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Chesapeake Lodging Trust Reports Third Quarter Results

The following excerpt is from the company's SEC filing.

ANNAPOLIS, MD, November 2, 2015 – Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended September 30, 2015.

HIGHLIGHTS

RevPAR

pro forma increase for the hotel portfolio over the same period in 2014.

Adjusted Hotel EBITDA Margin

110 basis point pro forma increase to

$58.1 million

Adjusted Corporate EBITDA

$54.1 million

Adjusted FFO

$42.9 million

per diluted common share.

Dividend

Increased third quarter 2015 dividend by 14% to $0.40 per common share (5.8% annualized yield based on the closing price of the Trust’s common shares on October 30, 2015).

Share Repurchase Program

Authorized to acquire up to $100.0 million of its common shares.

PRESS RELEASE

For Immediate Release

Contact: Douglas W. Vicari (410) 972-4142

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the

three and nine months

September 30, 2015

(in millions, except share and per share amounts):

Three months ended September 30,

Nine months ended September 30,

Total revenue

Net income available to common shareholders

Net income per diluted common share

AFFO available to common shareholders

AFFO per diluted common share

Weighted-average number of diluted common shares outstanding

58,991,087

50,567,849

57,536,971

49,758,044

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 September 30, 2015, the Trust owned 22 hotels. Since two of its hotels owned as of September 30, 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 and nine months ended September 30, 2015 and 2014.

Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three and nine months ended September 30, 2015 and 2014 (in thousands, except for ADR and RevPAR):

Change

Pro forma Occupancy

440 bps

120 bps

Pro forma ADR

237.33

233.06

230.75

220.30

Pro forma RevPAR

208.58

194.50

189.32

178.09

Pro forma Adjusted Hotel EBITDA

58,087

52,989

149,630

137,445

Pro forma Adjusted Hotel EBITDA Margin

110 bps

100 bps

__________

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

On September 29, 2015, the Trust's board of trustees authorized a share repurchase program pursuant to which the Trust may acquire up to $100.0 million of its common shares using cash on hand and borrowings under its revolving credit facility. The timing and volume of repurchases will be determined by the Trust's management based on its ongoing assessments of the capital needs of the business, prevailing market prices, general economic and market conditions and other considerations. The repurchase program authorizes the Trust to repurchase its common shares from time to time through open market purchases, negotiated transactions or other means, including Rule 10b5-1 trading plans, in accordance with applicable securities laws and other restrictions. The repurchase program expires in September 2018, but may be suspended or discontinued at any time, and does not obligate the Trust to acquire any particular amount of its shares. As of November 2, 2015, $100.0 million remained available for the repurchase of common shares.

The Trust has not sold any common shares under its continuous at-the-market (ATM) program during 2015.

DIVIDENDS

On July 15, 2015, the Trust paid dividends in the amounts of $0.35 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of June 30, 2015. On July 30, 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 September 30, 2015. Both dividends were paid on October 15, 2015.

2015 OUTLOOK

The Trust is updating its 2015 outlook previously provided on September 29, 2015 to incorporate its third quarter results and recent operating trends and fundamentals. The updated outlook assumes no additional acquisitions, dispositions, or financing transactions (in millions, except RevPAR and per share amounts):

Fourth Quarter 2015

Outlook

CONSOLIDATED:

Corporate cash general and administrative expense

Corporate non-cash general and administrative expense

HOTEL PORTFOLIO:

179.00

182.00

Pro forma RevPAR increase over 2014

Pro forma Adjusted Hotel EBITDA Margin increase over 2014

185 bps

260 bps

___________

The comparable 2014 period includes results of operations for certain hotels prior to their acquisition by the Trust.

Full Year 2015

Updated Outlook

Previous Outlook

186.00

187.00

189.00

140 bps

115 bps

"We are adjusting our full year outlook to reflect more conservative growth expectations for November and December given weaker than expected business transient demand in October predominantly at our hotels located in the San Francisco and New York markets,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. "We continue to believe positive fundamentals for the U.S. lodging industry and for the majority of our markets remain intact as we look into 2016 based on favorable convention calendars, our group pace, and the continued expectation that lodging demand growth will exceed lodging supply growth.”

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 EBITDA – Hotel 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...


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