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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Chesapeake Lodging Trust | NYSE:CHSP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 27.17 | 0 | 01:00:00 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
MARYLAND
|
|
27-0372343
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
4300 Wilson Boulevard, Suite 625
Arlington, Virginia
|
|
22203
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
Page
|
PART I
|
||
|
|
|
PART II
|
||
|
|
|
Item 1.
|
Financial Statements
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Property and equipment, net
|
$
|
1,828,303
|
|
|
$
|
1,882,869
|
|
Intangible assets, net
|
35,401
|
|
|
35,835
|
|
||
Cash and cash equivalents
|
43,568
|
|
|
43,060
|
|
||
Restricted cash
|
34,168
|
|
|
36,128
|
|
||
Accounts receivable, net of allowance for doubtful accounts of
$137 and $157, respectively
|
28,273
|
|
|
19,966
|
|
||
Prepaid expenses and other assets
|
19,005
|
|
|
17,516
|
|
||
Assets held for sale
|
40,179
|
|
|
—
|
|
||
Total assets
|
$
|
2,028,897
|
|
|
$
|
2,035,374
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Long-term debt
|
$
|
877,352
|
|
|
$
|
737,310
|
|
Accounts payable and accrued expenses
|
68,074
|
|
|
64,581
|
|
||
Other liabilities
|
42,075
|
|
|
44,808
|
|
||
Liabilities related to assets held for sale
|
1,451
|
|
|
—
|
|
||
Total liabilities
|
988,952
|
|
|
846,699
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Preferred shares, $.01 par value; 100,000,000 shares authorized; Series A Cumulative Redeemable Preferred Shares; no shares and
5,000,000 shares issued and outstanding, respectively
|
—
|
|
|
50
|
|
||
Common shares, $.01 par value; 400,000,000 shares authorized; 60,115,071 and 59,671,964 shares issued and outstanding, respectively
|
601
|
|
|
597
|
|
||
Additional paid-in capital
|
1,188,435
|
|
|
1,304,364
|
|
||
Cumulative dividends in excess of net income
|
(149,110
|
)
|
|
(116,297
|
)
|
||
Accumulated other comprehensive income (loss)
|
19
|
|
|
(39
|
)
|
||
Total shareholders’ equity
|
1,039,945
|
|
|
1,188,675
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,028,897
|
|
|
$
|
2,035,374
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Rooms
|
$
|
123,241
|
|
|
$
|
127,552
|
|
|
$
|
344,410
|
|
|
$
|
358,291
|
|
Food and beverage
|
27,172
|
|
|
29,633
|
|
|
89,620
|
|
|
95,852
|
|
||||
Other
|
7,864
|
|
|
7,344
|
|
|
21,582
|
|
|
20,428
|
|
||||
Total revenue
|
158,277
|
|
|
164,529
|
|
|
455,612
|
|
|
474,571
|
|
||||
EXPENSES
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses:
|
|
|
|
|
|
|
|
||||||||
Rooms
|
28,132
|
|
|
28,532
|
|
|
80,822
|
|
|
81,909
|
|
||||
Food and beverage
|
21,306
|
|
|
22,536
|
|
|
66,694
|
|
|
69,413
|
|
||||
Other direct
|
1,480
|
|
|
1,690
|
|
|
4,136
|
|
|
4,837
|
|
||||
Indirect
|
54,081
|
|
|
54,633
|
|
|
157,428
|
|
|
158,316
|
|
||||
Total hotel operating expenses
|
104,999
|
|
|
107,391
|
|
|
309,080
|
|
|
314,475
|
|
||||
Depreciation and amortization
|
19,369
|
|
|
18,703
|
|
|
57,252
|
|
|
55,797
|
|
||||
Air rights contract amortization
|
130
|
|
|
130
|
|
|
390
|
|
|
390
|
|
||||
Corporate general and administrative
|
4,216
|
|
|
4,074
|
|
|
13,798
|
|
|
14,074
|
|
||||
Total operating expenses
|
128,714
|
|
|
130,298
|
|
|
380,520
|
|
|
384,736
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
29,563
