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DiamondRock Hospitality Company Reports Fourth Quarter And Full Year 2013 Results

Introduces 2014 Outlook with RevPAR Growth of 9% to 11%

BETHESDA, Md., Feb. 25, 2014 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 26 premium hotels in the United States, today announced results of operations for the fourth quarter and full year ended December 31, 2013.  The Company also announced a 21% increase to its quarterly dividend commencing with the first quarter 2014.

2013 Operating Results        

  • RevPAR: RevPAR was $138.11, an increase of 1.4% from 2012.  Excluding the New York City hotels under renovation during 2013, the Company's RevPAR increased 5.3% from 2012.
  • Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 25.80%, a decrease of 143 basis points from 2012. Excluding the New York City hotels under renovation during 2013, the Company's Hotel Adjusted EBITDA margin increased 45 basis points from 2012.
  • Adjusted EBITDA: Adjusted EBITDA was $196.9 million.
  • Adjusted FFO: Adjusted FFO was $139.3 million and Adjusted FFO per diluted share was $0.71.
  • Dividends: The Company declared four quarterly dividends totaling $0.34 per share during 2013 and returned approximately $65 million to shareholders.

Fourth Quarter 2013 Highlights

  • RevPAR: RevPAR was $139.98, an increase of 3.3% from 2012.
  • Hotel Adjusted EBITDA Margin: Hotel Adjusted EBITDA margin was 25.81%, a decrease of 188 basis points from 2012.
  • Adjusted EBITDA: Adjusted EBITDA was $49.3 million.
  • Adjusted FFO: Adjusted FFO was $33.5 million and Adjusted FFO per diluted share was $0.17.
  • Lexington Hotel Renovation: The Company completed its comprehensive renovation of the Lexington Hotel New York City during the fourth quarter. The feedback from guests and meeting planners post-renovation has been very favorable.
  • Non-Core Hotel Disposition: The Company sold the 487-room Torrance Marriott South Bay for proceeds of approximately $76 million, which represented a 5.8% cap rate on the hotel's net operating income.
  • Salt Lake City Refinancing: The Company entered into a new $63 million mortgage loan secured by the Salt Lake City Marriott. The loan has a term of seven years and bears interest at a fixed rate of 4.25%.
  • Dividends: The Company declared a quarterly dividend of $0.085 per share during the fourth quarter.

Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company, stated, "In 2013 we focused on repositioning DiamondRock for meaningful growth in 2014 and beyond. We are pleased to announce that we have substantially completed our $140 million capital program, which included a number of transformational projects such as the comprehensive renovation and rebranding of the Lexington Hotel. Importantly, we don't expect any meaningful renovation disruption in 2014. Our successful strategic initiatives in 2013 have positioned the Company for a strong 2014, as we look for performance to be bolstered by accelerated RevPAR growth, strong group pace, renovation tailwinds and our intensified asset management efforts."

Operating Results     

Please see "Certain Definitions" and "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDA," "Adjusted EBITDA," "Hotel Adjusted EBITDA Margin," "FFO" and "Adjusted FFO."

For the quarter ended December 31, 2013 (92 days), the Company reported the following:


Fourth Quarter



2013


2012 Pro Forma2

Change

ADR 1

$194.12


$187.04

3.8%

Occupancy 1

72.1%


72.4%

(0.3) percentage points

RevPAR 1

$139.98


$135.50

3.3%

Total Revenue 1

$201.5 million


$190.8 million

5.6%

Hotel Adjusted EBITDA Margin 1

25.81%


27.69%

(188) basis points

Adjusted EBITDA

$49.3 million




Adjusted FFO

$33.5 million




Adjusted FFO per diluted share

$0.17









1 Excludes the Torrance Marriott South Bay, which was sold in November 2013 and reported in discontinued operations.

2 Pro forma to (a) include the operating results of the Company's Marriott-managed hotels from October 6, 2012 to December 31, 2012 (87 days) and all other hotels from October 1, 2012 to December 31, 2012, (b) assume the hotels acquired in 2012 were owned as of January 1, 2012 and (c) exclude the results of hotels sold.

The year-over-year comparability of the Company's fourth quarter results is impacted by the change in its reporting calendar.  For the Company's Marriott-managed hotels, the 2013 fourth quarter includes 5 more days than the pro forma 2012 fourth quarter, which results in the 2013 fourth quarter including approximately 3% additional available room nights as compared to the pro forma 2012 fourth quarter.

For the year ended December 31, 2013, the Company reported the following:


Year Ended December 31,



2013


2012 Pro Forma2

Change

ADR 1

$183.85


$178.50

3.0%

Occupancy 1

75.1%


76.3%

(1.2) percentage points

RevPAR 1

$138.11


$136.27

1.4%

Total Revenue 1

$799.7 million


$779.5 million

2.6%

Hotel Adjusted EBITDA Margin 1

25.80%


27.23%

(143) basis points

Adjusted EBITDA

$196.9 million




Adjusted FFO

$139.3 million




Adjusted FFO per diluted share

$0.71









1 Excludes the Torrance Marriott South Bay, which was sold in November 2013 and reported in discontinued operations.

2 Pro forma to assume the hotels acquired in 2012 were owned as of January 1, 2012 and exclude the results of hotels sold.

The Company's operating results for the year ended December 31, 2013 were significantly impacted by the displacement of over 86,000 room nights at its three New York City hotels under renovation, the Lexington Hotel, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue. The renovations of the two Courtyards were completed during the second quarter of 2013 and the renovation of the Lexington Hotel was completed in October 2013.  The following are selected operating results for the Company excluding these three hotels:


Year Ended December 31,



2013


2012 Pro Forma2

Change

ADR 1

$176.37


$170.43

3.5%

Occupancy 1

75.7%


74.4%

1.3 percentage points

RevPAR 1

$133.56


$126.79

5.3%

Total Revenue 1

$718.0 million


$680.6 million

5.5%

Hotel Adjusted EBITDA 1

$191.0 million


$177.9 million

7.3%

Hotel Adjusted EBITDA Margin 1

26.60%


26.15%

45 basis points






1 Excludes the Torrance Marriott South Bay, which was sold in November 2013 and reported in discontinued operations.

2 Pro forma to assume the hotels acquired in 2012 were owned as of January 1, 2012 and exclude the results of hotels sold.

Capital Expenditures

The Company has substantially completed its $140 million capital improvement program. During the year ended December 31, 2013, the Company spent approximately $107.3 million on these capital improvements. The following is an update on the most significant capital projects.

  • Lexington Hotel New York: The Company completed its comprehensive renovation of the Lexington Hotel in October 2013. The hotel joined Marriott's Autograph Collection during August 2013 and has increased average daily rates by approximately $40 from the comparable period in 2012.
  • Manhattan Courtyards:  The Company completed the renovation of the guest rooms, corridors and guest bathrooms at the Courtyard Manhattan/Midtown East and Courtyard Manhattan/Fifth Avenue.  The renovation at the Courtyard Midtown East included the addition of 5 new guest rooms.
  • Westin Washington D.C.:  A comprehensive $17 million renovation commenced in October 2013 and was substantially completed in February 2014.
  • Westin San Diego: A comprehensive $14.5 million renovation commenced in October 2013 and was substantially completed in January 2014.
  • Hilton Minneapolis: A $13 million renovation of the guest rooms, guest bathrooms and corridors commenced in November 2013 and will be substantially complete during the first quarter of 2014.
  • Hilton Boston: A $7 million renovation of the guest rooms, corridors, public areas, and meeting space commenced in October 2013 and was substantially completed at the end of 2013.
  • Hilton Burlington:  A $6 million renovation of the lobby, corridors, guest rooms and outdoor space commenced in November 2013 and was substantially completed in February 2014.

