Chesapeake Lodging Trust Reports First Quarter Results
For the first quarter 2010, the Company reported total revenue of $2.4 million and net loss of $(1.3) million, or $(.14) per diluted share. Funds from operations (FFO) were $(1.1) million, or $(.12) per diluted share, and Adjusted FFO was $(0.4) million, or $(.04) per diluted share. Earnings before interest, income taxes, and depreciation and amortization (EBITDA) were $(1.2) million, or $(.13) per diluted share, and Adjusted EBITDA was $(0.5) million, or $(.05) per diluted share.
Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust (REIT), reported today its financial results for the quarter ended March 31, 2010.
“We are very pleased with our accomplishments over the last three months”
CONSOLIDATED FINANCIAL RESULTS
For the first quarter 2010, the Company reported total revenue of $2.4 million and net loss of $(1.3) million, or $(.14) per diluted share. Funds from operations (FFO) were $(1.1) million, or $(.12) per diluted share, and Adjusted FFO was $(0.4) million, or $(.04) per diluted share. Earnings before interest, income taxes, and depreciation and amortization (EBITDA) were $(1.2) million, or $(.13) per diluted share, and Adjusted EBITDA was $(0.5) million, or $(.05) per diluted share.
FFO, Adjusted FFO, EBITDA and Adjusted EBITDA 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. A reconciliation of these non-GAAP financial measures is included in the accompanying financial tables.
ACQUISITION ACTIVITY
On March 18, 2010, the Company acquired the 498-room Hyatt Regency Boston located in Boston, Massachusetts for approximately $113.1 million. The effective date of the acquisition was March 1, 2010. The Company's results of operations for the first quarter 2010 include 31 days of operating results for the Hyatt Regency Boston. The Company entered into a long-term agreement with Hyatt to continue to operate the hotel under the Hyatt Regency flag.
On April 29, 2010, the Company entered into definitive agreements to acquire the 188-room Hilton Checkers Los Angeles located in Los Angeles, California and the 153-room Courtyard Anaheim at Disneyland Resort located in Anaheim, California, for an aggregate purchase price of $71 million. The Company expects the Hilton Checkers Los Angeles acquisition to close by May 30, 2010 and the Courtyard Anaheim at Disneyland Resort acquisition to close by July 29, 2010.
“We are very pleased with our accomplishments over the last three months,” said James L. Francis, Chesapeake’s President and Chief Executive Officer. “We have invested or committed to invest all of the proceeds from our initial public offering in January. We are beginning to see a meaningful increase in hotel deal flow and we are excited about growing our hotel portfolio.”
BALANCE SHEET / LIQUIDITY
On January 27, 2010, the Company completed its initial public offering (IPO) of 7,500,000 common shares. On February 24, 2010, the Company sold an additional 85,854 common shares as a result of the exercise of the underwriters’ over-allotment option. After deducting initial underwriting fees (1% of gross proceeds) and offering expenses, the Company generated net proceeds from the IPO of approximately $148.7 million. In addition to the IPO, the Company completed private placement transactions on January 27, 2010 that raised an additional $28.5 million in cash proceeds. The total net proceeds generated in the first quarter from the IPO, the underwriters’ over-allotment option, and private placements were approximately $177.2 million.
As of March 31, 2010, the Company had $64.9 million of cash and cash equivalents. Total assets were $179.7 million, including $76.1 million of investment in hotel properties and $36.1 million of an intangible asset related to air rights, and shareholders’ equity was $168.5 million.
During the first quarter 2010, the Company generated $1.2 million of cash flows from operations, used $113.3 million in net investing activities, including $113.1 million to acquire the Hyatt Regency Boston, and obtained $176.9 million from net financing activities, including $177.2 million from the Company’s IPO and the concurrent private placements.
In May 2010, within five business days following the filing of the Company’s Form 10-Q, the Company intends to pay as required an additional $7.6 million in underwriting fees (5% of gross proceeds) as a result of satisfying the capital deployment hurdle set forth in its agreement with the underwriters of the IPO.
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, airport and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States.
