westin Boston Waterfront report results on a monthly basis. Additionally, the Company, as a REIT, is required by U.S. federal tax laws to report results on a calendar year basis. As a result, the Company has adopted the reporting periods used by Marriott International for its domestic hotels, except that the fiscal year always ends on December 31 to comply with REIT rules. The first three fiscal quarters end on the same day as Marriott International's fiscal quarters but the fourth quarter ends on December 31 and full year results, as reported in the statement of operations, always include the same number of days as the calendar year.
Two consequences of the reporting cycle the Company has adopted are: (1) quarterly start dates will usually differ between years, except for the first quarter which always commences on January 1, and (2) the first and fourth quarters of operations and year-to-date operations may not include the same number of days as reflected in prior years.
While the reporting calendar the Company adopted is more closely aligned with the reporting calendar used by the manager of most of its properties, one final consequence of the calendar is the Company is unable to report any results for Frenchman's Reef, Westin Atlanta North, Vail Marriott, Conrad Chicago, Westin Boston Waterfront or the Hilton Minneapolis for the month of operations that ends after its fiscal quarter-end because none of Vail Resorts, Davidson Hotel Company, Hilton Hotels Corporation, Westin Hotel Management, L.P., and Marriott International make mid-month results available. As a result, the quarterly results of operations include results from Frenchman's Reef, Westin Atlanta North, Vail Marriott, Conrad Chicago, Westin Boston Waterfront, and Hilton Minneapolis as follows: first quarter (January and February), second quarter (March to May), third quarter (June to August) and fourth quarter (September to December). While this does not affect full-year results, it does affect the reporting of quarterly results.
Ground Leases
Five of the Company's hotels are subject to ground leases: Bethesda Marriott Suites, Courtyard Manhattan Fifth Avenue, Salt Lake City Downtown Marriott, Westin Boston Waterfront and Hilton Minneapolis. In addition, part of a parking structure at a fifth hotel and two golf courses at two additional hotels are also subject to ground leases. In accordance with U.S. generally accepted accounting principles, the Company records rent expense on a straight-line basis for ground leases that provide minimal rental payments that increase in pre-established amounts over the remaining term of the ground lease. For the second quarter 2010, contractual cash rent payable on the ground leases totaled $0.4 million and the Company recorded approximately $2.2 million in ground rent expense. The non-cash portion of ground rent expense recorded for the second quarter 2010 was $1.8 million.
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 18, 2010 and December 31, 2009
(in thousands, except share amounts)
ASSETS
June 18, December 31,
2010 2009
--------- -------------
(Unaudited)
Property and equipment, at cost $2,337,163 $2,171,311
Less: accumulated depreciation (347,336) (309,224)
-------- --------
1,989,827 1,862,087
Deferred financing costs, net 3,365 3,624
Restricted cash 40,817 31,274
Due from hotel managers 66,243 45,200
Note receivable 60,482 -
Favorable lease assets, net 36,970 37,319
Prepaid and other assets 60,275 58,607
Cash and cash equivalents 155,418 177,380
------- -------
Total assets $2,413,397 $2,215,491
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage debt $783,844 $786,777
Senior unsecured credit facility - -
--- ---
Total debt 783,844 786,777
Deferred income related to key money, net 19,503 19,763
Unfavorable contract liabilities, net 81,890 82,684
Due to hotel managers 39,319 29,847
Dividends declared and unpaid - 41,810
Accounts payable and accrued expenses 75,536 79,104
------ ------
Total other liabilities 216,248 253,208
------- -------
Stockholders' Equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized; no shares
issued - -
and outstanding
