Chesapeake Lodging Trust Results

Chesapeake Lodging Trust Reports RevPAR and Adjusted Hotel EBITDA Margin Declines for Third Quarter

Chesapeake Lodging Trust

Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended September 30, 2017.

HIGHLIGHTS

  • RevPAR: 3.4% decrease for the 22-hotel portfolio and 3.4% decrease for the 15-hotel portfolio over the same period in 2016.
  • Adjusted Hotel EBITDA Margin: 100 basis point decrease to 33.6% for the 22-hotel portfolio and 90 basis point decrease to 35.8% for the 15-hotel portfolio over the same period in 2016.
  • Adjusted Hotel EBITDA: $53.1 million.
  • Adjusted Corporate EBITDA: $48.9 million.
  • Net income available to common shareholders: $14.1 million or $0.24 per diluted common share.
  • Adjusted FFO: $37.7 million or $0.64 per diluted common share.
  • Preferred share redemption: Redeemed $125.0 million of 7.75% Series A Cumulative Redeemable Preferred Shares.
  • Disposition: Entered into a definitive agreement to sell the 222-room The Hotel Minneapolis, Autograph Collection for a sale price of $46.0 million.

“We are pleased with our results for the third quarter which were in line with the mid-point of our provided outlook despite negative impacts resulting from Hurricanes Harvey and Irma during the quarter. Outside of those markets specifically effected by the recent hurricanes, including Hurricane Nate which negatively effected our New Orleans hotels in early October, we believe operating fundamentals for the U.S. lodging industry remain stable and as a result, we expect our 14-hotel portfolio to resume growth in RevPAR in the fourth quarter,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer.

Mr. Francis continued, “Our transformative renovation at the JW Marriott San Francisco Union Square remains on track with completion expected in December 2017 and we are encouraged by the positive guest feedback we have been receiving on the new room product. Between this renovation and those completed earlier in the year at both the Denver Marriott City Center and the Boston Marriott Newton, we believe our hotel portfolio is well positioned for outperformance relative to the U.S. lodging industry in 2018.”

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three and nine months ended September 30, 2017 and 2016 (in millions, except share and per share amounts):

           
Three Months Ended September 30, Nine Months Ended September 30,
2017       2016 2017       2016
Total revenue $ 158.3 $ 164.5 $ 455.6 $ 474.6
 
Net income available to common shareholders $ 14.1 $ 23.5 $ 38.9 $ 57.3
Net income per diluted common share $ 0.24 $ 0.40 $ 0.65 $ 0.97
 
Adjusted Hotel EBITDA $ 53.1 $ 57.0 $ 146.1 $ 159.6
 
Adjusted Corporate EBITDA $ 48.9 $ 52.9 $ 132.3 $ 145.6
 
AFFO available to common shareholders $ 37.7 $ 42.1 $ 100.2 $ 112.0
AFFO per diluted common share $ 0.64 $ 0.71 $ 1.69 $ 1.90
 
Weighted-average number of diluted common shares outstanding 59,287,812 58,928,433 59,244,803 58,894,529
 

HOTEL OPERATING RESULTS

During 2017, the Trust expects the following seven of its 22 hotels to be negatively effected as a result of (1) the expected negative impact on lodging demand in San Francisco resulting from the temporary closure and expansion of the Moscone Center and/or (2) significant guestroom renovations undergoing during the year: Le Meridien San Francisco, JW Marriott San Francisco Union Square, Hyatt Centric Fisherman’s Wharf, Hotel Adagio San Francisco, Autograph Collection, Boston Marriott Newton, Denver Marriott City Center, and Hyatt Regency Mission Bay Spa and Marina. As such, the Trust is reporting key operating metrics for a 15-hotel portfolio in addition to the 22-hotel portfolio. Included in the following table are comparisons of the key operating metrics for the 22-hotel portfolio and the 15-hotel portfolio for the three and nine months ended September 30, 2017 and 2016 (in thousands, except for ADR and RevPAR):

