Chesapeake Lodging Trust (CHSP) Guides FY15 AFFO, EPS; Updates on FY14 Expectations

Chesapeake Lodging Trust (NYSE: CHSP) provided today its 2015 outlook. The Trust’s 2015 outlook is as follows (in millions, except RevPAR and per share amounts):

“We expect 2015 to be another strong year for Chesapeake as we benefit from favorable lodging fundamentals in our key markets and outsized growth at our hotels that were undergoing major renovations last year,” said James L. Francis, Chesapeake Lodging Trust’s President and Chief Executive Officer. “We expect our hotel portfolio will meaningfully exceed the U.S. hotel industry RevPAR growth rate, despite the negative impact of guestroom renovations at several of our larger hotels which will have an impact on RevPAR growth and Adjusted Hotel EBITDA margin growth in the first quarter.” Mr. Francis continued, “Given our expectations for another strong year in 2015, we are also pleased to report that we are increasing our quarterly common share dividend for the first quarter by 17% to $0.35 per common share.”

The Trust’s 2015 outlook assumes a continuation of favorable U.S. lodging fundamentals driven by below historical average supply growth and healthy demand growth resulting from continued improvement in the U.S. economy and consumer confidence, continued strength in corporate and leisure transient business, improving group business, and continued strength of international travel. The Trust’s 2015 outlook assumes no additional acquisitions, dispositions, or financing transactions.

The Trust’s 2015 outlook contemplates the expected revenue and Hotel EBITDA displacement from guestroom renovations taking place during the first quarter at the 502-room Hyatt Regency Boston, the 360-room Le Meridien San Francisco and the 313-room Hyatt Fisherman’s Wharf. The Trust estimates that the negative impact on RevPAR growth for the first quarter and full year 2015 will be approximately 650 basis points and 150 basis points, respectively, and the negative impact on Adjusted Hotel EBITDA Margin growth for the first quarter and full year 2015 will be approximately 200 basis points and 25 basis points, respectively, resulting in Hotel EBITDA displacement of approximately $3.25 million for the first quarter and full year 2015.

The Trust’s 2015 outlook also includes a 17% increase in estimated real estate tax expense as a result of actual and expected real estate reassessments at certain of its hotels for 2015. The Trust estimates that the negative impact on Adjusted Hotel EBITDA Margin growth for 2015 will be approximately 70 basis points.

COMMON SHARE DIVIDEND INCREASE

The Trust also announced today that its board of trustees has declared a dividend payment of $0.35 per common share for the first quarter 2015, an increase of 17% over the fourth quarter dividend. The dividend will be paid on April 15, 2015 to shareholders of record at the close of business on March 31, 2015. The dividend represents a 3.6% annualized yield based on the closing price of the Trust’s common shares on January 23, 2015.

FOURTH QUARTER 2014 EARNINGS UPDATE

The Trust is also providing an update today on its financial results for the quarter and year ended December 31, 2014. For its 17-hotel portfolio, the Trust expects fourth quarter and full year 2014 RevPAR to increase 7.5% and 9.5%, respectively, and fourth quarter and full year 2014 Adjusted Hotel EBITDA to be between the middle and high end of the guidance ranges previously provided. For its 20-hotel portfolio, the Trust expects fourth quarter and full year 2014 RevPAR to increase 4.9% and 5.9%, respectively, and fourth quarter and full year 2014 Adjusted Hotel EBITDA to be slightly below the guidance range previously provided. The Trust expects fourth quarter 2014 AFFO per share to be at the low end of the guidance range previously provided and full year 2014 AFFO per share to be slightly below the guidance range previously provided. The preliminary results are subject to adjustments that may result from the completion of the Trust’s annual audit process. The Trust intends to release final financial results for the fourth quarter and full year 2014 after the market closes on February 19, 2015.

“Overall, we are pleased with our hotel portfolio’s performance during the fourth quarter. Our 17-hotel portfolio had another solid quarter generating strong top-line and bottom-line results,” said Mr. Francis. “Our 20-hotel portfolio RevPAR and Adjusted Hotel EBITDA were slightly below our guidance ranges predominantly due to slower than expected ramp at the Hyatt Herald Square New York which re-opened for business in October. In addition, our per share metrics for the fourth quarter and full year 2014 were negatively impacted from a higher than expected diluted share count as a result of our relative total shareholder return exceeding our expectations which required us to include additional unvested performance-based awards in our diluted share count."

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