RLJ Lodging Trust Reports Third Quarter 2022 Results

- Completed transformative conversions and rebrandings at Charleston and Mandalay Beach
- Addressed all 2023 maturities
- Acquired one hotel in Nashville
- Active share buy backs

BETHESDA, Md.--()--RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the three and nine months ended September 30, 2022.

Highlights

  • Pro forma RevPAR of $137.09 for Q3, representing 94.5% of 2019 levels, an improvement from Q2 2022 RevPAR as percentage of 2019
  • Total revenue of $318.1 million
  • Net income attributable to common shareholders of $11.3 million
  • Net income per basic and diluted share attributable to common shareholders of $0.07
  • Pro forma Hotel EBITDA of $100.0 million
  • Adjusted EBITDA of $92.0 million
  • Adjusted FFO per basic and diluted common share and unit of $0.40
  • Repurchased approximately 0.7 million common shares for $7.1 million, during fourth quarter
  • Completed two 2022 hotel conversions
  • Increased quarterly cash dividend to $0.05 per common share

“Our third quarter results exceeded our expectations, led by strong group production, continued recovery in business transient and leisure remaining strong while returning to normal seasonality. We saw a step up in trends post-Labor Day, especially in our Urban markets which led our RevPAR in September to achieve a new high relative to 2019 and we are pleased to see this positive momentum carry through October,” commented Leslie D. Hale, President and Chief Executive Officer. “We are especially thrilled this quarter to reintroduce the iconic Mills House Hotel in Charleston and launch the new beachfront Zachari Dunes at Mandalay Beach, both of which joined the Curio Collection by Hilton following transformative conversions, and are already outperforming our expectations. Additionally, we remained very active on the capital allocation front and executed on multiple initiatives including further strengthening our balance sheet by addressing our near term debt maturities, continuing to take advantage of the optionality our balance sheet provides to repurchase our shares accretively and raising our dividend, all of which positions us to drive growth and shareholder value.”

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 September 30,

 

For the nine months ended September 30,

 

2022

2021

 

2022

2021

Operational Overview: (1)

 

 

 

 

 

Pro forma ADR

$188.54

$160.89

 

$187.56

$144.02

Pro forma Occupancy

72.7%

64.2%

 

69.5%

56.0%

Pro forma RevPAR

$137.09

$103.22

 

$130.41

$80.68

 

 

 

 

 

 

Financial Overview:

 

 

 

 

 

Total Revenues

$318,071

$233,769

 

$891,471

$547,575

Pro forma Hotel Revenue

$318,673

$235,934

 

$894,675

$546,537

 

 

 

 

 

 

Net Income (Loss)

$17,683

($151,818)

 

$35,415

($283,157)

 

 

 

 

 

 

Pro forma Hotel EBITDA (2)

$100,020

$71,333

 

$282,423

$137,892

Pro forma Hotel EBITDA Margin

31.4%

30.2%

 

31.6%

25.2%

Adjusted EBITDA

$91,952

$60,130

 

$257,522

$107,280

 

 

 

 

 

 

Adjusted FFO

$63,994

$27,345

 

$168,288

$8,873

Adjusted FFO Per Basic and Diluted Common Share and Unit

$0.40

$0.17

 

$1.03

$0.05

Note:

(1) Pro forma statistics reflect the Company's 96 hotel portfolio owned as of September 30, 2022.

(2) Pro forma Hotel EBITDA for the three months ended September 30, 2022 and 2021 excludes $0.2 million net income and $1.3 million net loss, respectively, from sold hotels. Pro forma Hotel EBITDA for the nine months ended September 30, 2022 and 2021 excludes $0.5 million net income and $5.8 million net loss, respectively, from sold hotels. Pro forma Hotel EBITDA for the three months ended September 30, 2022 and 2021 includes $0.1 million net loss and $2.6 million net income, respectively, from acquired hotels. Pro forma Hotel EBITDA for the nine months ended September 30, 2022 and 2021 includes $0.5 million net income and $2.4 million net income, respectively, from acquired hotels.