The Company expects to spend approximately $95 million on capital improvements at its hotels in 2014, of which approximately $45 million relates to the completion of 2013 capital projects in early 2014 and approximately $50 million relates to new 2014 capital projects.

Salt Lake City Marriott Refinancing

The Company entered into a new $63 million mortgage loan secured by the Salt Lake City Marriott in October 2013. The new loan has a term of seven years and bears interest at a fixed rate of 4.25%. As part of the refinancing, the Company prepaid the $27.3 million mortgage loan previously secured by the hotel, which had a fixed interest rate of 5.5 % and a maturity date of January 2015. The cost of prepaying the loan through defeasance was approximately $1.5 million, which is added back to Adjusted EBITDA and Adjusted FFO. The Company used the proceeds from the new loan to repay the prior loan and to create additional investment capacity for the acquisition of the Hilton Garden Inn Times Square Central.

Sale of Torrance Marriott South Bay

On November 21, 2013, the Company sold the 487-room Torrance Marriott South Bay for approximately $76 million, which included credit for the hotel's replacement reserve. The proceeds from the sale will be used to create investment capacity for the acquisition of the Hilton Garden Inn Times Square Central.  The Torrance Marriott South Bay generated $5.4 million of Hotel Adjusted EBITDA during the year ended December 31, 2013.

Balance Sheet

As of December 31, 2013, the Company had $144.6 million of unrestricted cash on hand and approximately $1.1 billion of total debt, which consists solely of property-specific mortgage debt.  The Company has no outstanding borrowings on its $200 million senior unsecured credit facility.

Dividends

The Company's Board of Directors declared a quarterly dividend of $0.085 per share to stockholders of record as of December 31, 2013.  The dividend was paid on January 10, 2014.  The Company increased its quarterly dividend for 2014 by 21% and its Board of Directors declared a dividend of $0.1025 per share for stockholders of record as of March 31, 2014.

Outlook and Guidance

The Company is providing annual guidance for 2014, but does not undertake to update it for any developments in its business.  Achievement of the anticipated results is subject to the risks disclosed in the Company's filings with the U.S. Securities and Exchange Commission.  The Company's outlook assumes the Hilton Garden Inn Times Square Central opens in August 2014.  The 2014 Pro Forma RevPAR growth excludes the Hilton Garden Inn Times Square Central, which is expected to positively impact the Company's RevPAR by approximately 75 basis points.

Based on the above assumptions, the Company expects its full year 2014 results to be as follows:

Metric

Low End

High End

Pro Forma RevPAR Growth

9 percent

11 percent




Adjusted EBITDA

$230 million

$240 million




Adjusted FFO

$169 million

$176 million




Adjusted FFO per share

(based on 196.5 million shares)

$0.86 per share

$0.90 per share

The Company expects approximately 16% of full year 2014 Adjusted EBITDA to be earned during the first quarter of 2014.

The midpoint of the guidance range above implies Hotel Adjusted EBITDA margin growth of over 250 basis points.  For comparison purposes, the Company's Pro Forma RevPAR growth outlook excluding the New York City hotels under renovation during 2013 is 5.5 percent to 7.5 percent.

Earnings Call

The Company will host a conference call to discuss its fourth quarter and full year results on Tuesday, February 25, 2014, at 9:00 a.m. Eastern Time (ET).  To participate in the live call, investors are invited to dial 866-318-8618 (for domestic callers) or 617-399-5137 (for international callers).  The participant passcode is 29044846. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company's website at www.drhc.com or www.earnings.com. A replay of the webcast will also be archived on the website for thirty days.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations.  The Company owns 26 premium quality hotels with over 11,100 rooms. The Company has strategically positioned its hotels to generally be operated under the leading global brands such as Hilton, Marriott, and Westin. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions 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 potential for additional 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; relationships with property managers; the 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; risks associated with the development of a hotel by a third-party developer; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

 

DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
As of December 31, 2013 and December 31, 2012
(in thousands, except share and per share amounts)



2013


2012





ASSETS




Property and equipment, at cost

$

3,168,088



$

3,131,175


Less: accumulated depreciation

(600,555)



(519,721)



2,567,533



2,611,454


Deferred financing costs, net

7,702



9,724


Restricted cash

89,106



76,131


Due from hotel managers

69,353



68,532


Note receivable

50,084



53,792


Favorable lease assets, net

39,936



40,972


Prepaid and other assets (1)

79,474



73,814


Cash and cash equivalents

144,584



9,623


Total assets

$

3,047,772



$

2,944,042


LIABILITIES AND STOCKHOLDERS' EQUITY




Liabilities:




Mortgage debt

$

1,091,861



$

968,731


Senior unsecured credit facility



20,000


Total debt

1,091,861



988,731






Deferred income related to key money, net

23,707



24,362


Unfavorable contract liabilities, net

78,093



80,043


Due to hotel managers

54,225



51,003


Dividends declared and unpaid

16,981



15,911


Accounts payable and accrued expenses (2)

102,214



88,879


Total other liabilities

275,220



260,198


Stockholders' Equity:




Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and outstanding




Common stock, $0.01 par value; 400,000,000 shares authorized; 195,470,791 and 195,145,707 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively

1,955



1,951


Additional paid-in capital

1,979,613



1,976,200


Accumulated deficit

(300,877)



(283,038)


Total stockholders' equity

1,680,691



1,695,113


Total liabilities and stockholders' equity

$

3,047,772



$

2,944,042




(1)

Includes $39.4 million of deferred tax assets, $26.9 million for the Hilton Garden Inn Times Square purchase deposit, $8.1 million of prepaid expenses and $5.1 million of other assets as of December 31, 2013.

(2)

Includes $59.0 million of deferred ground rent, $11.0 million of deferred tax liabilities, $11.7 million of accrued property taxes, $8.6 million of accrued capital expenditures and $11.9 million of other accrued liabilities as of December 31, 2013.