|
|
|
34,231
|
|
|
75,092
|
|
|
89,835
|
|
||||
Interest expense
|
(9,020
|
)
|
|
(8,122
|
)
|
|
(24,989
|
)
|
|
(23,892
|
)
|
||||
Gain on sale of hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
598
|
|
||||
Income before income taxes
|
20,543
|
|
|
26,109
|
|
|
50,103
|
|
|
66,541
|
|
||||
Income tax expense
|
(1,590
|
)
|
|
(162
|
)
|
|
(1,470
|
)
|
|
(1,982
|
)
|
||||
Net income
|
18,953
|
|
|
25,947
|
|
|
48,633
|
|
|
64,559
|
|
||||
Preferred share dividends
|
(430
|
)
|
|
(2,422
|
)
|
|
(5,274
|
)
|
|
(7,266
|
)
|
||||
Write-off of issuance costs of redeemed preferred shares
|
(4,419
|
)
|
|
—
|
|
|
(4,419
|
)
|
|
—
|
|
||||
Net income available to common shareholders
|
$
|
14,104
|
|
|
$
|
23,525
|
|
|
$
|
38,940
|
|
|
$
|
57,293
|
|
|
|
|
|
|
|
|
|
||||||||
Net income available per common share—basic and diluted
|
$
|
0.24
|
|
|
$
|
0.40
|
|
|
$
|
0.65
|
|
|
$
|
0.97
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
18,953
|
|
|
$
|
25,947
|
|
|
$
|
48,633
|
|
|
$
|
64,559
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on cash flow hedge instruments
|
(215
|
)
|
|
77
|
|
|
(722
|
)
|
|
(357
|
)
|
||||
Reclassification of unrealized losses on cash flow
hedge instruments to interest expense
|
366
|
|
|
142
|
|
|
780
|
|
|
462
|
|
||||
Comprehensive income
|
$
|
19,104
|
|
|
$
|
26,166
|
|
|
$
|
48,691
|
|
|
$
|
64,664
|
|
|
Preferred Shares
|
|
Common Shares
|
|
Additional Paid-In Capital
|
|
Cumulative
Dividends in
Excess of Net Income
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
|||||||||||||||||
Balances at December 31, 2016
|
5,000,000
|
|
|
$
|
50
|
|
|
59,671,964
|
|
|
$
|
597
|
|
|
$
|
1,304,364
|
|
|
$
|
(116,297
|
)
|
|
$
|
(39
|
)
|
|
$
|
1,188,675
|
|
Redemption of preferred shares
|
(5,000,000
|
)
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(120,531
|
)
|
|
(4,419
|
)
|
|
—
|
|
|
(125,000
|
)
|
||||||
Repurchase of common shares
|
—
|
|
|
—
|
|
|
(40,504
|
)
|
|
—
|
|
|
(1,065
|
)
|
|
—
|
|
|
—
|
|
|
(1,065
|
)
|
||||||
Issuance of restricted common shares
|
—
|
|
|
—
|
|
|
481,068
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of unrestricted common shares
|
—
|
|
|
—
|
|
|
2,543
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||||
Amortization of deferred compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,608
|
|
|
—
|
|
|
—
|
|
|
5,608
|
|
||||||
Declaration of dividends on common shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,130
|
)
|
|
—
|
|
|
(72,130
|
)
|
||||||
Declaration of dividends on preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,897
|
)
|
|
—
|
|
|
(4,897
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,633
|
|
|
—
|
|
|
48,633
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
58
|
|
||||||
Balances at September 30, 2017
|
—
|
|
|
$
|
—
|
|
|
60,115,071
|
|
|
$
|
601
|
|
|
$
|
1,188,435
|
|
|
$
|
(149,110
|
)
|
|
$
|
19
|
|
|
$
|
1,039,945
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
48,633
|
|
|
$
|
64,559
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
57,252
|
|
|
55,797
|
|
||
Air rights contract amortization
|
|
390
|
|
|
390
|
|
||
Deferred financing costs amortization
|
|
1,248
|
|
|
1,409
|
|
||
Gain on sale of hotel
|
|
—
|
|
|
(598
|
)
|
||
Share-based compensation
|
|
5,671
|
|
|
7,150
|
|
||
Other
|
|
(465
|
)
|
|
(642
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(8,825
