News Release
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Chatham Lodging Trust Announces Fourth Quarter 2016 Results
Outperforms Expectations Across the Board
Fourth Quarter 2016 Key Metrics
-
Net Income - Declined
$1.8 million to $2.7 million . Net income per diluted share was$0.07 versus$0.12 in the 2015 fourth quarter. -
Portfolio Revenue per
Available Room (RevPAR) – Declined slightly, 0.8 percent, compared to the 2015 fourth quarter, to$118 for Chatham’s 38, wholly owned hotels. Average daily rate (ADR) improved 1.7 percent to$157 , offset by a 2.4 percent occupancy decline to 75 percent. -
Adjusted EBITDA – Rose
$0.3 million to $26.3 million . -
Adjusted FFO – Improved
$0.9 million to $17.0 million . Adjusted FFO per diluted share was$0.44 , up 5 percent versus last year and significantly exceeding the company’s guidance of$0.35-$0.38 per share. - Operating Margins – Experienced a 50 basis point reduction in comparable hotel gross operating profit margins (total revenue less total hotel operating expenses) to 45.9 percent, using comparable hotels regardless of ownership. Comparable hotel EBITDA margins dropped 80 basis points to 36.7 percent.
Consolidated Financial Results
The following is a summary of the consolidated financial results for the
three months and year ended
Three Months Ended | Year Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Net income | $2.7 | $4.5 | $31.7 | $33.2 | |||||||||
Diluted net income per common share | $0.07 | $0.12 | $0.81 | $0.86 | |||||||||
RevPAR | $118 | $119 | $131 | $131 | |||||||||
ADR | $157 | $154 | $163 | $161 | |||||||||
Occupancy | 75% | 77% | 81% | 82% | |||||||||
Adjusted EBITDA | $26.3 | $26.0 | $128.0 | $126.7 | |||||||||
GOP Margin | 45.9% | 46.4% | 48.6% | 49.9% | |||||||||
Hotel EBITDA Margin | 36.7% | 37.5% | 41.2% | 43.1% | |||||||||
AFFO | $17.0 | $16.1 | $89.0 | $87.8 | |||||||||
AFFO per diluted share | $0.44 | $0.42 | $2.30 | $2.29 | |||||||||
Dividends per share | $0.33 | $0.38 | $1.30 | $1.28 | |||||||||
Operating Results
“Our overall operating results were much better than the guidance we
provided for the fourth quarter. The results were driven by across the
board beats with RevPAR only declining 0.8 percent versus our guidance
of a decline of approximately 2.5 percent. Margins finished 130 basis
points better than forecasted, and we achieved lower corporate general
and administrative expenses,” commented
Fourth quarter RevPAR performance for certain key markets:
- Silicon Valley RevPAR rose 4.8 percent with a 5.7 percent increase in ADR
-
Four
Houston hotels experienced a RevPAR decline of 21.9 percent -
Two
Washington D.C. hotels saw RevPAR rise 4.8 percent -
Three
Boston hotels experienced a RevPAR decline of 3.2 percent
“As we mentioned during our third quarter earnings call, we quickly
implemented cost savings initiatives and modified revenue management
strategies across the portfolio. When combined with our top-line
performance, we generated better than expected operating margins of 45.9
percent, down 50 basis points from last year, but much-improved from the
180 basis point decline we experienced in the 2016 third quarter,”
highlighted
Joint Venture Investment Performance
During the quarter, the Innkeepers and Inland joint ventures contributed
Adjusted EBITDA and Adjusted FFO of approximately
Chatham received distributions of
Capital Markets & Capital Structure
As of
Chatham’s leverage ratio was approximately 40 percent at
On
“Our hotel investments continue to generate significant free cash flow,
enabling us to reduce our net debt by
Dividend
During the 2016 first quarter, Chatham’s Board of Trustees increased its
regular monthly dividend by 10 percent, or
No renovations were undertaken during the 2016 fourth quarter. The
32-suite expansion of the
2017 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
-
Industrywide RevPAR growth of 0 to 3 percent in 2017
-
Marriott is projecting North American RevPAR growth of 0 to 2 percent. Hilton provided global RevPAR growth of 0 to 3 percent. -
Smith Travel Research is projecting industry RevPAR growth of 2.5 percent and 1.3 percent for the upscale segment.
