- Q1 RevPAR increased 27.0% from 2022
- Repurchased $40 million of common shares - Increased
quarterly dividend to $0.08 per common share
RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported
results for the three months ended March 31, 2023.
First Quarter And Year To Date
Highlights
- Portfolio Comparable RevPAR of $136.45, an increase of 27.0%
from Q1 2022 and achieved 95% of the comparable period in 2019
- Total revenue of $314.5 million
- Net income of $10.5 million
- Net income per diluted share attributable to common
shareholders of $0.03
- Comparable Hotel EBITDA of $90.9 million
- Adjusted EBITDA of $82.7 million
- Adjusted FFO per diluted common share and unit of $0.35
- Repurchased approximately 3.9 million common shares for
approximately $40 million at an average price per share of
$10.22
- Increased quarterly dividend by 60% to $0.08 per common
share
- Exercised option to extend maturity of $225 million of term
loans and a $200 million secured loan to 2024
“We are pleased to see the positive momentum in lodging
fundamentals continue, especially in urban markets which benefited
from further improvement in business travel, strong group demand,
healthy leisure and rising international travel,” commented Leslie
D. Hale, President and Chief Executive Officer. “These positive
trends allowed our portfolio to achieve strong year-over-year
RevPAR growth with continuing pricing power, which led to our first
quarter results coming in ahead of our expectations. A number of
our key urban markets including San Diego, New York and Washington
DC, exceeded 2019 ADR by 10% or more during the quarter.
Additionally, we continued to demonstrate the optionality that our
strong balance sheet provides by executing on our incremental
growth initiatives, opportunistically repurchasing our shares on a
leverage neutral basis and meaningfully increasing our quarterly
dividend by 60%, which underscore the benefits of our strong free
cash flow profile.”
The prefix “comparable” as defined by the Company, denotes
operating results which include results for periods prior to its
ownership and excludes sold hotels. Explanations of EBITDA,
EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO,
and Adjusted FFO, as well as reconciliations of those measures to
net income or loss, if applicable, are included within this
release.
Financial and
Operating Highlights
($ in thousands, except ADR, RevPAR,
and per share amounts)
(unaudited)
For the three months ended
March 31,
2023
2022
Operational Overview: (1)
Comparable ADR
$199.07
$175.82
Comparable Occupancy
68.5%
61.1%
Comparable RevPAR
$136.45
$107.42
Financial Overview:
Total Revenues
$314,503
$242,899
Comparable Hotel Revenue
$314,488
$242,510
Net Income (Loss)
$10,514
($15,469)
Comparable Hotel EBITDA (2)
$90,926
$63,251
Comparable Hotel EBITDA Margin
28.9%
26.1%
Adjusted EBITDA
$82,685
$54,594
Adjusted FFO
$56,080
$23,894
Adjusted FFO Per Basic and Diluted Common
Share and Unit
$0.35
$0.14
Note:
(1) Comparable statistics reflect the
Company's 96 hotel portfolio owned as of March 31, 2023.
(2) Comparable Hotel EBITDA for the three
months ended March 31 2022 excludes $0.2 million net income from
sold hotels. Comparable Hotel EBITDA for the three months ended
March 31, 2022 includes $0.1 million net income from acquired
hotels.
Operational Update
During the first quarter, the Company’s portfolio generated
Comparable RevPAR of $136.45, an increase of 27.0% from the
comparable period in 2022 and achieved 95% of the comparable period
in 2019. Occupancy during the first quarter of 2023 increased by
12.2% while ADR increased by 13.2% compared to the comparable
period in 2022, achieving 90% and 105% of occupancy and ADR for the
comparable period in 2019, respectively. The Company’s strong
performance during the first quarter was positively impacted by
broad based improvement in all segments of demand, most notably in
urban markets where the Company generates over two-thirds of its
earnings.
Share Repurchases
Year-to-date through May 4, 2023, the Company has repurchased
approximately 3.9 million common shares for approximately $40
million, at an average price per share of $10.22, including 1.2
million shares repurchased so far during the second quarter for
$12.5 million at an average price per share of $10.21.