      Three Months Ended September 30,       Nine Months Ended September 30,
2017       2016       Change 2017       2016       Change

22-Hotel Portfolio

Occupancy 88.5 % 88.8 % (30) bps 83.9 % 85.2 % (130) bps
ADR $ 226.10 $ 233.19 (3.0)% $ 224.57 $ 229.20 (2.0)%
RevPAR $ 200.12 $ 207.12 (3.4)% $ 188.46 $ 195.34 (3.5)%
Adjusted Hotel EBITDA $ 53,123 $ 56,983 (6.8)% $ 146,067 $ 159,631 (8.5)%
Adjusted Hotel EBITDA Margin 33.6 % 34.6 % (100) bps 32.1 % 33.6 % (150) bps

15-Hotel Portfolio

Occupancy 88.5 % 88.3 % 20 bps 85.5 % 84.9 % 60 bps
ADR $ 220.66 $ 228.81 (3.6)% $ 219.67 $ 225.06 (2.4)%
RevPAR $ 195.29 $ 202.12 (3.4)% $ 187.78 $ 191.18 (1.8)%
Adjusted Hotel EBITDA $ 32,427 $ 34,747 (6.7)% $ 92,602 $ 98,319 (5.8)%
Adjusted Hotel EBITDA Margin 35.8 % 36.7 % (90) bps 35.1 % 36.1 % (100) bps

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 July 17, 2017, the Trust redeemed all 5,000,000 shares of its issued and outstanding 7.75% Series A Cumulative Redeemable Preferred Shares at a redemption amount of $25.00 per share, plus accrued and unpaid dividends, with a borrowing under its revolving credit facility.

DISPOSITION ACTIVITY

On November 2, 2017, the Trust announced that it had entered into a definitive agreement to sell the 222-room The Hotel Minneapolis, Autograph Collection located in Minneapolis, Minnesota for a sale price of $46.0 million, or approximately $207,000 per key, subject to customary working capital pro-rations at closing. Completion of the proposed sale is expected within the next 30 days, subject to customary closing requirements and conditions.

DIVIDENDS

On July 14, 2017, the Trust paid dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of June 30, 2017. On September 18, 2017, the Trust declared a dividend in the amount of $0.40 per share payable to its common shareholders of record as of September 29, 2017. The dividend was paid on October 13, 2017.

2017 OUTLOOK

The Trust is updating its 2017 outlook to incorporate its second quarter results, recent trends and fundamentals, the redemption of its 7.75% Series A Cumulative Redeemable Preferred Shares, and the pending sale of The Hotel Minneapolis, Autograph Collection. The outlook assumes no future acquisitions, additional dispositions, or financing transactions (in millions, except RevPAR and per share amounts):

Fourth Quarter 2017

      Outlook
Low       High
CONSOLIDATED:
 
Net income available to common shareholders $ 15.5 $ 17.5
Net income per diluted common share $ 0.26 $ 0.29
 
Adjusted Corporate EBITDA $ 37.1 $ 39.3
 
AFFO available to common shareholders $ 28.1 $ 30.0
AFFO per diluted common share $ 0.47 $ 0.51
 
Corporate cash general and administrative expense $ 2.3 $ 2.5
Corporate non-cash general and administrative expense $ 1.8 $ 1.8
 
Weighted-average number of diluted common shares outstanding 59.3 59.3
 
HOTEL PORTFOLIO(1):
 

21-Hotel Portfolio

Comparable RevPAR $ 174.00 $ 178.00
Comparable RevPAR change as compared to 2016 (1.0 )% 1.0 %
Comparable Adjusted Hotel EBITDA $ 40.8 $ 43.0
Comparable Adjusted Hotel EBITDA Margin 29.3 % 30.3 %
Comparable Adjusted Hotel EBITDA Margin change as compared to 2016 (100) bps 0 bps
 

