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| | | Exhibit 99.1 |
| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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CHESAPEAKE LODGING TRUST REPORTS SECOND QUARTER RESULTS
ANNAPOLIS, MD, July 29, 2016 – Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended June 30, 2016.
HIGHLIGHTS
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| • | RevPAR: 2.2% pro forma increase for the hotel portfolio over the same period in 2015. |
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| • | Adjusted Hotel EBITDA Margin: 50 basis point pro forma increase to 36.9% for the hotel portfolio over the same period in 2015. |
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| • | Adjusted Hotel EBITDA: $62.6 million. |
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| • | Adjusted Corporate EBITDA: $57.9 million. |
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| • | Net income available to common shareholders: $26.1 million or $0.44 per diluted common share. |
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| • | Adjusted FFO: $43.9 million or $0.75 per diluted common share. |
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| • | Financings: Prepaid without penalty its previous Hyatt Regency Boston loan and entered into a new $150.0 million, 10-year loan at 4.25%. |
CONSOLIDATED FINANCIAL RESULTS
The following is a summary of the consolidated financial results for the three and six months ended June 30, 2016 and 2015 (in millions, except share and per share amounts):
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| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015 | | 2016 | | 2015 |
| Total revenue | | $ | 169.4 |
| | $ | 162.1 |
| | $ | 310.0 |
| | $ | 271.4 |
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| | | | | | | | | |
| Net income available to common shareholders | | $ | 26.1 |
| | $ | 21.6 |
| | $ | 33.8 |
| | $ | 20.8 |
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| Net income per diluted common share | | $ | 0.44 |
| | $ | 0.36 |
| | $ | 0.57 |
| | $ | 0.36 |
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| | | | | | | | | |
| Adjusted Hotel EBITDA | | $ | 62.6 |
| | $ | 59.4 |
| | $ | 102.6 |
| | $ | 84.7 |
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| | | | | | | | | |
| Adjusted Corporate EBITDA | | $ | 57.9 |
| | $ | 54.9 |
| | $ | 92.6 |
| | $ | 75.6 |
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| | | | | | | | | |
| AFFO available to common shareholders | | $ | 43.9 |
| | $ | 39.8 |
| | $ | 69.9 |
| | $ | 54.2 |
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| AFFO per diluted common share | | $ | 0.75 |
| | $ | 0.68 |
| | $ | 1.19 |
| | $ | 0.95 |
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| | | | | | | | | |
| Weighted-average number of diluted common shares outstanding | | 58,864,050 |
| | 58,956,483 |
| | 58,836,746 |
| | 56,783,872 |
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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 June 30, 2016, the Trust owned 22 hotels. Since two of its hotels owned as of June 30, 2016 were acquired during 2015, the key operating metrics below reflect the pro forma operating results for those hotels for all, or a certain period, of the three and six months ended June 30, 2015.
Included in the following table are comparisons of the key operating metrics for the hotel portfolio for the three and six months ended June 30, 2016 and 2015 (in thousands, except for ADR and RevPAR):
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| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015(1) | | Change | | 2016 | | 2015(1) | | Change |
| Occupancy | | 88.1 | % | | 86.0 | % | | 210 bps | | 83.4 | % | | 79.1 | % | | 430 bps |
| ADR | | $ | 236.69 |
| | $ | 237.11 |
| | (0.2)% | | $ | 227.05 |
| | $ | 227.03 |
| | 0.0% |
| RevPAR | | $ | 208.43 |
| | $ | 203.99 |
| | 2.2% | | $ | 189.39 |
| | $ | 179.52 |
| | 5.5% |
| | | | | | | | | | | | | |
| Adjusted Hotel EBITDA | | $ | 62,597 |
| | $ | 59,875 |
| | 4.5% | | $ | 102,648 |
| | $ | 91,543 |
| | 12.1% |
| Adjusted Hotel EBITDA Margin | | 36.9 | % | | 36.4 | % | | 50 bps | | 33.1 | % | | 31.4 | % | | 170 bps |
__________
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| (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.