The Company's Board of Trustees recently approved a new one-year
share repurchase program to acquire up to an aggregate $250.0
million of common and preferred shares under the same terms as the
expiring program.
Balance Sheet
As of March 31, 2023, the Company had approximately $1.1 billion
of total liquidity, comprising approximately $474.3 million of
unrestricted cash and $600.0 million available under its revolving
credit facility ("Revolver"), and $2.2 billion of debt outstanding,
93% of which is currently either fixed or hedged.
During the first quarter of 2023, the Company drew down the
final $95 million in proceeds on its amended $200 million term loan
and utilized these proceeds to pay off $94 million in term loans
maturing in January 2023. Additionally, the Company extended the
maturity to January 2024 of approximately $225 million of its term
loans maturing in January 2023, and $200 million of a secured loan
maturing in 2023 to April 2024.
Dividends
The Company’s Board of Trustees declared a quarterly cash
dividend of $0.08 per common share of beneficial interest of the
Company. The dividend was paid on April 17, 2023 to shareholders of
record as of March 31, 2023.
The Company's Board of Trustees declared a quarterly cash
dividend of $0.4875 on the Company’s Series A Preferred Shares. The
dividend was paid on April 28, 2023 to shareholders of record as of
March 31, 2023.
Q2 2023 Outlook
Based on current trends and assuming no materials disruptions to
travel caused by pandemics or worsening macro-economic conditions,
the Company's second quarter 2023 is as follows:
Q2 2023
Comparable RevPAR
$155.00 to $159.00
Comparable Hotel EBITDA
$121.0M to $130.0.M
Adjusted EBITDA
$112.0M to $121.0M
Adjusted FFO per diluted
share
$0.51 to $0.57
No future acquisitions, dispositions, financings, or share
repurchases are incorporated into the Company's outlook and could
result in a material change to the Company's outlook.
Earnings Call
The Company will conduct its quarterly analyst and investor
conference call on May 5, 2023 at 10:00 a.m. (Eastern Time). The
conference call can be accessed by dialing (877) 407-3982 or (201)
493-6780 for international participants and requesting RLJ Lodging
Trust’s first quarter earnings conference call. Additionally, a
live webcast of the conference call will be available through the
Company’s website at http://www.rljlodgingtrust.com. A replay of
the conference call webcast will be archived and available through
the Investor Relations section of the Company’s website for two
weeks.
Supplemental Information
Please refer to the schedule of supplemental information for
additional detail and comparable operating statistics, which is
available through the Investor Relations section of the Company's
website.
About Us
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 currently consists of 96 hotels with approximately 21,200
rooms, located in 23 states and the District of Columbia and an
ownership interest in one unconsolidated hotel with 171 rooms.
Forward Looking
Statements
This information contains certain statements, other than purely
historical information, including estimates, projections,
statements relating to the Company’s business plans, objectives and
expected operating results, and the assumptions upon which those
statements are based, that are “forward looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally are identified by the
use of the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “plan,” “may,” “will,” “will continue,” “intend,”
“should,” “may,” or similar expressions. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, beliefs and
expectations, such forward-looking statements are not predictions
of future events or guarantees of future performance and our actual
results could differ materially from those set forth in the
forward-looking statements. Except as required by law, the Company
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. The Company cautions investors not to
place undue reliance on these forward looking statements and urges
investors to carefully review the disclosures the Company makes
concerning risks and uncertainties in the sections entitled “Risk
Factors,” “Forward- Looking Statements,” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in the Company’s Annual Report, as well as risks,
uncertainties and other factors discussed in other documents filed
by the Company with the Securities and Exchange Commission.
For additional information or to receive press
releases via email, please visit our website:
http://www.rljlodgingtrust.com
RLJ Lodging Trust
Non-GAAP and Accounting Commentary
Non-Generally Accepted Accounting
Principles (“Non-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 defines such
terms.
