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RLJ Lodging Trust Reports First Quarter 2020 Results and Provides Business Update

- Ample liquidity with approximately $1.2 billion of cash on hand

- Operations currently suspended at 57 hotels

RLJ Lodging Trust (the "Company") (NYSE:RLJ) today reported results for the three months ended March 31, 2020 and is providing a business update on its COVID-19 action plan.

Highlights

  • $1.2 billion of unrestricted cash and $200 million undrawn on line of credit
  • No debt maturities until 2022
  • Temporarily suspended operations at 57 hotels due to the ongoing COVID-19 pandemic
  • Total revenue of $265.5 million
  • Net loss of $30.8 million
  • Adjusted EBITDA of $41.4 million
  • Adjusted FFO per diluted common share and unit of $0.10

"Our hearts and minds are with all those affected by the COVID-19 global pandemic, and we express our heartfelt gratitude to the healthcare workers who are on the frontlines every day. This pandemic has inflicted unimaginable damage on the global economy and our industry," commented Leslie D. Hale, President and Chief Executive Officer. "At the onset of this crisis, we took a number of steps to protect our guests and associates, and to position RLJ to financially weather this unprecedented environment. Our dedicated team of asset managers worked incredibly hard with our operating partners to suspend operations at over 50% of our portfolio, and to significantly cut expenses at hotels that remain open, thereby drastically reducing our hotel operating costs. With a focus on further bolstering liquidity, we reduced our dividend to $0.01 per share, decreased spending on a number of growth projects, and suspended share buybacks. Although difficult, these timely actions have materially reduced our cash burn, and combined with our solid balance sheet prior to entering this catastrophe, have positioned us with $1.2 billion of liquidity to sustain an extended period of uncertainty. While we cannot predict the timing or the magnitude of a recovery, we are thoughtfully working with our operators to reopen hotels as appropriate in a socially and financially responsible manner. With a flexible balance sheet, a lean operating model and an orientation towards the transient segment, which should be the first to recover, we believe that not only will we be able to effectively navigate through this crisis, but also be positioned to realize our embedded growth opportunities over the longer term."

The prefix "Pro forma" as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude any hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. Explanations of EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release.

Financial and Operating Highlights

($ in thousands, except ADR, RevPAR, and per share amounts)

(unaudited)

  

 

 

For the three months ended March 31,

 

 

2020

 

2019

 

Change

Operational Overview: (1)

 

 

 

 

 

 

Pro forma ADR

 

$176.23

 

$185.63

 

(5.1)%

Pro forma Occupancy

 

60.5%

 

76.0%

 

(20.5)%

Pro forma RevPAR

 

$106.54

 

$141.07

 

(24.5)%

 

 

 

 

 

 

 

Financial Overview:

 

 

 

 

 

 

Total Revenues

 

$265,481

 

$399,267

 

(33.5)%

Pro forma Hotel Revenue

 

$265,453

 

$340,396

 

(22.0)%

 

 

 

 

 

 

 

Net (Loss) Income

 

($30,829)

 

$28,331

 

(208.8)%

 

 

 

 

 

 

 

Pro forma Hotel EBITDA

 

$51,047

 

$102,374

 

(50.1)%

Pro forma Hotel EBITDA Margin

 

19.2%

 

30.1%

 

-1,090 bps

Adjusted EBITDA (2)

 

$41,417

 

$111,546

 

(62.9)%

 

 

 

 

 

 

 

Adjusted FFO

 

$16,870

 

$82,639

 

(79.6)%

Adjusted FFO Per Diluted Common Share and Unit

 

$0.10

 

$0.48

 

(79.2)%

Note:

(1) Pro forma statistics reflect the Company's 103 hotel portfolio as of March 31, 2020.

(2) Adjusted EBITDA for the three months ended March 31, 2019, included $17.5 million from sold hotels.