Operational Update

Lodging fundamentals continued their positive momentum during the third quarter. The Company’s RevPAR in September achieved 98% of 2019, a new high since the pandemic, benefiting from significant improvement in group, ramping business transient which experienced a step-up post Labor Day, and continued strength in leisure. These positive trends were most impactful in the Company’s Urban markets which achieved rate premiums to the comparable period of 2019 on strong pricing power during both weekdays and weekends. These improving trends led the Company to achieve pro forma RevPAR of $137.09 and pro forma Hotel EBITDA of $100 million during the third quarter, which represented approximately 94% and 91% of 2019 levels respectively, with RevPAR recovery to 2019 achieving the highest level of the pandemic.

Conversions

In early October, the Company launched two hotel conversions, The Mills House Hotel, a Curio Collection Hotel by Hilton in Charleston, South Carolina; and Zachari Dunes on Mandalay Beach, a Curio Collection Hotel by Hilton in Oxnard, California. The conversions are anticipated to outperform the Company's original underwriting. These conversions demonstrate the ability of the Company to unlock significant embedded value in the portfolio.

Share Repurchases

Since the beginning of October, the Company has repurchased approximately 0.7 million common shares for $7.1 million, at an average price per share of $10.62. Year to date, the Company has repurchased 4.9 million shares for $57.1 million, at an average price per share of $11.75. The Company's share buyback program currently has approximately $193.0 million of remaining capacity.

Balance Sheet

As of September 30, 2022, the Company had approximately $1.1 billion of total liquidity, comprising approximately $488.1 million of unrestricted cash and $600.0 million available under its revolving credit facility ("Revolver"), and $2.2 billion of debt outstanding.

In October 2022, the Company exercised its option to extend the maturities of approximately $225.0 million of term loans to 2024. Additionally in November 2022, the Company entered into a $200.0 million term loan maturing in January 2028, inclusive of extension options. The proceeds will be used to repay $100.0 million term loan and $94.0 million of 2023 maturing term loans. The $200.0 million term loan will be funded in two tranches, $105.0 million which was funded at closing and $95.0 million to be funded through a delayed draw in early 2023.

Dividends

The Company’s Board of Trustees declared a quarterly cash dividend of $0.05 per common share of beneficial interest of the Company in the third quarter. The dividend was paid on October 17, 2022 to shareholders of record as of September 30, 2022.

The Company's Board of Trustees declared a quarterly cash dividend of $0.4875 on the Company’s Series A Preferred Shares in the third quarter. The dividend was paid on October 31, 2022 to shareholders of record as of September 30, 2022.

2022 Outlook

Given continued uncertainties the Company is unable to provide a future outlook at this time.

Earnings Call

The Company will conduct its quarterly analyst and investor conference call on November 3, 2022 at 12:00 p.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 third 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 pro forma 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, Section27A 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 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 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 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
  • 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 taxes, and non-cash 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.

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. The following is a summary of pro forma hotel adjustments:

Pro forma adjustments: Acquired hotels

For the three and nine months ended September 30, 2022 and 2021, pro forma adjustments included the following acquired hotels:

  • Hampton Inn & Suites Atlanta Midtown acquired in August 2021
  • AC Hotel Boston Downtown acquired in October 2021
  • Moxy Denver Cherry Creek acquired in December 2021
  • 21c Hotel Nashville acquired in July 2022

Pro forma adjustments: Sold hotels

For the three and nine months ended September 30, 2022 and 2021, pro forma adjustments included the following sold hotels:

  • Courtyard Houston Sugarland sold in January 2021
  • Residence Inn Chicago Naperville sold in May 2021
  • Residence Inn Indianapolis Fishers sold in May 2021
  • Fairfield Inn & Suites Chicago Southeast Hammond sold in July 2021
  • Residence Inn Chicago Southeast Hammond sold in August 2021
  • Courtyard Chicago Southeast Hammond sold in August 2021
  • Embassy Suites Secaucus-Meadowlands ground lease expired in October 2021
  • DoubleTree Hotel Metropolitan New York City sold in December 2021
  • 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)

 

 

September 30, 2022

 

December 31, 2021

Assets

 

 

 

Investment in hotel properties, net

$

4,171,428

 

 

$

4,219,116

 

Investment in unconsolidated joint ventures

 

6,777

 

 

 

6,522

 

Cash and cash equivalents

 

488,146

 

 

 

665,341

 

Restricted cash reserves

 

51,504

 

 

 

48,528

 

Hotel and other receivables, net of allowance of $302 and $274, respectively

 

42,393

 

 

 

31,091

 

Lease right-of-use assets

 

138,335

 

 

 

144,988

 