FINANCING ACTIVITY
On April 6, 2016, the Trust prepaid without penalty its previous mortgage loan secured by the Hyatt Regency Boston, which had an outstanding principal balance at the time of $88.2 million, with a borrowing under its revolving credit facility. On June 23, 2016, the Trust entered into a new 10-year, $150.0 million, fixed-rate mortgage loan secured by the Hyatt Regency Boston. The loan carries a fixed interest rate of 4.25% per annum, with principal and interest payments based on a 30-year principal amortization. The Trust used the proceeds from the new loan to repay outstanding borrowings under its revolving credit facility.
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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DISPOSITION ACTIVITY
On April 14, 2016, the Trust sold the separate, five-room villa building and related land parcel at the Hyatt Centric Santa Barbara for a sale price of $2.1 million. The Trust recognized a $0.6 million gain on sale.
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 2016.
DIVIDENDS
On April 15, 2016, 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 March 31, 2016. On May 17, 2016, 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 June 30, 2016. Both dividends were paid on July 15, 2016.
2016 OUTLOOK
The Trust is updating its 2016 outlook to incorporate its second quarter results and recent operating trends and fundamentals. The updated outlook assumes no acquisitions, dispositions, or financing transactions beyond the prepayment without penalty of the Courtyard Washington Capitol Hill/Navy Yard mortgage loan on August 1, 2016 (in millions, except RevPAR and per share amounts):
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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| Third Quarter 2016 | | Outlook |
| | | Low | | High |
| CONSOLIDATED: | | | | |
| | | | | |
| Net income available to common shareholders | | $ | 23.7 |
| | $ | 25.8 |
|
| Net income per diluted common share | | $ | 0.40 |
| | $ | 0.44 |
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| | | | | |
| Adjusted Corporate EBITDA | | $ | 53.5 |
| | $ | 55.8 |
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| | | | | |
| AFFO available to common shareholders | | $ | 42.5 |
| | $ | 44.6 |
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| AFFO per diluted common share | | $ | 0.72 |
| | $ | 0.76 |
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| | | | | |
| Corporate cash general and administrative expense | | $ | 2.1 |
| | $ | 2.3 |
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| Corporate non-cash general and administrative expense | | $ | 2.4 |
| | $ | 2.4 |
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| | | | | |
| Weighted-average number of diluted common shares outstanding | | 58.9 |
| | 58.9 |
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| 22-HOTEL PORTFOLIO: | | | | |
| | | | | |
| RevPAR | | $ | 209.00 |
| | $ | 213.00 |
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| RevPAR increase over 2015 | | 0.0 | % | | 2.0 | % |
| Adjusted Hotel EBITDA | | $ | 58.0 |
| | $ | 60.5 |
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| Adjusted Hotel EBITDA Margin | | 35.2 | % | | 36.0 | % |
| Adjusted Hotel EBITDA Margin increase over 2015 | | 0 bps |
| | 75 bps |
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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| Full Year 2016 | | Updated Outlook | | Previous Outlook |
| | | Low | | High | | Low | | High |
| CONSOLIDATED: | | | | | | | | |
| | | | | | | | | |
| Net income available to common shareholders | | $ | 69.6 |
| | $ | 74.6 |
| | $ | 74.3 |
| | $ | 80.1 |
|
| Net income per diluted common share | | $ | 1.18 |
| | $ | 1.27 |
| | $ | 1.26 |
| | $ | 1.36 |
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| | | | | | | | | |
| Adjusted Corporate EBITDA | | $ | 188.0 |
| | $ | 193.5 |
| | $ | 193.6 |
| | $ | 200.1 |
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| | | | | | | | | |
| AFFO available to common shareholders | | $ | 143.7 |
| | $ | 148.7 |
| | $ | 148.5 |
| | $ | 154.3 |
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| AFFO per diluted common share | | $ | 2.45 |
| | $ | 2.53 |
| | $ | 2.52 |
| | $ | 2.62 |
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| | | | | | | | | |
| Corporate cash general and administrative expense | | $ | 9.5 |
| | $ | 10.0 |
| | $ | 10.0 |
| | $ | 10.8 |
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| Corporate non-cash general and administrative expense | | $ | 9.5 |
| | $ | 9.5 |
| | $ | 9.4 |
| | $ | 9.4 |
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| Weighted-average number of diluted common shares outstanding | | 58.7 |
| | 58.7 |
| | 58.9 |
| | 58.9 |
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| 22-HOTEL PORTFOLIO: | | | | | | | | |
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| RevPAR | | $ | 191.00 |
| | $ | 194.00 |
| | $ | 195.00 |
| | $ | 199.00 |
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Pro forma RevPAR increase over 2015(1) | | 3.0 | % | | 4.5 | % | | 5.0 | % | | 7.0 | % |
| Adjusted Hotel EBITDA | | $ | 207.0 |
| | $ | 213.0 |
| | $ | 213.0 |
| | $ | 220.3 |
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| Adjusted Hotel EBITDA Margin | | 33.2 | % | | 33.7 | % | | 33.7 | % | | 34.2 | % |
Pro forma Adjusted Hotel EBITDA Margin increase over 2015(1) | | 50 bps |
| | 100 bps |
| | 100 bps |
| | 150 bps |
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___________
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| (1) | The comparable 2015 period includes results of operations for certain hotels prior to their acquisition by the Trust. |
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).
