RLJ Lodging Trust Results

RLJ Lodging Trust Reports Third Quarter 2018 Results

Adjusted EBITDA increased 22.4% to $132.7 million

RLJ Lodging Trust

RLJ Lodging Trust (NYSE:RLJ) today reported results for the three and nine months ended September 30, 2018.

Highlights

  • Sold Vinoy Renaissance for total consideration of $188.5 million, representing 19.6x TTM EBITDA
  • Sold Embassy Suites Napa Valley for $102.0 million, equating to 14.6x TTM EBITDA
  • Sold DoubleTree Burlington Vermont for $35.0 million, representing 17.3x TTM EBITDA inclusive of required capital expenditures
  • Sold Holiday Inn Fisherman's Wharf for gross proceeds of $75.3 million subsequent to quarter-end, representing 18.8x TTM EBITDA
  • Repaid $85.0 million mortgage loan secured by the Knickerbocker Hotel subsequent to quarter-end
  • Pro forma RevPAR decreased 0.8%
  • Net income was $74.7 million
  • Adjusted EBITDA increased 22.4% to $132.7 million
  • Adjusted FFO per diluted common share and unit was $0.58

“We are proud of our team's accomplishments over the last twelve months, as we have continued to execute incredibly well on our strategic initiatives, and are tracking ahead of our expectations for each of our objectives,” commented Leslie D. Hale, President and Chief Executive Officer. “We have sold non-core assets for over $700 million at a combined trailing EBITDA multiple of 16.5x and exceeded our leverage targets. Through these dispositions and subsequent debt reduction, RLJ is well positioned to deliver shareholder value in 2019 and beyond. Furthermore, we were very pleased with cost control initiatives during the third quarter that led us to exceed our revised guidance range despite transitory headwinds.”

Financial and Operating Results

Performance metrics such as Occupancy, Average Daily Rate (“ADR”), Revenue Per Available Room (“RevPAR”), Hotel EBITDA, and Hotel EBITDA Margin are Pro forma. The prefix “Pro forma” as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude any hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. Explanations of EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release. Trailing twelve months ("TTM") represents the twelve months of results prior to the disposition date.

Net income for the three months ended September 30, 2018, increased $70.5 million to $74.7 million over the comparable period in 2017. For the nine months ended September 30, 2018, net income increased $94.6 million to $162.9 million over the comparable period in 2017. For the three months and nine months ended September 30, 2017, net income included transaction costs of $32.6 million and $36.9 million, respectively, primarily related to the FelCor merger.

Pro forma RevPAR for the three months ended September 30, 2018, decreased 0.8% over the comparable period in 2017, driven by a Pro forma ADR increase of 0.9%, and by a Pro forma Occupancy decrease of 1.6%. Hurricane Florence, which directly affected the Company's Myrtle Beach and Charleston markets that account for 5% of the Company's EBITDA, impacted Pro forma RevPAR by 40 basis points. The Company also experienced incremental softness in Louisville, Austin, and Denver. Excluding these three markets and the impact from Hurricane Florence, Pro forma RevPAR would have increased 0.8%. For the nine months ended September 30, 2018, Pro forma RevPAR decreased 0.1% over the comparable period in 2017, driven by a Pro forma ADR increase of 0.3%, and by a Pro forma Occupancy decrease of 0.3%.

Pro forma Hotel EBITDA Margin for the three months ended September 30, 2018, was 32.3%, a decrease of 183 basis points over the comparable period in 2017. The impact of Proposition 13 on our acquired California hotels decreased margins by 36 basis points. For the nine months ended September 30, 2018, Pro forma Hotel EBITDA Margin decreased 132 basis points over the comparable period in 2017 to 32.7%.

Pro forma Hotel EBITDA for the three months ended September 30, 2018, decreased $8.9 million to $140.0 million, representing a 6.0% decrease over the comparable period in 2017. For the three months ended September 30, 2017, Pro forma Hotel EBITDA includes results from prior ownership of $37.6 million from the hotel properties acquired pursuant to the FelCor merger.

For the nine months ended September 30, 2018, Pro forma Hotel EBITDA decreased $17.2 million to $422.0 million, representing a 3.9% decrease over the comparable period in 2017. For the nine months ended September 30, 2017, Pro forma Hotel EBITDA includes results from prior ownership of $132.9 million from the hotel properties acquired pursuant to the FelCor merger.

Adjusted FFO for the three months ended September 30, 2018, increased $14.9 million to $101.4 million, representing a 17.2% increase over the comparable period in 2017. For the nine months ended September 30, 2018, Adjusted FFO increased $71.1 million to $310.8 million, representing a 29.7% increase over the comparable period in 2017.

Adjusted FFO per diluted common share and unit for the three months ended September 30, 2018, decreased $0.03 to $0.58, representing a 4.9% decrease over the comparable period in 2017. For the nine months ended September 30, 2018, Adjusted FFO per diluted common share and unit decreased $0.07 to $1.77, representing a 3.8% decrease over the comparable period in 2017.

Adjusted EBITDA for the three months ended September 30, 2018, increased $24.3 million to $132.7 million, representing a 22.4% increase over the comparable period in 2017. For the nine months ended September 30, 2018, Adjusted EBITDA increased $117.2 million to $408.3 million, representing a 40.3% increase over the comparable period in 2017.

Non-recurring items and other adjustments which were noteworthy for the three months ended September 30, 2018, include a $1.7 million loss on extinguishment of indebtedness. For the nine months ended September 30, 2018, non-recurring items and other adjustments which were noteworthy include a gain on extinguishment of indebtedness of $6.0 million.

Non-recurring items are included in net income but are excluded from Adjusted EBITDA and Adjusted FFO, as applicable. A complete listing of non-recurring items is provided in the Non-GAAP reconciliation tables located in this press release.