Prepaid expense and other assets

 

68,190

 

 

 

33,390

 

Total assets

$

4,966,773

 

 

$

5,148,976

 

Liabilities and Equity

 

 

 

Debt, net

$

2,212,752

 

 

$

2,409,438

 

Accounts payable and other liabilities

 

150,946

 

 

 

155,136

 

Advance deposits and deferred revenue

 

21,987

 

 

 

20,047

 

Lease liabilities

 

117,810

 

 

 

123,031

 

Accrued interest

 

9,492

 

 

 

19,110

 

Distributions payable

 

14,596

 

 

 

8,347

 

Total liabilities

 

2,527,583

 

 

 

2,735,109

 

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 September 30, 2022 and December 31, 2021

 

366,936

 

 

 

366,936

 

Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 162,726,642 and 166,503,062 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

1,627

 

 

 

1,665

 

Additional paid-in capital

 

3,056,603

 

 

 

3,092,883

 

Distributions in excess of net earnings

 

(1,041,610

)

 

 

(1,046,739

)

Accumulated other comprehensive income (loss)

 

41,805

 

 

 

(17,113

)

Total shareholders’ equity

 

2,425,361

 

 

 

2,397,632

 

Noncontrolling interests:

 

 

 

Noncontrolling interest in the Operating Partnership

 

6,341

 

 

 

6,316

 

Noncontrolling interest in consolidated joint ventures

 

7,488

 

 

 

9,919

 

Total noncontrolling interest

 

13,829

 

 

 

16,235

 

Total equity

 

2,439,190

 

 

 

2,413,867

 

Total liabilities and equity

$

4,966,773

 

 

$

5,148,976

 

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 September 30,

 

For the nine months ended September 30,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

Operating revenues

 

 

 

 

 

 

 

Room revenue

$

267,363

 

 

$

200,051

 

 

$

753,818

 

 

$

469,377

 

Food and beverage revenue

 

30,600

 

 

 

17,013

 

 

 

82,655

 

 

 

36,238

 

Other revenue

 

20,108

 

 

 

16,705

 

 

 

54,998

 

 

 

41,960

 

Total revenues

 

318,071

 

 

 

233,769

 

 

 

891,471

 

 

 

547,575

 

Expenses

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Room expense

 

68,394

 

 

 

51,951

 

 

 

188,015

 

 

 

124,276

 

Food and beverage expense

 

23,375

 

 

 

12,576

 

 

 

61,314

 

 

 

25,841

 

Management and franchise fee expense

 

25,390

 

 

 

16,225

 

 

 

71,846

 

 

 

34,216

 

Other operating expenses

 

82,021

 

 

 

67,599

 

 

 

227,563

 

 

 

173,602

 

Total property operating expenses

 

199,180

 

 

 

148,351

 

 

 

548,738

 

 

 

357,935

 

Depreciation and amortization

 

46,559

 

 

 

47,065

 

 

 

140,346

 

 

 

140,923

 

Impairment losses

 

 

 

 

138,899

 

 

 

 

 

 

144,845

 

Property tax, insurance and other

 

20,744

 

 

 

21,290

 

 

 

66,206

 

 

 

65,419

 

General and administrative

 

13,446

 

 

 

12,630

 

 

 

40,928

 

 

 

35,564

 

Transaction costs

 

(773

)

 

 

(154

)

 

 

(575

)

 

 

101

 

Total operating expenses

 

279,156

 

 

 

368,081

 

 

 

795,643

 

 

 

744,787

 

Other income (expense), net

 

710

 

 

 

676

 

 

 

8,716

 

 

 

(8,579

)

Interest income

 

1,281

 

 

 

222

 

 

 

1,800

 

 

 

826

 

Interest expense

 

(22,625

)

 

 

(26,933

)

 

 

(71,041

)

 

 

(81,194

)

(Loss) gain on sale of hotel properties, net

 

(57

)

 

 

1,947

 

 

 

996

 

 

 

3,133

 

Gain on extinguishment of indebtedness, net

 

 

 

 

7,100

 

 

 

 

 

 

893

 

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

 

18,224

 

 

 

(151,300

)

 

 

36,299

 

 

 

(282,133

)

Equity in (loss) income from unconsolidated joint ventures

 

(150

)

 

 

(232

)

 

 

255

 

 

 

(470

)

Income (loss) before income tax expense

 