-
-
Renovations at the following hotels:
-
Residence Inn San Diego Gaslamp and Courtyard byMarriott Houston Medical Center in the first quarter -
Homewood Suites
Maitland, Fla. , during the second quarter -
Homewood Suites in
Bloomington, Minn. , andBrentwood, Tenn. , during the third quarter -
Residence Inn San Diego Mission Valley in the fourth quarter
-
- No additional acquisitions, dispositions, debt or equity issuance
Q1 2017 |
2017 Forecast | ||||||||
RevPAR | $124-$125 | $130-$132 | |||||||
RevPAR growth | +0.0-1.0% | -1.0%-1.0% | |||||||
Total hotel revenue | $67.6-$68.3 M | $287.9-$293.4 M | |||||||
Net income | $3.8-$5.1 M | $24.3-$29.8 M | |||||||
Net income per diluted share | $0.10-$0.13 | $0.62-$0.76 | |||||||
Adjusted EBITDA | $26.9-$28.3 M | $121.0-$126.5 M | |||||||
Adjusted funds from operation ("FFO") | $17.0-$18.4 M | $80.5-$86.0 M | |||||||
Adjusted FFO per diluted share | $0.44-$0.47 | $2.06-$2.20 | |||||||
Hotel EBITDA margins | 38.7-40.2% | 39.7-40.5% | |||||||
Corporate cash administrative expenses | $2.3 M | $8.8 M | |||||||
Corporate non-cash administrative expenses | $0.8 M | $3.7 M | |||||||
Interest expense (excluding fee amortization) | $6.8 M | $27.2 M | |||||||
Non-cash amortization of deferred fees | $0.3 M | $1.4 M | |||||||
Income taxes | $0.0 M | $0.2 M | |||||||
Chatham’s share of JV EBITDA | $3.0-$3.2 M | $15.5-$16.5 M | |||||||
Chatham’s share of JV FFO | $1.1-$1.2 M | $7.5-$8.5 M | |||||||
Weighted average shares/units outstanding | 39.0 M | 39.0 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 Securities and Exchange Commission. See the discussion included in this press release for information regarding these non-GAAP financial measures. | ||
Earnings Call
The company will hold its fourth quarter 2016 conference later today at
About
Non-GAAP Financial Measures
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 calculates Adjusted FFO by further adjusting FFO for certain additional items that are not addressed in NAREIT’s definition of FFO, including hotel property acquisition costs and other charges, losses on the early extinguishment of debt and similar items related to its unconsolidated real estate entities that it believes do not represent costs related to hotel operations. 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, Adjusted EBITDA and
The company calculates EBITDA for purposes of the credit facility debt as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; and (4) unconsolidated real estate entity items including interest, depreciation and amortization excluding gains and losses from sales of real estate. 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 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 calculates Adjusted EBITDA by further adjusting EBITDA for certain additional items, including hotel property acquisition costs and other charges, gains or losses on the sale of real estate, losses on the early extinguishment of debt, amortization of non-cash share-based compensation and similar items related to its unconsolidated real estate entities, which it believes are not indicative of the performance of its underlying hotel properties entities. The company believes that Adjusted EBITDA provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs that report similar measures.
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 that report similar measures, these measures have limitations as analytical tools. Some of these limitations are:
-
FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect the company’s cash expenditures, or future requirements, for capital expenditures or contractual commitments; -
FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect changes in, or cash requirements for, the company’s working capital needs; -
FFO, Adjusted FFO, EBITDA,
Adjusted EBITDA and Adjusted Hotel EBITDA do not reflect funds available to make cash distributions; -
EBITDA, Adjusted EBITDA and
Adjusted Hotel 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, Adjusted EBITDA and
Adjusted Hotel 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 ongoing operating performance for a particular period using adjusted EBITDA;
-
Adjusted FFO, Adjusted EBITDA and
Adjusted Hotel 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, Adjusted EBITDA and
Adjusted Hotel EBITDA differently than the company does, limiting their usefulness as a comparative measure.