|
)
|
|
(11,209
|
)
|
||
Prepaid expenses and other assets
|
|
(1,907
|
)
|
|
585
|
|
||
Accounts payable and accrued expenses
|
|
5,089
|
|
|
4,605
|
|
||
Other liabilities
|
|
173
|
|
|
(33
|
)
|
||
Net cash provided by operating activities
|
|
107,259
|
|
|
122,013
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Disposition of hotel
|
|
—
|
|
|
2,028
|
|
||
Improvements and additions to hotels
|
|
(41,952
|
)
|
|
(17,562
|
)
|
||
Change in restricted cash
|
|
1,960
|
|
|
(810
|
)
|
||
Net cash used in investing activities
|
|
(39,992
|
)
|
|
(16,344
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Redemption of preferred shares
|
|
(125,000
|
)
|
|
—
|
|
||
Borrowings under revolving credit facility
|
|
300,000
|
|
|
175,000
|
|
||
Repayments under revolving credit facility
|
|
(250,000
|
)
|
|
(215,000
|
)
|
||
Proceeds from issuance of unsecured term loan
|
|
225,000
|
|
|
—
|
|
||
Proceeds from issuance of mortgage debt
|
|
—
|
|
|
150,000
|
|
||
Principal prepayments on mortgage debt
|
|
—
|
|
|
(122,220
|
)
|
||
Scheduled principal payments on mortgage debt
|
|
(134,435
|
)
|
|
(7,847
|
)
|
||
Payment of deferred financing costs
|
|
(1,771
|
)
|
|
(935
|
)
|
||
Payment of dividends to common shareholders
|
|
(72,168
|
)
|
|
(70,842
|
)
|
||
Payment of dividends to preferred shareholders
|
|
(7,320
|
)
|
|
(7,266
|
)
|
||
Repurchase of common shares
|
|
(1,065
|
)
|
|
(194
|
)
|
||
Net cash used in financing activities
|
|
(66,759
|
)
|
|
(99,304
|
)
|
||
Net increase in cash
|
|
508
|
|
|
6,365
|
|
||
Cash and cash equivalents, beginning of period
|
|
43,060
|
|
|
50,544
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
43,568
|
|
|
$
|
56,909
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
23,340
|
|
|
$
|
23,157
|
|
Cash paid for income taxes
|
|
$
|
1,650
|
|
|
$
|
1,895
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Land and land improvements
|
|
$
|
316,760
|
|
|
$
|
319,039
|
|
Buildings and leasehold improvements
|
|
1,615,859
|
|
|
1,634,432
|
|
||
Furniture, fixtures and equipment
|
|
213,030
|
|
|
197,815
|
|
||
Construction-in-progress
|
|
21,366
|
|
|
21,399
|
|
||
|
|
2,167,015
|
|
|
2,172,685
|
|
||
Less: accumulated depreciation and amortization
|
|
(338,712
|
)
|
|
(289,816
|
)
|
||
Property and equipment, net
|
|
$
|
1,828,303
|
|
|
$
|
1,882,869
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Intangible assets:
|
|
|
|
|
||||
Air rights contract
(1)
|
|
$
|
36,105
|
|
|
$
|
36,105
|
|
Favorable ground leases
(2)
|
|
3,568
|
|
|
3,568
|
|
||
|
|
39,673
|
|
|
39,673
|
|
||
Less: accumulated amortization
|
|
(4,272
|
)
|
|
(3,838
|
)
|
||
Intangible assets, net
|
|
$
|
35,401
|
|
|
$
|
35,835
|
|
|
|
|
|
|
||||
Intangible liability:
|
|
|
|
|
||||
Unfavorable contract liability
(2)
|
|
$
|
14,236
|
|
|
$
|
14,236
|
|
Less: accumulated amortization
|
|
(2,356
|
)
|
|
(2,061
|
)
|
||
Intangible liability, net (included within other liabilities)
|
|
$
|
11,880
|
|
|
$
|
12,175
|
|
(1)
|
In conjunction with the acquisition of the Hyatt Regency Boston on March 18, 2010, the Trust acquired an air rights contract which expires in
September 2079
and that requires no payments through maturity. The Trust recorded the fair value of the air rights contract of
$36.1 million
as an intangible asset and is amortizing the value over the term of the contract.