Funds From Operations
(“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
have instead 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) income tax benefit or expense; and (3) depreciation
and amortization expense. 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 benefit or expense, depreciation and
amortization expense, gains or losses from sales of real estate,
impairment, and adjustments for unconsolidated 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
EBITDA
The Company adjusts FFO, EBITDA, and EBITDAre for certain items
that the Company considers outside the normal course of operations.
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 the Company's
operating performance. The Company adjusts FFO, EBITDA, and
EBITDAre for the following items:
- Transaction Costs: The Company excludes transaction costs
expensed during the period
- Pre-Opening Costs: The Company excludes certain costs related
to pre-opening of hotels
- Non-Cash Expenses: The Company excludes the effect of certain
non-cash items such as the amortization of share-based
compensation, non-cash income tax expense or benefit, and non-cash
interest expense related to discontinued interest rate hedges
- Other Non-Operational Expenses: The Company excludes the effect
of certain non-operational expenses representing income and
expenses outside the normal course of operations
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 third-party management companies.
Comparable Hotel EBITDA and Comparable Hotel EBITDA margin
include prior ownership information provided by the sellers of the
hotels for periods prior to our acquisition of the hotels and
excludes results from sold hotels as applicable. The following is a
summary of Comparable hotel adjustments:
Comparable adjustments: Acquired
hotels
For the three months ended March 31, 2023 and 2022, Comparable
adjustments included the following acquired hotel:
- 21c Hotel Nashville acquired in July 2022
Comparable adjustments: Sold
hotels
For the three months ended March 31, 2022, comparable
adjustments included the following sold hotels:
- Marriott Denver Airport at Gateway Park sold in March 2022
- SpringHill Suites Denver North Westminster sold in April
2022
RLJ Lodging Trust
Consolidated Balance
Sheets
(Amounts in thousands, except
share and per share data)
(unaudited)
March 31,
2023
December 31,
2022
Assets
Investment in hotel properties, net
$
4,165,843
$
4,180,328
Investment in unconsolidated joint
ventures
7,260
6,979
Cash and cash equivalents
474,332
481,316
Restricted cash reserves
31,244
55,070
Hotel and other receivables, net of
allowance of $323 and $319, respectively
41,178
38,528
Lease right-of-use assets
135,480
136,915
Prepaid expense and other assets
76,615
79,089
Total assets
$
4,931,952
$
4,978,225
Liabilities and Equity
Debt, net
$
2,219,284
$
2,217,555
Accounts payable and other liabilities
144,775
155,916
Advance deposits and deferred revenue
27,904
23,769
Lease liabilities
116,193
117,010
Accrued interest
11,144
20,707
Distributions payable
19,412
14,622
Total liabilities
2,538,712
2,549,579
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
March 31, 2023 and December 31, 2022
366,936
366,936
Common shares of beneficial interest,
$0.01 par value, 450,000,000 shares authorized; 160,077,784 and
162,003,533 shares issued and outstanding at March 31, 2023 and
December 31, 2022, respectively
1,601
1,620
Additional paid-in capital
3,034,682
3,054,958
Distributions in excess of net
earnings
(1,057,939
)
(1,049,441
)
Accumulated other comprehensive income
34,175
40,591
Total shareholders’ equity
2,379,455
2,414,664
Noncontrolling interests:
Noncontrolling interest in the Operating
Partnership
6,264
6,313
Noncontrolling interest in consolidated
joint ventures
7,521
7,669
Total noncontrolling interest
