News Release
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Chatham Lodging Trust Announces First Quarter 2016 Results
RevPAR Growth, EBITDA, FFO and FFO per Share In-Line with Guidance
First Quarter 2016 Highlights
-
Portfolio RevPAR – Improved hotel revenue per available room
(RevPAR) 2.6 percent to
$124 for Chatham’s 38, wholly owned hotels, within the company’s guidance range of 2-4 percent. Average daily rate (ADR) was up 70 basis points to$159 , and occupancy was up 200 basis points to 78 percent. -
Adjusted EBITDA – Increased 13 percent to
$27.6 million . -
Adjusted FFO – Rose 18 percent to
$17.7 million . Adjusted FFO per diluted share grew 15 percent to$0.46 , at the upper end of the company’s guidance of$0.43-$0.47 per share. - Operating Margins –Experienced a 70 basis point-decline in comparable hotel gross operating profit (total revenue less total hotel operating expenses) to 46.6 percent using comparable hotels regardless of ownership, and comparable hotel EBITDA margins declined 90 basis points to 39.2 percent.
-
Dividend Raised – Announced a 10 percent increase to Chatham’s
monthly dividend from
$0.10 per share to$0.11 per share. The increase is the sixth consecutive year Chatham has raised its dividend since its 2010 IPO.
Consolidated Financial Results
The following is a summary of the consolidated financial results for the
first quarter ended
Three Months Ended March 31, |
||||||||||
2016 | 2015 | |||||||||
Net income | $ | 3.3 | $ | 1.4 | ||||||
Net income per diluted share to common shareholders | $ | 0.08 | $ | 0.04 | ||||||
RevPAR | $ | 124 | $ | 121 | ||||||
ADR | $ | 159 | $ | 158 | ||||||
Occupancy | 78 | % | 76 | % | ||||||
GOP Margin | 46.6 | % | 47.7 | % | ||||||
Hotel EBITDA Margin | 39.2 | % | 40.7 | % | ||||||
Adjusted EBITDA | $ | 27.6 | $ | 24.4 | ||||||
AFFO | $ | 17.7 | $ | 15.0 | ||||||
AFFO per diluted share | $ | 0.46 | $ | 0.40 | ||||||
Dividends per share | $ | 0.31 | $ | 0.30 | ||||||
Operating Results as Expected, Earnings Growth Remains Strong
“Fueled by high-quality acquisitions made in 2015, Chatham grew adjusted
FFO per share 15 percent in the 2016 first quarter. We are gratified to
deliver double digit growth this quarter,” said
“Chatham delivered RevPAR growth in-line with industry performance, and our operating results were towards the upper end of our guidance range,” Fisher noted. “Like most other lodging REITs, top-line growth is slowing, not surprising given the significant growth we have experienced over the past several years, the calendar shift for the Easter holiday, as well as the fact that for the first time since the fourth quarter of 2009, industry supply growth outpaced demand growth.”
Additional data points on the portfolio’s first quarter RevPAR performance include:
-
Four
Silicon Valley hotels increased overall RevPAR 4.3 percent to$186 . -
RevPAR at the four hotels acquired during 2015 rose 6.0 percent to
$165 . -
Four
Houston -area hotels increased RevPAR 5.4 percent. -
Chatham’s
Residence Inn portfolio RevPAR growth was 4.0 percent in the quarter.
“Despite a challenging quarter in which industry occupancy declined 0.5 percent, occupancy for our portfolio was up 2.0 percent and accounted for approximately three-fourths of our RevPAR growth,” Fisher stated. “We have been able to grow RevPAR in a market that is experiencing a combination of weakening demand, increasing supply and online rate transparency. Our ability to grow occupancy during this moderating environment is a testament to the overall quality of our portfolio and, specifically, the ability of our hotels to appeal to a broad range of travelers. As a result, we grew our market share by 20 basis points in the quarter. This portfolio strength enables us to maximize RevPAR during the various stages of a lodging cycle.
