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)
|
Title of Each Class
|
|
Trading Symbol(s)
|
|
Name of Exchange On Which Registered
|
Common Shares of Beneficial Interest, $.01 par value
|
|
CHSP
|
|
New York Stock Exchange
|
|
|
Page
|
PART I
|
||
|
|
|
PART II
|
||
|
|
|
Item 1.
|
Financial Statements
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Property and equipment, net
|
$
|
1,722,748
|
|
|
$
|
1,732,154
|
|
Operating lease right-of-use assets, net
|
74,883
|
|
|
—
|
|
||
Intangible assets, net
|
31,408
|
|
|
34,678
|
|
||
Cash and cash equivalents
|
46,101
|
|
|
71,259
|
|
||
Restricted cash
|
34,244
|
|
|
31,614
|
|
||
Accounts receivable, net of allowance for doubtful accounts of
$93 and $83, respectively
|
24,366
|
|
|
18,360
|
|
||
Prepaid expenses and other assets
|
21,821
|
|
|
21,012
|
|
||
Total assets
|
$
|
1,955,571
|
|
|
$
|
1,909,077
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Long-term debt
|
$
|
748,562
|
|
|
$
|
751,389
|
|
Operating lease liabilities
|
71,937
|
|
|
—
|
|
||
Accounts payable and accrued expenses
|
67,582
|
|
|
72,555
|
|
||
Other liabilities
|
30,912
|
|
|
31,155
|
|
||
Total liabilities
|
918,993
|
|
|
855,099
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Preferred shares, $.01 par value; 100,000,000 shares authorized;
no shares issued and outstanding, respectively
|
—
|
|
|
—
|
|
||
Common shares, $.01 par value; 400,000,000 shares authorized; 60,765,796 shares and 60,263,670 shares issued and outstanding, respectively
|
608
|
|
|
603
|
|
||
Additional paid-in capital
|
1,194,220
|
|
|
1,193,455
|
|
||
Cumulative dividends in excess of net income
|
(160,396
|
)
|
|
(144,341
|
)
|
||
Accumulated other comprehensive income
|
2,146
|
|
|
4,261
|
|
||
Total shareholders’ equity
|
1,036,578
|
|
|
1,053,978
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,955,571
|
|
|
$
|
1,909,077
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
REVENUE
|
|
|
|
||||
Rooms
|
$
|
99,082
|
|
|
$
|
100,613
|
|
Food and beverage
|
27,465
|
|
|
27,633
|
|
||
Other
|
7,190
|
|
|
6,779
|
|
||
Total revenue
|
133,737
|
|
|
135,025
|
|
||
EXPENSES
|
|
|
|
||||
Hotel operating expenses:
|
|
|
|
||||
Rooms
|
24,850
|
|
|
25,286
|
|
||
Food and beverage
|
20,459
|
|
|
21,059
|
|
||
Other direct
|
1,087
|
|
|
1,148
|
|
||
Indirect
|
50,150
|
|
|
49,793
|
|
||
Total hotel operating expenses
|
96,546
|
|
|
97,286
|
|
||
Depreciation and amortization
|
18,637
|
|
|
19,208
|
|
||
Air rights contract amortization
|
130
|
|
|
130
|
|
||
Corporate general and administrative
|
4,869
|
|
|
5,378
|
|
||
Total operating expenses
|
120,182
|
|
|
122,002
|
|
||
|
|
|
|
||||
Interest income
|
256
|
|
|
—
|
|
||
Interest expense
|
(8,000
|
)
|
|
(8,844
|
)
|
||
Income before income taxes
|
5,811
|
|
|
4,179
|
|
||
Income tax benefit
|
2,440
|
|
|
2,370
|
|
||
Net income
|
$
|
8,251
|
|
|
$
|
6,549
|
|
|
|
|
|
||||
Net income available per common share—basic and diluted
|
$
|
0.14
|
|
|
$
|
0.11
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
8,251
|
|
|
$
|
6,549
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Unrealized gains (losses) on cash flow hedge instruments
|
(1,755
|
)
|
|
3,334
|
|
||