Common stock, $.01 par value; 200,000,000
shares authorized; 154,570,543 1,546 1,243
and 124,299,423 shares issued and
outstanding at June 18, 2010 and
December 31, 2009, respectively
Additional paid-in capital 1,556,169 1,311,053
Accumulated deficit (144,410) (136,790)
-------- --------
Total stockholders' equity 1,413,305 1,175,506
--------- ---------
Total liabilities and stockholders'
equity $2,413,397 $2,215,491
========== ==========
DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Quarters Ended June 18, 2010 and June 19, 2009 and
the Periods from January 1, 2010 to June 18, 2010 and January 1, 2009
to June 19, 2009
(in thousands, except per share amounts)
Fiscal Fiscal
Quarter Quarter Period from Period from
January 1, January 1,
Ended Ended 2010 to 2009 to
June 19, June 18,
June 18, 2010 2009 2010 June 19, 2009
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Rooms $95,730 $90,228 $167,378 $165,343
Food and
beverage 47,699 44,697 83,250 81,587
Other 7,696 8,682 13,324 15,221
Total
revenues 151,125 143,607 263,952 262,151
Operating
Expenses:
Rooms 24,458 22,974 44,530 42,956
Food and
beverage 31,490 30,320 56,215 56,901
Management
fees 5,482 5,008 8,554 8,336
Other hotel
expenses 51,990 50,516 96,619 96,540
Impairment
of
favorable
lease
asset - 1,286 - 1,286
Depreciation
and
amortization 19,074 19,729 37,981 38,446
Corporate
expenses 3,897 3,651 7,248 7,419
Total
operating
expenses 136,391 133,484 251,147 251,884
Operating
profit 14,734 10,123 12,805 10,267
Other
Expenses
(Income):
Interest
income (286) (101) (367) (183)
Interest
expense 11,089 11,086 19,215 22,584
Total other
expenses 10,803 10,985 18,848 22,401
Income
(loss)
before
income
taxes 3,931 (862) (6,043) (12,134)
Income tax
(expense)
benefit (3,092) 3,319 (1,462) 9,297
Net income
(loss) $839 $2,457 $(7,505) $(2,837)
Earnings
(loss) per
share:
Basic and
diluted
earnings
(loss) per
share $0.01 $0.02 $(0.06) $(0.03)
DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods from January 1, 2010 to June 18, 2010 and January 1,
2009 to June 19, 2009
(in thousands)
Period from
January Period from
January 1,
1, 2010 to June 18, 2009 to
June 19,
2010 2009
Cash flows from operating activities: (Unaudited) (Unaudited)
Net income (loss) $(7,505) $(2,837)
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Real estate depreciation 37,981 38,446
Corporate asset depreciation as
corporate expenses 70 67
Non-cash ground rent 3,566 3,570
Non-cash financing costs as interest 457 386
Non-cash reversal of penalty interest (3,134) -
Impairment of favorable lease asset - 1,286
Amortization of unfavorable contract
liabilities (794) (794)
Amortization of deferred income (260) (260)
Stock-based compensation 1,915 2,532
Changes in assets and liabilities:
Prepaid expenses and other assets (1,368) (3,565)
Restricted cash (2,546) 123
Due to/from hotel managers (11,538) 4,754
Accounts payable and accrued expenses (3,083) (13,457)
Net cash provided by operating
activities 13,761 30,251
Cash flows from investing activities:
Hotel capital expenditures (10,391) (13,265)
Hotel acquisition (156,501) -
Purchase of mortgage loan (60,282) -
Change in restricted cash (6,997) (970)
Net cash used in investing activities (234,171) (14,235)
Cash flows from financing activities:
Repayments of credit facility - (57,000)
Scheduled mortgage debt principal
payments (2,934) (1,968)
Repurchase of common stock (3,961) (159)
Proceeds from sale of common stock,
net 209,864 82,158
Payment of financing costs (198) (1,240)
Payment of cash dividends (4,323) (80)
Net cash provided by financing
activities 198,448 21,711
Net (decrease) increase in cash and
cash equivalents (21,962) 37,727
Cash and cash equivalents, beginning
of period 177,380 13,830
Cash and cash equivalents, end of
period $155,418 $51,557
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest $23,484 $23,819
Cash paid for income taxes $642 $868
Non-GAAP Financial Measures
The Company uses the following four non-GAAP financial measures that it believes are useful to investors as key measures of its operating performance: (1) EBITDA, (2) FFO, (3) Adjusted EBITDA and (4) Adjusted FFO.