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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, and gain (losses) from sales of real estate, which is a non-recurring item. 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.
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.
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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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 Friday, July 29, 2016 at 11:00 a.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 47390763. 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 August 5, 2016. To access the replay, dial (855) 859-2056 (U.S./Canadian callers) or (404) 537-3406 (International callers). The conference call ID is 47390763. 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 6,694 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 third 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
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| | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 |
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this release is as of July 29, 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)
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| | | | | | | | |
| | | June 30, 2016 | | December 31, 2015 |
| | | (unaudited) | | |
| | | | | |
| ASSETS | | | | |
| Property and equipment, net | | $ | 1,897,638 |
| | $ | 1,926,944 |
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| Intangible assets, net | | 36,124 |
| | 36,414 |
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| Cash and cash equivalents | | 55,512 |
| | 50,544 |
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| Restricted cash | | 44,231 |
| | 40,361 |
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| Accounts receivable, net | | 25,307 |
| | 15,603 |
|
| Prepaid expenses and other assets | | 21,024 |
| | 17,900 |
|
| Total assets | | $ | 2,079,836 |
| | $ | 2,087,766 |
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| | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
| Long-term debt | | $ | 766,667 |
| | $ | 769,748 |
|
| Accounts payable and accrued expenses | | 67,896 |
| | 62,683 |
|
| Other liabilities | | 45,566 |
| | 45,778 |
|
| Total liabilities | | 880,129 |
| | 878,209 |
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| | | | | |
| 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; 60,101,531 shares and 59,659,522 shares issued and outstanding, respectively | | 601 |
| | 597 |
|
| Additional paid-in capital | | 1,302,443 |
| | 1,297,877 |
|
| Cumulative dividends in excess of net income | | (102,981 | ) | | (88,675 | ) |
| Accumulated other comprehensive loss | | (406 | ) | | (292 | ) |
| Total shareholders’ equity | | 1,199,707 |
| | 1,209,557 |
|
| Total liabilities and shareholders’ equity | | $ | 2,079,836 |
| | $ | 2,087,766 |
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| SUPPLEMENTAL CREDIT INFORMATION: | | | | |
Fixed charge coverage ratio(1) | | 3.34 |
| | 3.04 |
|
Leverage ratio(1) | | 32.3 | % | | 32.6 | % |
______________
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| (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)
(unaudited)
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| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015 | | 2016 | | 2015 |
| REVENUE | | | | | | | | |
| Rooms | | $ | 126,967 |
| | $ | 122,966 |
| | $ | 230,739 |
| | $ | 204,560 |
|
| Food and beverage | | 35,664 |
| | 33,014 |
| | 66,219 |
| | 56,412 |
|
| Other | | 6,800 |