Net cash flow from operating activities totaled $313.5 million for the nine months ended September 30, 2018, representing a 51.2% increase over the comparable period in 2017.

Dispositions

During the three months ended September 30, 2018, the Company sold the 205-room Embassy Suites Napa Valley for $102.0 million in July 2018, the 152-room DoubleTree Hotel Columbia in August 2018 for $12.9 million, the 362-room Vinoy Renaissance St. Petersburg Resort & Golf Club for total consideration of $188.5 million in August 2018, and the 309-room DoubleTree by Hilton Burlington Vermont for $35.0 million in September 2018.

Subsequent Events

The Holiday Inn San Francisco - Fisherman's Wharf consists of two separate buildings, the 342-room Columbus Street building and the 243-room Annex building. On October 31, 2018, the ground lease under the Columbus Street building expired and the building was transferred to the lessor in accordance with the ground lease. On October 15, 2018, the Company separately sold the remaining 243-room Annex building for a contractual sales price of $75.3 million of which the Company's pro rata share was approximately $30.4 million.

On November 5, 2018, the Company repaid the $85.0 million mortgage loan secured by the Knickerbocker Hotel with corporate cash. The repayment will reduce annual interest expense by over $4 million.

Balance Sheet

As of September 30, 2018, the Company had $425.4 million of unrestricted cash on its balance sheet, $600.0 million available on its revolving credit facility, and $2.3 billion of debt outstanding.

The Company’s ratio of net debt to Adjusted EBITDA for the trailing twelve-month period ended September 30, 2018, was 3.5x.

Dividends

The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the third quarter. The dividend was paid on October 15, 2018, to shareholders of record as of September 28, 2018.

The Company's Board of Trustees declared a preferred dividend of $0.4875 on its Series A cumulative convertible preferred shares. The dividend was paid on October 31, 2018, to shareholders of record as of September 28, 2018.

2018 Outlook

The Company’s outlook includes all hotels owned as of November 6, 2018. Potential future acquisitions or dispositions could result in a material change to the Company’s outlook. The 2018 outlook incorporates the Company's third quarter results including the impact from Hurricane Florence, asset sales, including $4 million of Pro forma Hotel EBITDA related to the transfer and sale of Holiday Inn San Francisco - Fisherman's Wharf, recent trends in Denver, Austin, and Louisville, and risks associated with the ongoing labor strike in San Francisco. The outlook is also based on a number of other assumptions, many of which are outside the Company’s control and all of which are subject to change.

For the full year 2018, the Company anticipates:

             
      Current Outlook    

Prior Outlook as of

August 7, 2018

Pro forma RevPAR growth     -1.25% to -0.50%     -0.5% to +1.0%
Pro forma Hotel EBITDA Margin 31.25% to 32.5% 31.25% to 32.5%
Pro forma Consolidated Hotel EBITDA $537M to $547M $555M to $586M
Adjusted EBITDA $518M to $528M $519M to $550M
Corporate Cash General & Administrative     $37M to $39M     $37M to $39M
 

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio consists of 150 hotels with approximately 28,600 rooms located in 25 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.

RLJ Lodging Trust

Non-GAAP and Accounting Commentary

Non-Generally Accepted Accounting Principles (“GAAP”) Financial Measures

The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre, (5) Adjusted EBITDA, (6) Hotel EBITDA, and (7) Hotel EBITDA Margin. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of its operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, and Hotel EBITDA Margin as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company.

FFO

The Company calculates Funds from Operations (“FFO”) in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company believes that the presentation of FFO provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between real estate investment trusts (“REITs”), even though FFO does not represent an amount that accrues directly to common shareholders.

The Company’s calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing the Company to non-REITs. The Company presents FFO attributable to common shareholders, which includes unitholders of limited partnership interest (“OP units”) in RLJ Lodging Trust, L.P., the Company’s operating partnership, because the OP units are redeemable for common shares of the Company. The Company believes it is meaningful for the investor to understand FFO attributable to all common shares and OP units.

EBITDA and EBITDAre

Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA") is defined as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sales of assets; and (3) depreciation and amortization. The Company considers EBITDA useful to an investor in evaluating and facilitating comparisons of its operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions.

In addition to EBITDA, the Company presents EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss (calculated in accordance with GAAP) excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated partnerships and joint ventures. The Company believes that the presentation of EBITDAre provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between REITs.

Adjustments to FFO and EBITDAre

The Company adjusts FFO, EBITDA, and EBITDAre for certain items that the Company considers outside the normal course of operations or extraordinary. The Company believes that Adjusted FFO, Adjusted EBITDA, and Adjusted EBITDAre provide useful supplemental information to investors regarding its ongoing operating performance that, when considered with net income or loss, FFO, EBITDA, and EBITDAre, are beneficial to an investor’s understanding of its operating performance. The Company adjusts FFO, EBITDA, and EBITDAre for the following items:

  • Transaction Costs: The Company excludes transaction costs expensed during the period.
  • Non-Cash Expenses: The Company excludes the effect of certain non-cash items such as the amortization of share-based compensation and non-cash income taxes.
  • Other Non-Operational Expenses: The Company excludes the effect of certain non-operational expenses representing income and expenses outside of the normal course of operations, including debt modification costs and hurricane-related costs that were not reimbursed by insurance, executive transition costs, receipts of prior year employee tax credits, and activist shareholder costs.

The Company previously presented Adjusted EBITDA with adjustments for noncontrolling interests in consolidated joint ventures. The rationale for including 100% of Adjusted EBITDA for consolidated joint ventures with noncontrolling interests is that the full amount of any debt of these consolidated joint ventures is reported in our consolidated balance sheet and metrics using debt to EBITDA provide a better understanding of the Company’s leverage. This is also consistent with NAREIT’s definition of EBITDAre.