EBITDA represents net (loss) income excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. The Company believes EBITDA is useful to an investor in evaluating its operating performance because it helps investors evaluate and compare the results of its operations from period to period by removing the impact of the Company's capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization) from its operating results. The Company also uses EBITDA as one measure in determining the value of hotel acquisitions and dispositions.
Historical (in 000s)
---------------------
Fiscal Quarter Ended Period From
-------------------- -----------
June 18, June 19, January 1, January 1,
2010 2009 2010 2009
to June 18, to June 19,
--------- --------- 2010 2009
------------ ------------
Net income (loss) $839 $2,457 $(7,505) $(2,837)
Interest expense 11,089 11,086 19,215 22,584
Income tax expense
(benefit) 3,092 (3,319) 1,462 (9,297)
Depreciation and
amortization 19,074 19,729 37,981 38,446
------ ------ ------ ------
EBITDA $34,094 $29,953 $51,153 $48,896
======= ======= ======= =======
Full Year Forecast 2010 (in
000s)
---------------------------
Low End High End
------- --------
Net loss $(14,800) $(10,800)
Interest expense 45,500 45,500
Income tax expense 3,500 5,500
Depreciation and amortization 88,000 86,000
------ ------
EBITDA $122,200 $126,200
======== ========
Acquisitions - 2010 Period
of Ownership
(in 000s)
---------
Hilton Renaissance
Minneapolis Charleston
----------- ----------
Net income $3,810 $630
Interest expense - -
Income tax expense 120 20
Depreciation and amortization 4,000 650
----- ---
EBITDA $7,930 $1,300
====== ======
The Company computes FFO in accordance with standards established by NAREIT, which defines FFO as net (loss) income determined in accordance with GAAP, excluding gains (losses) from sales of property, plus depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets. The Company also uses FFO as one measure in assessing its results.
Historical (in 000s)
---------------------
Fiscal Quarter Ended Period From
-------------------- -----------
June 18, June 19, January 1, January 1,
2010 2009 2010 2009
to June 18, to June 19,
--------- --------- 2010 2009
------------ ------------
Net income (loss) $839 $2,457 $(7,505) $(2,837)
Real estate
related
depreciation and
amortization 19,074 19,729 37,981 38,446
------ ------ ------ ------
FFO $19,913 $22,186 $30,476 $35,609
======= ======= ======= =======
FFO per share
(basic and
diluted) $0.14 $0.21 $0.23 $0.37
===== ===== ===== =====
Full Year Forecast 2010
(in 000s)
-----------------------
Low End High End
------- --------
Net loss $(14,800) $(10,800)
Real estate related depreciation and
amortization 88,000 86,000
------ ------
FFO $73,200 $75,200
======= =======
FFO per share (basic and diluted) $0.51 $0.52
===== =====
The Company also evaluates its performance by reviewing Adjusted EBITDA and Adjusted FFO because it believes that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO, when combined with the primary GAAP presentation of net income (loss), is beneficial to a complete understanding of the Company's operating performance. The Company adjusts EBITDA and FFO for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDA and Adjusted FFO:
-- Non-Cash Ground Rent: The Company excludes the non-cash expense
incurred from straight lining the rent from its ground lease
obligations and the non-cash amortization of its favorable lease
assets.
-- The impact of the non-cash amortization of the unfavorable contract
liabilities recorded in conjunction with the Company's acquisitions of
the Bethesda Marriott Suites and the Chicago Marriott Downtown. The
amortization of the unfavorable contract liabilities does not reflect
the underlying performance of the Company.
-- Cumulative effect of a change in accounting principle: Infrequently,
the Financial Accounting Standards Board (FASB) promulgates new
accounting standards that require the consolidated statement of
operations to reflect the cumulative effect of a change in accounting
principle. The Company excludes these one-time adjustments because
they do not reflect its actual performance for that period.
-- Gains from Early Extinguishment of Debt: The Company excludes the
effect of gains recorded on the early extinguishment of debt because
it believes that including them in EBITDA and FFO is not consistent
with reflecting the ongoing performance of its hotels.
