UNITED 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): November 01, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(301 ) 280-7777
(Registrant’s telephone number, including area code)
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):
Securities registered pursuant to Section 12 (b) of the Exchange Act:
| Title of Class | Trading Symbol | Name of Exchange on Which Registered | ||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 1, 2023 , RLJ Lodging Trust (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) The following exhibits are filed as part of this report:
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
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.
| RLJ LODGING TRUST | ||||||||
| Dated: November 1, 2023 | By: | /s/ Leslie D. Hale | ||||||
| Leslie D. Hale | ||||||||
| President and Chief Executive Officer | ||||||||
EXHIBIT LIST
| Exhibit Number | Description | |||||||
| 99.1 | Press release dated November 1, 2023, issued by RLJ Lodging Trust, providing financial results for the quarter ended September 30, 2023. | |||||||
Press Release
RLJ Lodging Trust Reports Third Quarter 2023 Results
–Q3 RevPAR increased 3.4% over last year
–Increased third quarter dividend by 25%
–Continued share repurchases
Bethesda, MD, November 1, 2023 – RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today reported results for the three and nine months ended September 30, 2023.
Third Quarter Highlights
•Portfolio Comparable RevPAR of $141.81; an increase of 3.4% from last year, led by both Occupancy and ADR growth
•Total revenue of $334.4 million
•Net income per diluted share attributable to common shareholders of $0.06
•Comparable Hotel EBITDA of $98.1 million
•Adjusted EBITDA of $88.8 million
•Adjusted FFO per diluted common share and unit of $0.40
•Continued to repurchase common shares, repurchasing 1.5 million common shares for approximately $14.4 million at an average price per share of $9.81
“We were pleased that our urban-centric portfolio achieved RevPAR growth that exceeded the industry for the third straight quarter. Our results were led by our urban markets, which benefited from the continued improvement in business travel, ongoing robust group demand, healthy urban leisure trends and recovering inbound international travel. Our RevPAR growth accelerated throughout the third quarter, with RevPAR exceeding 2019 levels for the first time in September. These positive trends also carried into October,” commented Leslie D. Hale, President and Chief Executive Officer. “Overall, we remain constructive on the outlook for lodging fundamentals, which continue to unfold with trends favorable for our urban-centric portfolio. In addition to achieving above industry RevPAR growth, we also executed on multiple capital allocation initiatives including share repurchases and increasing our dividend, demonstrating the optionality of our strong balance sheet."
The prefix “comparable” as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Explanations of EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA Margin, FFO, and Adjusted FFO, as well as reconciliations of those measures to net income or loss, if applicable, are included within this release.
1
Financial and Operating Highlights
($ in thousands, except ADR, RevPAR, and per share amounts)
(unaudited)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
Operational Overview: (1) | ||||||||||||||
| Comparable ADR | $191.33 | $188.54 | $197.94 | $187.56 | ||||||||||
| Comparable Occupancy | 74.1% | 72.7% | 72.6% | 69.5% | ||||||||||
| Comparable RevPAR | $141.81 | $137.09 | $143.74 | $130.41 | ||||||||||
| Financial Overview: | ||||||||||||||
| Total Revenues | $334,406 | $318,071 | $1,005,869 | $891,471 | ||||||||||
| Comparable Hotel Revenue | $334,389 | $318,673 | $1,005,782 | $894,674 | ||||||||||
| Net Income | $16,343 | $17,683 | $68,577 | $35,415 | ||||||||||
| Comparable Hotel EBITDA (2) | $98,065 | $100,020 | $311,788 | $282,423 | ||||||||||
| Comparable Hotel EBITDA Margin | 29.3% | 31.4% | 31.0% | 31.6% | ||||||||||
| Adjusted EBITDA | $88,767 | $91,952 | $285,281 | $257,522 | ||||||||||
| Adjusted FFO | $63,092 | $63,994 | $207,009 | $168,288 | ||||||||||
| Adjusted FFO Per Diluted Common Share and Unit | $0.40 | $0.40 | $1.31 | $1.03 | ||||||||||
Note:
(1) Comparable statistics reflect the Company's 96 hotel portfolio owned as of September 30, 2023.