“We trimmed slightly the midpoint of our adjusted EBITDA and FFO per share guidance by 2-3 percent on the basis that current trends through April might continue for the balance of 2016. Visibility to advance bookings is limited, therefore it is difficult to assume that RevPAR growth will accelerate much from the current run-rate in the second half of the year without accelerated growth in GDP. Even though group travel remains solid, other segments are not as strong as expected so far this year. Thankfully, we have a flexible operating platform that allows us to move quickly. We plan to concentrate our efforts for the balance of the year on maximizing performance by adjusting customer mix accordingly,” Fisher concluded.
Joint Venture Investment Performance
During the first quarter, the Innkeepers and Inland joint ventures
contributed adjusted EBITDA and adjusted FFO of approximately
“The joint venture properties with
Capital Markets & Capital Structure
As of
Chatham’s leverage ratio was approximately 41 percent at
During the first quarter, the company paid off the maturing
On
“We have a solid capital structure with no major maturities until late
2020, and our coverage ratios are very strong since most of our debt is
fixed at low rates,” explained
Dividend
During the first quarter, Chatham’s Board of Trustees increased its
regular monthly dividend by 10 percent, or
During the 2016 first quarter, Chatham completed the renovation of the
Homewood Suites in
The 32-room expansion of the
2016 Guidance
The company provides guidance, but does not undertake to update it for
any developments in its business. Achievement of the results is subject
to the risks disclosed in the company’s filings with the
- U.S. GDP growth rate of 1.5 to 2.5 percent for the last nine months of 2016.
-
Renovations at the following hotels:
Hilton Garden Inn Burlington , Mass., Courtyard byMarriott Addison (Dallas ),Texas , andHomewood SuitesCarlsbad, Calif. , during the second quarter;Residence Inn San Diego Gaslamp during the fourth quarter. -
Completion of the 32-room tower in
Mountain View, Calif. , early in the third quarter. - No additional acquisitions, dispositions, debt or equity issuance.
Q2 2016 | 2016 Forecast | ||||||||
RevPAR | $143-$144 | $134-$136 | |||||||
RevPAR growth | +2.0-3.0% | +2.0-3.5% | |||||||
Total hotel revenue | $78.0-$78.9 M | $295.2-$299.7 M | |||||||
Net income | $12.4-$13.3 M | $33.8-$39.5 M | |||||||
Net income per diluted share | $0.32-$0.34 | $0.88-$1.02 | |||||||
Adjusted EBITDA | $37.1-$38.0 M | $132.6-$138.3 M | |||||||
Adjusted funds from operation ("FFO") | $26.7-$27.6 M | $90.9-$96.6 M | |||||||
Adjusted FFO per diluted share | $0.69-$0.71 | $2.35-$2.50 | |||||||
Hotel EBITDA margins | 44.2-44.7% | 42.3-43.4% | |||||||
Corporate cash administrative expenses | $2.2 M | $8.9 M | |||||||
Corporate non-cash administrative expenses | $0.8 M | $3.6 M | |||||||
Interest expense (excluding fee amortization) | $6.8 M | $27.2 M | |||||||
Non-cash amortization of deferred fees | $0.3 M | $1.3 M | |||||||
Income taxes | $0.5 M | $1.4 M | |||||||
Chatham’s share of JV EBITDA | $4.8-$4.9 M | $16.7-$17.2 M | |||||||
Chatham’s share of JV FFO | $2.8-$2.9 M | $8.5-$9.0 M | |||||||
Weighted average shares outstanding | 38.7 M | 38.7 M | |||||||
|
Funds from operations (FFO), Adjusted FFO (AFFO), EBITDA and Adjusted
EBITDA are non-GAAP financial measures within the meaning of the rules
of the
Earnings Call
The company will hold its first quarter 2016 conference later today,
About
Included in this press release are certain “non-GAAP financial
measures,” within the meaning of
FFO As Defined by NAREIT and Adjusted FFO
The company calculates FFO in accordance with standards established
by the
The company further adjusts FFO for certain additional items that are not in NAREIT’s definition of FFO, including acquisition transaction costs and other charges, losses on the early extinguishment of debt and adjustments for unconsolidated partnerships and joint ventures. The company believes that Adjusted FFO provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that make similar adjustments to FFO.