-- Impairment Losses: The Company excludes the effect of impairment
losses recorded because it believes that including them in EBITDA and
FFO is not consistent with reflecting the ongoing performance of its
assets. In addition, the Company believes that impairment charges are
similar to depreciation expense, which is also excluded from EBITDA
and FFO.
-- Gains or Losses on Dispositions: The Company excludes the effect of
gains or losses on dispositions from EBITDA because it believes that
including them is not consistent with reflecting the ongoing
performance of its remaining assets. In addition, gains and losses on
dispositions are excluded from the calculation of FFO in accordance
with NAREIT standards.
-- Acquisition Costs: The Company excludes acquisition transaction costs
expensed during the period because it believes that including these
costs in EBITDA and FFO is not consistent with the underlying
performance of the Company.
-- Mortgage Loan Interest Payments Received: The Company includes cash
payments received on its senior loan secured by the Allerton Hotel in
Adjusted EBITDA and Adjusted FFO. GAAP requires the Company to record
the cash received from the borrower as a reduction of its basis in the
mortgage loan due to the uncertainty over the timing and amount of
cash payments on the loan. The Company believes that these cash
payments reflect its return on its investment in the mortgage loan and
should be included in Adjusted EBITDA and Adjusted FFO as they relate
to the operating performance of the Company.
-- Other Non-Cash and / or Non-Recurring Items: The Company excludes the
effect of certain non-cash and/or non-recurring items because it
believes that including these costs in EBITDA and FFO is not
consistent with the underlying performance of the Company.
Historical (in 000s)
---------------------
Fiscal Quarter Ended Period From
-------------------- -----------
June 18, June 19, January 1, January 1,
2010 2009 2010 2009
to June 18, to June 19,
--------- --------- 2010 2009
------------ ------------
EBITDA $34,094 $29,953 $51,153 $48,896
Non-cash ground
rent 1,777 1,783 3,566 3,570
Non-cash
amortization of
unfavorable
contract
liabilities (397) (397) (794) (794)
Acquisition costs 337 - 337 -
Impairment of
favorable lease
asset - 1,286 - 1,286
--- ----- --- -----
Adjusted EBITDA $35,811 $32,625 $54,262 $52,958
======= ======= ======= =======
Forecast Full Year 2010 (in
000s)
---------------------------
Low End High End
------- --------
EBITDA $122,200 $126,200
Non-cash ground rent 8,400 8,400
Non-cash amortization of unfavorable contract
liabilities (1,700) (1,700)
Acquisition costs 600 600
Mortgage loan cash payments 2,500 2,500
Adjusted EBITDA $132,000 $136,000
======== ========
Acquisitions - 2010 Period
of Ownership
(in 000s)
---------
Hilton Renaissance
Minneapolis Charleston
----------- ----------
EBITDA $7,930 $1,300
Non-cash ground rent 670 -
Adjusted EBITDA $8,600 $1,300
====== ======
Historical (in 000s)
---------------------
Fiscal Quarter Ended Period From
-------------------- -----------
June 18, June 19, January 1, January 1,
2010 2009 2010 2009
to June 18, to June 19,
--------- --------- 2010 2009
------------ -----------
FFO $19,913 $22,186 $30,476 $35,609
Non-cash ground
rent 1,777 1,783 3,566 3,570
Non-cash
amortization of
unfavorable
contract
liabilities (397) (397) (794) (794)
Acquisition costs 337 - 337 -
Impairment of
favorable lease
asset - 1,286 - 1,286
--- ----- --- -----
Adjusted FFO $21,630 $24,858 $33,585 $39,671
======= ======= ======= =======
Adjusted FFO per
share (basic and
diluted) $0.16 $0.24 $0.25 $0.41
===== ===== ===== =====
Forecast Full Year 2010 (in
000s)
---------------------------
Low End High End
------- --------
FFO $73,200 $75,200
Non-cash ground rent 8,400 8,400
Non-cash amortization of unfavorable
contract liabilities (1,700) (1,700)
Acquisition costs 600 600
Mortgage loan cash payments 2,500 2,500
Adjusted FFO $83,000 $85,000
======= =======
Adjusted FFO per share (basic and diluted) $0.57 $0.59
===== =====
Certain Definitions
In this release, when we discuss "Hotel Adjusted EBITDA," we exclude from Hotel EBITDA the non-cash expense incurred by the hotels due to the straight lining of the rent from our ground lease obligations, the non-cash amortization of our favorable lease assets, and the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with the acquisitions of the Bethesda Marriott Suites and the Chicago Marriott Downtown. Hotel EBITDA represents hotel net income excluding: (1) interest expense; (2) income taxes; and (3) depreciation and amortization. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues.