Business Update

COVID-19 Action Plan Update

In response to the significant and ongoing impact from COVID-19 to public health and the broader industry, the Company is providing an update on the wide-ranging actions it has taken at both the property and corporate-level to preserve liquidity:

  • Suspension of hotel operations: The Company has suspended operations at 57 of its hotels, where carrying costs of operating with low occupancies, exceeded the cost of suspending operations.
  • Cost containment initiatives: At the hotels remaining open, the Company’s asset managers continue to work closely with its hotel management partners to manage its hotels under aggressive operating cost containment plans. These plans include significantly reduced staffing, elimination of non-essential amenities & services, and the closure of several floors and all food & beverage outlets at properties.
  • Capital investment reduction: The Company’s 2020 capital expenditure program has been reduced by over 80%. All non-essential capital investments have been deferred. The Company will continue to make investments to protect and preserve its properties and expects to re-evaluate future capital plans when there is improved economic visibility.
  • ROI projects: The Company reviewed all 2020 ROI initiatives and suspended 90% of these projects. The Company expects to re-evaluate all ROI projects when there is improved economic visibility.
  • Common stock dividend reduction: The Company’s Board of Trustees reduced its first quarter common dividend to $0.01 per common share. The Company will continue to monitor its financial performance and the economic outlook to assess when it is appropriate to resume a regular quarterly common dividend at a level determined to be prudent based on the economic outlook.

Estimated Monthly Cash Burn Forecast

The Company estimates the average monthly cash burn across its portfolio to be approximately $25 million to $35 million (excluding capital investments) based on the following assumptions:

  • Average hotel-level monthly variable costs of approximately $5.0 million to $14.0 million, with the top end of the range assuming that all hotels are suspended through the end of 2020;
  • Average hotel fixed costs of $7.0 million, which includes property taxes and insurance;
  • Corporate-level monthly general and administrative cash expenses of $2.0 million; and
  • Corporate-level outflows of $11.0 million to $12.0 million, which includes interest and scheduled principal payment on the Company’s outstanding debt as well as both common and preferred dividends.

The actual monthly cash burn will vary based on the duration that individual hotels are suspended and the extent to which the low occupancy environment persists. If the current operating environment extends into the second half of the year, the Company will undertake additional cost-cutting measures to further reduce its monthly cash burn. Management believes that its current liquidity has positioned the Company to withstand a protracted period of limited hotel demand.

Lender Update

The Company is currently working with its lenders on an amendment of its corporate line of credit and unsecured term loans. The Company expects that this amendment will include the waiver of all financial maintenance covenants through March 31, 2021. The Company cannot provide assurances that it will complete the amendment of the credit facilities with the lenders, which is subject to the completion of the documentation and lender approval.

The Company remains in compliance with its financial covenants under its Senior Unsecured Notes.

Share Repurchases

During the first quarter, the Company repurchased 5.5 million shares of its common shares for $62.6 million at an average price per share of $11.40. The Company suspended share repurchases as broader uncertainty increased due to COVID-19.

Balance Sheet

As of March 31, 2020, the Company had $1.2 billion of unrestricted cash on its balance sheet, $200 million undrawn on its revolving credit facility, and $2.6 billion of debt outstanding.

The Company’s ratio of net debt to Adjusted EBITDA for the trailing twelve-month period ended March 31, 2020, was 3.9x.

Dividends

The Company’s Board of Trustees declared a quarterly cash dividend of $0.01 per common share of beneficial interest in the first quarter. The dividend was paid on April 15, 2020, to shareholders of record as of March 31, 2020.

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 30, 2020, to shareholders of record as of March 31, 2020.

2020 Outlook

Given the uncertainties related to the pandemic and its impact on travel, the Company in unable to provide a future outlook at this time.

Earnings Call

The Company will conduct its quarterly analyst and investor conference call on May 13, 2020, 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 online through the Investor Relations page 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 consists of 103 hotels with approximately 22,570 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.