Hotel EBITDA and Hotel EBITDA Margin

With respect to Consolidated Hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses and certain non-cash items provides a more complete understanding of the operating results over which individual hotels and operators have direct control. The Company believes property-level results provide investors with supplemental information about the ongoing operational performance of the Company’s hotels and the effectiveness of its third-party management companies.

Pro forma Consolidated Hotel EBITDA includes prior ownership information provided by the sellers of the hotels for periods prior to our acquisition of the hotels, which has not been audited and excludes results from sold hotels as applicable. Pro forma Hotel EBITDA and Pro forma Hotel EBITDA Margin exclude the results of any non-comparable hotels that were under renovation or not open for the entirety of the comparable periods. The following is a summary of pro forma hotel adjustments:

Pro forma adjustments: Acquired hotels

For the nine months ended September 30, 2018, no hotels were acquired.

The Company acquired the following hotels in August 2017 in conjunction with the FelCor merger:

  • DoubleTree Suites by Hilton Austin
  • DoubleTree Suites by Hilton Orlando - Lake Buena Vista
  • Embassy Suites Atlanta - Buckhead
  • Embassy Suites Birmingham
  • Embassy Suites Boston - Marlborough
  • Embassy Suites Dallas - Love Field
  • Embassy Suites Deerfield Beach - Resort & Spa
  • Embassy Suites Fort Lauderdale 17th Street
  • Embassy Suites Los Angeles - International Airport/South
  • Embassy Suites Mandalay Beach - Hotel & Resort
  • Embassy Suites Miami - International Airport
  • Embassy Suites Milpitas Silicon Valley
  • Embassy Suites Minneapolis - Airport
  • Embassy Suites Myrtle Beach - Oceanfront Resort
  • Embassy Suites Napa Valley
  • Embassy Suites Orlando - International Drive South/Convention Center
  • Embassy Suites Phoenix - Biltmore
  • Embassy Suites San Francisco Airport - South San Francisco
  • Embassy Suites San Francisco Airport - Waterfront
  • Embassy Suites Secaucus - Meadowlands
  • Hilton Myrtle Beach Resort
  • Holiday Inn San Francisco - Fisherman's Wharf
  • San Francisco Marriott Union Square
  • DoubleTree by Hilton Burlington Vermont, formerly the Sheraton Burlington Hotel & Conference Center
  • Sheraton Philadelphia Society Hill Hotel
  • The Fairmont Copley Plaza
  • The Knickerbocker, New York
  • The Mills House Wyndham Grand Hotel, Charleston
  • The Vinoy Renaissance St. Petersburg Resort & Golf Club
  • Wyndham Boston Beacon Hill
  • Wyndham Houston - Medical Center Hotel & Suites
  • Wyndham New Orleans - French Quarter
  • Wyndham Philadelphia Historic District
  • Wyndham Pittsburgh University Center
  • Wyndham San Diego Bayside
  • Wyndham Santa Monica At the Pier

Pro forma adjustments: Sold hotels

For the nine months ended September 30, 2018, the following hotels were sold:

  • Embassy Suites Boston - Marlborough was sold in February 2018
  • Sheraton Philadelphia Society Hill Hotel was sold in March 2018
  • Embassy Suites Napa Valley was sold in July 2018
  • DoubleTree Hotel Columbia was sold in August 2018
  • The Vinoy Renaissance St. Petersburg Resort & Golf Club was sold in August 2018
  • DoubleTree by Hilton Burlington Vermont was sold in September 2018

For the year ended December 31, 2017, the following hotel was sold:

  • The Fairmont Copley Plaza was sold in December 2017

The Company's 2018 full-year pro forma outlook incorporates the impact of dispositions during the nine months ended September 30, 2018, in addition to the transfer and sale of the Holiday Inn San Francisco - Fisherman's Wharf in October 2018.

 
RLJ Lodging Trust
Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

(unaudited)

   
September 30, December 31,
2018 2017
Assets
Investment in hotel properties, net $ 5,373,171 $ 5,791,925
Investment in unconsolidated joint ventures 22,472 23,885
Cash and cash equivalents 425,384 586,470
Restricted cash reserves 78,113 72,606
Hotel and other receivables, net of allowance of $610 and $510, respectively 76,914 60,011
Deferred income tax asset, net 52,415 56,761
Intangible assets, net 53,633 133,211
Prepaid expense and other assets 77,154 69,936
Assets of hotel properties held for sale, net 25,449    
Total assets $ 6,184,705   $ 6,794,805  
Liabilities and Equity
Debt, net $ 2,290,164 $ 2,880,488
Accounts payable and other liabilities 203,982 225,664
Deferred income tax liability 5,547 5,547
Advance deposits and deferred revenue 29,506 30,463
Accrued interest 14,296 17,081
Distributions payable 65,746   65,284  
Total liabilities 2,609,241 3,224,527
Equity
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized

Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475

shares issued and outstanding, liquidation value of $328,266, at September 30, 2018 and December 31, 2017

366,936 366,936

Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 175,215,202 and

174,869,046 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively

1,752 1,749
Additional paid-in capital 3,215,208 3,208,002
Accumulated other comprehensive income 38,315 8,846
Distributions in excess of net earnings (113,841 ) (82,566 )
Total shareholders’ equity 3,508,370 3,502,967
Noncontrolling interest:
Noncontrolling interest in consolidated joint ventures 11,640 11,700
Noncontrolling interest in the Operating Partnership 11,024   11,181  
Total noncontrolling interest 22,664   22,881  

Preferred equity in a consolidated joint venture, liquidation value of $45,515 and $45,430 at September 30, 2018

and December 31, 2017, respectively

44,430   44,430  
Total equity 3,575,464   3,570,278  
Total liabilities and equity $ 6,184,705   $ 6,794,805  
 
Note:

The corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.