|
(2)
|
In conjunction with the acquisition of the Denver Marriott City Center on October 3, 2011, the Trust assumed
three
lease agreements for land parcels underlying a portion of the hotel with initial terms ending
July 2068
,
February 2072
and
April 2072
. The Trust concluded that the terms of
two
of the
three
ground leases were below market terms and recorded an aggregate of
$4.8 million
of favorable ground lease assets at the time. On July 29, 2014, the Trust terminated
one
of the
two
ground leases with below market terms in connection with acquiring the associated land parcel. The Trust is amortizing the remaining favorable ground lease asset over the life of the respective lease and including within indirect hotel operating expenses in the interim consolidated statements of operations. Also in conjunction with the acquisition of the Denver Marriott City Center, the Trust assumed a management contract with a non-cancelable term ending
December 2047
. The Trust concluded that the management agreement terms were above market terms and recorded a
$14.2 million
unfavorable contract liability, which the Trust is amortizing over the remaining non-cancelable term and including within indirect hotel operating expenses in the interim consolidated statements of operations.
|
|
Origination
|
|
Original Principal Amount
|
|
|
|
Interest Rate
|
|
Principal Amortization Period
|
|
September 30,
|
|
December 31,
|
||||||
|
|
|
Maturity
|
|
|
|
2017
|
|
2016
|
||||||||||
Unsecured:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revolving credit facility
(1)
|
July 2010
|
|
n/a
|
|
March 2019
|
|
Floating
|
|
n/a
|
|
$
|
110,000
|
|
|
$
|
60,000
|
|
||
Term loan
(2)
|
April 2017
|
|
$
|
225,000
|
|
|
April 2022
|
|
Floating
|
|
n/a
|
|
225,000
|
|
|
—
|
|
||
Secured:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Royal Palm South Beach Miami, a Tribute Portfolio Resort
(3)
|
March 2015
|
|
$
|
125,000
|
|
|
March 2017
|
|
Floating
|
|
n/a
|
|
—
|
|
|
125,000
|
|
||
Boston Marriott Newton
|
May 2013
|
|
$
|
60,000
|
|
|
June 2020
|
|
3.63%
|
|
25
|
|
53,366
|
|
|
54,614
|
|
||
Le Meridien San Francisco
|
July 2013
|
|
$
|
92,500
|
|
|
August 2020
|
|
3.50%
|
|
25
|
|
82,536
|
|
|
84,476
|
|
||
Denver Marriott City Center
(4)
|
July 2012
|
|
$
|
70,000
|
|
|
August 2022
|
|
4.90%
|
|
30
|
|
64,079
|
|
|
65,048
|
|
||
Hilton Checkers Los Angeles
|
February 2013
|
|
$
|
32,000
|
|
|
March 2023
|
|
4.11%
|
|
30
|
|
29,419
|
|
|
29,884
|
|
||
W Chicago – City Center
|
July 2013
|
|
$
|
93,000
|
|
|
August 2023
|
|
4.25%
|
|
25
|
|
83,932
|
|
|
85,720
|
|
||
Hyatt Herald Square New York/Hyatt Place New York Midtown South
|
July 2014
|
|
$
|
90,000
|
|
|
July 2024
|
|
4.30%
|
|
30
|
|
88,316
|
|
|
89,414
|
|
||
Hyatt Regency Boston
|
June 2016
|
|
$
|
150,000
|
|
|
July 2026
|
|
4.25%
|
|
30
|
|
146,822
|
|
|
148,749
|
|
||
|
|
|
|
|
|
|
|
|
|
|
883,470
|
|
|
742,905
|
|
||||
Unamortized deferred financing costs
|
|
|
|
|
|
|
|
|
|
(6,118
|
)
|
|
(5,595
|
)
|
|||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
$
|
877,352
|
|
|
$
|
737,310
|
|
(1)
|
The Trust may exercise an option to extend the maturity by
one
year, subject to certain customary conditions. As of
September 30, 2017
, the interest rate in effect was
2.79%
. See below for additional information related to the revolving credit facility.
|
(2)
|
The term loan bears interest equal to LIBOR plus
1.45%
-
2.20%
(the spread over LIBOR based on the Trust’s consolidated leverage ratio).