Forward Looking Statements

The following 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, measures being taken in response to the COVID-19 pandemic, and the impact of the COVID-19 pandemic on our business, 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," 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 the Company’s actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the current global economic uncertainty and a worsening of global economic conditions or low levels of economic growth; the duration and scope of the COVID-19 pandemic and its impact on the demand for travel and on levels of consumer confidence; actions governments, businesses and individuals take in response to the pandemic, including limiting or banning travel; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, travel, and economic activity; the pace of recovery when the COVID-19 pandemic subsides; the effects of steps we and our third party management partners take to reduce operating costs; increased direct competition, changes in government regulations or accounting rules; changes in local, national and global real estate conditions; declines in the lodging industry, including as a result of the COVID-19 pandemic; seasonality of the lodging industry; risks related to natural disasters, such as earthquakes and hurricanes; hostilities, including future terrorist attacks or fear of hostilities that affect travel; the Company’s ability to obtain lines of credit or permanent financing on satisfactory terms; changes in interest rates; access to capital through offerings of the Company’s common and preferred shares of beneficial interest, or debt; the Company’s ability to identify suitable acquisitions; the Company’s ability to close on identified acquisitions and integrate those businesses; and inaccuracies of the Company’s accounting estimates. Given these uncertainties, undue reliance should not be placed on such 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 urge 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.

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 instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company believes that the presentation of FFO provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between real estate investment trusts ("REITs"), even though FFO does not represent an amount that accrues directly to common shareholders.

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

EBITDA and EBITDAre

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

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

Adjustments to FFO and EBITDA

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

  • Transaction Costs: The Company excludes transaction costs expensed during the period
  • Non-Cash Expenses: The Company excludes the effect of certain non-cash items such as the amortization of share-based compensation, non-cash income taxes, and unrealized gains and loss related to 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.

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

Pro forma adjustments: Acquired hotels

For the quarters ended March 31, 2020 and 2019, respectively, no hotels were acquired.

Pro forma adjustments: Sold hotels

For the quarters ended March 31, 2020 and 2019, respectively, pro forma adjustments included the following sold hotels:

  • Courtyard Austin Airport in June 2019
  • Courtyard Boulder Longmont in June 2019
  • Courtyard Fort Lauderdale SW Miramar in June 2019
  • Courtyard Salt Lake City Airport in June 2019
  • Fairfield Inn & Suites San Antonio Downtown Market in June 2019
  • Hampton Inn Fort Walton Beach in June 2019
  • Hampton Inn West Palm Beach Airport Central in June 2019
  • Hampton Inn & Suites Clearwater St. Petersburg Ulmerton Road in June 2019
  • Hampton Inn & Suites Denver Tech Center in June 2019
  • Hilton Garden Inn Bloomington in June 2019
  • Hilton Garden Inn Durham Raleigh Research Triangle Park in June 2019
  • Hilton Garden Inn West Palm Beach Airport in June 2019
  • Residence Inn Chicago Oak Brook in June 2019
  • Residence Inn Detroit Novi in June 2019
  • Residence Inn Fort Lauderdale Plantation in June 2019
  • Residence Inn Fort Lauderdale SW Miramar in June 2019
  • Residence Inn Longmont Boulder in June 2019
  • Residence Inn Salt Lake City Airport in June 2019
  • Residence Inn San Antonio Downtown Market Square in June 2019
  • Residence Inn Silver Spring in June 2019
  • SpringHill Suites Boulder Longmont in June 2019
  • Embassy Suites Myrtle Beach Oceanfront Resort in June 2019
  • Hilton Myrtle Beach Resort in June 2019
  • Courtyard Austin Northwest Arboretum in August 2019
  • Courtyard Boulder Louisville in August 2019
  • Courtyard Denver West Golden in August 2019
  • Courtyard Louisville Northeast in August 2019
  • Courtyard South Bend Mishawaka in August 2019
  • Hampton Inn Houston Galleria in August 2019
  • Hyatt House Austin Arboretum in August 2019
  • Hyatt House Houston Galleria in August 2019
  • Hyatt House Dallas Lincoln Park in August 2019
  • Hyatt House Dallas Uptown in August 2019
  • Residence Inn Austin Northwest Arboretum in August 2019
  • Residence Inn Austin North Parmer Lane in August 2019
  • Residence Inn Boulder Louisville in August 2019
  • Residence Inn Denver West Golden in August 2019
  • Residence Inn Louisville Northeast in August 2019
  • SpringHill Suites Austin North Parmer Lane in August 2019
  • SpringHill Suites Louisville Hurstbourne North in August 2019
  • SpringHill Suites South Bend Mishawaka in August 2019
  • Residence Inn Columbia in September 2019
  • Courtyard Austin South in November 2019
  • Fairfield Inn & Suites Austin South Airport in November 2019
  • Marriott Austin South in November 2019
  • Residence Inn Austin South in November 2019
  • SpringHill Suites Austin South in November 2019