18,074

 

 

 

(151,532

)

 

 

36,554

 

 

 

(282,603

)

Income tax expense

 

(391

)

 

 

(286

)

 

 

(1,139

)

 

 

(554

)

Net income (loss)

 

17,683

 

 

 

(151,818

)

 

 

35,415

 

 

 

(283,157

)

Net (income) loss attributable to noncontrolling interests:

 

 

 

 

 

 

 

Noncontrolling interest in the Operating Partnership

 

(53

)

 

 

727

 

 

 

(74

)

 

 

1,391

 

Noncontrolling interest in consolidated joint ventures

 

(36

)

 

 

3,084

 

 

 

(29

)

 

 

4,326

 

Net income (loss) attributable to RLJ

 

17,594

 

 

 

(148,007

)

 

 

35,312

 

 

 

(277,440

)

Preferred dividends

 

(6,279

)

 

 

(6,279

)

 

 

(18,836

)

 

 

(18,836

)

Net income (loss) attributable to common shareholders

$

11,315

 

 

$

(154,286

)

 

$

16,476

 

 

$

(296,276

)

Basic per common share data:

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders - basic

$

0.07

 

 

$

(0.94

)

 

$

0.10

 

 

$

(1.81

)

Weighted-average number of common shares

 

160,368,297

 

 

 

164,068,011

 

 

 

162,681,840

 

 

 

163,964,227

 

Diluted per common share data:

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders - diluted

$

0.07

 

 

$

(0.94

)

 

$

0.10

 

 

$

(1.81

)

Weighted-average number of common shares

 

160,784,709

 

 

 

164,068,011

 

 

 

163,064,462

 

 

 

163,964,227

 

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 September 30,

 

For the nine months ended September 30,

 

2022

 

2021

 

2022

 

2021

Net income (loss)

$

17,683

 

 

$

(151,818

)

 

$

35,415

 

 

$

(283,157

)

Preferred dividends

 

(6,279

)

 

 

(6,279

)

 

 

(18,836

)

 

 

(18,836

)

Depreciation and amortization

 

46,559

 

 

 

47,065

 

 

 

140,346

 

 

 

140,923

 

Loss (gain) on sale of hotel properties, net

 

57

 

 

 

(1,947

)

 

 

(996

)

 

 

(3,133

)

Impairment losses

 

 

 

 

138,899

 

 

 

 

 

 

144,845

 

Noncontrolling interest in consolidated joint ventures

 

(36

)

 

 

3,084

 

 

 

(29

)

 

 

4,326

 

Adjustments related to consolidated joint ventures (1)

 

(47

)

 

 

(2,476

)

 

 

(144

)

 

 

(2,626

)

Adjustments related to unconsolidated joint ventures (2)

 

241

 

 

 

291

 

 

 

831

 

 

 

876

 

FFO

 

58,178

 

 

 

26,819

 

 

 

156,587

 

 

 

(16,782

)

Transaction costs

 

(773

)

 

 

(154

)

 

 

(575

)

 

 

101

 

Gain on extinguishment of indebtedness, net

 

 

 

 

(7,100

)

 

 

 

 

 

(893

)

Amortization of share-based compensation

 

5,420

 

 

 

5,165

 

 

 

16,074

 

 

 

12,765

 

Non-cash income tax expense

 

 

 

 

 

 

 

 

 

 

 

Corporate and property-level severance (3)

 

 

 

 

904

 

 

 

 

 

 

904

 

Derivative (gains) losses in accumulated other comprehensive income (loss) reclassified to earnings (4)

 

 

 

 

 

 

 

(5,866

)

 

 

10,658

 

Other expenses (5)

 

1,169

 

 

 

1,711

 

 

 

2,068

 

 

 

2,120

 

Adjusted FFO

$

63,994

 

 

$

27,345

 

 

$

168,288

 

 

$

8,873

 

 

 

 

 

 

 

 

 

Adjusted FFO per common share and unit-basic

$

0.40

 

 

$

0.17

 

 

$

1.03

 

 

$

0.05

 

Adjusted FFO per common share and unit-diluted

$

0.40

 

 

$

0.17

 

 

$

1.03

 

 

$

0.05

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares and units outstanding (6)

 

161,140

 

 

 

164,840

 

 

 

163,454

 

 

 

164,736

 

Diluted weighted-average common shares and units outstanding (6)

 

161,557

 

 

 

165,183

 

 

 

163,836

 

 

 

165,014

 

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) Severance for the three and nine months ended September 30, 2021 includes severance for associates at hotels operating under collective bargaining agreements.