 
 
RLJ Lodging Trust
Consolidated Statements of Operations

(Amounts in thousands, except share and per share data)

(unaudited)

   
For the three months ended For the nine months ended
September 30, September 30,
2018   2017 2018   2017
Revenues
Operating revenues
Room revenue $ 377,237 $ 292,046 $ 1,138,115 $ 770,751
Food and beverage revenue 47,211 35,580 157,850 91,392
Other revenue 22,594   13,629   65,362   31,628  
Total revenues $ 447,042   $ 341,255   $ 1,361,327   $ 893,771  
Expenses
Operating expenses
Room expense $ 95,161 $ 69,380 $ 279,589 $ 176,523
Food and beverage expense 37,780 27,061 121,450 66,458
Management and franchise fee expense 34,838 29,571 107,766 86,110
Other operating expense 105,646   78,120   320,325   195,000  
Total property operating expenses 273,425 204,132 829,130 524,091
Depreciation and amortization 60,373 45,231 183,429 122,136
Property tax, insurance and other 34,382 23,618 104,418 60,929
General and administrative 11,622 9,506 38,059 28,757
Transaction costs 261   32,607   2,181   36,923  
Total operating expenses 380,063   315,094   1,157,217   772,836  
Operating income 66,979 26,161 204,110 120,935
Other income 856 110 2,514 323
Interest income 1,149 1,157 3,339 2,306
Interest expense (24,629 ) (19,650 ) (78,772 ) (48,527 )
Gain (loss) on sale of hotel properties, net 35,895 (19 ) 32,957 (49 )
(Loss) gain on extinguishment of indebtedness, net (1,656 ) 6,010
Gain on settlement of investment in loan   2,670     2,670  
Income before equity in income from unconsolidated joint ventures 78,594 10,429 170,158 77,658
Equity in income from unconsolidated joint ventures 219   57   637   57  
Income before income tax expense 78,813 10,486 170,795 77,715
Income tax expense (4,156 ) (6,375 ) (7,852 ) (9,362 )
Net income 74,657 4,111 162,943 68,353
Net (income) loss attributable to noncontrolling interests:
Noncontrolling interest in consolidated joint ventures (9 ) (32 ) 170 5
Noncontrolling interest in the Operating Partnership (299 ) (43 ) (626 ) (318 )
Preferred distributions - consolidated joint venture (374 ) (122 ) (1,109 ) (122 )
Net income attributable to RLJ 73,975 3,914 161,378 67,918
Preferred dividends (6,279 ) (2,093 ) (18,836 ) (2,093 )
Net income attributable to common shareholders $ 67,696   $ 1,821   $ 142,542   $ 65,825  
Basic per common share data:
Net income per share attributable to common shareholders $ 0.39   $ 0.01   $ 0.81   $ 0.50  
Weighted-average number of common shares 174,326,198   140,249,961   174,253,393   129,317,120  
Diluted per common share data:
Net income per share attributable to common shareholders $ 0.39   $ 0.01   $ 0.81   $ 0.50  
Weighted-average number of common shares 174,479,341   140,307,269   174,365,101   129,399,177  
 

Note:

The Statements of Comprehensive Income and corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.

 
 
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures

(Amounts in thousands, except per share data)

(unaudited)

 
FFO Attributable to Common Shareholders and Unitholders
   
For the three months ended For the nine months ended
September 30, September 30,
2018   2017 2018   2017
Net income $ 74,657 $ 4,111 $ 162,943 $ 68,353
Preferred dividends (6,279 ) (2,093 ) (18,836 ) (2,093 )
Preferred distributions - consolidated joint venture (374 ) (122 ) (1,109 ) (122 )
Depreciation and amortization 60,373 45,231 183,429 122,136
(Gain) loss on sale of hotel properties, net (35,895 ) 19 (32,957 ) 49
Noncontrolling interest in consolidated joint ventures (9 ) (32 ) 170 5
Adjustments related to consolidated joint ventures (1) (78 ) (46 ) (233 ) (109 )
Adjustments related to unconsolidated joint ventures (2) 661   193   1,998   193  
FFO 93,056 47,261 295,405 188,412
Transaction costs 261 32,607 2,181 36,923
Loss (gain) on extinguishment of indebtedness, net 1,656 (6,010 )
Gain on settlement of investment in loan (2,670 ) (2,670 )
Amortization of share-based compensation 4,036 2,495 9,722 7,964
Non-cash income tax expense 3,217 5,711 6,171 7,972
Other (income) expenses (3) (839 ) 1,116   3,330   1,116  
Adjusted FFO $ 101,387   $ 86,520   $ 310,799   $ 239,717  
 
Adjusted FFO per common share and unit-basic $ 0.58 $ 0.61 $ 1.78 $ 1.85
Adjusted FFO per common share and unit-diluted $ 0.58 $ 0.61 $ 1.77 $ 1.84
 
Basic weighted-average common shares and units outstanding (4) 175,100 140,879 175,027 129,900
Diluted weighted-average common shares and units outstanding (4) 175,253 140,936 175,139 129,982
 

Note:

(1)   Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint ventures.
(2) Includes our ownership interest of the depreciation and amortization expense of the unconsolidated joint ventures.
(3) Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, receipts of prior year employee tax credits, and activist shareholder costs.
(4) Includes 0.8 million and 0.6 million weighted-average operating partnership units for the three and nine month periods ended September 30, 2018 and 2017, respectively.
 