| | 6,165 |
| | 13,084 |
| | 10,463 |
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| Total revenue | | 169,431 |
| | 162,145 |
| | 310,042 |
| | 271,435 |
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| | | | | | | | | |
| EXPENSES | | | | | | | | |
| Hotel operating expenses: | | | | | | | | |
| Rooms | | 27,876 |
| | 26,144 |
| | 53,377 |
| | 47,244 |
|
| Food and beverage | | 24,111 |
| | 23,495 |
| | 46,877 |
| | 41,961 |
|
| Other direct | | 1,589 |
| | 1,906 |
| | 3,147 |
| | 3,239 |
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| Indirect | | 53,103 |
| | 51,024 |
| | 103,683 |
| | 94,029 |
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| Total hotel operating expenses | | 106,679 |
| | 102,569 |
| | 207,084 |
| | 186,473 |
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| Depreciation and amortization | | 18,610 |
| | 17,929 |
| | 37,094 |
| | 32,856 |
|
| Air rights contract amortization | | 130 |
| | 130 |
| | 260 |
| | 260 |
|
| Corporate general and administrative | | 4,734 |
| | 4,498 |
| | 10,000 |
| | 9,075 |
|
| Hotel acquisition costs | | — |
| | 466 |
| | — |
| | 835 |
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| Total operating expenses | | 130,153 |
| | 125,592 |
| | 254,438 |
| | 229,499 |
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| | | | | | | | | |
| Operating income | | 39,278 |
| | 36,553 |
| | 55,604 |
| | 41,936 |
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| | | | | | | | | |
| Interest expense | | (7,560 | ) | | (8,168 | ) | | (15,770 | ) | | (15,347 | ) |
| Gain on sale of hotel | | 598 |
| | — |
| | 598 |
| | — |
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| | | | | | | | | |
| Income before income taxes | | 32,316 |
| | 28,385 |
| | 40,432 |
| | 26,589 |
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| | | | | | | | | |
| Income tax expense | | (3,774 | ) | | (4,340 | ) | | (1,820 | ) | | (992 | ) |
| | | | | | | | | |
| Net income | | 28,542 |
| | 24,045 |
| | 38,612 |
| | 25,597 |
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| | | | | | | | | |
| Preferred share dividends | | (2,422 | ) | | (2,422 | ) | | (4,844 | ) | | (4,844 | ) |
| Net income available to common shareholders | | $ | 26,120 |
| | $ | 21,623 |
| | $ | 33,768 |
| | $ | 20,753 |
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| | | | | | | | | |
| Net income per common share: | | | | | | | | |
| Basic | | $ | 0.44 |
| | $ | 0.37 |
| | $ | 0.57 |
| | $ | 0.36 |
|
| Diluted | | $ | 0.44 |
| | $ | 0.36 |
| | $ | 0.57 |
| | $ | 0.36 |
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| | | | | | | | | |
| Weighted-average number of common shares outstanding: | | | | | | | | |
| Basic | | 58,722,104 |
| | 58,544,392 |
| | 58,701,815 |
| | 56,373,504 |
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| Diluted | | 58,864,050 |
| | 58,956,483 |
| | 58,836,746 |
| | 56,783,872 |
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CHESAPEAKE LODGING TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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| | | | | | | | |
| | | Six Months Ended June 30, |
| | | 2016 | | 2015 |
| | | | | |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 38,612 |
| | $ | 25,597 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortization | | 37,094 |
| | 32,856 |
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| Air rights contract amortization | | 260 |
| | 260 |
|
| Deferred financing costs amortization | | 936 |
| | 939 |
|