DIAMONDROCK HOSPITALITY COMPANY
HOTEL OPERATIONAL DATA
Schedule of Property Level Results
(in thousands)
(unaudited)
Fiscal Quarter Fiscal Quarter %
Ended Ended Change
June 18, 2010 June 19, 2009
Revenues:
Rooms $95,730 $90,228 6.1%
Food and beverage 47,699 44,697 6.7%
Other 7,696 8,682 (11.4)%
Total revenues 151,125 143,607 5.2%
Operating
Expenses:
Rooms 24,458 22,974 6.5%
Food and beverage 31,490 30,320 3.9%
Other direct
departmental 4,421 4,598 (3.8)%
General and
administrative 13,063 12,406 5.3%
Utilities 5,710 5,404 5.7%
Repairs and
maintenance 6,782 6,829 (0.7)%
Sales and
marketing 10,952 10,154 7.9%
Base management
fees 4,085 3,796 7.6%
Incentive
management fees 1,397 1,212 15.3%
Property taxes 6,503 6,240 4.2%
Ground rent 2,213 2,222 (0.4)%
Other fixed
expenses 2,346 2,659 (11.8)%
Total operating
expenses 113,420 108,814 4.2%
Hotel EBITDA $37,705 $34,793 8.4%
Non-cash ground
rent 1,777 1,783 0.3%
Non-cash
amortization of
unfavorable
contract
liabilities (397) (397) 0.0%
Hotel Adjusted
EBITDA $39,085 $36,179 8.0%
Period from Period from %
January 1, January 1,
2010 to 2009 to Change
June 18, 2010 June 19, 2009
Revenues:
Rooms $167,378 $165,343 1.2%
Food and beverage 83,250 81,587 2.0%
Other 13,324 15,221 (12.5)%
Total revenues 263,952 262,151 0.7%
Operating
Expenses:
Rooms 44,530 42,956 3.7%
Food and beverage 56,215 56,901 (1.2)%
Other direct
departmental 8,022 8,718 (8.0)%
General and
administrative 24,144 23,531 2.6%
Utilities 10,749 10,807 (0.5)%
Repairs and
maintenance 12,842 13,027 (1.4)%
Sales and
marketing 19,417 18,849 3.0%
Base management
fees 7,048 6,924 1.8%
Incentive
management fees 1,506 1,412 6.7%
Property taxes 12,675 12,381 2.4%
Ground rent 4,431 4,449 (0.4)%
Other fixed
expenses 4,339 4,780 (9.2)%
Total operating
expenses 205,918 204,735 0.6%
Hotel EBITDA $58,034 $57,416 1.1%
Non-cash ground
rent 3,566 3,570 (0.1)%
Non-cash
amortization of
unfavorable
contract
liabilities (794) (794) 0.0%
Hotel Adjusted
EBITDA $60,806 $60,192 1.0%
Market Capitalization as of June 18, 2010
(in thousands, except per share data)
Enterprise Value
----------------
Common equity capitalization (at
June 18, 2010 closing price of
$8.97/share) $1,400,522
Consolidated debt 783,844
Cash and cash equivalents (155,418)
--------
Total enterprise value $2,028,948
==========
Share Reconciliation
--------------------
Common shares outstanding 154,571
Unvested restricted stock held by
management and employees 1,548
Share grants under deferred
compensation plan held by
directors 15
---
Combined shares outstanding 156,134
=======
Debt Summary as of June 18, 2010