 
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

 
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
   
For the three months ended For the nine months ended
September 30, September 30,
2018   2017 2018   2017
Net income $ 74,657 $ 4,111 $ 162,943 $ 68,353
Depreciation and amortization 60,373 45,231 183,429 122,136
Interest expense, net (1) 23,479 18,873 75,433 47,589
Income tax expense 4,156 6,375 7,852 9,362
Adjustments related to unconsolidated joint ventures (2) 788   236   2,379   236  
EBITDA 163,453 74,826 432,036 247,676
(Gain) loss on sale of hotel properties, net (35,895 ) 19   (32,957 ) 49  
EBITDAre 127,558 74,845 399,079 247,725
Transaction costs 261 32,607 2,181 36,923
Loss (gain) on extinguishment of indebtedness, net 1,656 (6,010 )
Gain on settlement of investment in loan (2,670 ) (2,670 )
Amortization of share-based compensation 4,036 2,495 9,722 7,964
Other (income) expenses (3) (839 ) 1,116   3,330   1,116  
Adjusted EBITDA 132,672 108,393 408,302 291,058
General and administrative (4) 7,586 7,011 28,337 20,794
Other corporate adjustments (5) 760   48   (2,004 ) (308 )
Consolidated Hotel EBITDA 141,018   115,452   434,635   311,544  
Pro forma adjustments - income from sold hotels (1,045 ) (4,229 ) (12,675 ) (5,228 )
Pro forma adjustments - income from prior ownership of acquired hotels (6)   37,634     132,852  
Pro forma Consolidated Hotel EBITDA 139,973   148,857   421,960   439,168  
Pro forma adjustments - income from non-comparable hotels        
Pro forma Hotel EBITDA $ 139,973   $ 148,857   $ 421,960   $ 439,168  
 

Note:

(1)   Excludes amounts attributable to investment in loans of $0.4 million and $1.4 million for the three and nine months ended September 30, 2017, respectively.
(2) Includes our ownership interest of the interest, depreciation, and amortization expense of the unconsolidated joint ventures.
(3) Represents income and expenses outside of the normal course of operations, including debt modification costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, receipts of prior year employee tax credits, and activist shareholder costs.
(4) General and administrative expenses exclude amortization of share-based compensation reflected in Adjusted EBITDA.
(5) Other corporate adjustments include property-level adjustments and certain revenues and expenses at corporate entities. These items include interest income, amortization of deferred management fees, key money amortization, ground rent amortization, legal fees, revenues and expenses associated with non-hotel properties, income (loss) from unconsolidated entities, internal lease rent expense, and other items.
(6) The information above includes results for periods prior to the Company's ownership. The information has not been audited and is presented only for comparison purposes.
 
 
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

 
Pro forma Hotel EBITDA Margin
 
  For the three months ended   For the nine months ended
September 30,   September 30,
2018   2017 2018   2017
Total revenue $ 447,042 $ 341,255 $ 1,361,327 $ 893,771
Pro forma adjustments - revenue from sold hotels (11,992 ) (16,385 ) (68,157 ) (19,646 )
Pro forma adjustments - revenue from prior ownership of acquired hotels (1) 111,765 416,744
Other corporate adjustments / non-hotel revenue (1,669 ) (520 ) (3,295 ) (550 )
Pro forma Hotel Revenue $ 433,381   $ 436,115   $ 1,289,875   $ 1,290,319  
 
Pro forma Hotel EBITDA $ 139,973   $ 148,857   $ 421,960   $ 439,168  
 
Pro forma Hotel EBITDA Margin 32.3 % 34.1 % 32.7 % 34.0 %
 

Note:

(1)   The information above includes results for periods prior to the Company's ownership. The information has not been audited and is presented only for comparison purposes.
 
 
RLJ Lodging Trust
Consolidated Debt Summary

(Amounts in thousands)

(unaudited)

 
Loan  

Base Term

(Years)

 

Maturity

(incl. extensions)

 

Floating /

Fixed

 

Interest

Rate (1)

   

Balance as of

September 30, 2018 (2)

Secured Debt            
Scotiabank - 1 hotel (3) 4 Nov 2018 Floating 5.08 % $ 85,000
Wells Fargo - 4 hotels 3 Oct 2021 Floating (4) 4.08 % 150,000
Wells Fargo - 4 hotels 2 Mar 2022 Floating (4) 4.05 % 141,000
Wells Fargo - 1 hotel 10 Jun 2022 Fixed 5.25 % 31,580
PNC - 2 hotels 10 Oct 2022 Fixed 4.95 % 57,360
Wells Fargo - 1 hotel 10 Oct 2022 Fixed 4.95 % 32,971
Prudential - 1 hotel 10 Oct 2022 Fixed 4.94 % 29,126
PNC - 5 hotels 5   Mar 2023   Floating   4.36 % 85,000
Weighted-Average / Secured Total 4.48 % $ 612,037
 
Unsecured Debt
Revolver (5) 4 Apr 2021 Floating 3.76 % $
$400 Million Term Loan Maturing 2021 5 Apr 2021 Floating (4)(6) 3.08 % 400,000
$150 Million Term Loan Maturing 2022 7 Jan 2022 Floating (4) 3.08 % 150,000
$400 Million Term Loan Maturing 2023 5 Jan 2023 Floating (4)(6) 3.19 % 400,000
$225 Million Term Loan Maturing 2023 5 Jan 2023 Floating (4) 3.44 % 225,000
Senior Unsecured Notes 10   Jun 2025   Fixed   6.00 % 475,000
Weighted-Average / Unsecured Total 4.00 % $ 1,650,000
   
Weighted-Average / Gross Debt 4.13 % $ 2,262,037
 

Note:

(1)   Interest rates as of September 30, 2018.
(2) Excludes the impact of fair value adjustments and deferred financing costs.
(3) On November 5, 2018, the Scotiabank mortgage loan was paid off in full.
(4) The floating interest rate is hedged with an interest rate swap.
(5) As of September 30, 2018, there was $600.0 million of borrowing capacity on the revolver, which is charged an unused commitment fee of 0.30% annually.
(6) Reflects interest rate swap on $350.0 million.
 