Contemporaneous with the closing of the term loan, the Trust entered into an interest rate swap to fix LIBOR at
1.86%
for the
five
-year term (as of
September 30, 2017
, the effective interest rate on the unsecured term loan was
3.31%
). Under the terms of this interest rate swap, the Trust pays fixed interest of
1.86%
per annum on a notional amount of
$225.0 million
and receives floating rate interest equal to one-month LIBOR. The effective date of this interest rate swap was
April 21, 2017
and it will mature on
April 21, 2022
.
|
(3)
|
On March 9, 2015, in connection with the acquisition of the Royal Palm South Beach Miami, a Tribute Portfolio Resort, the Trust assumed an existing loan agreement with an outstanding principal balance of
$125.0 million
. The term loan was amended and restated at the time of assumption and provided for a new
two
-year term. The term loan bore interest equal to one-month LIBOR plus
2.40%
. Contemporaneous with the assumption of the term loan, the Trust entered into an interest rate swap to effectively fix the interest rate on the term loan for the new
two
-year term at
3.34%
per annum. Under the terms of this interest rate swap, the Trust paid fixed interest of
0.94%
per annum on a notional amount of
$125.0 million
and received floating rate interest equal to one-month LIBOR. The effective date of this interest rate swap was
March 9, 2015
and it matured on
March 9, 2017
. The Trust repaid the term loan at maturity on
March 9, 2017
.
|
(4)
|
The loan has a term of
30
years, but is callable by the lender after
10
years, and the Trust expects the lender to call the loan at that time. The indicated maturity is based on the date the loan is callable by the lender.
|
Year
|
|
Amounts
|
||
2017
|
|
$
|
3,003
|
|
2018
|
|
13,178
|
|
|
2019
|
|
123,732
|
|
|
2020
|
|
135,316
|
|
|
2021
|
|
10,233
|
|
|
Thereafter
|
|
598,008
|
|
|
|
|
$
|
883,470
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Administrative and general
|
$
|
13,004
|
|
|
$
|
13,421
|
|
|
$
|
38,843
|
|
|
$
|
39,897
|
|
Advertising and sales
|
10,914
|
|
|
11,155
|
|
|
32,240
|
|
|
32,582
|
|
||||
Repairs and maintenance
|
5,226
|
|
|
5,102
|
|
|
15,763
|
|
|
15,525
|
|
||||
Utilities
|
4,352
|
|
|
4,321
|
|
|
12,026
|
|
|
11,876
|
|
||||
Franchise fees
|
2,799
|
|
|
2,804
|
|
|
7,664
|
|
|
7,778
|
|
||||
Management fees
|
6,634
|
|
|
7,128
|
|
|
17,361
|
|
|
18,818
|
|
||||
Property and other taxes
|
8,108
|
|
|
7,358
|
|
|
24,656
|
|
|
22,162
|
|
||||
Insurance, leases and other
|
3,044
|
|
|
3,344
|
|
|
8,875
|
|
|
9,678
|
|
||||
Indirect hotel operating expenses
|
$
|
54,081
|
|
|
$
|
54,633
|
|
|
$
|
157,428
|
|
|
$
|
158,316
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income available to common shareholders
|
$
|
14,104
|
|
|
$
|
23,525
|
|
|
$
|
38,940
|
|
|
$
|
57,293
|
|
Less: Dividends declared on unvested time-based awards
|
(124