| CHESAPEAKE LODGING TRUST | |||||||
|
CONSOLIDATED BALANCE SHEETS |
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| (in thousands, except share data) | |||||||
| March 31, 2010 | December 31, 2009 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Investment in hotel properties, net | $ | 76,068 | $ | - | |||
| Cash and cash equivalents | 64,895 | 23 | |||||
| Restricted cash | 73 | - | |||||
| Accounts receivable, net | 1,742 | - | |||||
| Prepaid expenses and other assets | 805 | 412 | |||||
| Intangible asset, net | 36,083 | - | |||||
| Total assets | $ | 179,666 | $ | 435 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Accounts payable and accrued expenses | $ | 3,610 | $ | 185 | |||
| Related-party loan | - | 249 | |||||
| Deferred underwriting fees | 7,586 | - | |||||
| Total liabilities | 11,196 | 434 | |||||
| Commitments and contingencies | |||||||
|
Preferred shares, $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding, respectively |
- | - | |||||
|
Common shares, $.01 par value; 400,000,000 shares authorized; 9,349,339 shares and 100,000 shares issued and outstanding, respectively |
93 | 1 | |||||
| Additional paid-in capital | 169,678 | - | |||||
| Retained deficit | (1,301 | ) | - | ||||
| Total shareholders' equity | 168,470 | 1 | |||||
| Total liabilities and shareholders' equity | $ | 179,666 | $ | 435 | |||
| CHESAPEAKE LODGING TRUST | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS | ||||
| (in thousands, except share and per share data) | ||||
| (unaudited) | ||||
| Three Months Ended | ||||
| March 31, 2010 | ||||
| REVENUE | ||||
| Rooms | $ | 1,807 | ||
| Food and beverage | 528 | |||
| Other | 86 | |||
| Total revenue | 2,421 | |||
| EXPENSES | ||||
| Hotel operating expenses: | ||||
| Rooms | 467 | |||
| Food and beverage | 429 | |||
| Other direct | 46 | |||
| Indirect | 882 | |||
| Total hotel operating expenses | 1,824 | |||
| Depreciation and amortization | 208 | |||
| Intangible asset amortization | 22 | |||
| Corporate general and administrative: | ||||
| Share-based compensation | 400 | |||
| Hotel property acquisition costs | 674 | |||
| Other | 687 | |||
| Total operating expenses | 3,815 | |||
| Operating loss | (1,394 | ) | ||
| Interest income | 49 | |||
| Loss before income taxes | (1,345 | ) | ||
| Income tax benefit | 44 | |||
| Net loss | $ | (1,301 | ) | |
| Loss per share: | ||||
| Basic | $ | (0.14 | ) | |
| Diluted | $ | (0.14 | ) | |
| Weighted-average number of common shares outstanding: | ||||
| Basic |
9,061,090 |
|||
| Diluted |
9,061,090 |
|||
| CHESAPEAKE LODGING TRUST | ||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
| (in thousands) | ||||
| (unaudited) | ||||
| Three Months Ended | ||||
| March 31, 2010 | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (1,301 | ) | |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
| Depreciation and amortization | 208 | |||
| Intangible asset amortization | 22 | |||
| Share-based compensation | 400 | |||
| Changes in assets and liabilities: | ||||
| Accounts receivable, net | (601 | ) | ||
| Prepaid expenses and other assets | (54 | ) | ||
| Accounts payable and accrued expenses | 2,544 | |||
| Net cash provided by operating activities | 1,218 | |||
| Cash flows from investing activities: | ||||
| Acquisition of hotel properties, net of cash acquired | (113,079 | ) | ||
| Improvements and additions to hotel properties | (113 | ) | ||
| Change in restricted cash | (73 | ) | ||
| Net cash used in investing activities | (113,265 | ) | ||
| Cash flows from financing activities: | ||||
|
Proceeds from sale of common shares, net of underwriting fees |
178,717 | |||
| Payment of offering costs related to sale of common shares | (1,533 | ) | ||
| Repurchase of common shares | (1 | ) | ||
| Repayment of related-party loan | (249 | ) | ||
| Payment of deferred financing costs | (15 | ) | ||
| Net cash provided by financing activities | 176,919 | |||
| Net increase in cash | 64,872 | |||
| Cash and cash equivalents, beginning of period | 23 | |||
| Cash and cash equivalents, end of period | $ | 64,895 | ||
| CHESAPEAKE LODGING TRUST | ||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||
| (in thousands, except per share data) | ||||
| (unaudited) | ||||
| The following table reconciles net loss to FFO and Adjusted FFO for the three months ended March 31, 2010: | ||||
| Three Months Ended | ||||
| March 31, 2010 | ||||
| Net loss | $ | (1,301 | ) | |
| Add: Depreciation and amortization | 208 | |||
| FFO | (1,093 | ) | ||
| Add: Hotel property acquisition costs | 674 | |||
| Intangible asset amortization | 22 | |||
| Adjusted FFO | $ | (397 | ) | |
| FFO per share: | ||||
| Basic | $ | (0.12 | ) | |
| Diluted | $ | (0.12 | ) | |
| Adjusted FFO per share: | ||||
| Basic | $ | (0.04 | ) | |
| Diluted | $ | (0.04 | ) | |
| The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three months ended March 31, 2010: | ||||
| Three Months Ended | ||||
| March 31, 2010 | ||||
| Net loss | $ | (1,301 | ) | |
| Add: Depreciation and amortization | 208 | |||
| Less: Interest income | (49 | ) | ||
| Income tax benefit | (44 | ) | ||
| EBITDA | (1,186 | ) | ||
| Add: Hotel property acquisition costs | 674 | |||
| Intangible asset amortization | 22 | |||
| Adjusted EBITDA | $ | (490 | ) | |
| EBITDA per share: | ||||
| Basic | $ | (0.13 | ) | |
| Diluted | $ | (0.13 | ) | |
| Adjusted EBITDA per share: | ||||
| Basic | $ | (0.05 | ) | |
| Diluted | $ | (0.05 | ) | |