14-Hotel Portfolio

Comparable RevPAR $ 178.00 $ 181.00
Comparable RevPAR change as compared to 2016 0.0% 2.0 %
Comparable Adjusted Hotel EBITDA $ 26.9 $ 28.3
Comparable Adjusted Hotel EBITDA Margin 33.3 % 34.3 %
Comparable Adjusted Hotel EBITDA Margin change as compared to 2016 (25) bps 75 bps

_____________

(1)   The Trust uses the term “comparable” to refer to metrics that include only those hotels owned for the entirety of the two periods being compared. Since The Hotel Minneapolis, Autograph Collection, is under contract to be sold with completion of the proposed sale expected in Q4 2017, it has been excluded in the updated outlook for the hotel portfolio metrics for Q4 and full year 2017.
 

Full Year 2017

      Updated Outlook       Previous Outlook
Low         High Low       High
CONSOLIDATED:      
 
Net income available to common shareholders $ 54.1 $ 56.0 $   45.3 $   49.8
Net income per diluted common share $ 0.91 $ 0.95 $ 0.77 $ 0.84
 
Adjusted Corporate EBITDA $ 169.4 $ 171.5 $ 169.0 $ 174.3
 
AFFO available to common shareholders $ 128.2 $ 130.2 $ 127.8 $ 132.3
AFFO per diluted common share $ 2.16 $ 2.20 $ 2.16 $ 2.24
 
Corporate cash general and administrative expense $ 10.4 $ 10.6 $ 10.5 $ 11.3
Corporate non-cash general and administrative expense $ 7.5 $ 7.5 $ 7.5 $ 7.5
 
Weighted-average number of diluted common shares outstanding 59.3 59.3 59.1 59.1
 

HOTEL PORTFOLIO(1):

 

21-Hotel Portfolio

Comparable RevPAR $ 186.00 $ 187.00
Comparable RevPAR change as compared to 2016 (2.8 )% (2.3 )%
Comparable Adjusted Hotel EBITDA $ 184.4 $ 186.6
Comparable Adjusted Hotel EBITDA Margin 31.5 % 31.7 %
Comparable Adjusted Hotel EBITDA Margin change as compared to 2016 (140) bps (115) bps
 

14-Hotel Portfolio

Comparable RevPAR $ 188.00 $ 189.00
Comparable RevPAR change as compared to 2016 (1.0 )% (0.5 )%
Comparable Adjusted Hotel EBITDA $ 117.1 $ 118.4
Comparable Adjusted Hotel EBITDA Margin 34.9 % 35.1 %
Comparable Adjusted Hotel EBITDA Margin change as compared to 2016 (70) bps (45) bps

_____________

(1)   The Trust uses the term “comparable” to refer to metrics that include only those hotels owned for the entirety of the two periods being compared. Since The Hotel Minneapolis, Autograph Collection, is under contract to be sold with completion of the proposed sale expected in Q4 2017, it has been excluded in the updated outlook for the hotel portfolio metrics for Q4 and full year 2017.
 

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 capital structure (primarily interest), the Trust’s asset base (primarily depreciation and amortization), and the Trust’s corporate-level expenses (corporate general and administrative and hotel acquisition costs).

Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for non-cash amortization of intangible assets and liabilities, including ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items, and gain (losses) from sales of real estate, which is a non-recurring item. The Trust believes that Adjusted Hotel EBITDA provides investors with another useful financial measure to evaluate the Trust’s hotel operating performance, excluding the effect of these items.

Adjusted Hotel EBITDA Margin – Adjusted Hotel EBITDA Margin is defined as Adjusted Hotel EBITDA as a percentage of total revenues. The Trust believes that Adjusted Hotel EBITDA Margin provides investors another useful financial measure to evaluate the Trust’s hotel operating performance.

Corporate EBITDA – Corporate EBITDA is defined as net income before interest, income taxes, and depreciation and amortization. The Trust believes that Corporate EBITDA provides investors a useful financial measure to evaluate the Trust’s operating performance, excluding the impact of the Trust’s capital structure (primarily interest expense) and the Trust’s asset base (primarily depreciation and amortization).