Reclassification of unrealized losses (gains) on cash flow
hedge instruments to interest expense
|
(360
|
)
|
|
148
|
|
||
Comprehensive income
|
$
|
6,136
|
|
|
$
|
10,031
|
|
|
Three Months Ended March 31, 2018
|
|||||||||||||||||||||
|
Common Shares
|
|
Additional Paid-In Capital
|
|
Cumulative Dividends in Excess of Net Income
|
|
Accumulated
Other Comprehensive Income
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Total
|
||||||||||||||
Balances at December 31, 2017
|
59,941,088
|
|
|
$
|
599
|
|
|
$
|
1,190,250
|
|
|
$
|
(144,734
|
)
|
|
$
|
2,313
|
|
|
$
|
1,048,428
|
|
Repurchase of common shares
|
(42,137
|
)
|
|
—
|
|
|
(1,146
|
)
|
|
—
|
|
|
—
|
|
|
(1,146
|
)
|
|||||
Issuance of restricted common shares
|
481,449
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of unrestricted common shares
|
764
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||
Amortization of deferred compensation
|
—
|
|
|
—
|
|
|
1,927
|
|
|
—
|
|
|
—
|
|
|
1,927
|
|
|||||
Declaration of dividends on common shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,152
|
)
|
|
—
|
|
|
(24,152
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
6,549
|
|
|
—
|
|
|
6,549
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,482
|
|
|
3,482
|
|
|||||
Balances at March 31, 2018
|
60,381,164
|
|
|
$
|
604
|
|
|
$
|
1,191,047
|
|
|
$
|
(162,337
|
)
|
|
$
|
5,795
|
|
|
$
|
1,035,109
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
8,251
|
|
|
$
|
6,549
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
18,637
|
|
|
19,208
|
|
||
Air rights contract amortization
|
|
130
|
|
|
130
|
|
||
Deferred financing costs amortization
|
|
368
|
|
|
424
|
|
||
Share-based compensation
|
|
1,933
|
|
|
1,948
|
|
||
Other
|
|
(71
|
)
|
|
(75
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(6,006
|
)
|
|
(4,596
|
)
|
||
Prepaid expenses and other assets
|
|
(2,937
|
)
|
|
(3,310
|
)
|
||
Accounts payable and accrued expenses
|
|
(4,416
|
)
|
|
208
|
|
||
Other liabilities
|
|
—
|
|
|
(88
|
)
|
||
Net cash provided by operating activities
|
|
15,889
|
|
|
20,398
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Improvements and additions to hotels
|
|
(8,961
|
)
|
|
(10,165
|
)
|
||
Net cash used in investing activities
|
|
(8,961
|
)
|
|
(10,165
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings under revolving credit facility
|
|
5,000
|
|
|
20,000
|
|
||
Repayments under revolving credit facility
|
|
(5,000
|
)
|
|
(15,000
|
)
|
||
Scheduled principal payments on mortgage debt
|
|
(3,195
|
)
|
|
(3,292
|
)
|
||
Payment of dividends to common shareholders
|
|
(25,098
|
)
|
|
(23,741
|
)
|
||
Repurchase of common shares
|
|
(1,163
|
)
|
|
(1,146
|
)
|
||
Net cash used in financing activities
|
|
(29,456
|
)
|
|
(23,179
|
)
|
||
Net decrease in cash, cash equivalents, and restricted cash
|
|
(22,528
|
)
|
|
(12,946
|
)
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
102,873
|
|
|
74,916
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
|
$
|
80,345
|
|
|
$
|
61,970
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
7,067
|
|
|
$
|
8,356
|
|
Cash paid for income taxes
|
|
$
|
—
|
|
|
$
|
84
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Land and land improvements
|
|
