Form 8-K Chesapeake Lodging Trust For: Jan 26
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
��________________________________________________________________________
FORM 8-K
________________________________________________________________________
�
CURRENT REPORT
Pursuant to Section�13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2015
�________________________________________________________________________
CHESAPEAKE LODGING TRUST
(Exact name of registrant as specified in its charter)
�________________________________________________________________________
Maryland | � | 001-34572 | � | 27-0372343 |
(State or other jurisdiction of incorporation) | � | (Commission File Number) | � | (IRS Employer Identification No.) |
�
1997 Annapolis Exchange Parkway, Suite 410 Annapolis, MD | � | 21401 |
(Address of principal executive offices) | � | (Zip�Code) |
Registrants telephone number, including area code: (410)�972-4140
Not Applicable
(Former name or former address, if changed since last report.)
�________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
�
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item�2.02.�Results of Operations and Financial Condition.
Item�7.01. Regulation FD Disclosure.
On January 26, 2015, Chesapeake Lodging Trust (the Trust ) issued a press release providing the Trusts 2015 outlook and reporting certain preliminary financial results for the three months and year ended December 31, 2014. A copy of the press release is filed as Exhibit 99.1 to this report and is incorporated by reference herein.
�
The information furnished under Items�2.02 and 7.01 and Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section�18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item�9.01.�Financial Statements and Exhibits.
(d) Exhibits.
Exhibit�No. | �� | Exhibit Description |
99.1 | �� | Press release dated January 26, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
�
Date: January 26, 2015 | � | � | CHESAPEAKE LODGING TRUST | |||
� | � | By: | � | /s/ Graham J. Wootten | ||
� | � | � | Graham J. Wootten | |||
� | � | � | Senior Vice President and Chief Accounting Officer | |||
Exhibit 99.1 | ||
 | PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 | |
CHESAPEAKE LODGING TRUST PROVIDES 2015 OUTLOOK
ANNAPOLIS, MD, January 26, 2015 - Chesapeake Lodging Trust (NYSE: CHSP), a lodging real estate investment trust (REIT), provided today its 2015 outlook. The Trusts 2015 outlook is as follows (in millions, except RevPAR and per share amounts):
�
2015 Outlook | ||||||||
� | Low | High | ||||||
CONSOLIDATED: | ||||||||
Net income available to common shareholders | $ | 62.9 | $ | 68.2 | ||||
Net income per diluted common share | $ | 1.16 | $ | 1.25 | ||||
Adjusted Corporate EBITDA | $ | 158.0 | $ | 163.8 | ||||
AFFO available to common shareholders | $ | 119.9 | $ | 125.2 | ||||
AFFO per diluted common share | $ | 2.20 | $ | 2.30 | ||||
Corporate cash general and administrative expense | $ | 9.4 | $ | 10.2 | ||||
Corporate non-cash general and administrative expense | $ | 7.6 | $ | 7.6 | ||||
Weighted-average number of diluted common shares outstanding | 54.5 | 54.5 | ||||||
HOTEL PORTFOLIO: | ||||||||
RevPAR | $ | 186.00 | $ | 189.00 | ||||
Pro forma RevPAR increase over 2014(1) | 7.5 | % | 9.5 | % | ||||
Adjusted Hotel EBITDA | $ | 175.0 | $ | 181.5 | ||||
Adjusted Hotel EBITDA Margin | 32.5 | % | 33.0 | % | ||||
Pro forma Adjusted Hotel EBITDA Margin increase over 2014(1) | 75 bps | 125 bps | ||||||
_____________
(1) | The comparable 2014 period includes results of operations for one hotel prior to its acquisition by the Trust. |
We expect 2015 to be another strong year for Chesapeake as we benefit from favorable lodging fundamentals in our key markets and outsized growth at our hotels that were undergoing major renovations last year, said James L. Francis, Chesapeake Lodging Trusts President and Chief Executive Officer. We expect our hotel portfolio will meaningfully exceed the U.S. hotel industry RevPAR growth rate, despite the negative impact of guestroom renovations at several of our larger hotels which will have an impact on RevPAR growth and Adjusted Hotel EBITDA margin growth in the first quarter. Mr. Francis continued, Given our expectations for another strong year in 2015, we are also pleased to report that we are increasing our quarterly common share dividend for the first quarter by 17% to $0.35 per common share.
| PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 | |
The Trusts 2015 outlook assumes a continuation of favorable U.S. lodging fundamentals driven by below historical average supply growth and healthy demand growth resulting from continued improvement in the U.S. economy and consumer confidence, continued strength in corporate and leisure transient business, improving group business, and continued strength of international travel. The Trusts 2015 outlook assumes no additional acquisitions, dispositions, or financing transactions.
The Trusts 2015 outlook contemplates the expected revenue and Hotel EBITDA displacement from guestroom renovations taking place during the first quarter at the 502-room Hyatt Regency Boston, the 360-room Le Meridien San Francisco and the 313-room Hyatt Fishermans Wharf. The Trust estimates that the negative impact on RevPAR growth for the first quarter and full year 2015 will be approximately 650 basis points and 150 basis points, respectively, and the negative impact on Adjusted Hotel EBITDA Margin growth for the first quarter and full year 2015 will be approximately 200 basis points and 25 basis points, respectively, resulting in Hotel EBITDA displacement of approximately $3.25 million for the first quarter and full year 2015.
The Trusts 2015 outlook also includes a 17% increase in estimated real estate tax expense as a result of actual and expected real estate reassessments at certain of its hotels for 2015. The Trust estimates that the negative impact on Adjusted Hotel EBITDA Margin growth for 2015 will be approximately 70 basis points.
COMMON SHARE DIVIDEND INCREASE
The Trust also announced today that its board of trustees has declared a dividend payment of�$0.35�per common share for the first quarter 2015, an increase of 17% over the fourth quarter dividend. The dividend will be paid on�April 15, 2015�to shareholders of record at the close of business on�March 31, 2015. The dividend represents a 3.6% annualized yield based on the closing price of the Trusts common shares on�January 23, 2015.
FOURTH QUARTER 2014 EARNINGS UPDATE
The Trust is also providing an update today on its financial results for the quarter and year ended December 31, 2014. For its 17-hotel portfolio, the Trust expects fourth quarter and full year 2014 RevPAR to increase 7.5% and 9.5%, respectively, and fourth quarter and full year 2014 Adjusted Hotel EBITDA to be between the middle and high end of the guidance ranges previously provided. For its 20-hotel portfolio, the Trust expects fourth quarter and full year 2014 RevPAR to increase 4.9% and 5.9%, respectively, and fourth quarter and full year 2014 Adjusted Hotel EBITDA to be slightly below the guidance range previously provided. The Trust expects fourth quarter 2014 AFFO per share to be at the low end of the guidance range previously provided and full year 2014 AFFO per share to be slightly below the guidance range previously provided. The preliminary results are subject to adjustments that may result from the completion of the
| PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 | |
Trusts annual audit process. The Trust intends to release final financial results for the fourth quarter and full year 2014 after the market closes on February 19, 2015.
Overall, we are pleased with our hotel portfolios performance during the fourth quarter. Our 17-hotel portfolio had another solid quarter generating strong top-line and bottom-line results, said Mr. Francis. Our 20-hotel portfolio RevPAR and Adjusted Hotel EBITDA were slightly below our guidance ranges predominantly due to slower than expected ramp at the Hyatt Herald Square New York which re-opened for business in October. In addition, our per share metrics for the fourth quarter and full year 2014 were negatively impacted from a higher than expected diluted share count as a result of our relative total shareholder return exceeding our expectations which required us to include additional unvested performance-based awards in our diluted share count."
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 total revenues less total hotel operating expenses. The Trust believes that Hotel EBITDA provides investors a useful financial measure to evaluate the Trusts hotel operating performance.
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 Trusts hotel operating performance.
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 Trusts 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 Trusts operating performance, excluding the impact of the Trusts capital structure (primarily interest expense) and the Trusts asset base (primarily depreciation and amortization).
| PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 | |
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 Trusts 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 Trusts operating performance after taking into account the interests of holders of the Trusts 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 NAREITs 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.