(2) Comparable Hotel EBITDA for the three months ended September 30, 2023 and 2022 excludes $0.1 million and $0.2 million net income, respectively, from sold hotels. Comparable Hotel EBITDA for the nine months ended September 30, 2023 and 2022 excludes $0.5 million net income from sold hotels. Comparable Hotel EBITDA for the three months ended September 30, 2022 includes $0.1 million net loss from acquired hotels. Comparable Hotel EBITDA for the nine months ended September 30, 2022 includes $0.6 million net income from acquired hotels.
Operational Update
During the third quarter, the Company’s portfolio generated Comparable RevPAR of $141.81, an increase of 3.4% from the comparable period in 2022 and achieved 98% of the third quarter of 2019. Comparable Revenues were $334.4 million for the third quarter, a 4.9% increase over the prior year. The third quarter comparable RevPAR increase over last year was led by a 1.9% increase in Occupancy and a 1.5% increase in ADR. The Company’s performance during the third quarter was positively impacted by sustained positive trends in its Urban markets.
Share Repurchases
During the third quarter the Company repurchased approximately 1.5 million common shares for approximately $14.4 million at an average price per share of $9.81.
Year-to-date the Company has repurchased approximately 6.6 million common shares for approximately $70 million, at an average price per share of $10.12 including repurchasing approximately 0.3 million shares for $2.7 million, subsequent to September 30, 2023. As of November 1, 2023, the 2023 Share Repurchase Program had a remaining capacity of $219.9 million.
Balance Sheet
As of September 30, 2023, the Company had approximately $1.1 billion of total liquidity, comprising approximately $494.6 million of unrestricted cash and $600.0 million available under its revolving credit facility, and $2.2 billion of debt outstanding, 93.0% of which is currently either fixed or hedged.
2
Dividends
The Company’s Board of Trustees declared a third quarter cash dividend of $0.10 per common share of beneficial interest of the Company. The dividend was paid on October 16, 2023 to shareholders of record as of September 29, 2023.
The Company's Board of Trustees declared a third quarter cash dividend of $0.4875 on the Company’s Series A Preferred Shares. The dividend was paid on October 31, 2023 to shareholders of record as of September 29, 2023.
Q4 2023 Outlook
Based on current trends and assuming no material disruptions to travel or worsening macro-economic conditions, the Company's fourth quarter 2023 outlook is as follows:
| Q4 2023 | |||||
| Comparable RevPAR | $129.50 to $134.50 | ||||
| Comparable Hotel EBITDA | $82.0M to $92.0M | ||||
| Adjusted EBITDA | $73.0M to $83.0M | ||||
| Adjusted FFO per diluted share | $0.30 to $0.36 | ||||
No future acquisitions, dispositions, financings, or share repurchases are incorporated into the Company's outlook and could result in a material change to the Company's outlook.
Earnings Call
The Company will conduct its quarterly analyst and investor conference call on November 2, 2023 at 12:00 p.m. (Eastern Time). The conference call can be accessed by dialing (877) 407-3982 or (201) 493-6780 for international participants and requesting RLJ Lodging Trust’s third quarter earnings conference call. Additionally, a live webcast of the conference call will be available through the Company’s website at http://www.rljlodgingtrust.com. A replay of the conference call webcast will be archived and available through the Investor Relations section of the Company’s website for two weeks.
Supplemental Information
Please refer to the schedule of supplemental information for additional detail and comparable operating statistics, which is available through the Investor Relations section of the Company's website.
About Us
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 96 hotels with approximately 21,200 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.
3
Forward Looking Statements
This information contains certain statements, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, that are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally are identified by the use of the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “plan,” “may,” “will,” “will continue,” “intend,” “should,” “may,” or similar expressions. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The Company cautions investors not to place undue reliance on these forward looking statements and urges investors to carefully review the disclosures the Company makes concerning risks and uncertainties in the sections entitled “Risk Factors,” “Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report and the Company's Quarterly Reports on Form 10-Q, as well as risks, uncertainties and other factors discussed in other documents filed by the Company with the Securities and Exchange Commission.