 
RLJ Lodging Trust
Pro forma Operating Statistics - Top 60 Assets

(unaudited)

     
Pro forma Consolidated Hotel
Property   City/State   # of Rooms   EBITDA
The Knickerbocker New York New York, NY 330 $12,436
Marriott Louisville Downtown Louisville, KY 616 10,920
San Francisco Marriott Union Square San Francisco, CA 401 9,427
Wyndham San Diego Bayside San Diego, CA 600 9,388
Wyndham Boston Beacon Hill Boston, MA 304 9,332
The Mills House Wyndham Grand Hotel Charleston, SC 216 8,974
Embassy Suites San Francisco Airport - Waterfront Burlingame, CA 340 8,593
Embassy Suites Fort Lauderdale 17th Street Fort Lauderdale, FL 361 8,368
DoubleTree Metropolitan Hotel New York City New York, NY 764 8,340
Courtyard Austin Downtown Convention Center Austin, TX 270 8,245
Embassy Suites Los Angeles - International Airport South El Segundo, CA 349 8,058
Courtyard Portland City Center Portland, OR 256 7,913
Wyndham New Orleans - French Quarter New Orleans, LA 374 7,872
Embassy Suites Mandalay Beach - Hotel & Resort Oxnard, CA 250 7,691
Embassy Suites Tampa Downtown Convention Center Tampa, FL 360 7,582
DoubleTree Grand Key Resort Key West, FL 216 7,441
Hilton Myrtle Beach Resort Myrtle Beach, SC 385 7,306
Courtyard Chicago Downtown Magnificent Mile Chicago, IL 306 7,226
Residence Inn Palo Alto Los Altos Los Altos, CA 156 7,154
Courtyard San Francisco San Francisco, CA 166 7,085
Wyndham Santa Monica At the Pier Santa Monica, CA 132 6,883
Embassy Suites Myrtle Beach - Oceanfront Resort Myrtle Beach, SC 255 6,595
Renaissance Pittsburgh Hotel Pittsburgh, PA 300 6,592
Hilton Garden Inn San Francisco Oakland Bay Brg Emeryville, CA 278 6,583
Wyndham Philadelphia Historic District Philadelphia, PA 364 6,514
Embassy Suites Deerfield Beach - Resort & Spa Deerfield Beach, FL 244 6,421
Hyatt House Emeryville San Francisco Bay Area Emeryville, CA 234 6,204
Embassy Suites San Francisco Airport - South San Francisco South San Francisco, CA 312 6,163
Hyatt House Santa Clara Santa Clara, CA 150 6,098
Fairfield Inn & Suites Washington DC Downtown Washington, DC 198 6,065
Hyatt House San Jose Silicon Valley San Jose, CA 164 6,054
Courtyard Waikiki Beach Honolulu, HI 403 5,767
Hilton Cabana Miami Beach Miami Beach, FL 231 5,678
Wyndham Houston - Medical Center Hotel & Suites Houston, TX 287 5,673
Embassy Suites Atlanta - Buckhead Atlanta, GA 316 5,570
Marriott Denver South @ Park Meadows Lone Tree, CO 279 5,554
Renaissance Fort Lauderdale Plantation Hotel Plantation, FL 250 5,406
Residence Inn Bethesda Downtown Bethesda, MD 188 5,178
DoubleTree Suites by Hilton Austin Austin, TX 188 5,157
Embassy Suites Los Angeles Downey Downey, CA 220 4,965
Hyatt House San Diego Sorrento Mesa San Diego, CA 193 4,957
Residence Inn Austin Downtown Convention Center Austin, TX 179 4,927
Embassy Suites Boston Waltham Waltham, MA 275 4,906
Hilton Garden Inn Los Angeles Hollywood Los Angeles, CA 160 4,800
Embassy Suites Irvine Orange County Irvine, CA 293 4,651
Embassy Suites Orlando - International Drive South/Convention Center Orlando, FL 244 4,588
Courtyard Charleston Historic District Charleston, SC 176 4,581
Homewood Suites Washington DC Downtown Washington, DC 175 4,538
Embassy Suites Milpitas Silicon Valley Milpitas, CA 266 4,510
Renaissance Boulder Flatiron Hotel Broomfield, CO 232 4,490
Hyatt Place Washington DC Downtown K Street Washington, DC 164 4,327
Marriott Denver Airport @ Gateway Park Aurora, CO 238 4,271
Embassy Suites Dallas - Love Field Dallas, TX 248 4,152
Hyatt Place Fremont Silicon Valley Fremont, CA 151 4,099
Embassy Suites Minneapolis - Airport Bloomington, MN 310 4,040
Embassy Suites Phoenix - Biltmore Phoenix, AZ 232 3,845
Embassy Suites Miami - International Airport Miami, FL 318 3,826
Residence Inn National Harbor Washington DC Oxon Hill, MD 162 3,781
Wyndham Pittsburgh University Center Pittsburgh, PA 251 3,591
Hilton Garden Inn New Orleans Convention Center New Orleans, LA 286   3,567
Top 60 Assets 16,566 374,918
Other (91 Assets) 12,616   183,123
Total Portfolio 29,182   $558,041
 

Note: For the trailing twelve months ended September 30, 2018. Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. Amounts in thousands, except rooms. The information above includes results for periods prior to the Company's ownership. The information has not been audited and is presented only for comparison purposes.

