Chesapeake Lodging Trust (CHSP) 8-K Chesapeake Lodging Trust Reports Fourth Quarter Results

	Exhibit 99.1
	PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

CHESAPEAKE LODGING TRUST REPORTS FOURTH QUARTER RESULTS

ANNAPOLIS, MD, February 18, 2016 – Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended December 31, 2015.

HIGHLIGHTS

• RevPAR: 3.8% pro forma increase for the hotel portfolio over the same period in 2014.

• Adjusted Hotel EBITDA Margin: 240 basis point pro forma increase to 32.7% for the hotel portfolio over the same period in 2014.

• Adjusted Hotel EBITDA: $47.8 million.

• Adjusted Corporate EBITDA: $42.8 million.

• Adjusted FFO: $30.7 million or $0.52 per diluted common share.

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

CONSOLIDATED FINANCIAL RESULTS

The following is a summary of the consolidated financial results for the three months and year ended December 31, 2015 and 2014 (in millions, except share and per share amounts):

	Three Months Ended December 31,				Year Ended December 31,
	2015		2014		2015		2014
Total revenue	$	146.2	$	123.5	$	582.6	$	478.0
Net income available to common shareholders	$	12.3	$	6.4	$	57.8	$	51.3
Net income per diluted common share	$	0.21	$	0.12	$	0.99	$	1.00
Adjusted Hotel EBITDA	$	47.8	$	37.7	$	190.6	$	154.0
Adjusted Corporate EBITDA	$	42.8	$	33.7	$	172.5	$	138.4
AFFO available to common shareholders	$	30.7	$	24.0	$	127.8	$	100.4
AFFO per diluted common share	$	0.52	$	0.44	$	2.21	$	1.97
Weighted-average number of diluted common shares outstanding	59,027,852		54,262,749		57,926,399		50,890,861

HOTEL OPERATING RESULTS

Management assesses the operating performance of its hotels irrespective of the hotel owner during the periods compared using the following key operating metrics: occupancy, ADR, RevPAR, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin. The Trust uses the term "pro forma" to refer to metrics that include, or comparisons of metrics that are based on, the operating results of hotels under previous ownership for either a portion of or the entire period. As of December 31, 2015, the Trust owned 22 hotels. Since two of its hotels owned as of December 31, 2015 were acquired during 2015 and another one was acquired in October 2014, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three months and year ended December 31, 2015 and 2014.

Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three months and year ended December 31, 2015 and 2014 (in thousands, except for ADR and RevPAR):

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

	Three Months Ended December 31,							Year Ended December 31,
	2015			2014(1)			Change	2015(1)			2014(1)			Change
Pro forma Occupancy	79.0		%	75.2		%	380 bps	81.3		%	79.4		%	190 bps
Pro forma ADR	$	222.41		$	225.11		(1.2)%	$	228.70		$	221.44		3.3%
Pro forma RevPAR	$	175.68		$	169.29		3.8%	$	185.88		$	175.87		5.7%
Pro forma Adjusted Hotel EBITDA	$	47,763		$	42,668		11.9%	$	197,393		$	180,113		9.6%
Pro forma Adjusted Hotel EBITDA Margin	32.7		%	30.3		%	240 bps	32.7		%	31.4		%	130 bps

__________

(1) Includes results of operations for certain hotels prior to their acquisition by the Trust.

Hotel EBITDA, Adjusted Hotel EBITDA, Adjusted Hotel EBITDA Margin, Corporate EBITDA, Adjusted Corporate EBITDA, FFO, FFO available to common shareholders and AFFO available to common shareholders are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. See the discussion included in this press release for information regarding these non-GAAP financial measures.

CAPITAL MARKETS ACTIVITY

The Trust has not sold any common shares under its continuous at-the-market (ATM) program or repurchased any common shares under its share repurchase program during 2015 and through February 18, 2016.

DIVIDENDS

On October 15, 2015, the Trust paid dividends in the amounts of $0.40 per share to its common shareholders and $0.484375 per share to its preferred shareholders, both of record as of September 30, 2015. On December 17, 2015, the Trust declared dividends in the amounts of $0.40 per share payable to its common shareholders and $0.484375 per share payable to its preferred shareholders, both of record as of December 31, 2015. Both dividends were paid on January 15, 2016.