###
Additional Contact:
Sean M. Mahoney, Executive Vice President and Chief Financial Officer – (301) 280-7774
For additional information or to receive press releases via email, please visit our website:
http://www.rljlodgingtrust.com
4
RLJ Lodging Trust
Non-GAAP and Accounting Commentary
Non-Generally Accepted Accounting Principles (“Non-GAAP”) Financial Measures
The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre, (5) Adjusted EBITDA, (6) Hotel EBITDA, and (7) Hotel EBITDA Margin. These Non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of its operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA, and Hotel EBITDA Margin, as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company defines such terms.
Funds From Operations (“FFO”)
The Company calculates Funds from Operations (“FFO”) in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, 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 have instead historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company believes that the presentation of FFO provides useful information to investors regarding the Company’s operating performance and can facilitate comparisons of operating performance between periods and between real estate investment trusts (“REITs”), even though FFO does not represent an amount that accrues directly to common shareholders.
The Company’s calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing the Company to non-REITs. The Company presents FFO attributable to common shareholders, which includes unitholders of limited partnership interest (“OP units”) in RLJ Lodging Trust, L.P., the Company’s operating partnership, because the OP units may be redeemed for common shares of the Company. The Company believes it is meaningful for the investor to understand FFO attributable to all common shares and OP units.
EBITDA and EBITDAre
Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) is defined as net income or loss excluding: (1) interest expense; (2) income tax expense; and (3) depreciation and amortization expense. The Company considers EBITDA useful to an investor in evaluating and facilitating comparisons of its operating performance between periods and between REITs by removing the impact of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization expense) from its operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions.
5
In addition to EBITDA, the Company presents EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss (calculated in accordance with GAAP) 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. The Company believes 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.
Adjustments to FFO and EBITDA
The Company adjusts FFO, EBITDA, and EBITDAre for certain items that the Company considers outside the normal course of operations. The Company believes that Adjusted FFO, Adjusted EBITDA, and Adjusted EBITDAre provide useful supplemental information to investors regarding its ongoing operating performance that, when considered with net income or loss, FFO, EBITDA, and EBITDAre, are beneficial to an investor’s understanding of the Company's operating performance. The Company adjusts FFO, EBITDA, and EBITDAre for the following items:
•Transaction Costs: The Company excludes transaction costs expensed during the period
•Pre-Opening Costs: The Company excludes certain costs related to pre-opening of hotels
•Non-Cash Expenses: The Company excludes the effect of certain non-cash items such as the amortization of share-based compensation, non-cash income tax expense or benefit, and non-cash interest expense related to discontinued interest rate hedges
•Other Non-Operational Expenses: The Company excludes the effect of certain non-operational expenses representing income and expenses outside the normal course of operations
Hotel EBITDA and Hotel EBITDA Margin
With respect to Consolidated Hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses and certain non-cash items provides a more complete understanding of the operating results over which individual hotels and operators have direct control. The Company believes property-level results provide investors with supplemental information about the ongoing operational performance of the Company’s hotels and the effectiveness of third-party management companies.