(4) Reclassification of interest rate swap (gains) losses from accumulated other comprehensive income (loss) to earnings for discontinued interest rate hedges.

(5) Represents expenses and income outside of the normal course of operations, including $0.3 million and $0.5 million of non-cash interest expense related to discontinued interest rate hedges, and $0.9 million and $1.5 million of pre-opening costs during the three and nine months ended September 30, 2022, respectively. Other expenses for the three and nine months ended September 30, 2021 included hurricane costs not covered by insurance of $1.5 million.

(6) Includes 0.8 million weighted-average operating partnership units for the three and nine month periods ended September 30, 2022 and 2021.

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 September 30,

 

For the nine months ended September 30,

 

2022

 

2021

 

2022

 

2021

Net income (loss)

$

17,683

 

 

$

(151,818

)

 

$

35,415

 

 

$

(283,157

)

Depreciation and amortization

 

46,559

 

 

 

47,065

 

 

 

140,346

 

 

 

140,923

 

Interest expense, net of interest income

 

21,344

 

 

 

26,711

 

 

 

69,241

 

 

 

80,368

 

Income tax expense

 

391

 

 

 

286

 

 

 

1,139

 

 

 

554

 

Adjustments related to unconsolidated joint ventures (1)

 

354

 

 

 

408

 

 

 

1,169

 

 

 

1,225

 

EBITDA

 

86,331

 

 

 

(77,348

)

 

 

247,310

 

 

 

(60,087

)

Loss (gain) on sale of hotel properties, net

 

57

 

 

 

(1,947

)

 

 

(996

)

 

 

(3,133

)

Impairment losses

 

 

 

 

138,899

 

 

 

 

 

 

144,845

 

EBITDAre

 

86,388

 

 

 

59,604

 

 

 

246,314

 

 

 

81,625

 

Transaction costs

 

(773

)

 

 

(154

)

 

 

(575

)

 

 

101

 

Gain on extinguishment of indebtedness, net

 

 

 

 

(7,100

)

 

 

 

 

 

(893

)

Amortization of share-based compensation

 

5,420

 

 

 

5,165

 

 

 

16,074

 

 

 

12,765

 

Corporate and property-level severance (2)

 

 

 

 

904

 

 

 

 

 

 

904

 

Derivative gains (losses) in accumulated other comprehensive income (loss) reclassified to earnings (3)

 

 

 

 

 

 

 

(5,866

)

 

 

10,658

 

Other expenses (4)

 

917

 

 

 

1,711

 

 

 

1,575

 

 

 

2,120

 

Adjusted EBITDA

 

91,952

 

 

 

60,130

 

 

 

257,522

 

 

 

107,280

 

General and administrative

 

8,026

 

 

 

7,465

 

 

 

24,854

 

 

 

22,799

 

Other corporate adjustments

 

358

 

 

 

(111

)

 

 

(1

)

 

 

(417

)

Consolidated Hotel EBITDA

 

100,336

 

 

 

67,484

 

 

 

282,375

 

 

 

129,662

 

Pro forma adjustments - (income) loss from sold hotels

 

(213

)

 

 

1,252

 

 

 

(510

)

 

 

5,843

 

Pro forma adjustments - income from acquired hotels

 

(103

)

 

 

2,597

 

 

 

558

 

 

 

2,387

 

Pro forma Hotel EBITDA

$

100,020

 

 

$

71,333

 

 

$

282,423

 

 

$

137,892

 

Note: Pro forma statistics reflect the Company's 96 hotel portfolio owned as of September 30, 2022.

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

(2) Severance for the three and nine months ended September 30, 2021 includes severance for associates at hotels operating under collective bargaining agreements.

(3) Reclassification of interest rate swap (gains) losses from accumulated other comprehensive income (loss) to earnings for discontinued interest rate hedges.

(4) Represents expenses and income outside of the normal course of operations, including $0.9 million and $1.5 million of pre-opening costs during the three and nine months ended September 30, 2022, respectively. Other expenses for the three and nine months ended September 30, 2021 includes hurricane costs not covered by insurance of $1.5 million.