 

 

DIAMONDROCK HOSPITALITY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Quarters Ended December 31, 2013 and December 31, 2012 and
the Years Ended December 31, 2013 and December 31, 2012
(in thousands, except per share amounts)
(unaudited)



Fiscal Quarter Ended December 31,


Year Ended December 31,






2013


2012


2013


2012



Revenues:








Rooms

$

142,864



$

183,215



$

558,751



$

509,902


Food and beverage

47,239



61,024



193,043



174,963


Other

11,364



14,993



47,894



42,022


Total revenues

201,467



259,232



799,688



726,887










Operating Expenses:








Rooms

38,573



46,248



151,040



135,437


Food and beverage

33,194



41,891



136,454



124,890


Management fees

6,621



9,410



25,546



24,307


Other hotel expenses

71,241



88,396



284,523



254,265


Impairment loss







30,844


Depreciation and amortization

25,374



36,409



103,895



97,004


Hotel acquisition costs



246





10,591


Corporate expenses

4,971



5,384



23,072



21,095


Total operating expenses

179,974



227,984



724,530



698,433


Operating profit

21,493



31,248



75,158



28,454










Other Expenses (Income):








Interest income

(1,724)



(29)



(6,328)



(305)


Interest expense

14,769



17,061



57,279



53,771


Loss (gain) on early extinguishment of debt

1,492





1,492



(144)


Total other expenses, net

14,537



17,032



52,443



53,322


Income (loss) from continuing operations before income taxes

6,956



14,216



22,715



(24,868)


Income tax (expense) benefit

(128)



1,400



1,113



6,793


Income (loss) from continuing operations

6,828



15,616



23,828



(18,075)


Income from discontinued operations, net of income taxes

22,727



1,012



25,237



1,483


Net income (loss)

29,555



16,628



49,065



(16,592)










Earnings (loss) earnings per share:








Continuing operations

$

0.03



$

0.08



$

0.12



$

(0.10)


Discontinued operations

0.12



0.00



0.13



0.01


Basic and diluted earnings (loss) per share

$

0.15



$

0.08



$

0.25



$

(0.09)


Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP.  EBITDA, Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.

EBITDA and FFO

EBITDA represents net income excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from  our operating results. In addition, covenants included in our indebtedness use EBITDA as a measure of financial compliance. We also use EBITDA as one measure in determining the value of hotel acquisitions and dispositions.

The Company computes FFO in accordance with standards established by NAREIT, which defines FFO as net income determined in accordance with GAAP, excluding gains or losses from sales of properties and impairment losses, plus depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets.  The Company also uses FFO as one measure in assessing its results.

Adjustments to EBITDA and FFO

We adjust EBITDA and FFO when evaluating our performance because we believe that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO, when combined with GAAP net income, EBITDA and FFO, is beneficial to an investor's complete understanding of our operating performance.  We adjust EBITDA and FFO for the following items:

  • Non-Cash Ground Rent: We exclude the non-cash expense incurred from the straight line recognition of rent from our ground lease obligations and the non-cash amortization of our favorable lease assets.
  • Non-Cash Amortization of Favorable and Unfavorable Contracts: We exclude the non-cash amortization of the favorable management contract assets recorded in conjunction with our acquisitions of the Westin Washington D.C. City Center, Westin San Diego, and Hilton Burlington and the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with our acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York.  The amortization of the favorable and unfavorable contracts does not reflect the underlying operating performance of our hotels.
  • Cumulative Effect of a Change in Accounting Principle: Infrequently, the Financial Accounting Standards Board (FASB) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle.  We exclude the effect of these one-time adjustments because they do not reflect its actual performance for that period.
  • Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses recorded on the early extinguishment of debt because we believe they do not accurately reflect the underlying performance of the Company.
  • Acquisition Costs:  We exclude acquisition transaction costs expensed during the period because we believe they do not reflect the underlying performance of the Company.
  • Allerton Loan:  In 2012, due to the uncertainty of the timing of the bankruptcy resolution, we excluded both cash interest payments received and the legal costs incurred as a result of the bankruptcy proceedings from our calculation of Adjusted EBITDA and Adjusted FFO.  Due to the settlement of the bankruptcy proceedings and amended and restated loan, we commenced recognizing interest income in 2013, which includes the amortization of the difference between the carrying basis of the old loan and face value of the new loan. Cash payments received during 2010 and 2011 that were included in Adjusted EBITDA and Adjusted FFO and reduced the carrying basis of the loan are now deducted from Adjusted EBITDA and Adjusted FFO on a straight-line basis over the anticipated five-year term of the new loan.
  • Other Non-Cash and /or Unusual Items:  From time to time we incur costs or realize gains that we do not believe reflect the underlying performance of the Company.  Such items include, but are not limited to, new hotel pre-opening costs, contract termination fees and severance costs.  In 2012, we excluded the franchise termination fee paid to Radisson Hotels International, Inc. for the Lexington Hotel New York.  In 2013, we excluded the severance costs associated with the departure of our former President and Chief Operating Officer, as well as the write off of unamortized key money, net of a termination payment, related to the termination of the Oak Brook Hills Resort management agreement.

In addition, to derive Adjusted EBITDA we exclude gains or losses on sales of properties and impairment losses because we believe that including them in EBITDA is not consistent with reflecting the ongoing performance of our hotels. Additionally, the gains or losses on sales of properties and impairment losses represent either accelerated depreciation or excess depreciation in previous periods, and depreciation is excluded from EBITDA.

In addition, to derive Adjusted FFO we exclude any fair value adjustments to debt instruments.  Specifically, we exclude the impact of the non-cash amortization of the debt premium recorded in conjunction with the acquisition of the JW Marriott Denver at Cherry Creek and fair market value adjustments to the Company's interest rate cap agreement.

The following tables are reconciliations of our U.S. GAAP net income to EBITDA and Adjusted EBITDA (in thousands):   


Fiscal Quarter Ended
December 31,


Year Ended
December 31,










2013


2012


2013


2012

Net income (loss)

$

29,555


$

16,628


$

49,065


$

(16,592)

Interest expense (1)

14,769


17,061


57,279


56,068

Income tax expense (benefit) (2)

928


(1,242)


(16)


(6,046)









Real estate related depreciation (3)

25,374


37,350


105,655


101,498

EBITDA

70,626


69,797


211,983


134,928

Non-cash ground rent

1,677


2,074


6,787


6,694

Non-cash amortization of favorable and unfavorable contract liabilities, net

(424)


(357)


(1,487)


(1,653)

(Gain) loss on sale of hotel properties

(22,733)


61


(22,733)


(9,479)









Loss (gain) on early extinguishment of debt

1,492



1,492


(144)

Acquisition costs


246



10,591









Reversal of previously recognized Allerton income

(291)



(1,163)


Allerton loan legal fees


476



2,493

Write-off of key money

(1,082)



(1,082)


Franchise termination fee




750

Impairment losses (4)




45,534

Severance costs



3,065


Adjusted EBITDA

$

49,265


$

72,297


$

196,862


$

189,714

(1)

Includes $2.3 million of interest expense reported in discontinued operations for the year ended December 31, 2012. 

(2)

Includes $0.8 million of income tax expense reported in discontinued operations for the fiscal quarter ended December 31, 2013 and $1.1 million of income tax expense reported in discontinued operations for the year ended December 31, 2013.  Includes $0.2 million of income tax expense reported in discontinued operations for the fiscal quarter ended December 31, 2012 and $0.7 million of income tax expense reported in discontinued operations for the year ended December 31, 2012.

(3)

Includes $1.8 million of depreciation expense reported in discontinued operations for the year ended December 31, 2013.  Includes $0.9 million of depreciation expense reported in discontinued operations for the quarter ended December 31, 2012 and $4.5 million of depreciation expense reported in discontinued operations for the year ended December 31, 2012.

(4)

Includes impairment losses of $14.7 million reported in discontinued operations for the year ended December 31, 2012. 