2016 OUTLOOK

The Trust reaffirms its previously provided first quarter and full year 2016 outlook as follows (in millions, except RevPAR and per share amounts):

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

	First Quarter						Full Year
	2016 Outlook						2016 Outlook
	Low			High			Low			High
CONSOLIDATED:
Net income available to common shareholders	$	3.4		$	5.1		$	72.9		$	78.6
Net income per diluted common share	$	0.06		$	0.09		$	1.24		$	1.34
Adjusted Corporate EBITDA	$	31.2		$	32.7		$	193.6		$	200.1
AFFO available to common shareholders	$	21.8		$	23.6		$	147.1		$	152.8
AFFO per diluted common share	$	0.37		$	0.40		$	2.50		$	2.60
Corporate cash general and administrative expense	$	2.8		$	3.0		$	10.0		$	10.8
Corporate non-cash general and administrative expense	$	2.3		$	2.3		$	9.4		$	9.4
Weighted-average number of diluted common shares outstanding	59.2			59.2			58.9			58.9
HOTEL PORTFOLIO:
RevPAR	$	164.00		$	167.00		$	195.00		$	199.00
Pro forma RevPAR increase over 2015(1)	6.0		%	8.0		%	5.0		%	7.0		%
Adjusted Hotel EBITDA	$	36.3		$	38.0		$	213.0		$	220.3
Adjusted Hotel EBITDA Margin	26.9		%	27.6		%	33.7		%	34.2		%
Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1)	200 bps			275 bps			100 bps			150 bps

_____________

(1) The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust.

The Trust’s 2016 outlook assumes no acquisitions, dispositions, or financing transactions beyond the refinance of the Hyatt Regency Boston mortgage loan and the Courtyard Washington Capitol Hill/Navy Yard mortgage loan, which are prepayable without penalty on April 6, 2016 and August 1, 2016, respectively. See the accompanying financial tables for quarterly pro forma hotel operating results for the hotel portfolio for 2015.

“We are off to a strong start in 2016 with RevPAR growth of over 9.0% in January. We continue to see solid trends on the group side of our business, which in turn has helped compression with transient booking thus far,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “We expect the remainder of the quarter to exhibit continued strong growth and as a result, we are reaffirming the first quarter and full year outlook we provided earlier this year.”

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

NON-GAAP FINANCIAL MEASURES

The Trust reports the following eight non-GAAP financial measures that it believes are useful to investors as key measures of its operating performance: (1) Hotel EBITDA, (2) Adjusted Hotel EBITDA, (3) Adjusted Hotel EBITDA Margin, (4) Corporate EBITDA, (5) Adjusted Corporate EBITDA, (6) FFO, (7) FFO available to common shareholders and (8) AFFO available to common shareholders. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are included in the accompanying financial tables.

Hotel EBITDA – Hotel EBITDA is defined as net income before interest, income taxes, depreciation and amortization, air rights amortization, corporate general and administrative, and hotel acquisition costs. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trust’s hotel operating performance, excluding the impact of the Trust’s capital structure (primarily interest), the Trust’s asset base (primarily depreciation and amortization), and the Trust’s corporate-level expenses (corporate general and administrative and hotel acquisition costs).

Adjusted Hotel EBITDA – The Trust further adjusts Hotel EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for non-cash amortization of intangible assets and liabilities, including ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that Adjusted Hotel EBITDA provides investors with another useful financial measure to evaluate the Trust’s hotel operating performance, excluding the effect of these non-cash items.

Adjusted Hotel EBITDA Margin – Adjusted Hotel EBITDA Margin is defined as Adjusted Hotel EBITDA as a percentage of total revenues. The Trust believes that Adjusted Hotel EBITDA Margin provides investors another useful financial measure to evaluate the Trust’s hotel operating performance.

Corporate EBITDA – Corporate EBITDA is defined as net income before interest, income taxes, and depreciation and amortization. The Trust believes that Corporate EBITDA provides investors a useful financial measure to evaluate the Trust’s operating performance, excluding the impact of the Trust’s capital structure (primarily interest expense) and the Trust’s asset base (primarily depreciation and amortization).