EBITDA and Adjusted EBITDA
The company calculates EBITDA as net income or loss excluding interest expense; provision for income taxes, including income taxes applicable to sale of assets; depreciation and amortization; and after adjustments for unconsolidated partnerships and joint ventures. The company believes EBITDA is useful to investors in evaluating its operating performance because it helps investors compare the company’s operating performance between periods and between REITs that report similar measures by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results. In addition, the company uses EBITDA as one measure in determining the value of hotel acquisitions and dispositions.
The company further adjusts EBITDA for certain additional items, including acquisition transaction costs and other charges, losses on the early extinguishment of debt, non-cash share-based compensation and adjustments for unconsolidated partnerships and joint ventures, which it believes are not indicative of the performance of its underlying hotel properties. The company believes that Adjusted EBITDA provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs.
Although the company presents FFO, Adjusted FFO, EBITDA and Adjusted EBITDA because it believes they are useful to investors in comparing the company’s operating performance between periods and between REITs, these measures have limitations as analytical tools. Some of these limitations are:
- FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect the company’s cash expenditures, or future requirements, for capital expenditures or contractual commitments;
- FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the company’s working capital needs;
- FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect funds available to make cash distributions;
- EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the company’s debts;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may need to be replaced in the future, and FFO, Adjusted FFO, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
- Non-cash compensation is and will remain a key element of the company’s overall long-term incentive compensation package, although the company excludes it as an expense when evaluating its operating performance for a particular period using adjusted EBITDA;
- Adjusted FFO and Adjusted EBITDA do not reflect the impact of certain cash charges (including acquisition transaction costs) that result from matters the company considers not to be indicative of the underlying performance of its hotel properties; and
- Other companies in the company’s industry may calculate FFO, Adjusted FFO, EBITDA and Adjusted EBITDA differently than the company does, limiting their usefulness as a comparative measure.
The company’s reconciliation of FFO, Adjusted FFO, EBITDA and Adjusted EBITDA to net income attributable to common shareholders, as determined under GAAP, is set forth below.
Forward-Looking Statement Safe Harbor
Note: This press release contains forward-looking statements within
the meaning of federal securities regulations. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "plan," "predict," "project," "will," "continue" and other
similar terms and phrases, including references to assumption and
forecasts of future results. Forward-looking statements are not
guarantees of future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results to
differ materially from those anticipated at the time the forward-looking
statements are made. These risks include, but are not limited to:
national and local economic and business conditions, including the
effect on travel of potential terrorist attacks, that will affect
occupancy rates at the company’s hotels and the demand for hotel
products and services; operating risks associated with the hotel
business; risks associated with the level of the company’s indebtedness
and its ability to meet covenants in its debt agreements; relationships
with property managers; the company’s ability to maintain its properties
