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SEC Filings

10-K
RLJ LODGING TRUST filed this Form 10-K on 03/01/2019
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EBITDA and EBITDAre
 
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is defined as net income or loss excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sales of assets; and (3) depreciation and amortization. We consider EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results.  In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and disposals.
 
In addition to EBITDA, we present EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated joint ventures. We believe that the presentation of EBITDAre provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between REITs.

We also present Adjusted EBITDA, which includes additional adjustments for items such as gains or losses on extinguishment of indebtedness, transaction costs, the amortization of share-based compensation, and certain other income or expenses that we consider outside the normal course of operations. We believe that Adjusted EBITDA provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income, EBITDA and EBITDAre, is beneficial to an investor’s understanding of our operating performance. We previously presented Adjusted EBITDA in a similar manner, with the exception of the adjustments for noncontrolling interests in consolidated joint ventures, which totaled approximately $0.1 million for each of the years ended December 31, 2017 and 2016. The rationale for including 100% of Adjusted EBITDA for the consolidated joint ventures with noncontrolling interests is that the full amount of any debt for the consolidated joint ventures is reported in our consolidated balance sheet and the metrics using debt to EBITDA provide a better understanding of the Company’s leverage. This is also consistent with NAREIT’s definition of EBITDAre.
 
The following table is a reconciliation of our GAAP net income to EBITDA, EBITDAre and Adjusted EBITDA for the years ended December 31, 2018, 2017 and 2016 (in thousands):
 
For the year ended December 31,
 
2018
 
2017
 
2016
Net income
$
190,862

 
$
75,739

 
$
201,314

Depreciation and amortization
241,641

 
186,993

 
162,500

Interest expense, net (1)
96,752

 
76,703

 
58,793

Income tax expense
8,793

 
42,118

 
8,190

Adjustments related to unconsolidated joint ventures (2)
3,152

 
1,072

 

EBITDA
541,200

 
382,625

 
430,797

Gain on sale of hotel properties, net
(30,941
)
 
(8,980
)
 
(45,929
)
EBITDAre
510,259

 
373,645

 
384,868

Transaction costs
2,057

 
44,398

 
192

Gain on extinguishment of indebtedness, net
(5,996
)
 

 

Gain on settlement of an investment in loan

 
(2,670
)
 

Amortization of share-based compensation
12,251

 
10,607

 
5,990

Other expenses (3)
3,558

 
1,591

 
1,528

Adjusted EBITDA
$
522,129

 
$
427,571

 
$
392,578


(1)
Excludes amounts attributable to investment in loans of $1.4 million and $1.7 million for the years ended December 31, 2017 and 2016, respectively.
(2)
Includes our ownership interest of the interest, depreciation, and amortization expense of the unconsolidated joint ventures.
(3)
Represents income and expenses outside of the normal course of operations, including debt modification costs, debt extinguishment costs, hurricane-related costs that were not reimbursed by insurance, executive transition costs, receipts of prior year employee tax credits, and activist shareholder costs.


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