Adjusted Corporate EBITDA – The Trust further adjusts Corporate EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items, and gains (losses) from sales of real estate, which is a non-recurring item. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges of depreciable real estate, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, 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 industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust’s operating performance.

FFO available to common shareholders – The Trust reduces FFO for preferred share dividends, write-off of issuance costs of redeemed preferred shares, and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust’s operating performance after taking into account the interests of holders of the Trust’s preferred shares and unvested time-based awards.

AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT’s definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items, and the write-off of issuance costs of redeemed preferred shares, which is a non-recurring item. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

ABOUT CHESAPEAKE LODGING TRUST

Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 22 hotels with an aggregate of 6,694 rooms in nine states and the District of Columbia. 

           

CHESAPEAKE LODGING TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 
September 30, 2017 December 31, 2016
(unaudited)
 
ASSETS
Property and equipment, net $ 1,828,303 $ 1,882,869
Intangible assets, net 35,401 35,835
Cash and cash equivalents 43,568 43,060
Restricted cash 34,168 36,128
Accounts receivable, net 28,273 19,966
Prepaid expenses and other assets 19,005 17,516
Assets held for sale 40,179    
Total assets $ 2,028,897   $ 2,035,374  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt $ 877,352 $ 737,310
Accounts payable and accrued expenses 68,074 64,581
Other liabilities 42,075 44,808
Liabilities related to assets held for sale 1,451    
Total liabilities 988,952   846,699  
 
Commitments and contingencies
 

Preferred shares, $.01 par value; 100,000,000 shares authorized;

Series A Cumulative Redeemable Preferred Shares; no shares and

5,000,000 shares issued and outstanding, respectively

50

Common shares, $.01 par value; 400,000,000 shares authorized;

60,115,071 shares and 59,671,964 shares issued and outstanding, respectively

601 597
Additional paid-in capital 1,188,435 1,304,364
Cumulative dividends in excess of net income (149,110 ) (116,297 )
Accumulated other comprehensive income (loss) 19   (39 )
Total shareholders’ equity 1,039,945   1,188,675  
Total liabilities and shareholders’ equity $ 2,028,897   $ 2,035,374  
 
 
SUPPLEMENTAL CREDIT INFORMATION:
Fixed charge coverage ratio(1) 2.93 3.24
Leverage ratio(1) 40.5 % 31.9 %
           

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2017       2016 2017       2016
REVENUE
Rooms $ 123,241 $ 127,552 $ 344,410 $ 358,291
Food and beverage 27,172 29,633 89,620 95,852
Other 7,864   7,344   21,582   20,428  
Total revenue 158,277   164,529   455,612   474,571  
 
EXPENSES
Hotel operating expenses:
Rooms 28,132 28,532 80,822 81,909
Food and beverage 21,306 22,536 66,694 69,413
Other direct 1,480 1,690 4,136 4,837
Indirect 54,081   54,633   157,428   158,316  
Total hotel operating expenses 104,999 107,391 309,080 314,475
Depreciation and amortization 19,369 18,703 57,252 55,797
Air rights contract amortization 130 130 390 390
Corporate general and administrative 4,216   4,074   13,798   14,074  
Total operating expenses 128,714   130,298   380,520   384,736  
 
Operating income 29,563 34,231 75,092 89,835
 
Interest expense (9,020 ) (8,122 ) (24,989 ) (23,892 )
Gain on sale of hotel         598  
 
Income before income taxes 20,543 26,109 50,103 66,541
 
Income tax expense (1,590 ) (162 ) (1,470 ) (1,982 )
 
Net income 18,953 25,947 48,633 64,559
 
Preferred share dividends (430 ) (2,422 ) (5,274 ) (7,266 )
Write-off of issuance costs of redeemed preferred shares (4,419 )   (4,419 )  
Net income available to common shareholders $ 14,104   $ 23,525   $ 38,940   $ 57,293  
 