| Gain on sale of hotel | | (598 | ) | | — |
|
| Share-based compensation | | 4,764 |
| | 3,743 |
|
| Other | | (442 | ) | | (392 | ) |
| Changes in assets and liabilities: | | | | |
| Accounts receivable, net | | (9,704 | ) | | (13,309 | ) |
| Prepaid expenses and other assets | | (3,126 | ) | | (6,584 | ) |
| Accounts payable and accrued expenses | | 4,407 |
| | 6,403 |
|
| Other liabilities | | (22 | ) | | 5,981 |
|
| Net cash provided by operating activities | | 72,181 |
| | 55,494 |
|
| | | | | |
| Cash flows from investing activities: | | | | |
| Acquisition of hotels, net of cash acquired | | — |
| | (255,249 | ) |
| Disposition of hotel, net of cash sold | | 2,028 |
| | — |
|
| Improvements and additions to hotels | | (9,217 | ) | | (24,361 | ) |
| Change in restricted cash | | (3,870 | ) | | 4,841 |
|
| Net cash used in investing activities | | (11,059 | ) | | (274,769 | ) |
| | | | | |
| Cash flows from financing activities: | | | | |
| Proceeds from sale of common shares, net of underwriting fees | | — |
| | 153,962 |
|
| Payment of offering costs related to sale of common shares | | — |
| | (254 | ) |
| Borrowings under revolving credit facility | | 130,000 |
| | 310,000 |
|
| Repayments under revolving credit facility | | (190,000 | ) | | (175,000 | ) |
| Proceeds from issuance of mortgage debt | | 150,000 |
| | — |
|
| Principal prepayment on mortgage debt | | (88,190 | ) | | — |
|
| Scheduled principal payments on mortgage debt | | (4,877 | ) | | (5,103 | ) |
| Payment of deferred financing costs | | (844 | ) | | (2,302 | ) |
| Payment of dividends to common shareholders | | (47,205 | ) | | (36,906 | ) |
| Payment of dividends to preferred shareholders | | (4,844 | ) | | (4,844 | ) |
| Repurchase of common shares | | (194 | ) | | (1,690 | ) |
| Net cash provided by (used in) financing activities | | (56,154 | ) | | 237,863 |
|
| Net increase in cash | | 4,968 |
| | 18,588 |
|
| Cash and cash equivalents, beginning of period | | 50,544 |
| | 29,326 |
|
| Cash and cash equivalents, end of period | | $ | 55,512 |
| | $ | 47,914 |
|
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 and six months ended June 30, 2016 and 2015:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015 | | 2016 | | 2015 |
| Net income | | $ | 28,542 |
| | $ | 24,045 |
| | $ | 38,612 |
| | $ | 25,597 |
|
| Add: Interest expense | | 7,560 |
| | 8,168 |
| | 15,770 |
| | 15,347 |
|
| Income tax expense | | 3,774 |
| | 4,340 |
| | 1,820 |
| | 992 |
|
| Depreciation and amortization | | 18,610 |
| | 17,929 |
| | 37,094 |
| | 32,856 |
|
| Air rights contract amortization | | 130 |
| | 130 |
| | 260 |
| | 260 |
|
| Corporate general and administrative | | 4,734 |
| | 4,498 |
| | 10,000 |
| | 9,075 |
|
| Hotel acquisition costs | | — |
| | 466 |
| | — |
| | 835 |
|
| Hotel EBITDA | | 63,350 |
| | 59,576 |
| | 103,556 |
| | 84,962 |
|
| | | | | | | | | |
Less: Non-cash amortization(1) | | (155 | ) | | (180 | ) | | (310 | ) | | (261 | ) |
| Gain on sale of hotel | | (598 | ) | | — |
| | (598 | ) | | — |
|
| Adjusted Hotel EBITDA | | 62,597 |
| | 59,396 |
| | 102,648 |
| | 84,701 |
|
| | | | | | | | | |
Add: Prior owner Hotel EBITDA(2) | | — |
| | 479 |
| | — |
| | 6,842 |
|
| Pro forma Adjusted Hotel EBITDA | | $ | 62,597 |
| | $ | 59,875 |
| | $ | 102,648 |
| | $ | 91,543 |
|
| | | | | | | | | |
| Total revenue | | $ | 169,431 |
| | $ | 162,145 |
| | $ | 310,042 |
| | $ | 271,435 |
|
Add: Prior owner total revenue(2) | | — |
| | 2,242 |
| | — |
| | 20,286 |
|
| Pro forma total revenue | | $ | 169,431 |