In addition, FFO, Adjusted FFO, EBITDA, Adjusted EBITDA and
The company’s reconciliation of FFO, Adjusted FFO, EBITDA, Adjusted
EBITDA and
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) | |||||||||
December 31, |
December 31, |
||||||||
Assets: | |||||||||
Investment in hotel properties, net | $ | 1,233,094 | $ | 1,258,452 | |||||
Cash and cash equivalents | 12,118 | 21,036 | |||||||
Restricted cash | 25,083 | 19,273 | |||||||
Investment in unconsolidated real estate entities | 20,424 | 23,618 | |||||||
Hotel receivables (net of allowance for doubtful accounts of $155 and $95, respectively). | 4,389 | 4,433 | |||||||
Deferred costs, net | 4,642 | 5,365 | |||||||
Prepaid expenses and other assets | 2,778 | 5,052 | |||||||
Deferred tax asset, net | 426 | - | |||||||
Total assets | $ | 1,302,954 | $ | 1,337,229 | |||||
Liabilities and Equity: |
|||||||||
Mortgage debt, net | $ | 530,323 | $ | 539,623 | |||||
Revolving credit facility | 52,500 | 65,580 | |||||||
Accounts payable and accrued expenses | 27,782 | 25,100 | |||||||
Distributions and losses in excess of investments of unconsolidated real estate entities | 6,017 | 2,703 | |||||||
Distributions payable | 4,742 | 7,221 | |||||||
Total liabilities |
621,364 | 640,227 | |||||||
Commitments and contingencies | |||||||||
Equity: |
|||||||||
Shareholders' Equity: | |||||||||
Preferred shares, $0.01 par value, 100,000,000 shares authorized and unissued at December 31, 2016 and 2015 |
- | - | |||||||
Common shares, $0.01 par value, 500,000,000 shares authorized; 38,367,014 and 38,308,937 shares issued and outstanding at December 31, 2016 and 2015, respectively |
380 | 379 | |||||||
Additional paid-in capital | 722,019 | 719,773 | |||||||
Retained earnings (distributions in excess of retained earnings) | (45,657 | ) | (27,281 | ) | |||||
Total shareholders' equity |
676,742 | 692,871 | |||||||
Noncontrolling Interests: | |||||||||
Noncontrolling interest in Operating Partnership | 4,848 | 4,131 | |||||||
Total equity | 681,590 | 697,002 | |||||||
Total liabilities and equity | $ | 1,302,954 | $ | 1,337,229 | |||||
CHATHAM LODGING TRUST | ||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||
For the three months ended | For the years ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Revenue: | ||||||||||||||||||||
Room | $ | 61,907 | $ | 62,051 | $ | 273,345 | $ | 258,137 | ||||||||||||
Food and beverage | 1,493 | 1,670 | 6,221 | 5,536 | ||||||||||||||||
Other | 2,424 | 2,439 | 10,115 | 9,534 | ||||||||||||||||
Cost reimbursements from unconsolidated real estate entities | 1,411 | 1,098 | 4,139 | 3,743 | ||||||||||||||||
Total revenue | 67,235 | 67,258 | 293,820 | 276,950 | ||||||||||||||||
Expenses: | ||||||||||||||||||||
Hotel operating expenses: | ||||||||||||||||||||
Room | 13,758 | 13,039 | 57,209 | 50,165 | ||||||||||||||||
Food and beverage | 1,225 | 1,265 | 4,928 | 4,127 | ||||||||||||||||
Telephone | 412 | 471 | 1,712 | 1,708 | ||||||||||||||||
Other hotel operating | 569 | 640 | 2,358 | 2,467 | ||||||||||||||||
General and administrative | 5,424 | 5,686 | 22,274 | 21,101 | ||||||||||||||||
Franchise and marketing fees | 5,119 | 5,094 | 22,412 | 21,240 | ||||||||||||||||
Advertising and promotions | 1,248 | 1,304 | 5,147 | 5,040 | ||||||||||||||||
Utilities | 2,244 | 2,305 | 9,545 | 9,464 | ||||||||||||||||