Comparable Hotel EBITDA and Comparable Hotel EBITDA margin include prior ownership information provided by the sellers of the hotels for periods prior to our acquisition of the hotels and excludes results from sold hotels as applicable. The following is a summary of Comparable hotel adjustments:
Comparable adjustments: Acquired hotel
For the three and nine months ended September 30, 2022, Comparable adjustments included the following acquired hotel:
•21c Hotel Nashville acquired in July 2022
Comparable adjustments: Sold hotels
For the nine months ended September 30, 2022, comparable adjustments included the following sold hotels:
•Marriott Denver Airport at Gateway Park sold in March 2022
•SpringHill Suites Denver North Westminster sold in April 2022
6
RLJ Lodging Trust
Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(unaudited)
| September 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Investment in hotel properties, net | $ | 4,142,365 | $ | 4,180,328 | |||||||
| Investment in unconsolidated joint ventures | 7,294 | 6,979 | |||||||||
| Cash and cash equivalents | 494,563 | 481,316 | |||||||||
| Restricted cash reserves | 35,807 | 55,070 | |||||||||
Hotel and other receivables, net of allowance of $237 and $319, respectively | 47,990 | 38,528 | |||||||||
| Lease right-of-use assets | 137,546 | 136,915 | |||||||||
| Prepaid expense and other assets | 74,777 | 79,089 | |||||||||
| Total assets | $ | 4,940,342 | $ | 4,978,225 | |||||||
| Liabilities and Equity | |||||||||||
| Debt, net | $ | 2,219,781 | $ | 2,217,555 | |||||||
| Accounts payable and other liabilities | 150,650 | 155,916 | |||||||||
| Advance deposits and deferred revenue | 30,995 | 23,769 | |||||||||
| Lease liabilities | 119,780 | 117,010 | |||||||||
| Accrued interest | 12,593 | 20,707 | |||||||||
| Distributions payable | 22,448 | 14,622 | |||||||||
| Total liabilities | 2,556,247 | 2,549,579 | |||||||||
| Equity | |||||||||||
| Shareholders’ equity: | |||||||||||
| Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized | |||||||||||
| Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at September 30, 2023 and December 31, 2022 | 366,936 | 366,936 | |||||||||
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 156,172,739 and 162,003,533 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 1,562 | 1,620 | |||||||||
| Additional paid-in capital | 3,003,316 | 3,054,958 | |||||||||
| Distributions in excess of net earnings | (1,041,171) | (1,049,441) | |||||||||
| Accumulated other comprehensive income | 39,553 | 40,591 | |||||||||
| Total shareholders’ equity | 2,370,196 | 2,414,664 | |||||||||
| Noncontrolling interests: | |||||||||||
| Noncontrolling interest in the Operating Partnership | 6,361 | 6,313 | |||||||||
| Noncontrolling interest in consolidated joint ventures | 7,538 | 7,669 | |||||||||
| Total noncontrolling interest | 13,899 | 13,982 | |||||||||
| Total equity | 2,384,095 | 2,428,646 | |||||||||
| Total liabilities and equity | $ | 4,940,342 | $ | 4,978,225 | |||||||
Note: The corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.
7
RLJ Lodging Trust
Consolidated Statements of Operations
(Amounts in thousands, except share and per share data)
(unaudited)
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Operating revenues | |||||||||||||||||||||||
| Room revenue | $ | 277,088 | $ | 267,363 | $ | 833,416 | $ | 753,818 | |||||||||||||||
| Food and beverage revenue | 34,181 | 30,600 | 105,601 | 82,655 | |||||||||||||||||||
| Other revenue | 23,137 | 20,108 | 66,852 | 54,998 | |||||||||||||||||||
| Total revenues | 334,406 | 318,071 | 1,005,869 | 891,471 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Room expense | 71,278 | 68,394 | 207,662 | 188,015 | |||||||||||||||||||
| Food and beverage expense | 27,430 | 23,375 | 81,604 | 61,314 | |||||||||||||||||||
| Management and franchise fee expense | 27,095 | 25,390 | 82,554 | 71,846 | |||||||||||||||||||
| Other operating expenses | 87,736 | 82,021 | 254,567 | 227,563 | |||||||||||||||||||
| Total property operating expenses | 213,539 | 199,180 | 626,387 | 548,738 | |||||||||||||||||||
| Depreciation and amortization | 44,727 | 46,559 | 134,648 | 140,346 | |||||||||||||||||||
| Property tax, insurance and other | 26,936 | 20,744 | 76,268 | 66,206 | |||||||||||||||||||
| General and administrative | 14,747 | 13,446 | 43,030 | 40,928 | |||||||||||||||||||
| Transaction costs | 2 | (773) | 26 | (575) | |||||||||||||||||||