 
RLJ Lodging Trust
Pro forma Operating Statistics
 
For the three months ended September 30, 2018 and September 30, 2017
 
Top Markets  

# of

Hotels

  Occupancy     ADR     RevPAR
2018   2017   Var 2018   2017   Var 2018   2017   Var
Northern California 13 89.3% 90.2% (1.0)% $ 242.70 $ 229.61 5.7% $ 216.68 $ 207.07 4.6%
South Florida 13 81.6% 79.1% 3.2% 130.39 132.82 (1.8)% 106.40 105.00 1.3%
Southern California 9 88.8% 90.4% (1.8)% 192.73 193.53 (0.4)% 171.11 175.02 (2.2)%
Austin 14 68.2% 74.0% (7.9)% 143.93 144.28 (0.2)% 98.19 106.83 (8.1)%
Denver 13 84.7% 85.9% (1.5)% 148.21 152.37 (2.7)% 125.53 130.95 (4.1)%
New York City 5 92.7% 93.2% (0.6)% 237.67 236.15 0.6% 220.26 220.11 0.1%
Washington, DC 7 82.9% 83.6% (0.8)% 174.94 176.23 (0.7)% 145.08 147.38 (1.6)%
Chicago 14 78.9% 76.1% 3.7% 152.28 148.03 2.9% 120.17 112.60 6.7%
Houston 11 65.7% 70.1% (6.2)% 133.66 135.10 (1.1)% 87.87 94.66 (7.2)%
Louisville 5 58.8% 69.1% (14.9)% 136.51 140.20 (2.6)% 80.33 96.94 (17.1)%
Other 47 77.9%   79.0%   (1.3)% 159.58   159.46   0.1% 124.39   125.91   (1.2)%
Total 151 79.9%   81.2%   (1.6)% $ 172.51   $ 171.06   0.9% $ 137.82   $ 138.93   (0.8)%
 
Service Level

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Focused-Service 102 78.4% 80.1% (2.1)% $ 159.31 $ 158.03 0.8% $ 124.85 $ 126.53 (1.3)%
Compact Full-Service 46 83.0% 83.5% (0.5)% 185.19 183.52 0.9% 153.79 153.22 0.4%
Full-Service 3 64.5%   70.7%   (8.8)% 188.17   188.64   (0.2)% 121.33   133.43   (9.1)%
Total 151 79.9%   81.2%   (1.6)% $ 172.51   $ 171.06   0.9% $ 137.82   $ 138.93   (0.8)%
 
Chain Scale

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Upper Upscale 37 78.6% 79.8% (1.5)% $ 176.36 $ 174.96 0.8% $ 138.56 $ 139.60 (0.7)%
Upscale 96 80.4% 81.9% (1.9)% 167.41 166.02 0.8% 134.54 135.96 (1.0)%
Upper Midscale 16 81.2% 81.5% (0.4)% 168.84 169.01 (0.1)% 137.09 137.80 (0.5)%
Other 2 85.1%   86.7%   (1.9)% 286.75   273.86   4.7% 244.02   237.47   2.8%
Total 151 79.9%   81.2%   (1.6)% $ 172.51   $ 171.06   0.9% $ 137.82   $ 138.93   (0.8)%
 
Flags

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Residence Inn 29 79.8% 82.3% (3.0)% $ 147.30 $ 148.35 (0.7)% $ 117.50 $ 122.07 (3.7)%
Courtyard 24 78.4% 80.6% (2.8)% 170.39 167.92 1.5% 133.51 135.39 (1.4)%
Embassy Suites 22 81.5% 82.2% (0.8)% 171.65 171.69 0.0% 139.94 141.13 (0.8)%
Hyatt House 11 81.3% 84.9% (4.2)% 184.20 177.00 4.1% 149.74 150.23 (0.3)%
Hilton Garden Inn 8 77.0% 75.1% 2.6% 162.25 157.53 3.0% 124.93 118.23 5.7%
SpringHill Suites 8 69.5% 73.6% (5.6)% 127.20 130.89 (2.8)% 88.37 96.33 (8.3)%
Wyndham 8 83.7% 83.2% 0.7% 173.45 176.10 (1.5)% 145.26 146.45 (0.8)%
Fairfield Inn & Suites 7 79.2% 78.1% 1.4% 139.52 146.63 (4.9)% 110.44 114.45 (3.5)%
Hampton Inn 7 78.0% 79.1% (1.3)% 138.41 139.09 (0.5)% 107.97 109.99 (1.8)%
Marriott 6 70.1% 73.7% (4.9)% 194.67 187.87 3.6% 136.49 138.51 (1.5)%
DoubleTree 4 89.3% 89.9% (0.6)% 199.72 199.54 0.1% 178.38 179.34 (0.5)%
Renaissance 3 81.4% 81.5% (0.2)% 167.04 161.04 3.7% 135.95 131.28 3.6%
Hyatt Place 3 85.1% 86.0% (1.0)% 188.85 180.93 4.4% 160.77 155.57 3.3%
Homewood Suites 2 84.9% 84.2% 0.9% 174.95 181.25 (3.5)% 148.58 152.62 (2.6)%
Hilton 2 77.1% 78.7% (2.1)% 172.28 177.96 (3.2)% 132.75 140.08 (5.2)%
Hyatt 2 79.2% 79.1% 0.1% 189.81 174.05 9.1% 150.31 137.74 9.1%
Other 5 83.5%   84.9%   (1.6)% 248.02   238.00   4.2% 207.17   201.95   2.6%
Total 151 79.9%   81.2%   (1.6)% $ 172.51   $ 171.06   0.9% $ 137.82   $ 138.93   (0.8)%
 

Note: Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. The information above includes results for periods prior to the Company's ownership. The information has not been audited and is presented only for comparison purposes.