13,785
13,982
Total equity
2,393,240
2,428,646
Total liabilities and equity
$
4,931,952
$
4,978,225
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 March
31,
2023
2022
Revenues
Operating revenues
Room revenue
$
260,832
$
205,779
Food and beverage revenue
33,288
20,901
Other revenue
20,383
16,219
Total revenues
314,503
242,899
Expenses
Operating expenses
Room expense
66,051
53,828
Food and beverage expense
26,137
16,169
Management and franchise fee
expense
26,182
20,388
Other operating expenses
82,624
68,654
Total property operating expenses
200,994
159,039
Depreciation and amortization
44,996
46,865
Property tax, insurance and other
24,648
22,513
General and administrative
13,656
14,134
Transaction costs
20
62
Total operating expenses
284,314
242,613
Other income, net
849
7,285
Interest income
3,664
172
Interest expense
(24,130
)
(24,561
)
Gain on sale of hotel properties, net
—
1,417
Income (loss) before equity in income from
unconsolidated joint ventures
10,572
(15,401
)
Equity in income from unconsolidated joint
ventures
281
122
Income (loss) before income tax
expense
10,853
(15,279
)
Income tax expense
(339
)
(190
)
Net income (loss)
10,514
(15,469
)
Net (income) loss attributable to
noncontrolling interests:
Noncontrolling interest in the Operating
Partnership
(17
)
104
Noncontrolling interest in consolidated
joint ventures
148
118
Net income (loss) attributable to RLJ
10,645
(15,247
)
Preferred dividends
(6,279
)
(6,279
)
Net income (loss) attributable to common
shareholders
$
4,366
$
(21,526
)
Basic per common share data:
Net income (loss) per share attributable
to common shareholders - basic
$
0.03
$
(0.13
)
Weighted-average number of common
shares
159,483,268
164,179,661
Diluted per common share data:
Net income (loss) per share attributable
to common shareholders - diluted
$
0.03
$
(0.13
)
Weighted-average number of common
shares
160,143,748
164,179,661
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)
Funds from Operations (FFO)
Attributable to Common Shareholders and Unitholders
For the three months ended
March 31,
2023
2022
Net income (loss)
$
10,514
$
(15,469
)
Preferred dividends
(6,279
)
(6,279
)
Depreciation and amortization
44,996
46,865
Gain on sale of hotel properties, net
—
(1,417
)
Noncontrolling interest in consolidated
joint ventures
148
118
Adjustments related to consolidated joint
venture (1)
(43
)
(49
)
Adjustments related to unconsolidated
joint venture (2)
237
295
FFO
49,573
24,064
Transaction costs
20
62
Pre-opening costs (3)
222
234
Amortization of share-based
compensation
5,692
5,185
Non-cash income tax expense
—
(135
)
Non-cash interest expense related to
discontinued interest rate hedges
482
336
Derivative gains in accumulated other
comprehensive income reclassified to earnings (4)
—
(5,866
)
Other expenses (5)
91
14
Adjusted FFO
$
56,080
$
23,894
Adjusted FFO per common share and
unit-basic
$
0.35
$
0.14
Adjusted FFO per common share and
unit-diluted
$
0.35
$
0.14
Basic weighted-average common shares and
units outstanding (6)
160,255
164,951
Diluted weighted-average common shares and
units outstanding (6)
160,916
165,516
Notes:
(1)
Includes depreciation and
amortization expense allocated to the noncontrolling interest in
the consolidated joint venture.
(2)
Includes our ownership interest
in the depreciation and amortization expense of the unconsolidated
joint venture.
(3)
Represents expenses related to
the brand conversions of certain hotel properties prior to
opening.
(4)
Reclassification of interest rate
swap gains from accumulated other comprehensive income to earnings
for discontinued interest rate hedges.
(5)
Represents expenses outside of
the normal course of operations.
(6)
Includes 0.8 million
weighted-average operating partnership units for the three month
periods ended March 31, 2023 and 2022.