Adjusted Corporate EBITDA – The Trust further adjusts Corporate EBITDA for certain additional recurring and non-recurring items. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items, and gains (losses) from sales of real estate, which is a non-recurring item. The Trust believes that Adjusted Corporate EBITDA provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

FFO – The Trust calculates FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which defines FFO as net income (calculated in accordance with GAAP), excluding depreciation and amortization, impairment charges of depreciable real estate, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of depreciation and amortization and gains (losses) from sales of real estate, both of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, the Trust believes that FFO provides investors a useful financial measure to evaluate the Trust’s operating performance.

FFO available to common shareholders – The Trust reduces FFO for preferred share dividends and dividends declared on and earnings allocated to unvested time-based awards (consistent with adjustments required by GAAP in reporting net income available to common shareholders and related per share amounts). FFO available to common shareholders provides investors another financial measure to evaluate the Trust’s operating performance after taking into account the interests of holders of the Trust’s preferred shares and unvested time-based awards.

AFFO available to common shareholders – The Trust further adjusts FFO available to common shareholders for certain additional recurring and non-recurring items that are not in NAREIT’s definition of FFO. Specifically, the Trust adjusts for hotel acquisition costs and non-cash amortization of intangible assets and liabilities, including air rights contracts, ground lease assets and unfavorable contract liabilities, deferred franchise costs, and deferred key money, all of which are recurring items. The Trust believes that AFFO available to common shareholders provides investors with another financial measure of its operating performance that provides for greater comparability of its core operating results between periods.

CONFERENCE CALL

The Trust will host a conference call on Thursday, February 18, 2016 at 5:00 p.m. Eastern Time to discuss its financial results. Interested individuals are invited to listen to the call by dialing (877) 683-0303 (U.S./Canadian callers) or (706) 643-5037 (International callers). The conference call ID is 32353126. A simultaneous webcast of the call will be available on the Trust’s website at www.chesapeakelodgingtrust.com. It is recommended that participants call or log on 10 minutes ahead of the scheduled start time to ensure proper connection.

A replay of the conference call will be available two hours after the live call until midnight on February 25, 2016. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International

PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142

callers). The conference call ID is 32353126. A webcast replay and transcript of the conference call will be archived and available on the Trust’s website for 12 months.

ABOUT CHESAPEAKE LODGING TRUST

Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 22 hotels with an aggregate of 6,699 rooms in nine states and the District of Columbia. Additional information can be found on the Trust’s website at www.chesapeakelodgingtrust.com.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “plan,” “predict,” “project,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts, such as the Trust’s first quarter and full year 2016 outlook. 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: U.S. economic conditions generally and the real estate market and the lodging industry specifically; management and performance of the Trust's hotels; supply and demand for hotel rooms in the Trust's markets; the Trust's competition; the Trust’s ability to continue to satisfy complex rules in order for it to remain a REIT for federal income tax purposes; the effects of any acquisitions, dispositions or financing transactions the Trust may undertake; and other risks and uncertainties associated with the Trust’s business described in its filings with the SEC. Although the Trust 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 February 18, 2016, and the Trust undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Trust’s expectations, except as required by law.

CHESAPEAKE LODGING TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2015			2014
ASSETS
Property and equipment, net	$	1,926,944		$	1,580,427
Intangible assets, net	36,414			36,992
Cash and cash equivalents	50,544			29,326
Restricted cash	40,361			43,387
Accounts receivable, net	15,603			13,102
Prepaid expenses and other assets	17,900			10,637
Deferred financing costs, net	6,493			6,064
Total assets	$	2,094,259		$	1,719,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt	$	776,241		$	551,723
Accounts payable and accrued expenses	62,683			53,442
Other liabilities	45,778			32,788
Total liabilities	884,702			637,953
Commitments and contingencies
Preferred shares, $.01 par value; 100,000,000 shares authorized; Series A Cumulative Redeemable Preferred Shares; 5,000,000 shares issued and outstanding ($127,422 liquidation preference)	50			50
Common shares, $.01 par value; 400,000,000 shares authorized; 59,659,522 shares and 54,818,064 shares issued and outstanding, respectively	597			548
Additional paid-in capital	1,297,877			1,138,391
Cumulative dividends in excess of net income	(88,675		)	(57,007		)
Accumulated other comprehensive loss	(292		)	—
Total shareholders’ equity	1,209,557			1,081,982
Total liabilities and shareholders’ equity	$	2,094,259		$	1,719,935
SUPPLEMENTAL CREDIT INFORMATION:
Fixed charge coverage ratio(1)	3.04			2.65
Leverage ratio(1)	32.6		%	31.1		%