 

 






Guidance (in 000s)




Full Year 2014






Low End


High End

Net income (1)





$

69,163



$

76,663


Interest expense





59,200



59,100


Income tax expense (benefit)





1,400



4,500


Real estate related depreciation and amortization





95,500



95,000


EBITDA





225,263



235,263


Non-cash ground rent





6,400



6,400


Non-cash amortization of favorable and unfavorable contracts, net





(1,400)



(1,400)


Reversal of previously recognized Allerton income





(1,163)



(1,163)


Pre-opening costs





900



900


Adjusted EBITDA





$

230,000



$

240,000


(1)

Net income includes approximately $6.6 million of interest income related to the Allerton loan and approximately $21.0 million of corporate expenses.

 

 

The following tables are reconciliations of our U.S. GAAP net income to FFO and Adjusted FFO (in thousands):


Fiscal Quarter Ended
December 31,


Year Ended
December 31,










2013


2012


2013


2012

Net income (loss)

$

29,555


$

16,628


$

49,065


$

(16,592)

Real estate related depreciation (1)

25,374


37,350


105,655


101,498

Impairment losses (2)




45,534

(Gain) loss on sale of hotel properties

(22,733)


61


(22,733)


(9,479)

FFO

32,196


54,039


131,987


120,961

Non-cash ground rent

1,677


2,074


6,787


6,694

Non-cash amortization of unfavorable contract liabilities, net

(424)


(357)


(1,487)


(1,653)

Loss (gain) on early extinguishment of debt

1,492



1,492


(144)

Acquisition costs


246



10,591

Reversal of previously recognized Allerton income

(291)



(1,163)


Allerton loan legal fees


476



2,493

Write-off of key money

(1,082)



(1,082)


Franchise termination fee




750

Severance costs



3,065


Fair value adjustments to debt instruments

(65)


(28)


(298)


471

Adjusted FFO

$

33,503


$

56,450


$

139,301


$

140,163

Adjusted FFO per share

$

0.17


$

0.29


$

0.71


$

0.78



(1)

Includes $1.8 million of depreciation expense reported in discontinued operations for the year ended December 31, 2013.  Includes $0.9 million of depreciation expense reported in discontinued operations for the quarter ended December 31, 2012 and $4.5 million of depreciation expense reported in discontinued operations for the year ended December 31, 2012.

(2)

Includes impairment losses of $14.7 million reported in discontinued operations in the year ended December 31, 2012. 

  

 






Guidance (in 000s)




Full Year 2014






Low End


High End

Net income (1)





$

69,163



$

76,663


Real estate related depreciation and amortization





95,500



95,000


FFO





164,663



171,663


Non-cash ground rent





6,400



6,400


Non-cash amortization of favorable and unfavorable contracts, net





(1,400)



(1,400)


Reversal of previously recognized Allerton income





(1,163)



(1,163)


Pre-opening costs





900



900


Fair value adjustments to debt instruments





(400)



(400)


Adjusted FFO





$

169,000



$

176,000


Adjusted FFO per share





$

0.86



$

0.90


(1)

Net income includes approximately $6.6 million of interest income related to the Allerton loan and approximately $21.0 million of corporate expenses.

Use and Limitations of Non-GAAP Financial Measures

Our management and Board of Directors use EBITDA, Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

Certain Definitions

In this release, when we discuss "Hotel Adjusted EBITDA," we exclude from Hotel EBITDA the non-cash expense incurred by the hotels due to the straight lining of the rent from our ground lease obligations, the non-cash amortization of our favorable lease assets and other contracts, the non-cash amortization of the unfavorable contract liabilities recorded in conjunction with the acquisitions of the Bethesda Marriott Suites, the Chicago Marriott Downtown, the Renaissance Charleston and the Lexington Hotel New York. Hotel EBITDA represents hotel net income excluding: (1) interest expense; (2) income taxes; and (3) depreciation and amortization. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues. Net debt is calculated as total debt outstanding less unrestricted cash.

DIAMONDROCK HOSPITALITY COMPANY
HOTEL OPERATING DATA
Schedule of Property Level Results
(in thousands)
(unaudited)



Quarter Ended December 31,


Year Ended December 31,




Pro Forma


%




Pro Forma


%


2013


2012 (1)


Change


2013


2012 (2)


Change

Revenues:












Rooms

$

142,864



$

134,365



6.3

%


$

558,751



$

552,568



1.1

%

Food and beverage

47,239



45,148



4.6

%


193,043



181,891



6.1

%

Other

11,364



11,258



0.9

%


47,894



44,998



6.4

%

Total revenues

201,467



190,771



5.6

%


799,688



779,457



2.6

%













Operating Expenses:












Rooms departmental expenses

$

38,573



$

34,347



12.3

%


$

151,040



$

144,111



4.8

%

Food and beverage departmental expenses

33,194



31,445



5.6

%


136,454



129,361



5.5

%

Other direct departmental

5,092



4,896



4.0

%


21,933



20,941



4.7

%

General and administrative

16,903



15,151



11.6

%


64,204



61,759



4.0

%

Utilities

6,466



6,675



(3.1)

%


28,163



27,764



1.4

%

Repairs and maintenance

9,457



8,511



11.1

%


36,808



34,670



6.2

%

Sales and marketing

18,060



16,076



12.3

%


67,582



66,728



1.3

%

Base management fees

4,949



4,973



(0.5)

%


19,324



19,745



(2.1)

%

Incentive management fees

1,672



1,834



(8.8)

%


6,222



5,557



12.0

%

Property taxes

9,324



8,775



6.3

%


40,045



36,462



9.8

%

Ground rent

3,746



3,513



6.6

%


14,985



14,603



2.6

%

Other fixed expenses

3,277



3,008



8.9

%


11,886



10,856



9.5

%

Total hotel operating expenses

$

150,713



$

139,204



8.3

%


$

598,646



$

572,557



4.6

%



















Hotel EBITDA

50,754



51,567



(1.6)

%


201,042



206,900



(2.8)

%



















Non-cash ground rent

1,677



1,583



5.9

%


6,787



6,783



0.1

%

Non-cash amortization of unfavorable contract liabilities

(424)



(317)



33.8

%


(1,487)



(1,409)



5.5

%


Hotel Adjusted EBITDA

$

52,007



$

52,833



(1.6)

%


$

206,342



$

212,274



(2.8)

%



(1)

Pro forma to (a) include the operating results of the Company's Marriott-managed hotels from October 6, 2012 to December 31, 2012 and all other hotels from October 1, 2012 to December 31, 2012, (b) assume the hotels acquired in 2012 were owned as of January 1, 2012, and (c) exclude the operating results of hotels sold. 

(2)

Pro forma to (a) assume the hotels acquired in 2012 were owned as of January 1, 2012, and (b) exclude the operating results of hotels sold. 