in a first-class manner, including meeting capital expenditure
requirements; the company’s ability to compete effectively in areas such
as access, location, quality of accommodations and room rate structures;
changes in travel patterns, taxes and government regulations which
influence or determine wages, prices, construction procedures and costs;
the company’s ability to complete acquisitions and dispositions; and the
company’s ability to continue to satisfy complex rules in order for the
company to remain a REIT for federal income tax purposes and other risks
and uncertainties associated with the company’s business described in
the company's filings with the
CHATHAM LODGING TRUST | |||||||||||
Consolidated Balance Sheets | |||||||||||
(In thousands, except share and per share data) | |||||||||||
March 31, | December 31, | ||||||||||
2016 | 2015 | ||||||||||
Assets: | |||||||||||
Investment in hotel properties, net | $ | 1,251,143 | $ | 1,258,452 | |||||||
Cash and cash equivalents | 12,479 | 21,036 | |||||||||
Restricted cash | 21,420 | 19,273 | |||||||||
Investment in unconsolidated real estate entities | 23,113 | 23,618 | |||||||||
Hotel receivables (net of allowance for doubtful accounts of $120 and $95, respectively). | 7,316 | 5,518 | |||||||||
Deferred costs, net | 5,172 | 5,365 | |||||||||
Prepaid expenses and other assets | 6,519 | 3,967 | |||||||||
Total assets | $ | 1,327,162 | $ | 1,337,229 | |||||||
Liabilities and Equity: | |||||||||||
Mortgage debt | $ | 532,923 | $ | 539,623 | |||||||
Revolving credit facility | 70,580 | 65,580 | |||||||||
Accounts payable and accrued expenses | 25,927 | 25,100 | |||||||||
Distributions and losses in excess of investments of unconsolidated real estate entities | 3,667 | 2,703 | |||||||||
Distributions payable | 4,571 | 7,221 | |||||||||
Total liabilities | 637,668 | 640,227 | |||||||||
Commitments and contingencies | |||||||||||
Equity: | |||||||||||
Shareholders' Equity: | |||||||||||
Preferred shares, $0.01 par value, 100,000,000 shares | |||||||||||
authorized and unissued at March 31, 2016 and December 31, 2015 | - | - | |||||||||
Common shares, $0.01 par value, 500,000,000 shares authorized; | |||||||||||
38,347,715 and 38,308,937 shares issued and outstanding at March 31, 2016 and | |||||||||||
December 31, 2015, respectively | 380 | 379 | |||||||||
Additional paid-in capital | 720,753 | 719,773 | |||||||||
Retained earnings (distributions in excess of retained earnings) | (35,889 | ) | (27,281 | ) | |||||||
Total shareholders' equity | 685,244 | 692,871 | |||||||||
Noncontrolling Interests: | |||||||||||
Noncontrolling interest in Operating Partnership | 4,250 | 4,131 | |||||||||
Total equity | 689,494 | 697,002 | |||||||||
Total liabilities and equity | $ | 1,327,162 | $ | 1,337,229 | |||||||
CHATHAM LODGING TRUST | |||||||||||
Consolidated Statements of Operations | |||||||||||
(In thousands, except share and per share data) | |||||||||||
For the three months ended | |||||||||||
March 31, | |||||||||||
2016 | 2015 | ||||||||||
Revenue: | |||||||||||
Room | $ | 63,934 | $ | 55,032 | |||||||
Food and beverage | 1,508 | 1,167 | |||||||||
Other | 2,354 | 1,902 | |||||||||
Cost reimbursements from unconsolidated real estate entities | 1,054 | 848 | |||||||||
Total revenue | 68,850 | 58,949 | |||||||||
Expenses: | |||||||||||
Hotel operating expenses: | |||||||||||
Room | 13,812 | 10,941 | |||||||||
Food and beverage | 1,178 | 847 | |||||||||
Telephone | 421 | 409 | |||||||||
Other hotel operating | 589 | 527 | |||||||||
General and administrative | 5,497 | 4,642 | |||||||||
Franchise and marketing fees | 5,187 | 4,494 | |||||||||
Advertising and promotions | 1,352 | 1,220 | |||||||||
Utilities | 2,382 | 2,326 | |||||||||
Repairs and maintenance | 3,201 | 2,821 | |||||||||
Management fees | 2,229 | 1,816 | |||||||||
Insurance | 337 | 301 | |||||||||
Total hotel operating expenses | 36,185 | 30,344 | |||||||||
Depreciation and amortization | 12,475 | 11,523 | |||||||||
Property taxes, ground rent and insurance | 5,023 | 4,085 | |||||||||
General and administrative | 3,112 | 3,427 | |||||||||