Net income per common share—basic and diluted $ 0.24 $ 0.40 $ 0.65 $ 0.97
 
Weighted-average number of common shares outstanding:
Basic 59,043,425 58,729,338 59,024,497 58,711,056
Diluted 59,287,812 58,928,433 59,244,803 58,894,529
 
     

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 
Nine Months Ended September 30,
2017       2016
 
Cash flows from operating activities:
Net income $ 48,633 $ 64,559
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 57,252 55,797
Air rights contract amortization 390 390
Deferred financing costs amortization 1,248 1,409
Gain on sale of hotel (598 )
Share-based compensation 5,671 7,150
Other (465 ) (642 )
Changes in assets and liabilities:
Accounts receivable, net (8,825 ) (11,209 )
Prepaid expenses and other assets (1,907 ) 585
Accounts payable and accrued expenses 5,089 4,605
Other liabilities 173   (33 )
Net cash provided by operating activities 107,259   122,013  
 
Cash flows from investing activities:
Disposition of hotel 2,028
Improvements and additions to hotels (41,952 ) (17,562 )
Change in restricted cash 1,960   (810 )
Net cash used in investing activities (39,992 ) (16,344 )
 
Cash flows from financing activities:
Redemption of preferred shares (125,000 )
Borrowings under revolving credit facility 300,000 175,000
Repayments under revolving credit facility (250,000 ) (215,000 )
Proceeds from issuance of unsecured term loan 225,000
Proceeds from issuance of mortgage debt 150,000
Principal prepayments on mortgage debt (122,220 )
Scheduled principal payments on mortgage debt (134,435 ) (7,847 )
Payment of deferred financing costs (1,771 ) (935 )
Payment of dividends to common shareholders (72,168 ) (70,842 )
Payment of dividends to preferred shareholders (7,320 ) (7,266 )
Repurchase of common shares (1,065 ) (194 )
Net cash used in financing activities (66,759 ) (99,304 )
Net increase in cash 508 6,365
Cash and cash equivalents, beginning of period 43,060   50,544  
Cash and cash equivalents, end of period $ 43,568   $ 56,909  
 

The following table reconciles net income to Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the 22-hotel portfolio for the three and nine months ended September 30, 2017 and 2016:

      Three Months Ended September 30,       Nine Months Ended September 30,
2017       2016 2017       2016
Net income $ 18,953 $ 25,947 $ 48,633 $ 64,559
Add: Interest expense 9,020 8,122 24,989 23,892
Income tax expense 1,590 162 1,470 1,982
Depreciation and amortization 19,369 18,703 57,252 55,797
Air rights contract amortization 130 130 390 390
Corporate general and administrative 4,216   4,074   13,798   14,074  
Hotel EBITDA 53,278 57,138 146,532 160,694
 
Less: Non-cash amortization(1) (155 ) (155 ) (465 ) (465 )
Gain on sale of hotel       (598 )
Adjusted Hotel EBITDA $ 53,123   $ 56,983   $ 146,067   $ 159,631  
Total revenue $ 158,277 $ 164,529 $ 455,612 $ 474,571
 
Adjusted Hotel EBITDA Margin 33.6 % 34.6 % 32.1 % 33.6 %

The following table reconciles net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three and nine months ended September 30, 2017 and 2016:

      Three Months Ended September 30,       Nine Months Ended September 30,
2017       2016 2017       2016
Net income $ 18,953 $ 25,947 $ 48,633 $ 64,559
Add: Interest expense 9,020 8,122 24,989 23,892
Income tax expense 1,590 162 1,470 1,982
Depreciation and amortization 19,369   18,703   57,252   55,797  
Corporate EBITDA 48,932 52,934 132,344 146,230
 
Less: Non-cash amortization(1) (25 ) (26 ) (76 ) (76 )
Gain on sale of hotel       (598 )
Adjusted Corporate EBITDA $ 48,907   $ 52,908   $ 132,268   $ 145,556  

The following table reconciles net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three and nine months ended September 30, 2017 and 2016:

     

Three Months Ended

September 30,

     

Nine Months Ended

September 30,

2017       2016 2017       2016
Net income $ 18,953 $ 25,947 $ 48,633 $ 64,559
Add: Depreciation and amortization 19,369 18,703 57,252 55,797
Less: Gain on sale of hotel       (598 )
FFO 38,322 44,650 105,885 119,758
 
Less: Preferred share dividends (430 ) (2,422 ) (5,274 ) (7,266 )
Write-off of issuance costs of redeemed preferred shares (4,419 ) (4,419 )
Dividends declared on unvested time-based awards (124 ) (146 ) (371 ) (435 )
Undistributed earnings allocated to unvested time-based awards        
FFO available to common shareholders 33,349 42,082 95,821 112,057
 
Add: Write-off of issuance costs of redeemed preferred shares 4,419 4,419
Less: Non-cash amortization(1) (25 ) (26 ) (76 ) (76 )
AFFO available to common shareholders $ 37,743   $ 42,056   $ 100,164   $ 111,981  
 
FFO per common share:
Basic $ 0.56 $ 0.72 $ 1.62 $ 1.91
Diluted $ 0.56 $ 0.71 $ 1.62 $ 1.90
 
AFFO per common share:
Basic $ 0.64 $ 0.72 $ 1.70 $ 1.91
Diluted $ 0.64 $ 0.71 $ 1.69 $ 1.90

The following table reconciles forecasted net income to Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the 21-hotel portfolio for the three months and year ending December 31, 2017:

     

Three Months Ending

December 31, 2017

     

Year Ending

December 31, 2017

Low       High Low       High
Net income $ 15,620 $ 17,570 $ 64,270 $ 66,220
Add: Interest expense 8,990 8,990 33,980 33,980
Income tax expense (benefit) (50 ) 150 1,420 1,620
Depreciation and amortization 18,840 18,840 76,090 76,090
Air rights contract amortization 130 130 520 520
Corporate general and administrative 4,130   4,330   17,930   18,130  
Hotel EBITDA 47,660 50,010 194,210 196,560
 
Less: Non-cash amortization(1) (160 ) (160 ) (640 ) (640 )
Gain on sale of hotel (6,250 ) (6,250 ) (6,250 ) (6,250 )
Adjusted Hotel EBITDA 41,250 43,600 187,320 189,670
Less: Hotel EBITDA of hotel to be sold(2) (500 ) (600 ) (2,920 ) (3,020 )
Comparable Adjusted Hotel EBITDA(3) $ 40,750   $ 43,000   $ 184,400   $ 186,650  
 
Total revenue $ 140,400 $ 143,500 $ 596,010 $ 599,110
Less: Total revenue of hotel to be sold(2) (1,400 ) (1,600 ) (10,560 ) (10,760 )
Comparable total revenue(3) $ 139,000   $ 141,900   $ 585,450   $ 588,350  
 
Comparable Adjusted Hotel EBITDA Margin(3) 29.3 % 30.3 % 31.5 % 31.7 %

_____________

(1)   Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
(2) Reflects results of operations for The Hotel Minneapolis, Autograph Collection, which is under contract to be sold with completion of the sale expected in Q4 2017.
(3) The Trust uses the term "comparable" to refer to metrics that include only those hotels owned for the entirety of the two periods being compared.
 

The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months and year ending December 31, 2017:

     

Three Months Ending

December 31, 2017

     

Year Ending

December 31, 2017

Low       High Low       High
Net income $ 15,620 $ 17,570 $ 64,270 $ 66,220
Add: Interest expense 8,990 8,990 33,980 33,980
Income tax expense (benefit) (50 ) 150 1,420 1,620
Depreciation and amortization 18,840   18,840   76,090   76,090  
Corporate EBITDA 43,400 45,550 175,760 177,910
 