(dollars in thousands)
Property Interest Term Outstanding Maturity
Rate Principal
Courtyard Manhattan /
Midtown East 8.810% Fixed $42,799 October 2014
Salt Lake City Marriott
Downtown 5.500% Fixed 32,411 January 2015
Courtyard Manhattan /
Fifth Avenue 6.480% Fixed 51,000 June 2016
Los Angeles Airport
Marriott 5.300% Fixed 82,600 July 2015
Marriott Frenchman's
Reef 5.440% Fixed 60,992 August 2015
Renaissance Worthington 5.400% Fixed 56,724 July 2015
Orlando Airport Marriott 5.680% Fixed 59,000 January 2016
Chicago Marriott
Downtown 5.975% Fixed 218,318 April 2016
December
Austin Renaissance Hotel 5.507% Fixed 83,000 2016
Waverly Renaissance December
Hotel 5.503% Fixed 97,000 2016
Senior Unsecured Credit LIBOR + February
Facility 0.95 Variable - 2011
---
Total Debt $783,844
Operating Statistics - Second Quarter
ADR Occupancy
--- ---------
2Q 2010 2Q 2009 B/(W) 2Q 2010 2Q 2009 B/(W)
------- ------- ----- ------- ------- -----
Atlanta Alpharetta $118.12 $121.03 (2.4%) 64.9% 60.9% 4.0%
Westin Atlanta
North (1) $102.68 $100.01 2.7% 73.5% 66.6% 6.9%
Atlanta Waverly $128.22 $131.77 (2.7%) 60.6% 64.7% (4.1%)
Renaissance Austin $142.09 $150.74 (5.7%) 63.9% 63.5% 0.4%
Bethesda Marriott
Suites $168.63 $164.72 2.4% 76.8% 69.0% 7.8%
Boston Westin (1) $202.26 $203.52 (0.6%) 72.2% 67.5% 4.7%
Chicago Marriott $197.80 $183.70 7.7% 78.5% 78.0% 0.5%
Chicago Conrad (1) $164.48 $188.12 (12.6%) 83.0% 74.4% 8.6%
Courtyard Fifth
Avenue $254.26 $215.00 18.3% 91.3% 89.1% 2.2%
Courtyard Midtown
East $239.91 $207.19 15.8% 92.0% 87.3% 4.7%
Frenchman's Reef
(1) $251.22 $235.11 6.9% 85.6% 88.7% (3.1%)
Griffin Gate
Marriott $133.75 $133.78 0.0% 70.6% 66.0% 4.6%
Los Angeles
Airport $100.48 $108.05 (7.0%) 79.1% 70.3% 8.8%
Hilton Minneapolis
(2) - - - - - -
Oak Brook Hills $106.17 $122.08 (13.0%) 59.9% 39.3% 20.6%
Orlando Airport
Marriott $97.14 $100.37 (3.2%) 69.0% 74.9% (5.9%)
Salt Lake City
Marriott $130.64 $129.39 1.0% 54.8% 50.3% 4.5%
The Lodge at
Sonoma $192.05 $187.16 2.6% 71.2% 63.0% 8.2%
Torrance Marriott
South Bay $101.44 $111.70 (9.2%) 83.4% 72.3% 11.1%
Vail Marriott (1) $223.84 $199.48 12.2% 55.4% 61.2% (5.8%)
Renaissance
Worthington $164.74 $168.58 (2.3%) 67.3% 64.0% 3.3%
------- ------- ------ ---- ---- ---
Total/Weighted
Average $160.29 $159.30 0.6% 72.7% 69.0% 3.7%
RevPAR Hotel Adjusted
------ EBITDA Margin
-------------
2Q 2010 2Q 2009 B/(W) 2Q 2010 2Q 2009 B/(W)
------- ------- ----- ------- ------- -----
Atlanta Alpharetta $76.61 $73.71 3.9% 22.96% 25.06% -210bps
Westin Atlanta
North (1) $75.47 $66.63 13.3% 17.49% 9.16% 833bps