 

 

Market Capitalization as of December 31, 2013

(in thousands, except per share data)




Enterprise Value






Common equity capitalization (at December 31, 2013 closing price of  $11.55/share)


$

2,265,302

Consolidated debt


1,091,861

Cash and cash equivalents


(144,584)

Total enterprise value


$

3,212,579




Share Reconciliation






Common shares outstanding


195,471

Unvested restricted stock held by management and employees


583

Share grants under deferred compensation plan held by directors


76

Combined shares outstanding


196,130

 

 

Debt Summary as of December 31, 2013

(dollars in thousands)


Property


Interest

Rate


Term


Outstanding

Principal


Maturity

Courtyard Manhattan / Midtown East


8.810%


Fixed


$

41,530


October 2014

Salt Lake City Marriott Downtown


4.250%


Fixed


62,771


November 2020

Courtyard Manhattan / Fifth Avenue


6.480%


Fixed


49,591


June 2016

Los Angeles Airport Marriott


5.300%


Fixed


82,600


July 2015

Frenchman's Reef Marriott


5.440%


Fixed


57,671


August 2015

Renaissance Worthington


5.400%


Fixed


53,804


July 2015

Orlando Airport Marriott


5.680%


Fixed


56,778


January 2016

Chicago Marriott Downtown


5.975%


Fixed


208,417


April 2016

Hilton Minneapolis


5.464%


Fixed


94,874


May 2021

JW Marriott Denver at Cherry Creek


6.470%


Fixed


39,692


July 2015

Lexington Hotel New York


LIBOR +
3.00


Variable


170,368


March 2015

Westin Washington D.C. City Center


3.990%


Fixed


72,421


January 2023

The Lodge at Sonoma


3.960%


Fixed


30,607


April 2023

Westin San Diego


3.940%


Fixed


70,194


April 2023

Debt premium (1)






543



Total mortgage debt






$

1,091,861












Senior unsecured credit facility


LIBOR +
1.90


Variable


-


January 2017

Total debt




$

1,091,861





(1)

Non-cash GAAP adjustment recorded upon the assumption of the mortgage loan secured by the JW Marriott Denver Cherry Creek in 2011.

 


Pro Forma Operating Statistics – Fourth Quarter (1)


ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin


4Q 2013

4Q 2012

B/(W)


4Q 2013

4Q 2012

B/(W)


4Q 2013

4Q 2012

B/(W)


4Q 2013

4Q 2012

B/(W)

Atlanta Alpharetta Marriott

$

148.33


$

138.92


6.8

%


69.0

%

64.8

%

4.2

%


$

102.37


$

89.99


13.8

%


37.41

%

27.95

%

946 bps

Bethesda Marriott Suites

$

152.65


$

167.73


(9.0)

%


66.9

%

60.8

%

6.1

%


$

102.19


$

102.04


0.1

%


23.43

%

24.08

%

-65 bps

Boston Westin

$

235.69


$

226.21


4.2

%


64.4

%

63.1

%

1.3

%


$

151.71


$

142.83


6.2

%


26.14

%

25.28

%

86 bps

Hilton Boston Downtown

$

246.06


$

228.79


7.5

%


71.7

%

63.2

%

8.5

%


$

176.35


$

144.58


22.0

%


28.36

%

26.56

%

180 bps

Hilton Burlington

$

153.42


$

146.53


4.7

%


70.5

%

71.1

%

(0.6)%

%


$

108.16


$

104.24


3.8

%


35.57

%

33.10

%

247 bps

Renaissance Charleston

$

194.86


$

171.36


13.7

%


86.7

%

83.7

%

3.0

%


$

168.96


$

143.36


17.9

%


37.01

%

31.34

%

567 bps

Hilton Garden Inn Chelsea

$

258.71


$

262.00


(1.3)

%


93.9

%

98.5

%

(4.6)

%


$

242.95


$

258.15


(5.9)

%


48.34

%

50.80

%

-246 bps

Chicago Marriott

$

207.30


$

205.61


0.8

%


75.0

%

74.9

%

0.1

%


$

155.51


$

153.95


1.0

%


23.48

%

26.61

%

-313 bps

Chicago Conrad

$

223.92


$

228.29


(1.9)

%


77.8

%

79.9

%

(2.1)

%


$

174.24


$

182.38


(4.5)

%


34.46

%

30.07

%

439 bps

Courtyard Denver Downtown

$

167.12


$

160.72


4.0

%


78.8

%

81.8

%

(3.0)

%


$

131.75


$

131.41


0.3

%


43.53

%

44.75

%

-122 bps

Courtyard Fifth Avenue

$

304.14


$

315.61


(3.6)

%


88.4

%

96.5

%

(8.1)

%


$

268.83


$

304.67


(11.8)

%


30.00

%

39.29

%

-929 bps

Courtyard Midtown East

$

307.83


$

308.72


(0.3)

%


88.3

%

89.5

%

(1.2)

%


$

271.68


$

276.28


(1.7)

%


41.16

%

40.48

%

68 bps

Frenchman's Reef

$

227.75


$

211.33


7.8

%


76.3

%

72.9

%

3.4

%


$

173.68


$

154.00


12.8

%


16.11

%

13.25

%

286 bps

JW Marriott Denver Cherry Creek

$

234.65


$

229.00


2.5

%


78.6

%

77.8

%

0.8

%


$

184.49


$

178.06


3.6

%


30.13

%

28.99

%

114 bps

Los Angeles Airport Marriott

$

112.63


$

107.68


4.6

%


82.8

%

83.0

%

(0.2)

%


$

93.22


$

89.40


4.3

%


13.32

%

15.57

%

-225 bps

Hilton Minneapolis

$

147.35


$

150.08


(1.8)

%


64.2

%

67.9

%

(3.7)

%


$

94.60


$

101.93


(7.2)

%


22.63

%

27.18

%

-455 bps

Oak Brook Hills Resort

$

120.94


$

119.53


1.2

%


42.1

%

45.7

%

(3.6)

%


$

50.94


$

54.60


(6.7)

%


(10.10)

%

2.41

%

-1251 bps

Orlando Airport Marriott

$

96.68


$

98.78


(2.1)

%


76.6

%

70.3

%

6.3

%


$

74.07


$

69.45


6.7

%


24.80

%

23.06

%

174 bps

Hotel Rex

$

181.95


$

182.92


(0.5)

%


83.2

%

79.4

%

3.8

%


$

151.38


$

145.20


4.3

%


27.24

%

35.85

%

-861 bps

Salt Lake City Marriott

$

138.71


$

123.70


12.1

%


58.8

%

60.6

%

(1.8)

%


$

81.59


$

75.01


8.8

%


23.79

%

24.63

%

-84 bps

The Lodge at Sonoma

$

250.39


$

229.58


9.1

%


69.4

%

69.9

%

(0.5)

%


$

173.77


$

160.44


8.3

%


25.71

%

22.63

%

308 bps

Torrance Marriott South Bay

$

115.36


$

110.81


4.1

%


85.8

%

77.5

%

8.3

%


$

99.00


$

85.92


15.2

%


22.98

%

25.76

%

-278 bps

Vail Marriott

$

296.20


$

250.41


18.3

%


55.6

%

50.6

%

5.0

%


$

164.69


$

126.76


29.9

%


30.01

%

19.83

%

1018 bps

Lexington Hotel New York

$

268.22


$

232.56


15.3

%


87.7

%

95.5

%

(7.8)

%


$

235.30


$

222.18


5.9

%


28.59

%

44.90

%

-1631 bps

Westin San Diego

$

150.16


$

144.22


4.1

%


69.5

%

74.7

%

(5.2)

%


$

104.29


$

107.66


(3.1)

%


19.62

%

26.00

%

-638 bps

Westin Washington D.C. City Center

$

203.40


$

194.98


4.3

%


60.0

%

68.0

%

(8.0)