$
|
286,762
|
|
|
$
|
286,761
|
|
Buildings and leasehold improvements
|
|
1,626,724
|
|
|
1,620,864
|
|
||
Furniture, fixtures and equipment
|
|
190,258
|
|
|
235,585
|
|
||
Construction-in-progress
|
|
10,419
|
|
|
14,102
|
|
||
|
|
2,114,163
|
|
|
2,157,312
|
|
||
Less: accumulated depreciation and amortization
|
|
(391,415
|
)
|
|
(425,158
|
)
|
||
Property and equipment, net
|
|
$
|
1,722,748
|
|
|
$
|
1,732,154
|
|
|
|
March 31, 2019
|
||
2019
|
|
$
|
3,520
|
|
2020
|
|
4,699
|
|
|
2021
|
|
4,713
|
|
|
2022
|
|
4,566
|
|
|
2023
|
|
4,406
|
|
|
Thereafter
|
|
198,284
|
|
|
Total minimum lease payments
|
|
220,188
|
|
|
Imputed interest
|
|
(148,251
|
)
|
|
Operating lease liabilities
|
|
$
|
71,937
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Air rights contract
(1)
|
|
$
|
36,105
|
|
|
$
|
36,105
|
|
Favorable ground lease
(2)
|
|
—
|
|
|
3,568
|
|
||
|
|
36,105
|
|
|
39,673
|
|
||
Less: accumulated amortization
|
|
(4,697
|
)
|
|
(4,995
|
)
|
||
Intangible assets, net
|
|
$
|
31,408
|
|
|
$
|
34,678
|
|
(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 Hilton Denver City Center on October 3, 2011, the Trust assumed a lease agreement for a land parcel underlying a portion of the hotel with an initial term ending
February 2072
that it concluded had below market terms. The Trust recorded a favorable ground lease asset of
$3.6 million
associated with this lease agreement at the time. On January 1, 2019, the Trust reclassified the unamortized balance of this favorable ground lease asset to an operating lease right-of-use asset associated with this lease agreement upon the adoption of the new accounting guidance with respect to leases.
|
|
Origination
|
|
Original Principal Amount
|
|
|
|
Interest Rate
|
|
Principal Amortization Period
|
|
March 31,
|
|
December 31,
|
||||||
|
|
|
Maturity
|
|
|
|
2019
|
|
2018
|
||||||||||
Unsecured:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revolving credit facility
(1)
|
July 2010
|
|
n/a
|
|
May 2022
|
|
Floating
|
|
n/a
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Term loan
(2)
|
April 2017
|
|
$
|
225,000
|
|
|
April 2022
|
|
Floating
|
|
n/a
|
|
225,000
|
|
|
225,000
|
|
||
Secured:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Boston Marriott Newton
|
May 2013
|
|
$
|
60,000
|
|
|
June 2020
|
|
3.63%
|
|
25
|
|
50,755
|
|
|
51,205
|
|
||
Le Meridien San Francisco
|
July 2013
|
|
$
|
92,500
|
|
|
August 2020
|
|
3.50%
|
|
25
|
|
78,481
|
|
|
79,180
|
|
||
Hilton Denver City Center
(3)
|
July 2012
|
|
$
|
70,000
|
|
|
August 2022
|
|
4.90%
|
|
30
|
|
62,032
|
|
|
62,383
|
|
||
Hilton Checkers Los Angeles
|
February 2013
|
|
$
|
32,000
|
|
|
March 2023
|
|
4.11%
|
|
30
|
|
28,438
|
|
|
28,609
|
|
||
W Chicago – City Center
|
July 2013
|
|
$
|
93,000
|
|
|
August 2023
|
|
4.25%
|
|
25
|
|
80,160
|
|
|
80,815
|
|
||
Hyatt Herald Square New York/Hyatt Place New York Midtown South
|
July 2014
|
|
$
|
90,000
|
|
|
July 2024
|
|
4.30%
|
|
30
|
|
85,988
|
|
|
86,397
|
|
||
Hyatt Regency Boston
|
June 2016
|
|
$
|
150,000
|
|
|
July 2026
|
|
4.25%
|
|
30
|
|
143,011
|
|
|
143,471
|
|
||
|
|
|
|
|
|
|
|
|
|
|
753,865
|
|
|
757,060
|
|
||||
Unamortized deferred financing costs
|
|
|
|
|
|
|
|