|
)
|
|
(146
|
)
|
|
(371
|
)
|
|
(435
|
)
|
||||
Less: Undistributed earnings allocated to unvested time-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income available to common shareholders, excluding amounts attributable to unvested time-based awards
|
$
|
13,980
|
|
|
$
|
23,379
|
|
|
$
|
38,569
|
|
|
$
|
56,858
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common shares outstanding–basic
|
59,043,425
|
|
|
58,729,338
|
|
|
59,024,497
|
|
|
58,711,056
|
|
||||
Effect of dilutive unvested performance-based awards
|
244,387
|
|
|
199,095
|
|
|
220,306
|
|
|
183,473
|
|
||||
Weighted-average number of common shares outstanding–diluted
|
59,287,812
|
|
|
58,928,433
|
|
|
59,244,803
|
|
|
58,894,529
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income available per common share—basic and diluted
|
$
|
0.24
|
|
|
$
|
0.40
|
|
|
$
|
0.65
|
|
|
$
|
0.97
|
|
|
|
Record Date
|
|
Payment Date
|
|
Dividend Per
Common Share
|
||
Fourth Quarter 2016
|
|
December 30, 2016
|
|
January 13, 2017
|
|
$
|
0.40
|
|
First Quarter 2017
|
|
March 31, 2017
|
|
April 14, 2017
|
|
$
|
0.40
|
|
Second Quarter 2017
|
|
June 30, 2017
|
|
July 14, 2017
|
|
$
|
0.40
|
|
Third Quarter 2017
|
|
September 29, 2017
|
|
October 13, 2017
|
|
$
|
0.40
|
|
|
|
Record Date
|
|
Payment Date
|
|
Dividend Per Series A Cumulative Redeemable Preferred Share
|
||
Fourth Quarter 2016
|
|
December 30, 2016
|
|
January 13, 2017
|
|
$
|
0.484375
|
|
First Quarter 2017
|
|
March 31, 2017
|
|
April 14, 2017
|
|
$
|
0.484375
|
|
Second Quarter 2017
|
|
June 30, 2017
|
|
July 14, 2017
|
|
$
|
0.484375
|
|
Trust TSR as % of Performance Peer Group Total Return
|
|
Payout (% of Maximum)
|
<67%
|
|
0%
|
67%
|
|
25%
|
100%
|
|
50%
|
≥133%
|
|
100%
|
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Restricted common shares as of December 31, 2016
|
|
775,984
|
|
|
$
|
18.71
|
|
Granted
|
|
481,068
|
|
|
$
|
15.89
|
|
Vested
|
|
(186,185
|
)
|
|
$
|
26.21
|
|
Forfeited
|
|
—
|
|
|
$
|
—
|
|
Restricted common shares as of September 30, 2017
|
|
1,070,867
|
|
|
$
|
16.13
|
|
|
|
Fair Value at September 30, 2017
|
||||||||||||||
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap (included within prepaid expenses and other assets)
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
U.S. economic conditions generally and the real estate market and the lodging industry specifically;
|
•
|
management and performance of our hotels;
|
•
|
our plans for renovation of our hotels;
|
•
|
our financing plans and the terms on which capital is available to us;
|
•
|
supply and demand for hotel rooms in our current and proposed market areas;
|
•
|
our ability to acquire additional hotels and the risk that potential acquisitions may not be completed or perform in accordance with expectations;
|
•
|
legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts; and
|
•
|
our competition.