%


$

121.98


$

132.67


(8.1)

%


28.26

%

30.63

%

-237 bps

Renaissance Worthington

$

169.94


$

172.43


(1.4)

%


66.4

%

61.4

%

5.0

%


$

112.77


$

105.88


6.5

%


30.19

%

28.83

%

136 bps

Total

$

191.90


$

185.22


3.6

%


72.4

%

72.6

%

(0.2)

%


$

139.01


$

134.39


3.4

%


25.77

%

27.67

%

-190 bps

Total Excluding Torrance (2)

$

194.12


$

187.04


3.8

%


72.1

%

72.4

%

(0.3)%



$

139.98


$

135.50


3.3

%


25.81

%

27.69

%

-188 bps



(1)

The pro forma operating data includes the operating results for each of the Company's hotels assuming they were owned since January 1, 2012. 4Q 2012 includes the operating results of the Company's Marriott-managed hotels from October 6, 2012 to December 31, 2012 (87 days) and all other hotels from October 1, 2012 to December 31, 2012.

(2)

Excludes the Torrance Marriott South Bay that was sold during 2013.

 

 

Pro Forma Operating Statistics – Full Year (1)


ADR


Occupancy


RevPAR


Hotel Adjusted EBITDA Margin


YTD 2013

YTD 2012

B/(W)


YTD 2013

YTD 2012

B/(W)


YTD 2013

YTD 2012

B/(W)


YTD 2013

YTD 2012

B/(W)

Atlanta Alpharetta Marriott

$

148.12


$

139.59


6.1

%


73.8

%

66.0

%

7.8

%


$

109.37


$

92.11


18.7

%


34.72

%

29.90

%

482 bps

Bethesda Marriott Suites

$

161.18


$

166.08


(3.0)

%


61.9

%

64.8

%

(2.9)

%


$

99.71


$

107.69


(7.4)

%


23.00

%

26.08

%

-308 bps

Boston Westin

$

207.60


$

203.85


1.8

%


74.5

%

73.3

%

1.2

%


$

154.60


$

149.46


3.4

%


24.59

%

23.39

%

120 bps

Hilton Boston Downtown

$

226.68


$

220.59


2.8

%


80.4

%

76.0

%

4.4

%


$

182.26


$

167.68


8.7

%


31.89

%

35.92

%

-403 bps

Hilton Burlington

$

159.43


$

156.57


1.8

%


74.1

%

73.8

%

0.3

%


$

118.16


$

115.55


2.3

%


39.87

%

37.13

%

274 bps

Renaissance Charleston

$

191.27


$

180.50


6.0

%


87.5

%

85.1

%

2.4

%


$

167.31


$

153.58


8.9

%


35.05

%

34.36

%

69 bps

Hilton Garden Inn Chelsea

$

231.99


$

217.77


6.5

%


95.9

%

96.1

%

(0.2)

%


$

222.51


$

209.30


6.3

%


45.34

%

44.02

%

132 bps

Chicago Marriott

$

205.83


$

200.80


2.5

%


76.2

%

74.1

%

2.1

%


$

156.86


$

148.78


5.4

%


23.40

%

23.50

%

-10 bps

Chicago Conrad

$

217.76


$

212.28


2.6

%


81.6

%

80.6

%

1.0

%


$

177.61


$

171.18


3.8

%


32.14

%

29.52

%

262 bps

Courtyard Denver Downtown

$

168.42


$

159.29


5.7

%


83.4

%

84.6

%

(1.2)

%


$

140.47


$

134.83


4.2

%


44.89

%

45.46

%

-57 bps

Courtyard Fifth Avenue

$

277.14


$

274.04


1.1

%


80.1

%

91.7

%

(11.6)

%


$

221.92


$

251.29


(11.7)

%


21.68

%

30.96

%

-928 bps

Courtyard Midtown East

$

275.73


$

269.79


2.2

%


82.3

%

86.7

%

(4.4)

%


$

226.81


$

233.91


(3.0)

%


31.66

%

34.59

%

-293 bps

Frenchman's Reef

$

239.69


$

228.17


5.0

%


82.1

%

78.7

%

3.4

%


$

196.78


$

179.48


9.6

%


20.09

%

19.51

%

58 bps

JW Marriott Denver Cherry Creek

$

239.27


$

227.24


5.3

%


80.4

%

76.4

%

4.0

%


$

192.39


$

173.69


10.8

%


30.38

%

29.72

%

66 bps

Los Angeles Airport Marriott

$

113.33


$

109.11


3.9

%


86.5

%

86.7

%

(0.2)

%


$

98.09


$

94.64


3.6

%


19.33

%

18.49

%

84 bps

Hilton Minneapolis

$

145.56


$

143.19


1.7

%


72.3

%

72.6

%

(0.3)

%


$

105.21


$

103.99


1.2

%


26.86

%

27.12

%

-26 bps

Oak Brook Hills Resort

$

122.44


$

120.39


1.7

%


56.8

%

56.6

%

0.2

%


$

69.55


$

68.12


2.1

%


8.78

%

9.69

%

-91 bps

Orlando Airport Marriott

$

99.85


$

103.82


(3.8)

%


75.5

%

72.2

%

3.3

%


$

75.38


$

74.97


0.5

%


23.29

%

23.53

%

-24 bps

Hotel Rex

$

187.88


$

178.93


5.0

%


84.4

%

84.8

%

(0.4)

%


$

158.66


$

151.72


4.6

%


30.99

%

36.58

%

-559 bps

Salt Lake City Marriott

$

142.26


$

134.07


6.1

%


67.1

%

66.4

%

0.7

%


$

95.51


$

89.07


7.2

%


31.54

%

29.64

%

190 bps

The Lodge at Sonoma

$

254.13


$

235.86


7.7

%


74.2

%

72.1

%

2.1

%


$

188.52


$

170.05


10.9

%


25.71

%

21.81

%

390 bps

Torrance Marriott South Bay

$

116.79


$

110.53


5.7

%


84.4

%

83.5

%

0.9

%


$

98.57


$

92.25


6.9

%


25.13

%

26.07

%

-94 bps

Vail Marriott

$

243.94


$

225.47


8.2

%


67.7

%

63.7

%

4.0

%


$

165.25


$

143.72


15.0

%


30.21

%

27.82

%

239 bps

Lexington Hotel New York

$

224.92


$

205.70


9.3

%


62.4

%

94.8

%

(32.4)

%


$

140.26


$

195.01


(28.1)

%


9.03

%

35.99

%

-2696 bps

Westin San Diego

$

153.50


$

149.32


2.8

%


82.7

%

79.3

%

3.4

%


$

126.98


$

118.40


7.2

%


29.72

%

30.03

%

-31 bps

Westin Washington D.C. City Center

$

192.13


$

193.77


(0.8)

%


73.5

%

73.2

%

0.3

%


$

141.19


$

141.93


(0.5)

%


31.35

%

34.44

%

-309 bps

Renaissance Worthington

$

170.73


$

161.04


6.0

%


65.4

%

68.3

%

(2.9)

%


$

111.70


$

109.93


1.6

%


30.68

%

29.26

%

142 bps

Total

$

181.03


$

175.71


3.0

%


75.5

%

76.6

%

(1.1)

%


$

136.62


$

134.62


1.5

%


25.79

%

27.20

%

-141 bps

Total Excluding Torrance (2)

$

183.85


$

178.50


3.0

%


75.1

%

76.3

%

(1.2)

%


$

138.11


$

136.27


1.4

%


25.80

%

27.23

%

-143 bps

Total Excluding NY Renovations and Torrance (3)

$

176.37


$

170.43


3.5

%


75.7

%

74.4

%

1.3

%


$

133.56


$

126.79


5.3

%


26.60

%

26.15

%

45 bps



(1)

The pro forma operating data includes the operating results for each of the Company's hotels assuming they were owned since January 1, 2012.