|
|
(5,303
|
)
|
|
(5,671
|
)
|
|||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
$
|
748,562
|
|
|
$
|
751,389
|
|
(1)
|
The Trust may exercise an option to extend the maturity by
one
year, subject to certain customary conditions. As of
March 31, 2019
, the interest rate in effect was
4.00%
. 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
March 31, 2019
, the effective interest rate on the 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)
|
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
|
||
2019
|
|
$
|
10,547
|
|
2020
|
|
135,326
|
|
|
2021
|
|
9,984
|
|
|
2022
|
|
291,635
|
|
|
2023
|
|
100,623
|
|
|
Thereafter
|
|
205,750
|
|
|
|
|
$
|
753,865
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Administrative and general
|
$
|
12,889
|
|
|
$
|
12,287
|
|
Advertising and sales
|
10,156
|
|
|
10,281
|
|
||
Repairs and maintenance
|
5,192
|
|
|
5,344
|
|
||
Utilities
|
3,584
|
|
|
3,648
|
|
||
Franchise fees
|
2,119
|
|
|
2,289
|
|
||
Management fees
|
4,995
|
|
|
4,619
|
|
||
Property and other taxes
|
8,288
|
|
|
8,227
|
|
||
Insurance, leases and other
|
2,927
|
|
|
3,098
|
|
||
Indirect hotel operating expenses
|
$
|
50,150
|
|
|
$
|
49,793
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
8,251
|
|
|
$
|
6,549
|
|
Less: Dividends declared on unvested time-based awards
|
(118
|
)
|
|
(121
|
)
|
||
Less: Undistributed earnings allocated to unvested time-based awards
|
—
|
|
|
—
|
|
||
Net income available to common shareholders, excluding amounts attributable to unvested time-based awards
|
$
|
8,133
|
|
|
$
|
6,428
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted-average number of common shares outstanding–basic
|
59,390,500
|
|
|
59,120,065
|
|
||
Effect of dilutive unvested performance-based awards
|
548,176
|
|
|
598,921
|
|
||
Weighted-average number of common shares outstanding–diluted
|
59,938,676
|
|
|
59,718,986
|
|
||
|
|
|
|
||||
Net income available per common share—basic and diluted
|
$
|
0.14
|
|
|
$
|
0.11
|
|
|
|
Record Date
|
|
Payment Date
|
|
Dividend Per Common Share
|
||
Fourth Quarter 2018
|
|
December 31, 2018
|
|
January 15, 2019
|
|
$
|
0.40
|
|
First Quarter 2019
|
|
March 29, 2019
|
|
April 15, 2019
|
|
$
|
0.40
|
|
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, 2018
|
|
953,429
|
|
|
$
|
15.39
|
|
Granted
|
|
548,419
|
|
|
$
|
13.12
|
|
Vested
|
|
(130,186
|
)
|
|
$
|
25.99
|
|
Forfeited
|
|
—
|
|
|
$
|
—
|
|
Restricted common shares as of March 31, 2019
|
|
1,371,662
|
|
|
$
|
13.48
|
|
|
|
Fair Value at March 31, 2019
|
||||||||||||||
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap (included within prepaid expenses and other assets)
|
|
$
|
2,146
|
|
|
$
|
—
|
|
|
$
|
2,146
|
|
|
$
|
—
|
|
|
|
$
|
2,146
|
|
|
$
|
—
|
|
|
$
|
2,146
|
|
|
$
|
—
|
|
•
|
each of the Trust’s outstanding common shares (other than shares held by the Trust, any wholly-owned subsidiary of the Trust or by any of the Park Parties or any of their respective wholly-owned subsidiaries) will be converted into the right to receive
0.628
of a share of Park common stock, par value
$0.01
per share (“Park Common Stock”), and
$11.00
in cash (collectively, the “Merger Consideration”); and
|
•
|