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
March 31,
2023
2022
Net income (loss)
$
10,514
$
(15,469
)
Depreciation and amortization
44,996
46,865
Interest expense, net of interest
income
20,466
24,389
Income tax expense
339
190
Adjustments related to unconsolidated
joint venture (1)
345
407
EBITDA
76,660
56,382
Gain on sale of hotel properties, net
—
(1,417
)
EBITDAre
76,660
54,965
Transaction costs
20
62
Pre-opening costs (2)
222
234
Amortization of share-based
compensation
5,692
5,185
Derivative gains in accumulated other
comprehensive income reclassified to earnings (3)
—
(5,866
)
Other expenses (4)
91
14
Adjusted EBITDA
82,685
54,594
General and administrative
7,964
8,949
Other corporate adjustments
470
(166
)
Consolidated Hotel EBITDA
91,119
63,377
Comparable adjustments - income from sold
hotels
(193
)
(191
)
Comparable adjustments - income from
acquired hotels
—
65
Comparable Hotel EBITDA
$
90,926
$
63,251
Notes: Comparable statistics
reflect the Company's 96 hotel portfolio owned as of March 31,
2023.
(1)
Includes our ownership interest in the
interest, depreciation, and amortization expense of the
unconsolidated joint venture.
(2)
Represents expenses related to the brand
conversions of certain hotel properties prior to opening.
(3)
Reclassification of interest rate swap
gains from accumulated other comprehensive income to earnings for
discontinued interest rate hedges.
(4)
Represents expenses outside of the normal
course of operations.
RLJ Lodging Trust
Reconciliation of Non-GAAP
Measures
(Amounts in thousands except
%)
(unaudited)
Comparable Hotel EBITDA Margin
For the three months ended
March 31,
2023
2022
Total revenue
$
314,503
$
242,899
Comparable adjustments - revenue from sold
hotels
—
(2,220
)
Comparable adjustments - revenue from
prior ownership of acquired hotels
—
1,846
Other corporate adjustments / non-hotel
revenue
(15
)
(15
)
Comparable Hotel Revenue
$
314,488
$
242,510
Comparable Hotel EBITDA
$
90,926
$
63,251
Comparable Hotel EBITDA Margin
28.9
%
26.1
%
RLJ Lodging Trust
Consolidated Debt
Summary
(Amounts in thousands except
%)
(unaudited)
Loan
Base Term (Years)
Maturity
(incl. extensions)
Floating / Fixed (1)
Interest Rate (2)
Balance as of
March 31, 2023 (3)
Mortgage Debt
Mortgage loan - 1 hotel
10
Jan 2029
Fixed
5.06%
$ 25,000
Mortgage loan - 7 hotels (4)
3
Apr 2024
Floating
4.35%
200,000
Mortgage loan - 3 hotels
5
Apr 2026
Floating
2.53%
96,000
Mortgage loan - 4 hotels
5
Apr 2026
Floating
4.89%
85,000
Weighted Average / Mortgage
Total
4.08%
$ 406,000
Corporate Debt
Revolver (5)
4
May 2025
Floating
-
$ —
$200 Million Term Loan Maturing 2026
3
January 2028
Floating
3.43%
200,000
$400 Million Term Loan Maturing 2024
5
January 2024
Floating
6.71%
151,683
$225 Million Term Loan Maturing 2024
5
January 2024
Floating
4.57%
72,973
$400 Million Term Loan Maturing 2025
5
May 2025
Floating
3.27%
400,000
$500 Million Senior Notes due 2026
5
July 2026
Fixed
3.75%
500,000
$500 Million Senior Notes due 2029
8
September 2029
Fixed
4.00%
500,000
Weighted Average / Corporate
Total
3.96%
$ 1,824,656
Weighted Average / Total
3.98%
$ 2,230,656
Notes:
(1) The floating interest rate is
hedged with an interest rate swap.
(2) Interest rates as of March
31, 2023.
(3) Excludes the impact of fair
value adjustments and deferred financing costs.
(4) In April 2023 the Company
exercised the right to a one-year extension on this loan.
(5) As of March 31, 2023, there
was $600.0 million of borrowing capacity on the Revolver, which is
charged an unused commitment fee of 0.25% annually.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504006030/en/
Sean M. Mahoney, Executive Vice President and Chief Financial
Officer – (301) 280-7774
RLJ Lodging (NYSE:RLJ)
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RLJ Lodging (NYSE:RLJ)
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