Less: Non-cash amortization(1) (30 ) (30 ) (120 ) (120 )
Gain on sale of hotel (6,250 ) (6,250 ) (6,250 ) (6,250 )
Adjusted Corporate EBITDA $ 37,120   $ 39,270   $ 169,390   $ 171,540  

The following table reconciles forecasted net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months and year ending December 31, 2017:

     

Three Months Ending

December 31, 2017

     

Year Ending

December 31, 2017

Low       High Low       High
Net income $ 15,620 $ 17,570 $ 64,270 $ 66,220
Add: Depreciation and amortization 18,840 18,840 76,090 76,090
Less: Gain on sale of hotel (6,250 ) (6,250 ) (6,250 ) (6,250 )
FFO 28,210 30,160 134,110 136,060
 
Less: Preferred share dividends (5,270 ) (5,270 )
Write-off of issuance costs of redeemed preferred shares (4,420 ) (4,420 )
Dividends declared on unvested time-based awards (120 ) (120 ) (490 ) (490 )
Undistributed earnings allocated to unvested time-based awards        
FFO available to common shareholders 28,090 30,040 123,930 125,880
 

Add: Write-off of issuance costs of redeemed preferred shares

4,420 4,420
Less: Non-cash amortization(1) (30 ) (30 ) (120 ) (120 )
AFFO available to common shareholders $ 28,060   $ 30,010   $ 128,230   $ 130,180  
 
FFO per common share:
Basic $ 0.48 $ 0.51 $ 2.10 $ 2.13
Diluted $ 0.47 $ 0.51 $ 2.09 $ 2.12
 
AFFO per common share:
Basic $ 0.48 $ 0.51 $ 2.17 $ 2.21
Diluted $ 0.47 $ 0.51 $ 2.16 $ 2.20
 
Weighted-average number of common shares outstanding:
Basic 59,044 59,044 59,026 59,026
Diluted 59,322 59,322 59,263 59,263
                 

CHESAPEAKE LODGING TRUST

CURRENT HOTEL PORTFOLIO

 
Hotel Location Rooms Acquisition Date
1       Hyatt Regency Boston Boston, MA 502 March 18, 2010
2 Hilton Checkers Los Angeles Los Angeles, CA 193 June 1, 2010
3 Boston Marriott Newton Newton, MA 430 July 30, 2010
4 Le Meridien San Francisco San Francisco, CA 360 December 15, 2010
5 Homewood Suites Seattle Convention Center Seattle, WA 195 May 2, 2011
6 W Chicago – City Center Chicago, IL 403 May 10, 2011
7 Hotel Indigo San Diego Gaslamp Quarter San Diego, CA 210 June 17, 2011
8 Courtyard Washington Capitol Hill/Navy Yard Washington, DC 204 June 30, 2011
9 Hotel Adagio San Francisco, Autograph Collection San Francisco, CA 171 July 8, 2011
10 Denver Marriott City Center Denver, CO 613 October 3, 2011
11 Hyatt Herald Square New York New York, NY 122 December 22, 2011
12 W Chicago – Lakeshore Chicago, IL 520 August 21, 2012
13 Hyatt Regency Mission Bay Spa and Marina San Diego, CA 429 September 7, 2012
14 The Hotel Minneapolis, Autograph Collection(1) Minneapolis, MN 222 October 30, 2012
15 Hyatt Place New York Midtown South New York, NY 185 March 14, 2013
16 W New Orleans – French Quarter New Orleans, LA 97 March 28, 2013
17 Le Meridien New Orleans New Orleans, LA 410 April 25, 2013
18 Hyatt Centric Fisherman’s Wharf San Francisco, CA 316 May 31, 2013
19 Hyatt Centric Santa Barbara Santa Barbara, CA 200 June 27, 2013
20 JW Marriott San Francisco Union Square San Francisco, CA 337 October 1, 2014
21 Royal Palm South Beach Miami, a Tribute Portfolio Resort Miami Beach, FL 393 March 9, 2015
22 Ace Hotel and Theater Downtown Los Angeles Los Angeles, CA 182 April 30, 2015
6,694



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