all unvested awards granted under the Plan will become one hundred percent (100%) vested and all restrictions and forfeiture conditions thereon will lapse, and thereafter, the holders thereof will only have the right to receive the Merger Consideration with respect to such shares.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
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
|
|
Hilton Denver 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
|
|
438
|
|
|
September 7, 2012
|
14
|
|
Hyatt Place New York Midtown South
|
|
New York, NY
|
|
185
|
|
|
March 14, 2013
|
15
|
|
W New Orleans – French Quarter
|
|
New Orleans, LA
|
|
97
|
|
|
March 28, 2013
|
16
|
|
Le Meridien New Orleans
|
|
New Orleans, LA
|
|
410
|
|
|
April 25, 2013
|
17
|
|
Hyatt Centric Fisherman’s Wharf
|
|
San Francisco, CA
|
|
316
|
|
|
May 31, 2013
|
18
|
|
JW Marriott San Francisco Union Square
|
|
San Francisco, CA
|
|
344
|
|
|
October 1, 2014
|
19
|
|
Royal Palm South Beach Miami, a Tribute Portfolio Resort
|
|
Miami Beach, FL
|
|
393
|
|
|
March 9, 2015
|
20
|
|
Ace Hotel and Theater Downtown Los Angeles
|
|
Los Angeles, CA
|
|
182
|
|
|
April 30, 2015
|
|
|
|
|
|
|
6,288
|
|
|
|
•
|
our outstanding common shares (other than shares held by us, any of our wholly-owned subsidiaries or by any of the Park Parties or any of their respective wholly-owned subsidiaries) will be converted into the Merger Consideration; and
|
•
|
all unvested awards granted under the Plan will become one hundred percent (100%) vested and all restrictions and forfeiture conditions thereon will lapse, and thereafter, the holders thereof will only have the right to receive the Merger Consideration with respect to such shares.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
|
Change
|
||
Comparable Occupancy
|
78.6
|
%
|
|
80.8
|
%
|
|
(220) bps
|
Comparable ADR
|
$222.89
|
|
$214.03
|
|
4.1%
|
||
Comparable RevPAR
|
$175.20
|
|
$172.95
|
|
1.3%
|
||
|
|
|
|
|
|
||
Comparable Adjusted Hotel EBITDA
re
|
$37,128
|
|
$36,779
|
|
0.9%
|
||
Comparable Adjusted Hotel EBITDA
re
Margin
|
27.8
|
%
|
|
28.0
|
%
|
|
(20) bps
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
8,251
|
|
|
$
|
6,549
|
|
Add: Interest expense
|
8,000
|
|
|
8,844
|
|
||
Depreciation and amortization
|
18,637
|
|
|
19,208
|
|
||
Less: Income tax benefit
|
(2,440
|
)
|
|
(2,370
|
)
|
||
Interest income
|
(256
|
)
|
|
—
|
|
||
EBITDA
re
|
32,192
|
|
|
32,231
|
|
||
Add: Non-cash amortization
(1)
|
67
|
|
|
55
|
|
||
Adjusted Corporate EBITDA
re
|
32,259
|
|
|
32,286
|
|
||
Add: Corporate general and administrative
|
4,869
|
|
|
5,378
|
|
||
Adjusted Hotel EBITDA
re
|
37,128
|
|
|
37,664
|
|
||
Less: Adjusted Hotel EBITDA
re
of hotel sold
(2)
|
—
|
|
|
(885
|
)
|
||
Comparable Adjusted Hotel EBITDA
re
|
$
|
37,128
|
|
|
$
|
36,779
|
|
|
|
|
|
||||
Total revenue
|
$
|
133,737
|
|
|
$
|
135,025
|
|
Less: Total revenue of hotel sold
(2)
|
—
|
|
|
(3,570
|
)
|
||
Comparable total revenue
|
$
|
133,737
|
|
|
$
|
131,455
|
|
|
|
|
|
||||
Comparable Adjusted Hotel EBITDA
re
Margin
|
27.8
|
%
|
|
28.0
|
%
|
(1)
|
Reflects non-cash amortization of operating lease right-of-use assets, deferred franchise costs, deferred key money, and air rights contract.