(2)

Excludes the Torrance Marriott South Bay that was sold during 2013.

(3)

Excludes three hotels in New York City under renovation during the year ended December 31, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue as well as the Torrance Marriott South Bay that was sold during 2013.

 

 

Hotel Adjusted EBITDA Reconciliation


Fourth Quarter 2013





Plus:

Plus:

Plus:

Equals:


Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash
Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott

$

4,306



$

1,207


$

404


$


$


$

1,611


Bethesda Marriott Suites

$

3,743



$

(1,028)


$

371


$


$

1,534


$

877


Boston Westin

$

18,768



$

2,743


$

2,160


$


$

3


$

4,906


Hilton Boston Downtown

$

6,371



$

255


$

1,510


$


$

42


$

1,807


Hilton Burlington

$

3,365



$

325


$

849


$


$

23


$

1,197


Renaissance Charleston

$

3,207



$

814


$

405


$


$

(32)


$

1,187


Hilton Garden Inn Chelsea

$

3,879



$

1,373


$

502


$


$


$

1,875


Chicago Marriott

$

24,959



$

395


$

2,627


$

3,233


$

(395)


$

5,860


Chicago Conrad

$

6,655



$

1,335


$

958


$


$


$

2,293


Courtyard Denver Downtown

$

2,325



$

743


$

269


$


$


$

1,012


Courtyard Fifth Avenue

$

4,597



$

45


$

430


$

852


$

52


$

1,379


Courtyard Midtown East

$

8,198



$

1,719


$

679


$

976


$


$

3,374


Frenchman's Reef

$

13,868



$

(193)


$

1,601


$

826


$


$

2,234


JW Marriott Denver Cherry Creek

$

5,595



$

591


$

515


$

580


$


$

1,686


Los Angeles Airport Marriott

$

13,950



$

(404)


$

1,127


$

1,135


$


$

1,858


Minneapolis Hilton

$

11,462



$

(587)


$

1,963


$

1,351


$

(133)


$

2,594


Oak Brook Hills Resort

$

4,376



$

(1,059)


$

510


$


$

107


$

(442)


Orlando Airport Marriott

$

5,251



$

(321)


$

794


$

829


$


$

1,302


Hotel Rex

$

1,520



$

181


$

233


$


$


$

414


Salt Lake City Marriott

$

5,869



$

17


$

755


$

624


$


$

1,396


The Lodge at Sonoma

$

5,375



$

694


$

372


$

316


$


$

1,382


Vail Marriott

$

7,104



$

1,524


$

608


$


$


$

2,132


Lexington Hotel New York

$

16,444



$

(172)


$

3,132


$

1,781


$

(40)


$

4,701


Westin San Diego

$

5,908



$

(726)


$

1,124


$

715


$

46


$

1,159


Westin Washington D.C. City Center

$

5,754



$

1


$

802


$

778


$

45


$

1,626


Renaissance Worthington

$

8,618



$

1,172


$

675


$

753


$

2


$

2,602


Total (2)

$

201,467



$

10,644


$

25,375


$

14,749


$

1,254


$

52,007




(1)

The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities.

(2)

Excludes the Torrance Marriott South Bay that was sold during 2013.

 

 

Pro Forma Hotel Adjusted EBITDA Reconciliation



Fourth Quarter 2012 (1)






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash
Adjustments (2)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

3,664



$

652


$

372


$


$


$

1,024


Bethesda Marriott Suites


$

3,443



$

(1,115)


$

479


$


$

1,465


$

829


Boston Westin


$

18,369



$

2,704


$

1,938


$


$

2


$

4,644


Hilton Boston Downtown


$

5,256



$

(391)


$

1,745


$


$

42


$

1,396


Hilton Burlington


$

3,281



$

32


$

1,031


$


$

23


$

1,086


Renaissance Charleston


$

2,572



$

479


$

356


$


$

(29)


$

806


Hilton Garden Inn Chelsea


$

4,142



$

1,667


$

437


$


$


$

2,104


Chicago Marriott


$

24,452



$

702


$

3,128


$

3,041


$

(365)


$

6,506


Chicago Conrad


$

6,758



$

1,184


$

848


$


$


$

2,032


Courtyard Denver Downtown


$

2,297



$

789


$

239


$


$


$

1,028


Courtyard Fifth Avenue


$

4,953



$

810


$

283


$

805


$

48


$

1,946


Courtyard Midtown East


$

7,754



$

1,665


$

535


$

939


$


$

3,139


Frenchman's Reef


$

12,977



$

(598)


$

1,535


$

783


$


$

1,720


JW Marriott Denver Cherry Creek


$

5,160



$

494


$

435


$

567


$


$

1,496


Los Angeles Airport Marriott


$

12,681



$

(403)


$

1,316


$

1,061


$


$

1,974


Minneapolis Hilton


$

12,169



$

402


$

1,771


$

1,303


$

(169)


$

3,307


Oak Brook Hills Resort


$

4,270



$

(76)


$

68


$


$

111


$

103


Orlando Airport Marriott


$

4,640



$

(431)


$

716


$

785


$


$

1,070


Hotel Rex


$

1,470



$

253


$

274


$


$


$

527


Salt Lake City Marriott


$

5,229



$

215


$

690


$

383


$


$

1,288


The Lodge at Sonoma


$

4,433



$

660


$

343


$


$


$

1,003


Vail Marriott


$

5,382



$

513


$

554


$


$


$

1,067


Lexington Hotel New York


$

15,336



$

(850)


$

5,884


$

1,808


$

44


$

6,886


Westin San Diego


$

6,192



$

265


$

1,298


$


$

47


$

1,610


Westin Washington D.C. City Center


$

6,235



$

341


$

1,523


$


$

46


$

1,910


Renaissance Worthington


$

7,656



$

826


$

664


$

715


$

2


$

2,207


Total (3)


$

190,771



$

10,789


$

28,462


$

12,190


$

1,267


$

52,833




(1)

The pro forma operating data includes the operating results for each the Company's hotels assuming they were owned as of January 1, 2012 and includes the operating results of the Company's Marriott-managed hotels from October 6, 2012 to December 31, 2012 and all other hotels from October 1, 2012 to December 31, 2012. 

(2)

The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of our favorable lease assets and the non-cash amortization of our unfavorable contract liabilities.

(3)

Excludes the Torrance Marriott South Bay that was sold during 2013.