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
| PRESS RELEASE For Immediate Release Contact: Douglas W. Vicari (410) 972-4142 | |
basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 20 hotels with an aggregate of 6,116 rooms in eight states and the District of Columbia. Additional information can be found on the Trusts 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 forward-looking statements include, but are not limited to, the preliminary expected financial results for the three months and year ended December 31, 2014, and the Trusts expectations regarding the future Hotel EBITDA and Adjusted Hotel EBITDA of its existing hotels and the Trusts 2015 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: the Trusts ability to continue to satisfy complex rules in order for it to remain a REIT for federal income tax purposes and other risks and uncertainties associated with the Trusts 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 January 26, 2015, and the Trust undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Trusts expectations, except as required by law.
CHESAPEAKE LODGING TRUST
RECONCILIATION OF NON-GAAP FINANICAL MEASURES
(in thousands, except per share data)
(unaudited)
The following table calculates forecasted Hotel EBITDA and Adjusted Hotel EBITDA for the year ending December�31, 2015:
�
� | Year Ending December�31, 2015 | |||||||
� | Low | High | ||||||
Total revenue | $ | 537,800 | $ | 549,300 | ||||
Less: Total hotel operating expenses | 362,480 | 367,480 | ||||||
Hotel EBITDA | 175,320 | 181,820 | ||||||
Add: Non-cash amortization(1) | (320 | ) | (320 | ) | ||||
Adjusted Hotel EBITDA | $ | 175,000 | $ | 181,500 | ||||
_____________�
(1) | Includes 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 year ending December�31, 2015:
� | Year�Ending�December�31,�2015 | |||||||
� | Low | High | ||||||
Net income | $ | 73,140 | $ | 78,390 | ||||
Add: Depreciation and amortization | 56,810 | 56,810 | ||||||
Interest expense | 27,100 | 27,100 | ||||||
Income tax expense | 750 | 1,250 | ||||||
Less: Interest income | ||||||||
Corporate EBITDA | 157,800 | 163,550 | ||||||
Add: Hotel acquisition costs | ||||||||
Non-cash amortization(1) | 200 | 200 | ||||||
Adjusted Corporate EBITDA | $ | 158,000 | $ | 163,750 | ||||
____________
(1) | Includes 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 FINANICAL MEASURES
(in thousands, except 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 year ending December�31, 2015:
� | Year�Ending�December�31,�2015 | |||||||
� | Low | High | ||||||
Net income | $ | 73,140 | $ | 78,390 | ||||
Add: Depreciation and amortization | 56,810 | 56,810 | ||||||
FFO | 129,950 | 135,200 | ||||||
Less: Preferred share dividends | (9,690 | ) | (9,690 | ) | ||||
Dividends declared on unvested time-based awards | (530 | ) | (530 | ) | ||||
Undistributed earnings allocated to unvested time-based awards | ||||||||
FFO available to common shareholders | 119,730 | 124,980 | ||||||
Add: Hotel acquisition costs | ||||||||
Non-cash amortization(1) | 200 | 200 | ||||||
AFFO available to common shareholders | $ | 119,930 | $ | 125,180 | ||||
FFO per common share: | ||||||||
Basic | $ | 2.22 | $ | 2.31 | ||||
Diluted | $ | 2.20 | $ | 2.29 | ||||
AFFO per common share: | ||||||||
Basic | $ | 2.22 | $ | 2.32 | ||||
Diluted | $ | 2.20 | $ | 2.30 | ||||
Weighted-average number of common shares outstanding: | ||||||||
Basic | 53,990 | 53,990 | ||||||
Diluted | 54,465 | 54,465 | ||||||
____________�
(1) | Includes 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 Fishermans Wharf | San Francisco, CA | 313 | May 31, 2013 | ||||
19 | Hyatt Santa Barbara | Santa Barbara, CA | 200 | June 27, 2013 | ||||
20 | JW Marriott San Francisco Union Square | San Francisco, CA | 337 | October 1, 2014 | ||||
6,116 | ||||||||
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