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Chesapeake Lodging Trust Reports Preliminary Fourth Quarter Results

  Chesapeake Lodging Trust Reports Preliminary Fourth Quarter Results

Business Wire

ANNAPOLIS, Md. -- January 31, 2013

Chesapeake Lodging Trust (NYSE:CHSP), a lodging real estate investment trust
(REIT), reported today its preliminary financial results for the quarter and
year ended December 31, 2012. The following preliminary results are subject to
adjustments that may result from the completion of the Trust’s annual audit
process (unaudited):

                                                      
                           Three months
                           ended
                           December 31,       Year ended December 31, 2012
                           2012
                           Preliminary        Preliminary       Previous
                                                                Guidance^(1)
                                                                
Pro forma RevPAR
increase over              5.5%               8.8%              8.75% - 9.25%
2011^(2)
                                                                
Net income available
to common                                                       
shareholders,
excluding amounts
attributable to
unvested
time-based                 $7.4               $22.6             $19.8 - $20.6
awards^(3)
                                                                
Adjusted Hotel             $26.7              $92.2             $91.0 - $92.0
EBITDA^(3)
                                                                
AFFO per diluted           $0.41              $1.61             $1.57 - $1.60
share

________________________________
(1)    Reflects guidance announced on November 1, 2012.
        
        Management assesses the operating performance of its hotels
        irrespective of the hotel owner during the periods compared, or on a
        pro forma basis. This metric includes the hotel operating results of
        10 of the Trust’s 15 hotels owned as of December 31, 2012 and does not
(2)     include operating results for the Holiday Inn New York City Midtown –
        31^st Street, as the hotel opened for business on January 19, 2012,
        the Hotel Adagio, as the hotel was under renovation during the period,
        and the W Chicago – Lakeshore, the Hyatt Regency Mission Bay Spa and
        Marina, and The Hotel Minneapolis, as these hotels were acquired
        during 2012.
        
(3)     In millions.
        

“We are pleased with the continued strong performance of our hotel portfolio
in the fourth quarter 2012,” said James L. Francis, Chesapeake Lodging Trust’s
President and Chief Executive Officer. “Our pro forma RevPAR increase for the
fourth quarter 2012 was negatively impacted by (i) cancellations related to
travel disruptions caused by Superstorm Sandy in October 2012, (ii) the early
addition of 35 guestrooms at the W Chicago – City Center on October 19, 2012,
which were originally scheduled to open January 1, 2013, and (iii) the
disruption from the renovation of the lobby and public spaces at the Le
Meridien San Francisco. Excluding the estimated impact from these items, our
pro forma RevPAR increase for the fourth quarter 2012 and for the year ended
December 31, 2012 would have been between 7.75% - 8.00% and between 9.4% -
9.5%, respectively.”

Funds from operations (FFO), Adjusted FFO (AFFO), Hotel EBITDA, and Adjusted
Hotel EBITDA are non-GAAP financial measures within the meaning of the rules
of the Securities and Exchange Commission. A reconciliation of these non-GAAP
financial measures is included in the accompanying financial tables.

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, 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.

AFFO – The Trust further adjusts FFO 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 unfavorable contract liabilities. The Trust believes
that AFFO provides investors with another financial measure of its operating
performance that provides for greater comparability of its core operating
results between periods.

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 Trust’s 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 unfavorable contract
liabilities. The Trust believes that Adjusted Hotel EBITDA provides investors
with another useful financial measure to evaluate the Trust’s hotel operating
performance.

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 15 hotels with an aggregate of 4,722 rooms in seven
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.
Such forward-looking statements include, but are not limited to, the
preliminary expected financial results for the three months and year ended
December 31, 2012. 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 Trust’s ability to complete acquisitions;
the Trust’s 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 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 January 30, 2013,
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
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except share and per share data)
(unaudited)

The following table reconciles preliminary net income available to common
shareholders, excluding amounts attributable to unvested time-based awards to
FFO and AFFO available to common shareholders for the three months and year
ended December 31, 2012:


                                                      
                                  Three Months Ended        Year Ended
                                  December 31, 2012         December 31, 2012
                                  Preliminary               Preliminary
                                                                            
Net income available to
common shareholders,
excluding
amounts attributable to           $   7,390                 $   22,587
unvested time-based awards
Add: Depreciation and                8,509                   28,931      
amortization
FFO available to common               15,899                    51,518
shareholders
                                                                            
Add: Hotel acquisition                77                        2,994
costs
Non-cash amortization^(1)            61                      242         
AFFO available to common          $   16,037               $   54,754      
shareholders
                                                                            
FFO per common share -            $   0.40                  $   1.51
basic and diluted
                                                                            
AFFO per common share -           $   0.41                  $   1.61
basic and diluted
                                                                            
Weighted-average number of
common shares outstanding -
basic
and diluted                           39,391,677                34,048,752
____________________
(1) Includes non-cash amortization of ground lease asset, deferred franchise
costs, unfavorable contract liability, and air rights contract.
                                                                            
                                                                            
The following table calculates preliminary Hotel EBITDA and Adjusted Hotel
EBITDA for the three months and year ended December 31, 2012:
                                                                            
                                  Three Months Ended        Year Ended
                                  December 31, 2012         December 31, 2012
                                  Preliminary               Preliminary
                                                                            
Total revenue                     $   85,100                $   278,276
Less: Total hotel operating          58,362                  185,842     
expenses
Hotel EBITDA                          26,738                    92,434
                                                                            
Less: Non-cash                       (69          )           (278        )
amortization^(1)
Adjusted Hotel EBITDA             $   26,669               $   92,156      
____________________
(1) Includes non-cash amortization of ground lease asset, deferred franchise
costs, and unfavorable contract liability.


Contact:

Chesapeake Lodging Trust
Douglas W. Vicari, 410-972-4142
 
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