RLJ Lodging Trust

Consolidated Balance Sheets

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

(unaudited)

  

 

 

March 31,
2020

 

December 31,
2019

Assets

 

 

 

 

Investment in hotel properties, net

 

$

4,592,016

 

 

$

4,614,966

 

Investment in unconsolidated joint ventures

 

15,820

 

 

15,171

 

Cash and cash equivalents

 

1,157,818

 

 

882,474

 

Restricted cash reserves

 

43,548

 

 

44,686

 

Hotel and other receivables, net of allowance of $339 and $251, respectively

 

22,773

 

 

39,762

 

Lease right-of-use assets

 

143,010

 

 

144,358

 

Deferred income tax asset, net

 

52,689

 

 

51,447

 

Prepaid expense and other assets

 

41,551

 

 

58,536

 

Total assets

 

$

6,069,225

 

 

$

5,851,400

 

Liabilities and Equity

 

 

 

 

Debt, net

 

$

2,594,492

 

 

$

2,195,707

 

Accounts payable and other liabilities

 

209,710

 

 

183,408

 

Advance deposits and deferred revenue

 

48,930

 

 

57,459

 

Lease liabilities

 

120,514

 

 

121,154

 

Accrued interest

 

15,027

 

 

3,024

 

Distributions payable

 

8,718

 

 

64,165

 

Total liabilities

 

2,997,391

 

 

2,624,917

 

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, 2020 and December 31, 2019

 

366,936

 

 

366,936

 

Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 164,842,781 and 169,852,246 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

1,649

 

 

1,699

 

Additional paid-in capital

 

3,067,693

 

 

3,127,982

 

Accumulated other comprehensive loss

 

(75,991

)

 

(19,514

)

Distributions in excess of net earnings

 

(311,224

)

 

(274,769

)

Total shareholders’ equity

 

3,049,063

 

 

3,202,334

 

Noncontrolling interest:

 

 

 

 

Noncontrolling interest in consolidated joint ventures

 

13,022

 

 

14,065

 

Noncontrolling interest in the Operating Partnership

 

9,749

 

 

10,084

 

Total noncontrolling interest

 

22,771

 

 

24,149

 

Total equity

 

3,071,834

 

 

3,226,483

 

Total liabilities and equity

 

$

6,069,225

 

 

$

5,851,400

 

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,

 

 

2020

 

2019

Revenues

 

 

 

 

Operating revenues

 

 

 

 

Room revenue

 

$

218,892

 

 

$

337,670

 

Food and beverage revenue

 

30,767

 

 

44,246

 

Other revenue

 

15,822

 

 

17,351

 

Total revenues

 

265,481

 

 

399,267

 

Expenses

 

 

 

 

Operating expenses

 

 

 

 

Room expense

 

63,753

 

 

84,188

 

Food and beverage expense

 

26,381

 

 

34,209

 