Repairs and maintenance | 3,001 | 3,159 | 12,444 | 11,722 | ||||||||||||||||
Management fees | 2,217 | 2,140 | 9,389 | 8,742 | ||||||||||||||||
Insurance | 366 | 344 | 1,359 | 1,218 | ||||||||||||||||
Total hotel operating expenses | 35,583 | 35,447 | 148,777 | 136,994 | ||||||||||||||||
Depreciation and amortization | 12,022 | 12,835 | 48,775 | 48,981 | ||||||||||||||||
Property taxes, ground rent and insurance | 6,109 | 5,893 | 21,564 | 18,581 | ||||||||||||||||
General and administrative | 2,043 | 3,301 | 11,119 | 11,677 | ||||||||||||||||
Hotel property acquisition costs and other charges | 151 | 44 | 510 | 1,451 | ||||||||||||||||
Reimbursed costs from unconsolidated real estate entities | 1,411 | 1,098 | 4,139 | 3,743 | ||||||||||||||||
Total operating expenses | 57,319 | 58,618 | 234,884 | 221,427 | ||||||||||||||||
Operating income | 9,916 | 8,640 | 58,936 | 55,523 | ||||||||||||||||
Interest and other income | 9 | 41 | 51 | 264 | ||||||||||||||||
Interest expense, including amortization of deferred fees | (7,086 | ) | (7,229 | ) | (28,297 | ) | (27,924 | ) | ||||||||||||
Loss on early extinguishment of debt | - | (412 | ) | (4 | ) | (412 | ) | |||||||||||||
Income (loss) from unconsolidated real estate entities | (628 | ) | (132 | ) | 718 | 2,411 | ||||||||||||||
Income (loss) on sale from unconsolidated real estate entities | (2 | ) | 3,576 | (10 | ) | 3,576 | ||||||||||||||
Income before income tax benefit (expense) | 2,209 | 4,484 | 31,394 | 33,438 | ||||||||||||||||
Income tax benefit (expense) | 468 | 39 | 301 | (260 | ) | |||||||||||||||
Net income | 2,677 | 4,523 | 31,695 | 33,178 | ||||||||||||||||
Net income attributable to non-controlling interests | (18 | ) | (32 | ) | (212 | ) | (212 | ) | ||||||||||||
Net income attributable to common shareholders | $ | 2,659 | $ | 4,491 | $ | 31,483 | $ | 32,966 | ||||||||||||
Income per Common Share - Basic: | ||||||||||||||||||||
Net income attributable to common shareholders | $ | 0.07 | $ | 0.12 | $ | 0.82 | $ | 0.87 | ||||||||||||
Income per Common Share - Diluted: | ||||||||||||||||||||
Net income attributable to common shareholders | $ | 0.07 | $ | 0.12 | $ | 0.81 | $ | 0.86 | ||||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||||
Basic | 38,315,040 | 38,213,219 | 38,299,067 | 37,917,871 | ||||||||||||||||
Diluted | 38,525,598 | 38,361,697 | 38,482,875 | 38,322,285 | ||||||||||||||||
Distributions paid per common share | $ | 0.33 | $ | 0.38 | $ | 1.38 | $ | 1.20 | ||||||||||||
CHATHAM LODGING TRUST | ||||||||||||||||||
FFO and EBITDA | ||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||
For the three months ended |
For the years ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Funds From Operations ("FFO"): | ||||||||||||||||||
Net income | $ | 2,677 | $ | 4,523 | $ | 31,695 | $ | 33,178 | ||||||||||
Loss (income) on sale from unconsolidated real estate entities | 2 | (3,576 | ) | 10 | (3,576 | ) | ||||||||||||
Depreciation | 11,969 | 12,782 | 48,562 | 48,784 | ||||||||||||||
Adjustments for unconsolidated real estate entity items | 2,158 | 1,916 | 8,186 | 7,458 | ||||||||||||||
FFO attributable to common share and unit holders | 16,806 | 15,645 | 88,453 | 85,844 | ||||||||||||||
Hotel property acquisition costs and other charges | 151 | 44 | 510 | 1,451 | ||||||||||||||