| Total operating expenses | 299,951 | 279,156 | 880,359 | 795,643 | |||||||||||||||||||
| Other income, net | 1,921 | 710 | 3,506 | 8,716 | |||||||||||||||||||
| Interest income | 5,302 | 1,281 | 13,977 | 1,800 | |||||||||||||||||||
| Interest expense | (24,833) | (22,625) | (73,506) | (71,041) | |||||||||||||||||||
| Gain (loss) on sale of hotel properties, net | 16 | (57) | (28) | 996 | |||||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | — | (169) | — | |||||||||||||||||||
| Income before equity in (loss) income from unconsolidated joint ventures | 16,861 | 18,224 | 69,290 | 36,299 | |||||||||||||||||||
| Equity in (loss) income from unconsolidated joint ventures | (186) | (150) | 315 | 255 | |||||||||||||||||||
| Income before income tax expense | 16,675 | 18,074 | 69,605 | 36,554 | |||||||||||||||||||
| Income tax expense | (332) | (391) | (1,028) | (1,139) | |||||||||||||||||||
| Net income | 16,343 | 17,683 | 68,577 | 35,415 | |||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests: | |||||||||||||||||||||||
| Noncontrolling interest in the Operating Partnership | (50) | (53) | (238) | (74) | |||||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | 137 | (36) | 131 | (29) | |||||||||||||||||||
| Net income attributable to RLJ | 16,430 | 17,594 | 68,470 | 35,312 | |||||||||||||||||||
| Preferred dividends | (6,279) | (6,279) | (18,836) | (18,836) | |||||||||||||||||||
| Net income attributable to common shareholders | $ | 10,151 | $ | 11,315 | $ | 49,634 | $ | 16,476 | |||||||||||||||
| Basic per common share data: | |||||||||||||||||||||||
| Net income per share attributable to common shareholders - basic | $ | 0.06 | $ | 0.07 | $ | 0.31 | $ | 0.10 | |||||||||||||||
| Weighted-average number of common shares | 154,563,284 | 160,368,297 | 156,805,643 | 162,681,840 | |||||||||||||||||||
| Diluted per common share data: | |||||||||||||||||||||||
| Net income per share attributable to common shareholders - diluted | $ | 0.06 | $ | 0.07 | $ | 0.31 | $ | 0.10 | |||||||||||||||
| Weighted-average number of common shares | 155,081,645 | 160,784,709 | 157,280,206 | 163,064,462 | |||||||||||||||||||
Note: The Statements of Comprehensive Income and corresponding notes to the consolidated financial statements can be found in the Company’s Quarterly Report on Form 10-Q.
8
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures
(Amounts in thousands, except per share data)
(unaudited)
Funds from Operations (FFO) Attributable to Common Shareholders and Unitholders
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
| Net income | $ | 16,343 | $ | 17,683 | $ | 68,577 | $ | 35,415 | ||||||||||||
| Preferred dividends | (6,279) | (6,279) | (18,836) | (18,836) | ||||||||||||||||
| Depreciation and amortization | 44,727 | 46,559 | 134,648 | 140,346 | ||||||||||||||||
| (Gain) loss on sale of hotel properties, net | (16) | 57 | 28 | (996) | ||||||||||||||||
| Noncontrolling interest in consolidated joint ventures | 137 | (36) | 131 | (29) | ||||||||||||||||
| Adjustments related to consolidated joint venture (1) | (44) | (47) | (131) | (144) | ||||||||||||||||
| Adjustments related to unconsolidated joint venture (2) | 236 | 241 | 709 | 831 | ||||||||||||||||
| FFO | 55,104 | 58,178 | 185,126 | 156,587 | ||||||||||||||||
| Transaction costs | 2 | (773) | 26 | (575) | ||||||||||||||||
| Pre-opening costs (3) | 327 | 907 | 1,188 | 1,519 | ||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | — | 169 | — | ||||||||||||||||
| Amortization of share-based compensation | 6,247 | 5,420 | 18,028 | 16,074 | ||||||||||||||||
| Non-cash interest expense related to discontinued interest rate hedges | 482 | 252 | 1,446 | 493 | ||||||||||||||||
| Derivative gains in accumulated other comprehensive income reclassified to earnings (4) | — | — | — | (5,866) | ||||||||||||||||
| Other expenses (5) | 930 | 10 | 1,026 | 56 | ||||||||||||||||
| Adjusted FFO | $ | 63,092 | $ | 63,994 | $ | 207,009 | $ | 168,288 | ||||||||||||
| Adjusted FFO per common share and unit-basic | $ | 0.41 | $ | 0.40 | $ | 1.31 | $ | 1.03 | ||||||||||||
| Adjusted FFO per common share and unit-diluted | $ | 0.40 | $ | 0.40 | $ | 1.31 | $ | 1.03 | ||||||||||||
| Basic weighted-average common shares and units outstanding (6) | 155,335 | 161,140 | 157,577 | 163,454 | ||||||||||||||||
| Diluted weighted-average common shares and units outstanding (6) | 155,853 | 161,557 | 158,052 | 163,836 | ||||||||||||||||
Notes:
(1)Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint venture.