______________ 

(1) Calculated as defined under the Trust’s revolving credit facility.

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
	(unaudited)
REVENUE
Rooms	$	108,193		$	93,297		$	441,141		$	364,727
Food and beverage	31,139			25,093			117,171			94,307
Other	6,848			5,111			24,312			18,946
Total revenue	146,180			123,501			582,624			477,980
EXPENSES
Hotel operating expenses:
Rooms	25,175			22,515			100,245			84,445
Food and beverage	22,895			19,016			87,625			71,816
Other direct	1,809			2,019			7,109			8,032
Indirect	48,383			42,166			196,523			160,589
Total hotel operating expenses	98,262			85,716			391,502			324,882
Depreciation and amortization	18,581			14,079			69,743			51,567
Air rights contract amortization	130			130			520			520
Corporate general and administrative	4,952			4,052			18,046			15,557
Hotel acquisition costs	—			3,562			854			3,622
Total operating expenses	121,925			107,539			480,665			396,148
Operating income	24,255			15,962			101,959			81,832
Interest income	—			—			—			8
Interest expense	(8,222		)	(6,880		)	(31,856		)	(27,357		)
Gain on sale of hotel	—			—			—			7,006
Income before income taxes	16,033			9,082			70,103			61,489
Income tax expense	(1,302		)	(243		)	(2,595		)	(535		)
Net income	14,731			8,839			67,508			60,954
Preferred share dividends	(2,422		)	(2,422		)	(9,688		)	(9,688		)
Net income available to common shareholders	$	12,309		$	6,417		$	57,820		$	51,266
Net income per common share:
Basic	$	0.21		$	0.12		$	1.00		$	1.01
Diluted	$	0.21		$	0.12		$	0.99		$	1.00
Weighted-average number of common shares outstanding:
Basic	58,561,323			53,821,483			57,474,256			50,488,007
Diluted	59,027,852			54,262,749			57,926,399			50,890,861

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2015			2014
Cash flows from operating activities:
Net income	$	67,508		$	60,954
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69,743			51,567
Air rights contract amortization	520			520
Deferred financing costs amortization	1,882			2,448
Gain on sale of hotel	—			(7,006		)
Share-based compensation	7,644			5,803
Other	(834		)	625
Changes in assets and liabilities:
Accounts receivable, net	(679		)	1,277
Prepaid expenses and other assets	(4,101		)	(290		)
Accounts payable and accrued expenses	4,069			3,766
Other liabilities	5,961			(30		)
Net cash provided by operating activities	151,713			119,634
Cash flows from investing activities:
Acquisition of hotels, net of cash acquired	(255,249		)	(152,292		)
Disposition of hotel, net of cash sold	—			31,822
Improvements and additions to hotels	(36,782		)	(87,182		)
Change in restricted cash	3,026			(2,164		)
Net cash used in investing activities	(289,005		)	(209,816		)
Cash flows from financing activities:
Proceeds from sale of common shares, net of underwriting fees	153,962			144,320
Payment of offering costs related to sale of common shares	(284		)	(392		)
Borrowings under revolving credit facility	330,000			100,000
Repayments under revolving credit facility	(220,000		)	(100,000		)
Proceeds from issuance of mortgage debt	—			90,000
Scheduled principal payments on mortgage debt	(10,271		)	(69,837		)
Payment of deferred financing costs	(2,311		)	(2,011		)
Payment of dividends to common shareholders	(81,111		)	(58,892		)
Payment of dividends to preferred shareholders	(9,688		)	(9,688		)
Repurchase of common shares	(1,787		)	(2,705		)
Net cash provided by financing activities	158,510			90,795
Net increase in cash	21,218			613
Cash and cash equivalents, beginning of period	29,326			28,713
Cash and cash equivalents, end of period	$	50,544		$	29,326