Hotel property acquisition costs and other charges | 12 | 260 | |||||||||
Reimbursed costs from unconsolidated real estate entities | 1,054 | 848 | |||||||||
Total operating expenses | 57,861 | 50,487 | |||||||||
Operating income | 10,989 | 8,462 | |||||||||
Interest and other income | 21 | 26 | |||||||||
Interest expense, including amortization of deferred fees | (7,037 | ) | (6,813 | ) | |||||||
Loss on early extinguishment of debt | (4 | ) | - | ||||||||
Loss from unconsolidated real estate entities | (647 | ) | (256 | ) | |||||||
Income before income tax expense | 3,322 | 1,419 | |||||||||
Income tax expense | - | - | |||||||||
Net income | 3,322 | 1,419 | |||||||||
Net income attributable to noncontrolling interests | (22 | ) | (8 | ) | |||||||
Net income attributable to common shareholders | $ | 3,300 | $ | 1,411 | |||||||
Income per Common Share - Basic: | |||||||||||
Net income attributable to common shareholders | $ | 0.09 | $ | 0.04 | |||||||
Income per Common Share - Diluted: | |||||||||||
Net income attributable to common shareholders | $ | 0.08 | $ | 0.04 | |||||||
Weighted average number of common shares outstanding: | |||||||||||
Basic | 38,274,448 | 37,018,039 | |||||||||
Diluted | 38,671,129 | 37,322,278 | |||||||||
Distributions per common share | $ | 0.31 | $ | 0.30 | |||||||
CHATHAM LODGING TRUST | ||||||||||
FFO and EBITDA | ||||||||||
(In thousands, except share and per share data) | ||||||||||
For the three months ended | ||||||||||
March 31 | ||||||||||
2016 | 2015 | |||||||||
Funds From Operations ("FFO"): | ||||||||||
Net income | $ | 3,322 | $ | 1,419 | ||||||
Noncontrolling interests | (22 | ) | (8 | ) | ||||||
Depreciation | 12,421 | 11,477 | ||||||||
Adjustments for unconsolidated real estate entity items | 1,962 | 1,812 | ||||||||
FFO attributable to common shareholders | 17,683 | 14,700 | ||||||||
Hotel property acquisition costs and other charges | 12 | 260 | ||||||||
Loss on early extinguishment of debt | 4 | - | ||||||||
Adjustments for unconsolidated real estate entity items | 10 | 12 | ||||||||
Adjusted FFO attributable to common shareholders | $ | 17,709 | $ | 14,972 | ||||||
Weighted average number of common shares | ||||||||||
Basic | 38,274,448 | 37,018,039 | ||||||||
Diluted | 38,671,129 | 37,322,278 | ||||||||
For the three months ended | ||||||||||
March 31 | ||||||||||
2016 | 2015 | |||||||||
Earnings Before Interest, Taxes, | ||||||||||
Depreciation and Amortization ("EBITDA"): | ||||||||||
Net income | $ | 3,322 | $ | 1,419 | ||||||
Interest expense | 7,037 | 6,813 | ||||||||
Depreciation and amortization | 12,475 | 11,523 | ||||||||
Adjustments for unconsolidated real estate entity items | 3,983 | 3,663 | ||||||||
Noncontrolling interests | (22 | ) | (8 | ) | ||||||
EBITDA | 26,795 | 23,410 | ||||||||
Hotel property acquisition costs and other charges | 12 | 260 | ||||||||
Loss on early extinguishment of debt | 4 | - | ||||||||
Adjustments for unconsolidated real estate entity items | 10 | 36 | ||||||||
Share based compensation | 735 | 704 | ||||||||
Adjusted EBITDA | $ | 27,556 | $ | 24,410 | ||||||
CHATHAM LODGING TRUST | ||||||||||||
Hotel EBITDA | ||||||||||||
(In thousands, except share and per share data) | ||||||||||||
For the three months ended | ||||||||||||
March 31, | ||||||||||||
2016 | 2015 | |||||||||||
Net Income | 3,322 | 1,419 | ||||||||||
Add: | Interest expense | 7,037 | 6,813 | |||||||||
Depreciation and amortization | 12,475 | 11,523 | ||||||||||
General and administrative | 3,112 | 3,427 | ||||||||||
Hotel property acquisition costs and other charges | 12 | 260 | ||||||||||
Loss from unconsolidated real estate entities | 647 | 256 | ||||||||||
Loss on early extinguishment of debt | 4 | - | ||||||||||
Less: | Interest and other income | (21 | ) | (26 | ) | |||||||
Adjusted Hotel EBITDA | 26,588 | 23,672 | ||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160505005427/en/
Source:
Chatham Lodging Trust
Dennis Craven, 561-227-1386
Chief
Operating Officer
or
Media
Daly Gray, Inc.
Chris
Daly, 703-435-6293