 
RLJ Lodging Trust
Pro forma Operating Statistics
 
For the nine months ended September 30, 2018 and September 30, 2017
 
Top Markets  

# of

Hotels

  Occupancy     ADR     RevPAR
2018   2017   Var 2018   2017   Var 2018   2017   Var
Northern California 13 84.5% 86.5% (2.3)% $ 228.96 $ 221.16 3.5% $ 193.53 $ 191.41 1.1%
South Florida 13 86.5% 83.4% 3.8% 172.85 169.31 2.1% 149.57 141.16 6.0%
Southern California 9 86.4% 86.8% (0.4)% 182.70 182.87 (0.1)% 157.92 158.68 (0.5)%
Austin 14 75.0% 77.6% (3.3)% 162.19 166.69 (2.7)% 121.66 129.37 (6.0)%
Denver 13 77.0% 78.6% (2.1)% 141.26 142.67 (1.0)% 108.77 112.21 (3.1)%
New York City 5 89.4% 88.1% 1.4% 222.60 219.75 1.3% 198.90 193.59 2.7%
Washington, DC 7 82.7% 80.4% 2.8% 191.12 198.12 (3.5)% 158.03 159.35 (0.8)%
Chicago 14 72.3% 68.8% 5.2% 144.08 143.50 0.4% 104.22 98.68 5.6%
Houston 11 71.1% 70.6% 0.7% 140.88 146.28 (3.7)% 100.10 103.25 (3.0)%
Louisville 5 61.5% 68.4% (10.1)% 154.04 160.02 (3.7)% 94.80 109.51 (13.4)%
Other 47 77.5%   77.9%   (0.6)% 161.67   161.28   0.2% 125.23   125.71   (0.4)%
Total 151 79.1%   79.4%   (0.3)% $ 174.39   $ 173.94   0.3% $ 138.03   $ 138.11   (0.1)%
 
Service Level

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Focused-Service 102 78.1% 77.9% 0.3% $ 160.74 $ 161.70 (0.6)% $ 125.62 $ 125.99 (0.3)%
Compact Full-Service 46 81.9% 82.2% (0.4)% 188.39 186.20 1.2% 154.25 153.09 0.8%
Full-Service 3 62.1%   67.1%   (7.4)% 180.77   182.14   (0.8)% 112.31   122.18   (8.1)%
Total 151 79.1%   79.4%   (0.3)% $ 174.39   $ 173.94   0.3% $ 138.03   $ 138.11   (0.1)%
 
Chain Scale

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Upper Upscale 37 78.1% 79.0% (1.1)% $ 183.28 $ 181.28 1.1% $ 143.17 $ 143.16 0.0%
Upscale 96 79.8% 79.8% 0.0% 167.61 167.95 (0.2)% 133.79 134.08 (0.2)%
Upper Midscale 16 78.9% 78.5% 0.5% 165.52 167.19 (1.0)% 130.58 131.29 (0.5)%
Other 2 79.1%   78.1%   1.4% 274.83   267.54   2.7% 217.51   208.89   4.1%
Total 151 79.1%   79.4%   (0.3)% $ 174.39   $ 173.94   0.3% $ 138.03   $ 138.11   (0.1)%
 
Flags

# of

Hotels

Occupancy ADR RevPAR
2018 2017 Var 2018 2017 Var 2018 2017 Var
Residence Inn 29 79.6% 79.5% 0.2% $ 152.53 $ 154.59 (1.3)% $ 121.47 $ 122.87 (1.1)%
Courtyard 24 78.3% 79.0% (0.9)% 168.10 168.42 (0.2)% 131.58 133.00 (1.1)%
Embassy Suites 22 81.4% 81.9% (0.6)% 179.13 177.24 1.1% 145.90 145.21 0.5%
Hyatt House 11 82.9% 82.2% 0.9% 178.78 175.30 2.0% 148.21 144.06 2.9%
Hilton Garden Inn 8 77.2% 74.5% 3.6% 163.07 161.29 1.1% 125.94 120.19 4.8%
SpringHill Suites 8 69.1% 71.6% (3.5)% 128.59 133.54 (3.7)% 88.85 95.57 (7.0)%
Wyndham 8 80.5% 79.8% 0.9% 173.80 175.40 (0.9)% 139.93 139.95 0.0%
Fairfield Inn & Suites 7 78.2% 76.7% 1.9% 155.16 165.11 (6.0)% 121.27 126.67 (4.3)%
Hampton Inn 7 77.8% 75.5% 3.0% 141.57 142.27 (0.5)% 110.14 107.41 2.5%
Marriott 6 69.4% 73.2% (5.2)% 197.97 197.03 0.5% 137.48 144.31 (4.7)%
DoubleTree 4 90.2% 91.3% (1.2)% 203.64 201.53 1.0% 183.64 183.93 (0.2)%
Renaissance 3 78.7% 77.0% 2.1% 169.42 165.34 2.5% 133.28 127.37 4.6%
Hyatt Place 3 81.8% 83.3% (1.9)% 187.89 184.81 1.7% 153.64 154.02 (0.3)%
Homewood Suites 2 79.0% 80.4% (1.8)% 181.53 187.95 (3.4)% 143.36 151.10 (5.1)%
Hilton 2 72.7% 72.4% 0.4% 178.35 175.10 1.9% 129.59 126.73 2.3%
Hyatt 2 80.5% 79.3% 1.5% 195.70 186.95 4.7% 157.58 148.26 6.3%
Other 5 79.0%   80.4%   (1.8)% 228.07   219.78   3.8% 180.09   176.80   1.9%
Total 151 79.1%   79.4%   (0.3)% $ 174.39   $ 173.94   0.3% $ 138.03   $ 138.11   (0.1)%
 

Note: Results reflect 100% of the financial results of three consolidated joint ventures and exclude the Chateau LeMoyne-French Quarter New Orleans, which is an unconsolidated hotel. The information above includes results for periods prior to the Company's ownership. Wyndham hotels reclassified to Upscale to conform with Smith Travel Research chain scale definitions. The information has not been audited and is presented only for comparison purposes.



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