| | $ | 164,387 |
| | $ | 310,042 |
| | $ | 291,721 |
|
| | | | | | | | | |
| Pro forma Adjusted Hotel EBITDA Margin | | 36.9 | % | | 36.4 | % | | 33.1 | % | | 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. |
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 and six months ended June 30, 2016 and 2015:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015 | | 2016 | | 2015 |
| Net income | | $ | 28,542 |
| | $ | 24,045 |
| | $ | 38,612 |
| | $ | 25,597 |
|
| Add: Interest expense | | 7,560 |
| | 8,168 |
| | 15,770 |
| | 15,347 |
|
| Income tax expense | | 3,774 |
| | 4,340 |
| | 1,820 |
| | 992 |
|
| Depreciation and amortization | | 18,610 |
| | 17,929 |
| | 37,094 |
| | 32,856 |
|
| Corporate EBITDA | | 58,486 |
| | 54,482 |
| | 93,296 |
| | 74,792 |
|
| | | | | | | | | |
| Add: Hotel acquisition costs | | — |
| | 466 |
| | — |
| | 835 |
|
Less: Non-cash amortization(1) | | (25 | ) | | (50 | ) | | (50 | ) | | (1 | ) |
| Gain on sale of hotel | | (598 | ) | | — |
| | (598 | ) | | — |
|
| Adjusted Corporate EBITDA | | $ | 57,863 |
| | $ | 54,898 |
| | $ | 92,648 |
| | $ | 75,626 |
|
____________
| |
| (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 and six months ended June 30, 2016 and 2015:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2016 | | 2015 | | 2016 | | 2015 |
| Net income | | $ | 28,542 |
| | $ | 24,045 |
| | $ | 38,612 |
| | $ | 25,597 |
|
| Add: Depreciation and amortization | | 18,610 |
| | 17,929 |
| | 37,094 |
| | 32,856 |
|
| Less: Gain on sale of hotel | | (598 | ) | | — |
| | (598 | ) | | — |
|
| FFO | | 46,554 |
| | 41,974 |
| | 75,108 |
| | 58,453 |
|
| | | | | | | | | |
| Less: Preferred share dividends | | (2,422 | ) | | (2,422 | ) | | (4,844 | ) | | (4,844 | ) |
| Dividends declared on unvested time-based awards | | (146 | ) | | (136 | ) | | (289 | ) | | (273 | ) |
| Undistributed earnings allocated to unvested time-based awards | | (15 | ) | | (7 | ) | | — |
| | — |
|
| FFO available to common shareholders | | 43,971 |
| | 39,409 |
| | 69,975 |
| | 53,336 |
|
| | | | | | | | | |
| Add: Hotel acquisition costs | | — |
| | 466 |
| | — |
| | 835 |
|
Non-cash amortization(1) | | (25 | ) | | (50 | ) | | (50 | ) | | (1 | ) |
| AFFO available to common shareholders | | $ | 43,946 |
| | $ | 39,825 |
| | $ | 69,925 |
| | $ | 54,170 |
|
| | | | | | | | | |
| FFO per common share: | | | | | | | | |
| Basic | | $ | 0.75 |
| | $ | 0.67 |
| | $ | 1.19 |
| | $ | 0.95 |
|
| Diluted | | $ | 0.75 |
| | $ | 0.67 |
| | $ | 1.19 |
| | $ | 0.94 |
|
| | | | | | | | | |
| AFFO per common share: | | | | | | | | |
| Basic | | $ | 0.75 |
| | $ | 0.68 |
| | $ | 1.19 |
| | $ | 0.96 |
|
| Diluted | | $ | 0.75 |
| | $ | 0.68 |
| | $ | 1.19 |
| | $ | 0.95 |
|
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 September 30, 2016 and year ending December 31, 2016:
|
| | | | | | | | | | | | | | | |
| | Three Months Ending September 30, 2016 | | Year Ending December 31, 2016 |
| | Low | | High | | Low | | High |
| Net income | $ | 26,240 |
| | $ | 28,340 |
| | $ | 79,800 |
| | $ | 84,800 |
|
| Add: Interest expense | 8,120 |
| | 8,120 |
| | 31,820 |
| | 31,820 |
|
| Income tax expense | 300 |
| | 500 |
| | 2,250 |
| | 2,750 |
|
| Depreciation and amortization | 18,830 |
| | 18,830 |
| | 74,820 |
| | 74,820 |
|
| Air rights contract amortization | 130 |
| | 130 |
| | 520 |
| | 520 |
|
| Corporate general and administrative | 4,490 |
| | 4,690 |
| | 19,010 |
| | 19,510 |
|
| Hotel EBITDA | 58,110 |
| | 60,610 |
| | 208,220 |
| | 214,220 |
|
| | | | | | | | |