|
(2)
|
Reflects results of operations for the Hyatt Centric Santa Barbara, which was sold on July 26, 2018.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
8,251
|
|
|
$
|
6,549
|
|
Add: Depreciation and amortization
|
18,637
|
|
|
19,208
|
|
||
FFO
|
26,888
|
|
|
25,757
|
|
||
Less: Dividends declared on unvested time-based awards
|
(118
|
)
|
|
(121
|
)
|
||
Undistributed earnings allocated to unvested time-based awards
|
—
|
|
|
—
|
|
||
FFO available to common shareholders
|
26,770
|
|
|
25,636
|
|
||
Add: Non-cash amortization
(1)
|
67
|
|
|
55
|
|
||
AFFO available to common shareholders
|
$
|
26,837
|
|
|
$
|
25,691
|
|
|
|
|
|
||||
FFO available per common share—basic and diluted
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
|
|
|
||||
AFFO available per common share—basic and diluted
|
$
|
0.45
|
|
|
$
|
0.43
|
|
(1)
|
Reflects non-cash amortization of operating lease right-of-use assets, deferred franchise costs, deferred key money, 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)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term loan, including interest
(1)
|
|
248,778
|
|
|
7,581
|
|
|
15,120
|
|
|
226,077
|
|
|
—
|
|
|||||
Secured loans, including interest
|
|
623,703
|
|
|
35,772
|
|
|
179,306
|
|
|
190,562
|
|
|
218,063
|
|
|||||
Corporate office lease
|
|
1,001
|
|
|
298
|
|
|
622
|
|
|
81
|
|
|
—
|
|
|||||
Ground leases
(2)
|
|
233,063
|
|
|
4,773
|
|
|
9,549
|
|
|
9,570
|
|
|
209,171
|
|
|||||
|
|
$
|
1,106,545
|
|
|
$
|
48,424
|
|
|
$
|
204,597
|
|
|
$
|
426,290
|
|
|
$
|
427,234
|
|
(1)
|
Assumes no additional borrowings and interest payments are based on the interest rate in effect at
March 31, 2019
. 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
|
•
|
market reaction to the announcement of the Merger and the prospects of the combined company;
|
•
|
changes in our business, operations, assets, liabilities and prospects or changes in the businesses, operations, assets, liabilities and prospects of Park or the combined company;
|
•
|
changes in market assessments of our business, operations, assets, liabilities and prospects or the businesses, operations, assets, liabilities and prospects of Park or the combined company;
|
•
|
market assessments of the likelihood the Merger will be completed;
|
•
|
interest rates, general market and economic conditions and other factors generally affecting the market prices of our common shares and Park Common Stock;
|
•
|
federal, state and local legislation, governmental regulation and legal developments in the business in which we and Park operate; and
|
•
|
other factors beyond our control and the control of Park, including those described or referred to elsewhere in this “Risk Factors” section.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
|
|||
January 1, 2019 – January 31, 2019
|
|
47,501
|
|
|
$
|
24.40
|
|
February 1, 2019 – February 28, 2019
|
|
—
|
|
|
$
|
—
|
|
March 1, 2019 – March 31, 2019
|
|
152
|
|
|
$
|
28.86
|
|
|
|
47,653
|
|
|
$
|
24.42
|
|
(1)
|
We provide employees, who have been issued restricted common shares, the option of selling shares to us to satisfy the minimum statutory tax withholding requirements on the date their shares vest. The common shares repurchased during the three months ended March 31, 2019 related to such repurchases.
|
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:
|
May 8, 2019
|
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)
|
I have reviewed this report on Form 10-Q of Chesapeake Lodging Trust;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(1)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(2)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(3)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(4)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
|
(1)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(2)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James L. Francis
|
|
President and Chief Executive Officer
|
(1)
|
I have reviewed this report on Form 10-Q of Chesapeake Lodging Trust;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(1)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(2)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(3)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(4)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
|
(1)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(2)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Douglas W. Vicari
|
Executive Vice President and Chief Financial Officer
|
/s/ James L. Francis
|
President and Chief Executive Officer
|
/s/ Douglas W. Vicari
|
Executive Vice President and Chief Financial Officer
|