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share data)

(unaudited)

The following table reconciles net income to Hotel EBITDA, Adjusted Hotel EBITDA, pro forma Adjusted Hotel EBITDA, and pro forma Adjusted Hotel EBITDA Margin for the three months and year ended December 31, 2015 and 2014:

	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
Net income	$	14,731		$	8,839		$	67,508		$	60,954
Add: Interest expense	8,222			6,880			31,856			27,357
Income tax expense	1,302			243			2,595			535
Depreciation and amortization	18,581			14,079			69,743			51,567
Air rights contract amortization	130			130			520			520
Corporate general and administrative	4,952			4,052			18,046			15,557
Hotel acquisition costs	—			3,562			854			3,622
Less: Interest income	—			—			—			(8		)
Hotel EBITDA	47,918			37,785			191,122			160,104
Less: Non-cash amortization(1)	(155		)	(81		)	(571		)	889
Gain on sale of hotel	—			—			—			(7,006		)
Adjusted Hotel EBITDA	47,763			37,704			190,551			153,987
Add: Prior owner Hotel EBITDA(2)	—			4,964			6,842			28,219
Less: Hotel EBITDA of hotel sold(3)	—			—			—			(2,093		)
Pro forma Adjusted Hotel EBITDA	$	47,763		$	42,668		$	197,393		$	180,113
Total revenue	$	146,180		$	123,501		$	582,624		$	477,980
Add: Prior owner total revenue(2)	—			17,341			20,286			100,311
Less: Total revenue of hotel sold(3)	—			—			—			(5,166		)
Pro forma total revenue	$	146,180		$	140,842		$	602,910		$	573,125
Pro forma Adjusted Hotel EBITDA Margin	32.7		%	30.3		%	32.7		%	31.4		%

_____________

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.

(2) Reflects results of operations for certain hotels prior to our acquisition.

(3) Reflects results of operations for the Courtyard Anaheim at Disneyland Resort which was sold on September 30, 2014.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share data)

(unaudited)

The following table reconciles net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months and year ended December 31, 2015 and 2014:

	Three Months Ended December 31,					Year Ended December 31,
	2015			2014		2015			2014
Net income	$	14,731		$	8,839	$	67,508		$	60,954
Add: Interest expense	8,222			6,880		31,856			27,357
Income tax expense	1,302			243		2,595			535
Depreciation and amortization	18,581			14,079		69,743			51,567
Less: Interest income	—			—		—			(8		)
Corporate EBITDA	42,836			30,041		171,702			140,405
Add: Hotel acquisition costs	—			3,562		854			3,622
Less: Non-cash amortization(1)	(25		)	49		(51		)	1,408
Gain on sale of hotel	—			—		—			(7,006		)
Adjusted Corporate EBITDA	$	42,811		$	33,652	$	172,505		$	138,429

____________ 

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.

The following table reconciles net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months and year ended December 31, 2015 and 2014:

	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
Net income	$	14,731		$	8,839		$	67,508		$	60,954
Add: Depreciation and amortization	18,581			14,079			69,743			51,567
Less: Gain on sale of hotel	—			—			—			(7,006		)
FFO	33,312			22,918			137,251			105,515
Less: Preferred share dividends	(2,422		)	(2,422		)	(9,688		)	(9,688		)
Dividends declared on unvested time-based awards	(134		)	(114		)	(560		)	(499		)
Undistributed earnings allocated to unvested time-based awards	—			—			—			—
FFO available to common shareholders	30,756			20,382			127,003			95,328
Add: Hotel acquisition costs	—			3,562			854			3,622
Non-cash amortization(1)	(25		)	49			(51		)	1,408
AFFO available to common shareholders	$	30,731		$	23,993		$	127,806		$	100,358
FFO per common share:
Basic	$	0.53		$	0.38		$	2.21		$	1.89
Diluted	$	0.52		$	0.38		$	2.19		$	1.87
AFFO per common share:
Basic	$	0.52		$	0.45		$	2.22		$	1.99
Diluted	$	0.52		$	0.44		$	2.21		$	1.97

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share data)

(unaudited)

____________ 

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.