Less: Non-cash amortization(1) | (160 | ) | | (160 | ) | | (620 | ) | | (620 | ) |
| Gain on sale of hotel | — |
| | — |
| | (600 | ) | | (600 | ) |
| Adjusted Hotel EBITDA | $ | 57,950 |
| | $ | 60,450 |
| | $ | 207,000 |
| | $ | 213,000 |
|
| | | | | | | | |
| Total revenue | $ | 164,650 |
| | $ | 168,150 |
| | $ | 622,700 |
| | $ | 631,200 |
|
| | | | | | | | |
| Adjusted Hotel EBITDA Margin | 35.2 | % | | 36.0 | % | | 33.2 | % | | 33.7 | % |
_____________
| |
| (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 September 30, 2016 and year ending December 31, 2016:
|
| | | | | | | | | | | | | | | |
| | Three Months Ending September 30, 2016 | | Year Ending December 31, 2016 |
| | Low | | High | | Low | | High |
| Net income | $ | 26,240 |
| | $ | 28,340 |
| | $ | 79,800 |
| | $ | 84,800 |
|
| Add: Interest expense | 8,120 |
| | 8,120 |
| | 31,820 |
| | 31,820 |
|
| Income tax expense | 300 |
| | 500 |
| | 2,250 |
| | 2,750 |
|
| Depreciation and amortization | 18,830 |
| | 18,830 |
| | 74,820 |
| | 74,820 |
|
| Corporate EBITDA | 53,490 |
| | 55,790 |
| | 188,690 |
| | 194,190 |
|
| | | | | | | | |
Less: Non-cash amortization(1) | (30 | ) | | (30 | ) | | (100 | ) | | (100 | ) |
| Gain on sale of hotel | — |
| | — |
| | (600 | ) | | (600 | ) |
| Adjusted Corporate EBITDA | $ | 53,460 |
| | $ | 55,760 |
| | $ | 187,990 |
| | $ | 193,490 |
|
____________
| |
| (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 September 30, 2016 and year ending December 31, 2016:
|
| | | | | | | | | | | | | | | |
| | Three Months Ending September 30, 2016 | | Year Ending December 31, 2016 |
| | Low | | High | | Low | | High |
| Net income | $ | 26,240 |
| | $ | 28,340 |
| | $ | 79,800 |
| | $ | 84,800 |
|
| Add: Depreciation and amortization | 18,830 |
| | 18,830 |
| | 74,820 |
| | 74,820 |
|
| Less: Gain on sale of hotel | — |
| | — |
| | (600 | ) | | (600 | ) |
| FFO | 45,070 |
| | 47,170 |
| | 154,020 |
| | 159,020 |
|
| | | | | | | | |
| Less: Preferred share dividends | (2,420 | ) | | (2,420 | ) | | (9,690 | ) | | (9,690 | ) |
| Dividends declared on unvested time-based awards | (150 | ) | | (150 | ) | | (560 | ) | | (560 | ) |
| Undistributed earnings allocated to unvested time-based awards | (10 | ) | | (10 | ) | | — |
| | — |
|
| FFO available to common shareholders | 42,490 |
| | 44,590 |
| | 143,770 |
| | 148,770 |
|
| | | | | | | | |
Less: Non-cash amortization(1) | (30 | ) | | (30 | ) | | (100 | ) | | (100 | ) |
| AFFO available to common shareholders | $ | 42,460 |
| | $ | 44,560 |
| | $ | 143,670 |
| | $ | 148,670 |
|
| | | | | | | | |
| FFO per common share: | | | | | | | |
| Basic | $ | 0.72 |
| | $ | 0.76 |
| | $ | 2.45 |
| | $ | 2.53 |
|
| Diluted | $ | 0.72 |
| | $ | 0.76 |
| | $ | 2.45 |
| | $ | 2.53 |
|
| | | | | | | | |
| AFFO per common share: | | | | | | | |
| Basic | $ | 0.72 |
| | $ | 0.76 |
| | $ | 2.45 |
| | $ | 2.53 |
|
| Diluted | $ | 0.72 |
| | $ | 0.76 |
| | $ | 2.45 |
| | $ | 2.53 |
|
| | | | | | | | |
| Weighted-average number of common shares outstanding: | | | | | | | |
| Basic | 58,730 |
| | 58,730 |
| | 58,733 |
| | 58,733 |
|
| Diluted | 58,887 |
| | 58,887 |
| | 58,733 |
| | 58,733 |
|
____________
| |
| (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
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 Centric Fisherman’s Wharf | | San Francisco, CA | | 316 | | May 31, 2013 |
| 19 | | Hyatt Centric Santa Barbara | | Santa Barbara, CA | | 200 | | 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 |
| | | | | | | 6,694 | | |