RLJ Lodging Trust

Reconciliation of Non-GAAP Measures

(Amounts in thousands)

(unaudited)

Pro forma Hotel EBITDA Margin

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

 

2022

 

2021

 

2022

 

2021

Total revenue

$

318,071

 

 

$

233,769

 

 

$

891,471

 

 

$

547,575

 

Pro forma adjustments - revenue from sold hotels

 

 

 

 

(6,377

)

 

 

(2,337

)

 

 

(17,522

)

Pro forma adjustments - revenue from prior ownership of acquired hotels

 

614

 

 

 

8,553

 

 

 

5,585

 

 

 

16,533

 

Other corporate adjustments / non-hotel revenue

 

(12

)

 

 

(11

)

 

 

(44

)

 

 

(49

)

Pro forma Hotel Revenue

$

318,673

 

 

$

235,934

 

 

$

894,675

 

 

$

546,537

 

 

 

 

 

 

 

 

 

Pro forma Hotel EBITDA

$

100,020

 

 

$

71,333

 

 

$

282,423

 

 

$

137,892

 

 

 

 

 

 

 

 

 

Pro forma Hotel EBITDA Margin

 

31.4

%

 

 

30.2

%

 

 

31.6

%

 

 

25.2

%

Note: Pro forma statistics reflect the Company's 96 hotel portfolio owned as of September 30, 2022.

RLJ Lodging Trust

Consolidated Debt Summary

(Amounts in thousands)

(unaudited)

 

Loan

Base Term
(Years)

Maturity
(incl. extensions)

Floating / Fixed (1)

Interest Rate (2)

 

Balance as of
September 30, 2022 (3)

Mortgage Debt

 

 

 

 

 

 

Mortgage loan - 1 hotel

10

Jan 2029

Fixed

5.06%

 

$

25,000

Mortgage loan - 7 hotels

3

Apr 2024

Floating

3.30%

 

 

200,000

Mortgage loan - 3 hotels

5

Apr 2026

Floating

2.53%

 

 

96,000

Mortgage loan - 4 hotels

5

Apr 2026

Floating

3.43%

 

 

85,000

Weighted Average / Mortgage Total

 

 

 

3.25%

 

$

406,000

 

 

 

 

 

 

 

Corporate Debt

 

 

 

 

 

 

Revolver (4)

4

May 2025

Floating

4.59%

 

$

$150 Million Term Loan Maturing 2024 (5)

2

Jun 2024

Floating

2.63%

 

 

100,000

$400 Million Term Loan Maturing 2023

5

Jan 2023

Floating

3.74%

 

 

52,261

$400 Million Term Loan Maturing 2024 (6)

5

Jan 2024

Floating

3.74%

 

 

151,683

$225 Million Term Loan Maturing 2023

5

Jan 2023

Floating

3.74%

 

 

41,745

$225 Million Term Loan Maturing 2024 (7)

5

Jan 2024

Floating

3.08%

 

 

72,973

$400 Million Term Loan Maturing 2025 (8)

5

May 2025

Floating

3.12%

 

 

400,000

$500 Million Senior Notes due 2026

5

Jul 2026

Fixed

3.75%

 

 

500,000

$500 Million Senior Notes due 2029

8

Sep 2029

Fixed

4.00%

 

 

500,000

Weighted Average / Corporate Total

 

 

 

3.59%

 

$

1,818,662

 

 

 

 

 

 

 

Weighted Average / Total

 

 

 

3.53%

 

$

2,224,662

 

Note:

(1) The floating interest rate is hedged with an interest rate swap.

(2) Interest rates as of September 30, 2022.

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

(4) As of September 30, 2022, there was $600.0 million of borrowing capacity on the Revolver, which is charged an unused commitment fee of 0.25% annually.

(5) The Company has the option to extend the maturity one additional year to June 2024.

(6) This term loan includes a one-year extension option for approximately $151.7 million of the principal balance, which was exercised in October 2022.

(7) This term loan includes a one-year extension option for approximately $73.0 million of the principal balance, which was exercised in October 2022.

(8) Reflects an interest rate swap of $375.4 million on the $400.0 million term loan.

 

Contacts

Sean M. Mahoney, Executive Vice President and Chief Financial Officer – (301) 280-7774

Contacts

Sean M. Mahoney, Executive Vice President and Chief Financial Officer – (301) 280-7774