Management and franchise fee expense

 

17,144

 

 

34,118

 

Other operating expense

 

80,957

 

 

97,118

 

Total property operating expenses

 

188,235

 

 

249,633

 

Depreciation and amortization

 

49,173

 

 

58,403

 

Property tax, insurance and other

 

28,692

 

 

30,597

 

General and administrative

 

11,769

 

 

11,160

 

Transaction costs

 

10

 

 

559

 

Total operating expenses

 

277,879

 

 

350,352

 

Other income

 

579

 

 

274

 

Interest income

 

2,966

 

 

1,171

 

Interest expense

 

(23,813

)

 

(20,062

)

Gain on sale of hotel properties, net

 

102

 

 

 

(Loss) income before equity in income (loss) from unconsolidated joint ventures

 

(32,564

)

 

30,298

 

Equity in income (loss) from unconsolidated joint ventures

 

585

 

 

(381

)

(Loss) income before income tax benefit (expense)

 

(31,979

)

 

29,917

 

Income tax benefit (expense)

 

1,150

 

 

(1,586

)

Net (loss) income

 

(30,829

)

 

28,331

 

Net loss (income) attributable to noncontrolling interests:

 

 

 

 

Noncontrolling interest in consolidated joint ventures

 

1,313

 

 

353

 

Noncontrolling interest in the Operating Partnership

 

192

 

 

(92

)

Preferred distributions - consolidated joint venture

 

 

 

(186

)

Redemption of preferred equity - consolidated joint venture

 

 

 

(1,153

)

Net (loss) income attributable to RLJ

 

(29,324

)

 

27,253

 

Preferred dividends

 

(6,279

)

 

(6,279

)

Net (loss) income attributable to common shareholders

 

$

(35,603

)

 

$

20,974

 

Basic per common share data:

 

 

 

 

Net (loss) income per share attributable to common shareholders

 

$

(0.21

)

 

$

0.12

 

Weighted-average number of common shares

 

167,149,733

 

 

172,796,998

 

Diluted per common share data:

 

 

 

 

Net (loss) income per share attributable to common shareholders

 

$

(0.21

)

 

$

0.12

 

Weighted-average number of common shares

 

167,149,733

 

 

172,856,230

 

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,

 

 

2020

 

2019

Net (loss) income

 

$

(30,829

)

 

$

28,331

 

Preferred dividends

 

(6,279

)

 

(6,279

)

Preferred distributions - consolidated joint venture

 

 

 

(186

)

Redemption of preferred equity - consolidated joint venture

 

 

 

(1,153

)

Depreciation and amortization

 

49,173

 

 

58,403

 

Gain on sale of hotel properties, net

 

(102

)

 

 

Noncontrolling interest in consolidated joint ventures

 

1,313

 

 

353

 

Adjustments related to consolidated joint ventures (1)

 

(75

)

 

(74

)

Adjustments related to unconsolidated joint ventures (2)

 

494

 

 

694

 

FFO

 

13,695

 

 

80,089

 

Transaction costs

 

10

 

 

559

 

Amortization of share-based compensation

 

2,696

 

 

2,725

 

Non-cash income tax (benefit) expense

 

(1,242

)

 

1,281

 

Other expenses (income) (3)

 

1,711

 

 

(2,015

)

Adjusted FFO

 

$

16,870

 

 

$

82,639

 

 

 

 

 

 

Adjusted FFO per common share and unit-basic

 

$

0.10

 

 

$

0.48

 

Adjusted FFO per common share and unit-diluted

 

$

0.10

 

 

$

0.48

 

 

 

 

 

 

Basic weighted-average common shares and units outstanding (4)

 

167,922

 

 

173,570

 

Diluted weighted-average common shares and units outstanding (4)

 

167,922

 

 

173,629

 

Note:

(1)

 

Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint ventures.

(2)

 

Includes our ownership interest in the depreciation and amortization expense of the unconsolidated joint ventures.