|
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
(1)
|
|
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 Centric Fisherman’s Wharf
|
|
San Francisco, CA
|
|
316
|
|
|
May 31, 2013
|
19
|
|
Hyatt Centric Santa Barbara
|
|
Santa Barbara, CA
|
|
200
|
|
|
June 27, 2013
|
20
|
|
JW Marriott San Francisco Union Square
|
|
San Francisco, CA
|
|
337
|
|
|
October 1, 2014
|
21
|
|
Royal Palm South Beach Miami, a Tribute Portfolio Resort
|
|
Miami Beach, FL
|
|
393
|
|
|
March 9, 2015
|
22
|
|
Ace Hotel and Theater Downtown Los Angeles
|
|
Los Angeles, CA
|
|
182
|
|
|
April 30, 2015
|
|
|
|
|
|
|
6,694
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||
Occupancy
|
88.5
|
%
|
|
88.8
|
%
|
|
(30) bps
|
|
83.9
|
%
|
|
85.2
|
%
|
|
(130) bps
|
ADR
|
$226.10
|
|
$233.19
|
|
(3.0)%
|
|
$224.57
|
|
$229.20
|
|
(2.0)%
|
||||
RevPAR
|
$200.12
|
|
$207.12
|
|
(3.4)%
|
|
$188.46
|
|
$195.34
|
|
(3.5)%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted Hotel EBITDA
|
$53,123
|
|
$56,983
|
|
(6.8)%
|
|
$146,067
|
|
$159,631
|
|
(8.5)%
|
||||
Adjusted Hotel EBITDA Margin
|
33.6
|
%
|
|
34.6
|
%
|
|
(100) bps
|
|
32.1
|
%
|
|
33.6
|
%
|
|
(150) bps
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
|
$
|
18,953
|
|
|
$
|
25,947
|
|
|
$
|
48,633
|
|
|
$
|
64,559
|
|
Add: Interest expense
|
|
9,020
|
|
|
8,122
|
|
|
24,989
|
|
|
23,892
|
|
||||
Income tax expense
|
|
1,590
|
|
|
162
|
|
|
1,470
|
|
|
1,982
|
|
||||
Depreciation and amortization
|
|
19,369
|
|
|
18,703
|
|
|
57,252
|
|
|
55,797
|
|
||||
Air rights contract amortization
|
|
130
|
|
|
130
|
|
|
390
|
|
|
390
|
|
||||
Corporate general and administrative
|
|
4,216
|
|
|
4,074
|
|
|
13,798
|
|
|
14,074
|
|
||||
Hotel EBITDA
|
|
53,278
|
|
|
57,138
|
|
|
146,532
|
|
|
160,694
|
|
||||
Less: Non-cash amortization
(1)
|
|
(155
|
)
|
|
(155
|
)
|
|
(465
|
)
|
|
(465
|
)
|
||||
Gain on sale of hotel
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
||||
Adjusted Hotel EBITDA
|
|
$
|
53,123
|
|
|
$
|
56,983
|
|
|
$
|
146,067
|
|
|
$
|
159,631
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
|
$
|
158,277
|
|
|
$
|
164,529
|
|
|
$
|
455,612
|
|
|
$
|
474,571
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Hotel EBITDA Margin
|
|
33.6
|
%
|
|
34.6
|
%
|
|
32.1
|
%
|
|
33.6
|
%
|
(1)
|
Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, and unfavorable contract liability.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
18,953
|
|
|
$
|
25,947
|
|
|
$
|
48,633
|
|
|
$
|
64,559
|
|
Add: Interest expense
|
9,020
|
|
|
8,122
|
|
|
24,989
|
|
|
23,892
|
|
||||
Income tax expense
|
1,590
|
|
|
162
|
|
|
1,470
|
|
|
1,982
|
|
||||
Depreciation and amortization
|
19,369
|
|
|
18,703
|
|
|
57,252
|
|
|
55,797
|
|
||||
Corporate EBITDA
|
48,932
|
|
|
52,934
|
|
|
132,344
|
|
|
146,230
|
|
||||
Less: Non-cash amortization
(1)
|
(25
|
)
|
|
(26
|
)
|
|
(76
|
)
|
|
(76
|
)
|
||||
Gain on sale of hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
||||
Adjusted Corporate EBITDA
|
$
|
48,907
|
|
|
$
|
52,908
|
|
|
$
|
132,268
|
|
|
$
|
145,556
|
|
(1)
|
Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
18,953
|
|
|
$
|
25,947
|
|
|
$
|
48,633
|
|
|
$
|
64,559
|
|
Add: Depreciation and amortization
|
19,369
|
|
|
18,703
|
|
|
57,252
|
|
|
55,797
|
|
||||
Less: Gain on sale of hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
(598
|
)
|
||||
FFO
|
38,322
|
|
|
44,650
|
|
|
105,885
|
|
|
119,758
|
|
||||
Less: Preferred share dividends
|
(430
|
)
|
|
(2,422
|
)
|
|
(5,274
|
)
|
|
(7,266
|
)
|
||||
Write-off of issuance costs of redeemed preferred shares
|
(4,419
|
)
|
|
—
|
|
|
(4,419
|
)
|
|
—
|
|
||||