 

 

Hotel Adjusted EBITDA Reconciliation



Full Year 2013






Plus:

Plus:

Plus:

Equals:



Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash
Adjustments (1)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott


$

17,976



$

4,620


$

1,622


$


$


$

6,242


Bethesda Marriott Suites


$

13,992



$

(4,616)


$

1,628


$


$

6,206


$

3,218


Boston Westin


$

76,126



$

10,175


$

8,532


$


$

9


$

18,716


Hilton Boston Downtown


$

26,356



$

2,418


$

5,819


$


$

167


$

8,404


Hilton Burlington


$

14,252



$

2,215


$

3,376


$


$

91


$

5,682


Renaissance Charleston


$

12,410



$

2,880


$

1,596


$


$

(126)


$

4,350


Hilton Garden Inn Chelsea


$

14,081



$

4,328


$

2,056


$


$


$

6,384


Chicago Marriott


$

100,380



$

(269)


$

12,490


$

12,851


$

(1,587)


$

23,485


Chicago Conrad


$

26,706



$

4,825


$

3,759


$


$


$

8,584


Courtyard Denver Downtown


$

9,770



$

3,329


$

1,057


$


$


$

4,386


Courtyard Fifth Avenue


$

15,085



$

(1,953)


$

1,614


$

3,396


$

213


$

3,270


Courtyard Midtown East


$

26,875



$

2,048


$

2,553


$

3,908


$


$

8,509


Frenchman's Reef


$

62,439



$

2,777


$

6,465


$

3,299


$


$

12,541


JW Marriott Denver Cherry Creek


$

22,139



$

2,376


$

2,001


$

2,349


$


$

6,726


Los Angeles Airport Marriott


$

58,608



$

1,729


$

5,099


$

4,503


$


$

11,331


Minneapolis Hilton


$

50,097



$

809


$

7,779


$

5,401


$

(532)


$

13,457


Oak Brook Hills Resort


$

22,412



$

271


$

1,265


$


$

431


$

1,967


Orlando Airport Marriott


$

20,365



$

(1,689)


$

3,126


$

3,305


$


$

4,742


Hotel Rex


$

6,274



$

1,017


$

927


$


$


$

1,944


Salt Lake City Marriott


$

26,117



$

3,450


$

2,982


$

1,806


$


$

8,238


The Lodge at Sonoma


$

21,355



$

3,030


$

1,475


$

986


$


$

5,491


Vail Marriott


$

29,432



$

6,471


$

2,421


$


$


$

8,892


Lexington Hotel New York


$

39,757



$

(15,427)


$

12,142


$

6,824


$

52


$

3,591


Westin San Diego


$

28,095



$

1,682


$

4,309


$

2,171


$

187


$

8,349


Westin Washington D.C. City Center


$

25,981



$

(188)


$

5,034


$

3,116


$

182


$

8,144


Renaissance Worthington


$

32,608



$

4,223


$

2,768


$

3,006


$

8


$

10,005


Total (2)


$

799,688



$

40,531


$

103,895


$

56,921


$

5,301


$

206,342


Total Excluding NY Renovations (3)


$

717,971



$

55,863


$

87,586


$

42,793


$

5,036


$

190,972




(1)

The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of favorable lease assets, and the non-cash amortization of unfavorable contract liabilities.

(2)

Excludes the Torrance Marriott South Bay that was sold during 2013.

(3)

Excludes three hotels in New York City under renovation during the year ended December 31, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue.

 

 

Pro Forma Hotel Adjusted EBITDA Reconciliation


Full Year 2012 (1)





Plus:

Plus:

Plus:

Equals:


Total Revenues


Net Income / (Loss)

Depreciation

Interest Expense

Non-Cash
Adjustments (2)

Hotel Adjusted
EBITDA

Atlanta Alpharetta Marriott

$

15,340



$

3,237


$

1,350


$


$


$

4,587


Bethesda Marriott Suites

$

14,928



$

(4,447)


$

2,073


$


$

6,267


$

3,893


Boston Westin

$

72,755



$

8,312


$

8,700


$


$

7


$

17,019


Hilton Boston Downtown

$

24,225



$

2,864


$

5,671


$


$

167


$

8,702


Hilton Burlington

$

14,000



$

1,758


$

3,349


$


$

91


$

5,198


Renaissance Charleston

$

11,379



$

2,512


$

1,524


$


$

(126)


$

3,910


Hilton Garden Inn Chelsea

$

13,387



$

3,999


$

1,894


$


$


$

5,893


Chicago Marriott

$

96,735



$

(1,663)


$

12,978


$

13,003


$

(1,581)


$

22,737


Chicago Conrad

$

25,580



$

4,083


$

3,469


$


$


$

7,552


Courtyard Denver Downtown

$

9,393



$

3,067


$

1,028


$

175


$


$

4,270


Courtyard Fifth Avenue

$

17,202



$

(17)


$

1,693


$

3,443


$

207


$

5,326


Courtyard Midtown East

$

27,787



$

3,291


$

2,372


$

3,949


$


$

9,612


Frenchman's Reef

$

55,752



$

1,086


$

6,421


$

3,372


$


$

10,879


JW Marriott Denver Cherry Creek

$

20,076



$

1,686


$

1,867


$

2,414


$


$

5,967


Los Angeles Airport Marriott

$

56,728



$

173


$

5,800


$

4,514


$


$

10,487


Minneapolis Hilton

$

49,075



$

835


$

7,622


$

5,524


$

(671)


$

13,310


Oak Brook Hills Resort

$

21,946



$

(863)


$

2,504


$


$

486


$

2,127


Orlando Airport Marriott

$

20,047



$

(1,665)


$

3,024


$

3,359


$


$

4,718


Hotel Rex

$

5,960



$

1,288


$

892


$


$


$

2,180


Salt Lake City Marriott

$

24,136



$

2,613


$

2,876


$

1,664


$


$

7,153


The Lodge at Sonoma

$

18,994



$

2,637


$

1,506


$


$


$

4,143


Vail Marriott

$

25,503



$

4,731


$

2,363


$


$


$

7,094


Lexington Hotel New York

$

53,905



$

(1,238)


$

13,798


$

6,695


$

145


$

19,400


Westin San Diego

$

26,288



$

3,489


$

4,217


$


$

189


$

7,895


Westin Washington D.C. City Center

$

26,196



$

3,889


$

4,950


$


$

182


$

9,021


Renaissance Worthington

$

32,140



$

3,460


$

2,871


$

3,061


$

11


$

9,403


Total (3)

$

779,457



$

49,117


$

106,812


$

51,173


$

5,374


$

212,274


Total Excluding NY Renovations (4)

$

680,563



$

47,081


$

88,949


$

37,086


$

5,022


$

177,936




(1)

The pro forma operating data includes the operating results for each of the Company's hotels assuming they were owned since January 1, 2012.

(2)

The non-cash adjustments include expenses incurred by the hotels due to the straight lining of the rent from ground lease obligations, the non-cash amortization of our favorable lease assets and the non-cash amortization of our unfavorable contract liabilities.

(3)

Excludes the Torrance Marriott South Bay that was sold during 2013.

(4)

Excludes three hotels in New York City under renovation during the year ended December 31, 2013; the Lexington Hotel New York, Courtyard Manhattan Midtown East and Courtyard Fifth Avenue.

 

SOURCE DiamondRock Hospitality Company

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