RevPAR increased 11.5 Percent
DiamondRock Hospitality Company (NYSE:DRH) today announced results of operations for its third fiscal quarter 2007. The Company is a lodging focused real estate investment trust ("REIT") that owns and acquires premium hotels in North America.
Third Quarter 2007 Highlights
• RevPAR: Same-store revenue per available room ("RevPAR") increased 11.5 percent over the comparable period in 2006.
• Hotel Adjusted EBITDA Margins: Same-store hotel adjusted earnings before interest expense, taxes, depreciation and amortization ("Adjusted EBITDA") margins increased 245 basis points.
• Adjusted EBITDA: The Company's Adjusted EBITDA was $45.8 million.
• Adjusted FFO: The Company reported adjusted funds from operations ("Adjusted FFO") of $34.4 million and Adjusted FFO per share of $0.36.
• Dividend: The Company declared a quarterly dividend of $0.24 per share during the third quarter.
• Bethesda Refinancing: On July 31, 2007, the Company refinanced its $18.4 million fixed-rate mortgage debt on the Bethesda Marriott Suites with a $5.0 million variable-rate mortgage and a draw under its corporate credit facility.
William W. McCarten, chairman and chief executive officer, stated: "DiamondRock had a terrific third quarter as it continued to leverage a very strong travel environment. For the balance of 2007, we continue to see strong fundamentals with constrained supply in urban and resort markets and solid demand from all of our customer segments."
Operating Results
For the third quarter, beginning June 16, 2007 and ended September 7, 2007, the Company reported the following:
• Revenues of $168.0 million compared to $114.9 million for the comparable period in 2006.
• Adjusted EBITDA of $45.8 million compared to $29.8 million for the comparable period in 2006.
• Adjusted FFO and Adjusted FFO per diluted share of $34.4 million and $0.36, respectively, compared to $20.6 million and $0.29, respectively, for the comparable period in 2006.
• Net income of $15.9 million (or $0.17 per diluted share) compared to $6.5 million (or $0.09 per diluted share) for the comparable period in 2006.
Same-store RevPAR for the third quarter increased 11.5 percent from $117.23 to $130.68 as compared to the same period in 2006, driven by a 6.4 percent increase in the average daily rate and a 3.6 percentage point increase in occupancy (from 74.3 percent to 77.9 percent). Same-store Hotel Adjusted EBITDA margins for our hotels increased 245 basis points over the same period in the prior year.
The third quarter Adjusted FFO benefited by approximately $1.0 million (or $0.01 per share) from lower income taxes compared with our prior quarterly guidance. However, our full year income tax projections remain unchanged.
Year-to-date, beginning January 1, 2007 and ended September 7, 2007, the Company reported the following:
• Revenues of $481.3 million compared to $323.0 million for the comparable period in 2006.
• Adjusted EBITDA of $134.4 million compared to $89.1 million for the comparable period in 2006.
• Adjusted FFO and Adjusted FFO per diluted share of $98.2 million and $1.05, respectively, compared to $62.9 million and $0.99, respectively, for the comparable period in 2006.
• Net income of $43.2 million (or $0.46 per diluted share) compared to $24.7 million (or $0.38 per diluted share) for the comparable period in 2006.
Same-store year-to-date RevPAR increased 10.0 percent from $117.76 to $129.48 as compared to the same period in 2006, driven by a 7.0 percent increase in the average daily rate and a 2.0 percentage point increase in occupancy (from 73.6 percent to 75.6 percent). Year-to-date, same-store Hotel Adjusted EBITDA margins for our hotels increased 173 basis points over the same period in the prior year.
The third quarter and full year results are impacted by the refinancing of the Bethesda Marriott Suites mortgage debt. The refinancing allowed the Company to lower its interest rate on the associated debt. The new mortgage loan has a three-year term, can be repaid at any time without penalty, and bears interest of LIBOR plus 95 basis points. Net income reflects a gain of $0.4 million, which is comprised of the removal of the $2.5 million debt premium offset by the $2.0 million prepayment penalty and the write-off of deferred financing costs of $0.1 million. The reported Adjusted EBITDA and Adjusted FFO amounts exclude the net gain from the refinancing of Bethesda Marriott Suites debt.
Operating Results Compared to Prior Guidance
The following is a chart showing our actual third quarter 2007 results compared to our guidance for the third quarter 2007:
3Q 2007 Guidance Actual 3Q 2007 Results
RevPAR Growth 9% to 10% 11.5 %
Hotel Adjusted EBITDA Margins 150 to 200 basis 245 basis points
points
Adjusted EBITDA $43.5 to $45.5 $45.8 million
million
Adjusted FFO $30.9 to $32.9 $34.4 million
million
Adjusted FFO/Share $0.32 to $0.35 per $0.36 per diluted
diluted share share