(3)

 

Represents income and expenses outside of the normal course of operations, including debt modification costs, legal and other costs, hurricane-related costs that were not reimbursed by insurance, and unrealized gains and losses on certain discontinued cash flow hedges.

(4)

 

Includes 0.8 million weighted-average operating partnership units for the three month periods ended March 31, 2020 and 2019, respectively.

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

  

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

  

 

 

For the three months ended
March 31,

 

 

2020

 

2019

Net (loss) income

 

$

(30,829

)

 

$

28,331

 

Depreciation and amortization

 

49,173

 

 

58,403

 

Interest expense, net of interest income

 

20,847

 

 

18,891

 

Income tax (benefit) expense

 

(1,150

)

 

1,586

 

Adjustments related to unconsolidated joint ventures (1)

 

618

 

 

817

 

EBITDA

 

38,659

 

 

108,028

 

Gain on sale of hotel properties, net

 

(102

)

 

 

EBITDAre

 

38,557

 

 

108,028

 

Transaction costs

 

10

 

 

559

 

Amortization of share-based compensation

 

2,696

 

 

2,725

 

Other expenses (2)

 

154

 

 

234

 

Adjusted EBITDA

 

41,417

 

 

111,546

 

General and administrative (3)

 

9,073

 

 

8,426

 

Other corporate adjustments (4)

 

305

 

 

501

 

Consolidated Hotel EBITDA

 

50,795

 

 

120,473

 

Pro forma adjustments - income from sold hotels

 

252

 

(18,099

)

Pro forma Consolidated Hotel EBITDA

 

51,047

 

 

102,374

 

Pro forma Hotel EBITDA

 

$

51,047

 

 

$

102,374

 

Note:

(1)

 

Includes our ownership interest in the interest, depreciation and amortization expense of the unconsolidated joint ventures.

(2)

 

Represents expenses outside of the normal course of operations, including debt modification costs, legal and other costs, and hurricane-related costs that were not reimbursed by insurance.

(3)

 

Excludes amortization of share-based compensation and activist shareholder costs reflected in Adjusted EBITDA.

(4)

 

Other corporate adjustments include property-level adjustments and certain revenues and expenses at corporate entities. These items include interest income, amortization of deferred management fees, key money amortization, ground rent amortization, legal fees, revenues and expenses associated with non-hotel properties, income (loss) from unconsolidated entities, internal lease rent expense, and other items.

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

  

Pro forma Hotel EBITDA Margin

  

 

 

For the three months ended
March 31,

 

 

2020

 

2019

Total revenue

 

$

265,481

 

 

$

399,267

 

Pro forma adjustments - revenue from sold hotels

 

 

 

(58,498

)

Other corporate adjustments / non-hotel revenue

 

(28

)

 

(373

)

Pro forma Hotel Revenue

 

$

265,453

 

 

$

340,396

 

 

 

 

 

 

Pro forma Hotel EBITDA

 

$

51,047

 

 

$

102,374

 

 

 

 

 

 

Pro forma Hotel EBITDA Margin

 

19.2

%

 

30.1

%

RLJ Lodging Trust

Consolidated Debt Summary

(Amounts in thousands)

(unaudited)

 

Loan

 

Base Term
(Years)

 

Maturity
(incl.
extensions)

 

Floating / Fixed

 

Interest
Rate (1)

 

Balance as of
March 31, 2020 (2)

Secured Debt

 

 

 

 

 

 

 

 

 

 

Mortgage loan - 1 hotel

 

10

 

Jun 2022

 

Fixed

 

5.25%

 

$

30,643

 

Mortgage loan - 2 hotels

 

10

 

Oct 2022

 

Fixed

 

4.95%

 

 

55,555

 

Mortgage loan - 1 hotel

 

10

 

Oct 2022

 

Fixed

 

4.95%

 

 

31,970

 

Mortgage loan - 1 hotel

 