The following table reconciles forecasted net income to Hotel EBITDA, Adjusted Hotel EBITDA, and Adjusted Hotel EBITDA Margin for the three months ending March 31, 2016 and year ending December 31, 2016:

	Three Months Ending March 31, 2016						Year Ending December 31, 2016
	Low			High			Low			High
Net income	$	5,950		$	7,700		$	83,130		$	88,880
Add: Interest expense	8,260			8,260			33,510			33,510
Income tax expense (benefit)	(1,500		)	(1,700		)	2,750			3,500
Depreciation and amortization	18,470			18,470			74,290			74,290
Air rights contract amortization	130			130			520			520
Corporate general and administrative	5,100			5,300			19,420			20,170
Hotel EBITDA	36,410			38,160			213,620			220,870
Less: Non-cash amortization(1)	(160		)	(160		)	(620		)	(620		)
Adjusted Hotel EBITDA	$	36,250		$	38,000		$	213,000		$	220,250
Total revenue	$	134,900		$	137,600		$	631,500		$	643,500
Adjusted Hotel EBITDA Margin	26.9		%	27.6		%	33.7		%	34.2		%

_____________

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.

The following table reconciles forecasted net income to Corporate EBITDA and Adjusted Corporate EBITDA for the three months ending March 31, 2016 and year ending December 31, 2016:

	Three Months Ending March 31, 2016						Year Ending December 31, 2016
	Low			High			Low			High
Net income	$	5,950		$	7,700		$	83,130		$	88,880
Add: Interest expense	8,260			8,260			33,510			33,510
Income tax expense (benefit)	(1,500		)	(1,700		)	2,750			3,500
Depreciation and amortization	18,470			18,470			74,290			74,290
Corporate EBITDA	31,180			32,730			193,680			200,180
Less: Non-cash amortization(1)	(30		)	(30		)	(100		)	(100		)
Adjusted Corporate EBITDA	$	31,150		$	32,700		$	193,580		$	200,080

____________

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.

CHESAPEAKE LODGING TRUST

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share data)

(unaudited)

The following table reconciles forecasted net income to FFO, FFO available to common shareholders, and AFFO available to common shareholders for the three months ending March 31, 2016 and year ending December 31, 2016:

	Three Months Ending March 31, 2016						Year Ending December 31, 2016
	Low			High			Low			High
Net income	$	5,950		$	7,700		$	83,130		$	88,880
Add: Depreciation and amortization	18,470			18,470			74,290			74,290
FFO	24,420			26,170			157,420			163,170
Less: Preferred share dividends	(2,420		)	(2,420		)	(9,690		)	(9,690		)
Dividends declared on unvested time-based awards	(140		)	(140		)	(560		)	(560		)
Undistributed earnings allocated to unvested time-based awards	—			—			—			—
FFO available to common shareholders	21,860			23,610			147,170			152,920
Less: Non-cash amortization(1)	(30		)	(30		)	(100		)	(100		)
AFFO available to common shareholders	$	21,830		$	23,580		$	147,070		$	152,820
FFO per common share – basic and diluted	$	0.37		$	0.40		$	2.50		$	2.60
AFFO per common share – basic and diluted	$	0.37		$	0.40		$	2.50		$	2.60
Weighted-average number of common shares outstanding:
Basic	58,693			58,693			58,765			58,765
Diluted	59,196			59,196			58,860			58,860

____________ 

(1) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.