Loss on early extinguishment of debt | - | 412 | 4 | 412 | ||||||||||||||
Adjustments for unconsolidated real estate entity items | - | 10 | 25 | 104 | ||||||||||||||
Adjusted FFO attributable to common share and unit holders | $ | 16,957 | $ | 16,111 | $ | 88,992 | $ | 87,811 | ||||||||||
Weighted average number of common shares and units | ||||||||||||||||||
Basic | 38,572,815 | 38,470,994 | 38,556,842 | 38,175,646 | ||||||||||||||
Diluted | 38,783,373 | 38,619,472 | 38,740,650 | 38,327,355 | ||||||||||||||
For the three months ended | For the years ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Earnings Before Interest, Taxes, |
||||||||||||||||||
Depreciation and Amortization ("EBITDA"): |
||||||||||||||||||
Net income | $ | 2,677 | $ | 4,523 | $ | 31,695 | $ | 33,178 | ||||||||||
Interest expense | 7,086 | 7,229 | 28,297 | 27,924 | ||||||||||||||
Income tax (benefit) expense | (468 | ) | (39 | ) | (301 | ) | 260 | |||||||||||
Depreciation and amortization | 12,022 | 12,835 | 48,775 | 48,981 | ||||||||||||||
Adjustments for unconsolidated real estate entity items | 4,023 | 3,867 | 15,908 | 15,081 | ||||||||||||||
EBITDA | 25,340 | 28,415 | 124,374 | 125,424 | ||||||||||||||
Hotel property acquisition costs and other charges | 151 | 44 | 510 | 1,451 | ||||||||||||||
Loss on early extinguishment of debt | - | 412 | 4 | 412 | ||||||||||||||
Adjustments for unconsolidated real estate entity items | 20 | 11 | 62 | 136 | ||||||||||||||
Loss (income) on sale from unconsolidated real estate entities | 2 | (3,576 | ) | 10 | (3,576 | ) | ||||||||||||
Share based compensation | 759 | 732 | 3,013 | 2,835 | ||||||||||||||
Adjusted EBITDA | $ | 26,272 | $ | 26,038 | $ | 127,973 | $ | 126,682 | ||||||||||
CHATHAM LODGING TRUST | ||||||||||||||||||||
ADJUSTED HOTEL EBITDA | ||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||
For the three months ended | For the years ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Net Income | $ | 2,677 | $ | 4,523 | $ | 31,695 | $ | 33,178 | ||||||||||||
Add: | Interest expense | 7,086 | 7,229 | 28,297 | 27,924 | |||||||||||||||
Income tax expense | - | - | - | 260 | ||||||||||||||||
Depreciation and amortization | 12,022 | 12,835 | 48,775 | 48,981 | ||||||||||||||||
Corporate general and administrative | 2,043 | 3,301 | 11,119 | 11,677 | ||||||||||||||||
Hotel property acquisition costs and other charges | 151 | 44 | 510 | 1,451 | ||||||||||||||||
Loss from unconsolidated real estate entities | 628 | 132 | - | - | ||||||||||||||||
Loss on early extinguishment of debt | - | 412 | 4 | 412 | ||||||||||||||||
Loss on sale from unconsolidated real estate entities | 2 | - | 10 | - | ||||||||||||||||
Less: | Interest and other income | (9 | ) | (41 | ) | (51 | ) | (264 | ) | |||||||||||
Income from unconsolidated real estate entites | - | - | (718 | ) | (2,411 | ) | ||||||||||||||
Income on sale from unconsolidated real estate entities | - | (3,576 | ) | - | (3,576 | ) | ||||||||||||||
Income tax benefit | (468 | ) | (39 | ) | (301 | ) | - | |||||||||||||
Adjusted Hotel EBITDA | $ | 24,132 | $ | 24,820 | $ | 119,340 | $ | 117,632 | ||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170222006756/en/
Source:
Company:
Dennis Craven
Chief Operating Officer
561-227-1386
or
Media:
Chris
Daly
Daly Gray, Inc.
703-435-6293