(2)Includes our ownership interest in the depreciation and amortization expense of the unconsolidated joint venture.
(3)Represents expenses related to the brand conversions of certain hotel properties prior to opening.
(4)Reclassification of interest rate swap gains from accumulated other comprehensive income to earnings for discontinued interest rate hedges.
(5)Represents expenses and income outside of the normal course of operations. For the three and nine months ended September 30, 2023, other expenses included one-time management company transition costs of $0.6 million.
(6)Includes 0.8 million weighted-average operating partnership units for the three and nine month periods ended September 30, 2023 and 2022.
9
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures
(Amounts in thousands)
(unaudited)
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
| Net income | $ | 16,343 | $ | 17,683 | $ | 68,577 | $ | 35,415 | ||||||||||||
| Depreciation and amortization | 44,727 | 46,559 | 134,648 | 140,346 | ||||||||||||||||
| Interest expense, net of interest income | 19,531 | 21,344 | 59,529 | 69,241 | ||||||||||||||||
| Income tax expense | 332 | 391 | 1,028 | 1,139 | ||||||||||||||||
| Adjustments related to unconsolidated joint venture (1) | 344 | 354 | 1,034 | 1,169 | ||||||||||||||||
| EBITDA | 81,277 | 86,331 | 264,816 | 247,310 | ||||||||||||||||
| (Gain) loss on sale of hotel properties, net | (16) | 57 | 28 | (996) | ||||||||||||||||
EBITDAre | 81,261 | 86,388 | 264,844 | 246,314 | ||||||||||||||||
| Transaction costs | 2 | (773) | 26 | (575) | ||||||||||||||||
| Pre-opening costs (2) | 327 | 907 | 1,188 | 1,519 | ||||||||||||||||
| Loss on extinguishment of indebtedness, net | — | — | 169 | — | ||||||||||||||||
| Amortization of share-based compensation | 6,247 | 5,420 | 18,028 | 16,074 | ||||||||||||||||
| Derivative gains in accumulated other comprehensive income reclassified to earnings (3) | — | — | — | (5,866) | ||||||||||||||||
| Other expenses (4) | 930 | 10 | 1,026 | 56 | ||||||||||||||||
| Adjusted EBITDA | 88,767 | 91,952 | 285,281 | 257,522 | ||||||||||||||||
| General and administrative | 8,500 | 8,026 | 25,002 | 24,854 | ||||||||||||||||
| Other corporate adjustments | 873 | 358 | 2,009 | (1) | ||||||||||||||||
| Consolidated Hotel EBITDA | 98,140 | 100,336 | 312,292 | 282,375 | ||||||||||||||||
| Comparable adjustments - income from sold hotels | (75) | (213) | (504) | (510) | ||||||||||||||||
| Comparable adjustments - income from acquired hotels | — | (103) | — | 558 | ||||||||||||||||
| Comparable Hotel EBITDA | $ | 98,065 | $ | 100,020 | $ | 311,788 | $ | 282,423 | ||||||||||||
Notes: Comparable statistics reflect the Company's 96 hotel portfolio owned as of September 30, 2023.
