BETHESDA, Md.--(BUSINESS WIRE)--RLJ Lodging Trust (NYSE: RLJ) today reported results for the three and six months ended June 30, 2018.

Highlights

• Sold Embassy Suites Napa Valley for $102 million, representing a valuation of nearly 15x trailing EBITDA, subsequent to quarter-end
• Pro forma RevPAR increased 1.3%, Pro forma ADR increased 1.0%, and Pro forma Occupancy increased 0.3%
• Pro forma Hotel EBITDA Margin of 35.0%
• Net income increased 51.6% to $64.4 million
• Adjusted EBITDA increased 54.1% to $159.8 million
• Adjusted FFO per diluted common share and unit increased 2.8% to $0.73

“We continued the successful execution of our asset disposition strategy with our recent sale of the Embassy Suites Napa Valley,” commented Ross H. Bierkan, President and Chief Executive Officer. “With an unwavering focus, we have made meaningful progress in accomplishing our strategic objectives. Over the past year, we have generated $400 million from assets sales at an average EBITDA multiple of approximately 15x. With a healthy disposition pipeline, we are on pace to meet our incremental asset sales objective for 2018. Our leverage continues to be at our target and we have nearly realized our G&A synergies. With solid momentum and a talented team in place, I am confident that RLJ is well positioned to unlock meaningful value for shareholders in the years to come.”

Financial and Operating Results

Performance metrics such as Occupancy, Average Daily Rate (“ADR”), Revenue Per Available Room (“RevPAR”), Hotel EBITDA, and Hotel EBITDA Margin are Pro forma. The prefix “Pro forma” as defined by the Company, denotes operating results which include results for periods prior to its ownership and excludes sold hotels. Pro forma RevPAR and Pro forma Hotel EBITDA Margin are reported on a comparable basis and therefore exclude any hotels sold during the period and non-comparable hotels that were not open for operation or were closed for renovation for comparable periods. 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.

Net income for the three months ended June 30, 2018, increased $21.9 million to $64.4 million, representing a 51.6% increase over the comparable period in 2017. For the six months ended June 30, 2018, net income increased $24.0 million to $88.3 million, representing a 37.4% increase over the comparable period in 2017.

Pro forma RevPAR for the three months ended June 30, 2018, increased 1.3% over the comparable period in 2017, driven by a Pro forma ADR increase of 1.0%, and by a Pro forma Occupancy increase of 0.3%. Excluding Louisville, Austin, and Denver, which experienced softness in the quarter, Pro forma RevPAR growth was 2.6%. For the six months ended June 30, 2018, Pro forma RevPAR increased 0.4% over the comparable period in 2017, driven by a Pro forma ADR increase of 0.1% and by a Pro forma Occupancy increase of 0.2%.

Pro forma Hotel EBITDA Margin for the three months ended June 30, 2018, was 35.0%, a decrease of 79 basis points over the comparable period in 2017. Increases in real estate taxes and insurance expense impacted Pro forma Hotel EBITDA Margin by approximately 45 basis points. For the six months ended June 30, 2018, Pro forma Hotel EBITDA Margin decreased 122 basis points over the comparable period in 2017 to 32.3%.

Pro forma Hotel EBITDA for the three months ended June 30, 2018, was $169.3 million, largely flat with the comparable period in 2017. For the three months ended June 30, 2017, Pro forma Hotel EBITDA includes results from prior ownership of $60.0 million from the hotel properties acquired pursuant to the FelCor merger.

For the six months ended June 30, 2018, Pro forma Hotel EBITDA decreased $9.3 million to $293.3 million, representing a 3.1% decrease over the comparable period in 2017. For the six months ended June 30, 2018, Pro forma Hotel EBITDA includes results from prior ownership of $106.7 million from the hotel properties acquired pursuant to the FelCor merger.

Adjusted FFO for the three months ended June 30, 2018, increased $39.2 million to $127.9 million, representing a 44.1% increase over the comparable period in 2017. For the six months ended June 30, 2018, Adjusted FFO increased $56.2 million to $209.4 million, representing a 36.7% increase over the comparable period in 2017.

Adjusted FFO per diluted common share and unit for the three months ended June 30, 2018, increased $0.02 to $0.73, representing a 2.8% increase over the comparable period in 2017. For the six months ended June 30, 2018, Adjusted FFO per diluted common share and unit decreased $0.03 to $1.20, representing a 2.4% decrease over the comparable period in 2017.

Adjusted EBITDA for the three months ended June 30, 2018, increased $56.1 million to $159.8 million, representing a 54.1% increase over the comparable period in 2017. For the six months ended June 30, 2018, Adjusted EBITDA increased $93.0 million to $275.6 million, representing a 50.9% increase over the comparable period in 2017.

Non-recurring items and other adjustments which were noteworthy for the three months ended June 30, 2018, include $3.5 million of other expenses outside of the normal course of operations, including certain costs associated with shareholder activism. For the six months ended June 30, 2018, non-recurring items and other adjustments which were noteworthy also include a gain on extinguishment of indebtedness of $7.7 million.

Non-recurring items are included in net income but are excluded from Adjusted EBITDA and Adjusted FFO, as applicable. A complete listing of non-recurring items is provided in the Non-GAAP reconciliation tables located in this press release.

Net cash flow from operating activities totaled $195.8 million for the six months ended June 30, 2018, representing a 38.3% increase over the comparable period in 2017.

Balance Sheet

As of June 30, 2018, the Company had $382.5 million of unrestricted cash on its balance sheet, $350.0 million available on its revolving credit facility, and $2.5 billion of debt outstanding.

The Company’s ratio of net debt to Adjusted EBITDAfor the trailing twelve-month period ended June 30, 2018, was 3.9x.

Dividends

The Company’s Board of Trustees declared a cash dividend of $0.33 per common share of beneficial interest in the second quarter. The dividend was paid on July 13, 2018, to shareholders of record as of June 29, 2018.

The Company's Board of Trustees declared a preferred dividend of $0.4875 on its Series A cumulative convertible preferred shares. The dividend was paid on July 31, 2018, to shareholders of record as of June 29, 2018.

Subsequent Events

On July 13, 2018, the Company sold the Embassy Suites Napa Valley for $102.0 million and paid off $25.9 million in outstanding first mortgage associated with the asset.

On July 20, 2018, the Company paid down its revolving credit facility by $75.0 million. Following the payment, the remaining outstanding balance on the revolving credit facility was $175.0 million.

2018 Outlook

The Company’s outlook includes all hotels owned as of August 7, 2018. Potential future acquisitions or dispositions could result in a material change to the Company’s outlook. The 2018 outlook is also based on a number of other assumptions, many of which are outside the Company’s control and all of which are subject to change.

The Company's 2018 outlook revisions only reflect the sale of the Embassy Suites Napa Valley. No other adjustments have been made.

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 consists of 154 hotels with approximately 30,000 rooms located in 26 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.