Dividends declared on unvested time-based awards
|
(124
|
)
|
|
(146
|
)
|
|
(371
|
)
|
|
(435
|
)
|
||||
Undistributed earnings allocated to unvested time-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
FFO available to common shareholders
|
33,349
|
|
|
42,082
|
|
|
95,821
|
|
|
112,057
|
|
||||
Add: Write-off of issuance costs of redeemed preferred shares
|
4,419
|
|
|
—
|
|
|
4,419
|
|
|
—
|
|
||||
Less: Non-cash amortization
(1)
|
(25
|
)
|
|
(26
|
)
|
|
(76
|
)
|
|
(76
|
)
|
||||
AFFO available to common shareholders
|
$
|
37,743
|
|
|
$
|
42,056
|
|
|
$
|
100,164
|
|
|
$
|
111,981
|
|
|
|
|
|
|
|
|
|
||||||||
FFO available per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.56
|
|
|
$
|
0.72
|
|
|
$
|
1.62
|
|
|
$
|
1.91
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
0.71
|
|
|
$
|
1.62
|
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
||||||||
AFFO available per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.64
|
|
|
$
|
0.72
|
|
|
$
|
1.70
|
|
|
$
|
1.91
|
|
Diluted
|
$
|
0.64
|
|
|
$
|
0.71
|
|
|
$
|
1.69
|
|
|
$
|
1.90
|
|
(1)
|
Reflects non-cash amortization of ground lease asset, deferred franchise costs, deferred key money, unfavorable contract liability, and air rights contract.
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less Than
One Year
|
|
One to Three Years
|
|
Three to Five Years
|
|
More Than Five Years
|
||||||||||
Revolving credit facility, including interest
(1)
|
|
$
|
114,683
|
|
|
$
|
3,108
|
|
|
$
|
111,575
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term loan, including interest
(1)
|
|
260,087
|
|
|
7,560
|
|
|
15,141
|
|
|
237,386
|
|
|
—
|
|
|||||
Secured loans, including interest
|
|
676,623
|
|
|
35,034
|
|
|
193,124
|
|
|
110,254
|
|
|
338,211
|
|
|||||
Corporate office lease
|
|
1,433
|
|
|
287
|
|
|
597
|
|
|
549
|
|
|
—
|
|
|||||
Ground leases
(2)
|
|
206,513
|
|
|
4,101
|
|
|
8,201
|
|
|
8,210
|
|
|
186,001
|
|
|||||
|
|
$
|
1,259,339
|
|
|
$
|
50,090
|
|
|
$
|
328,638
|
|
|
$
|
356,399
|
|
|
$
|
524,212
|
|
(1)
|
Assumes no additional borrowings and interest payments are based on the interest rate in effect at
September 30, 2017
. Also assumes that no extension options, if any, are exercised. See Note
6
, “Long-Term Debt,” to our interim consolidated financial statements for additional information relating to our revolving credit facility and term loan.
|
(2)
|
The ground leases for the Hyatt Regency Mission Bay Spa and Marina and the JW Marriott San Francisco Union Square provide for the greater of base or percentage rent, subject to potential increases over the term of the leases. Amounts assume only base rent for all periods presented and do not assume any adjustments for potential increases.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit Number
|
|
Description of Exhibit
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS XBRL
|
|
Instance Document
|
|
|
|
101.SCH XBRL
|
|
Taxonomy Extension Schema Document
|
|
|
|
101.CAL XBRL
|
|
Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF XBRL
|
|
Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB XBRL
|
|
Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE XBRL
|
|
Taxonomy Extension Presentation Linkbase Document
|
|
|
CHESAPEAKE LODGING TRUST
|
||
|
|
|
|
|
Date:
|
November 2, 2017
|
By:
|
|
/
S
/ D
OUGLAS
W. V
ICARI
|
|
|
|
|
Douglas W. Vicari
|
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/
S
/ G
RAHAM
J. W
OOTTEN
|
|
|
|
|
Graham J. Wootten
|
|
|
|
|
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
1 Year Chesapeake Lodging Chart |
1 Month Chesapeake Lodging Chart |
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