Atlanta Waverly $77.70 $85.29 (8.9%) 16.76% 23.49% -673bps
Renaissance Austin $90.82 $95.70 (5.1%) 31.92% 32.71% -79bps
Bethesda Marriott
Suites $129.43 $113.69 13.8% 27.99% 27.96% 3bps
Boston Westin (1) $145.95 $137.28 6.3% 29.59% 31.19% -160bps
Chicago Marriott $155.31 $143.26 8.4% 26.59% 25.35% 124bps
Chicago Conrad (1) $136.55 $139.90 (2.4%) 22.78% 26.07% -329bps
Courtyard Fifth
Avenue $232.11 $191.57 21.2% 33.63% 24.62% 901bps
Courtyard Midtown
East $220.72 $180.89 22.0% 37.63% 32.27% 535bps
Frenchman's Reef
(1) $215.08 $208.61 3.1% 31.13% 31.48% -34bps
Griffin Gate
Marriott $94.45 $88.33 6.9% 28.80% 29.88% -108bps
Los Angeles
Airport $79.48 $75.97 4.6% 13.18% 12.11% 107bps
Hilton Minneapolis
(2) - - - - - -
Oak Brook Hills $63.58 $47.99 32.5% 16.06% 15.17% 89bps
Orlando Airport
Marriott $66.99 $75.21 (10.9%) 17.72% 24.95% -723bps
Salt Lake City
Marriott $71.57 $65.07 10.0% 26.52% 17.53% 899bps
The Lodge at
Sonoma $136.80 $117.87 16.1% 14.27% 10.67% 360bps
Torrance Marriott
South Bay $84.65 $80.73 4.9% 21.36% 23.69% -233bps
Vail Marriott (1) $124.04 $122.02 1.7% 25.23% 18.67% 656bps
Renaissance
Worthington $110.87 $107.88 2.8% 34.49% 31.61% 288bps
------- ------- --- ----- ----- ------
Total/Weighted
Average $116.53 $109.85 6.1% 25.86% 25.19% 67bps
(1) The hotel reports results on a monthly basis. The data
presented is based upon the Company's reporting calendar for the
second quarter and includes the months of March, April and May.
(2) Hilton Minneapolis reports operations on a calendar month and
year basis. The fiscal quarter ended June 18, 2010 excludes the
operations of the Hilton Minneapolis since it was acquired on June
16, 2010.
Operating Statistics - Year to Date
ADR Occupancy
--- ---------
YTD YTD
YTD 2010 YTD 2009 B/(W) 2010 2009 B/(W)
-------- -------- ----- ---- ---- -----
Atlanta
Alpharetta $119.44 $128.38 (7.0%) 66.8% 59.1% 7.7%
Westin Atlanta
North (1) $102.42 $103.88 (1.4%) 71.1% 66.5% 4.6%
Atlanta Waverly $129.43 $137.52 (5.9%) 65.2% 62.6% 2.6%
Renaissance
Austin $143.70 $153.74 (6.5%) 63.8% 63.2% 0.6%
Bethesda
Marriott
Suites $166.99 $179.41 (6.9%) 66.9% 62.7% 4.2%
Boston Westin
(1) $187.61 $190.13 (1.3%) 63.2% 60.0% 3.2%
Chicago
Marriott $177.18 $169.99 4.2% 65.2% 67.9% (2.7%)
Chicago Conrad
(1) $158.74 $177.78 (10.7%) 70.6% 67.2% 3.4%
Courtyard Fifth
Avenue $230.28 $208.59 10.4% 86.8% 88.4% (1.6%)
Courtyard
Midtown East $214.31 $204.01 5.0% 84.6% 83.2% 1.4%
Frenchman's
Reef (1) $267.55 $252.70 5.9% 84.4% 86.5% (2.1%)
Griffin Gate
Marriott $122.07 $122.83 (0.6%) 60.0% 57.4% 2.6%<
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