CHESAPEAKE LODGING TRUST

SUPPLEMENTAL HOTEL OPERATING RESULTS

(in thousands, except ADR and RevPAR)

(unaudited)

The following table includes the Trust's 2015 hotel operating results for the hotel portfolio:

	Three Months Ended												Year Ended
	March 31, 2015			June 30, 2015			September 30, 2015			December 31, 2015			December 31, 2015
HOTEL PORTFOLIO(1):
Occupancy	72.0		%	86.0		%	87.9		%	79.0		%	81.3		%
ADR	$	214.86		$	237.11		$	237.33		$	222.41		$	228.70
RevPAR	$	154.78		$	203.99		$	208.58		$	175.68		$	185.88
Net income	$	1,552		$	24,045		$	27,180		$	14,731		$	67,508
Add: Interest expense	7,179			8,168			8,287			8,222			31,856
Income tax expense (benefit)	(3,348		)	4,340			301			1,302			2,595
Depreciation and amortization	14,927			17,929			18,306			18,581			69,743
Air rights contract amortization	130			130			130			130			520
Corporate general and administrative	4,577			4,498			4,019			4,952			18,046
Hotel acquisition costs	369			466			19			—			854
Hotel EBITDA	25,386			59,576			58,242			47,918			191,122
Less: Non-cash amortization(2)	(81		)	(180		)	(155		)	(155		)	(571		)
Adjusted Hotel EBITDA	25,305			59,396			58,087			47,763			190,551
Add: Prior owner Hotel EBITDA(1)	6,363			479			—			—			6,842
Pro forma Adjusted Hotel EBITDA	$	31,668		$	59,875		$	58,087		$	47,763		$	197,393
Total revenue	$	109,290		$	162,145		$	165,009		$	146,180		$	582,624
Add: Prior owner total revenue(1)	18,044			2,242			—			—			20,286
Pro forma total revenue	$	127,334		$	164,387		$	165,009		$	146,180		$	602,910
Pro forma Adjusted Hotel EBITDA Margin	24.9		%	36.4		%	35.2		%	32.7		%	32.7		%

_____________

(1) The hotel operating results for the three months ended March 31, 2015 and June 30, 2015, and for the year ended December 31, 2015, reflect results of operations for certain hotel(s) prior to their acquisition by the Trust.

(2) Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.

CHESAPEAKE LODGING TRUST

CURRENT HOTEL PORTFOLIO

Hotel		Location	Rooms	Acquisition Date
1	Hyatt Regency Boston	Boston, MA	502	March 18, 2010
2	Hilton Checkers Los Angeles	Los Angeles, CA	193	June 1, 2010
3	Boston Marriott Newton	Newton, MA	430	July 30, 2010
4	Le Meridien San Francisco	San Francisco, CA	360	December 15, 2010
5	Homewood Suites Seattle Convention Center	Seattle, WA	195	May 2, 2011
6	W Chicago – City Center	Chicago, IL	403	May 10, 2011
7	Hotel Indigo San Diego Gaslamp Quarter	San Diego, CA	210	June 17, 2011
8	Courtyard Washington Capitol Hill/Navy Yard	Washington, DC	204	June 30, 2011
9	Hotel Adagio San Francisco, Autograph Collection	San Francisco, CA	171	July 8, 2011
10	Denver Marriott City Center	Denver, CO	613	October 3, 2011
11	Hyatt Herald Square New York	New York, NY	122	December 22, 2011
12	W Chicago – Lakeshore	Chicago, IL	520	August 21, 2012
13	Hyatt Regency Mission Bay Spa and Marina	San Diego, CA	429	September 7, 2012
14	The Hotel Minneapolis, Autograph Collection	Minneapolis, MN	222	October 30, 2012
15	Hyatt Place New York Midtown South	New York, NY	185	March 14, 2013
16	W New Orleans – French Quarter	New Orleans, LA	97	March 28, 2013
17	Le Meridien New Orleans	New Orleans, LA	410	April 25, 2013
18	Hyatt Fisherman’s Wharf	San Francisco, CA	316	May 31, 2013
19	Hyatt Santa Barbara	Santa Barbara, CA	205	June 27, 2013
20	JW Marriott San Francisco Union Square	San Francisco, CA	337	October 1, 2014
21	Royal Palm South Beach Miami, a Tribute Portfolio Resort	Miami Beach, FL	393	March 9, 2015
22	Ace Hotel and Theater Downtown Los Angeles	Los Angeles, CA	182	April 30, 2015
			6,699