(1)Includes our ownership interest in the interest, depreciation, and amortization expense of the unconsolidated joint venture.
(2)Represents expenses related to the brand conversions of certain hotel properties prior to opening.
(3)Reclassification of interest rate swap gains from accumulated other comprehensive income to earnings for discontinued interest rate hedges.
(4)Represents expenses and income outside of the normal course of operations. For the three and nine months ended September 30, 2023, other expenses included one-time management company transition costs of $0.6 million.
10
RLJ Lodging Trust
Reconciliation of Non-GAAP Measures
(Amounts in thousands except %)
(unaudited)
Comparable Hotel EBITDA Margin
| For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Total revenue | $ | 334,406 | $ | 318,071 | $ | 1,005,869 | $ | 891,471 | |||||||||||||||
| Comparable adjustments - revenue from sold hotels | — | — | (35) | (2,337) | |||||||||||||||||||
| Comparable adjustments - revenue from prior ownership of acquired hotels | — | 614 | — | 5,585 | |||||||||||||||||||
| Other corporate adjustments / non-hotel revenue | (17) | (12) | (52) | (45) | |||||||||||||||||||
| Comparable Hotel Revenue | $ | 334,389 | $ | 318,673 | $ | 1,005,782 | $ | 894,674 | |||||||||||||||
| Comparable Hotel EBITDA | $ | 98,065 | $ | 100,020 | $ | 311,788 | $ | 282,423 | |||||||||||||||
| Comparable Hotel EBITDA Margin | 29.3 | % | 31.4 | % | 31.0 | % | 31.6 | % | |||||||||||||||
11
RLJ Lodging Trust
Consolidated Debt Summary
(Amounts in thousands except %)
(unaudited)
| Loan | Base Term (Years) | Maturity (incl. extensions) | Floating / Fixed (1) | Interest Rate (2) | Balance as of September 30, 2023 (3) | |||||||||||||||
| Mortgage Debt | ||||||||||||||||||||
| Mortgage loan - 1 hotel | 10 | Jan 2029 | Fixed | 5.06% | $ | 25,000 | ||||||||||||||
| Mortgage loan - 7 hotels | 3 | Apr 2024 | Floating | 5.94% | 200,000 | |||||||||||||||
| Mortgage loan - 3 hotels | 5 | Apr 2026 | Floating | 5.02% | 96,000 | |||||||||||||||
| Mortgage loan - 4 hotels | 5 | Apr 2026 | Floating | 5.61% | 85,000 | |||||||||||||||
| Weighted Average / Mortgage Total | 5.60% | $ | 406,000 | |||||||||||||||||
| Corporate Debt | ||||||||||||||||||||
| Revolver (4) | 4 | May 2028 | Floating | — | $ | — | ||||||||||||||
| $225 Million Term Loan Maturing 2026 | 3 | May 2028 | Floating | 2.97% | 225,000 | |||||||||||||||
| $200 Million Term Loan Maturing 2026 | 3 | January 2028 | Floating | 3.48% | 200,000 | |||||||||||||||
| $400 Million Term Loan Maturing 2025 | 5 | May 2025 | Floating | 3.38% | 400,000 | |||||||||||||||
| $500 Million Senior Notes due 2026 | 5 | July 2026 | Fixed | 3.75% | 500,000 | |||||||||||||||
| $500 Million Senior Notes due 2029 | 8 | September 2029 | Fixed | 4.00% | 500,000 | |||||||||||||||
| Weighted Average / Corporate Total | 3.61% | $ | 1,825,000 | |||||||||||||||||
| Weighted Average / Total | 3.97% | $ | 2,231,000 | |||||||||||||||||
Notes:
(1)The floating interest rate is hedged, or partially hedged, with an interest rate swap.
(2)Interest rates as of September 30, 2023, inclusive of the impact of interest rate hedges.
(3)Excludes the impact of fair value adjustments and deferred financing costs.
(4)As of September 30, 2023, there was $600.0 million of borrowing capacity on the Revolver, which is charged an unused commitment fee of 0.25% annually.
12