10

 

Oct 2022

 

Fixed

 

4.94%

 

 

28,240

 

Mortgage loan - 7 hotels

 

3

 

Apr 2024

 

Floating (3)

 

3.33%

 

 

200,000

 

Mortgage loan - 3 hotels

 

5

 

Apr 2026

 

Floating (3)

 

2.88%

 

 

96,000

 

Mortgage loan - 4 hotels

 

5

 

Apr 2026

 

Floating (3)(5)

 

3.38%

 

 

85,000

 

Weighted-Average / Secured Total

 

 

 

 

 

 

 

3.72%

 

$

527,408

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Debt

 

 

 

 

 

 

 

 

 

 

Revolver (4)

 

4

 

May 2025

 

Floating

 

2.44%

 

$

400,000

 

$150 Million Term Loan Maturing 2022

 

7

 

Jan 2022

 

Floating (3)

 

3.08%

 

 

150,000

 

$400 Million Term Loan Maturing 2023

 

5

 

Jan 2023

 

Floating (3)

 

3.78%

 

 

400,000

 

$225 Million Term Loan Maturing 2023

 

5

 

Jan 2023

 

Floating (3)

 

3.78%

 

 

225,000

 

$400 Million Term Loan Maturing 2025

 

5

 

May 2025

 

Floating (3)(5)

 

2.92%

 

 

400,000

 

Senior Unsecured Notes

 

10

 

Jun 2025

 

Fixed

 

6.00%

 

 

474,888

 

Weighted-Average / Unsecured Total

 

 

 

 

 

 

 

3.81%

 

$

2,049,888

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average / Gross Debt

 

 

 

 

 

 

 

3.79%

 

$

2,577,296

 

Note:

(1)

 

Interest rates as of March 31, 2020.

(2)

 

Excludes the impact of fair value adjustments and deferred financing costs.

(3)

 

The floating interest rate is hedged with an interest rate swap.

(4)

 

As of March 31, 2020, there was $200.0 million undrawn on the Revolver, which is charged an unused commitment fee of 0.20% annually.

(5)

 

Reflects an interest rate swap of $82.3 million on the $85.0 million loan and $399.0 million on the $400.0 million term loan.

...

RLJ Lodging Trust

Pro forma Operating Statistics - Top 60 Assets

(unaudited)

 

Property

 

City/State

 

# of Rooms

 

Pro forma Consolidated
Hotel EBITDA

Marriott Louisville Downtown

 

Louisville, KY

 

620

 

$16,074

The Knickerbocker New York

 

New York, NY

 

330

 

10,713

Wyndham San Diego Bayside

 

San Diego, CA

 

600

 

10,084

San Francisco Marriott Union Square

 

San Francisco, CA

 

401

 

10,072

The Mills House Wyndham Grand Hotel

 

Charleston, SC

 

216

 

9,710

Wyndham Boston Beacon Hill

 

Boston, MA

 

304

 

9,560

Courtyard Austin Downtown Convention Center

 

Austin, TX

 

270

 

8,125

Wyndham New Orleans - French Quarter

 

New Orleans, LA

 

374

 

7,859

Embassy Suites San Francisco Airport - Waterfront

 

Burlingame, CA

 

340

 

7,785

DoubleTree Grand Key Resort

 

Key West, FL

 

216

 

7,462

Embassy Suites Los Angeles - International Airport South

 

El Segundo, CA

 

349

 

7,449

Embassy Suites Fort Lauderdale 17th Street

 

Fort Lauderdale, FL

 

361

 

6,927

Wyndham Philadelphia Historic District

 

Philadelphia, PA

 

364

 

6,851

Courtyard Waikiki Beach

 

Honolulu, HI

 

403

 

6,629

Courtyard Portland City Center

 

Portland, OR

 

256

 

6,605

Embassy Suites Mandalay Beach - Hotel & Resort

 

Oxnard, CA

 

250