ANNAPOLIS, MD-Chesapeake Lodging posted quarterly results that had been buffeted by several headwinds, but the REIT also scored some notable achievements as well, including two acquisitions and the closing of a new mortgage loan.
It posted FFO (funds from operations) of $3.8 million for the quarter ending March 31, compared to $5.7 million for the same period in 2012. But as James L. Francis, the REIT's president and CEO also pointed out, its Pro Forma Adjusted Hotel EBITDA Margin increased by 170 basis points for a comparable 15-hotel portfolio over the same period in 2012.
In March the REIT acquired the newly developed 185-room Hyatt Place New York Midtown South approximately $76.4 million. It funded the acquisition by borrowing $35 million under its existing $60 million term loan and available cash on hand. It also acquired in March the 97-room W New Orleans – French Quarter for approximately $25.6 million. It funded that hotel with cash on hand.
During the quarter, the REIT netted about $165.9 million from an offering and closed on a $32 million, 10-year fixed-rate mortgage loan secured by the Hilton Checkers Los Angeles. It also received a subsequent advance of $35 million under its $60 million term loan in connection with its acquisition of the Hyatt Place New York Midtown South.
The REIT has been active since the close of the quarter as well: on April 25, it acquired the 410-room W New Orleans for approximately $65.7 million, and on May 3 it closed on a $60 million, seven-year fixed-rate mortgage loan secured by the Boston Marriott Newton.
As of May 7 it had $225 million in investment capacity.
Still, the quarter was not an easy for Chesapeake. It had to navigate several negative events including a disruption from the renovation at the Le Meridien San Francisco, several major snowstorms in the Northeast and Midwest, and a decrease in business at the Courtyard Washington Capitol Hill/Navy Yard as a result of sequestration, among others.
The REIT believes that an increase in pro forma RevPAR would have clocked in at 5.5% and 6.0%, without these developments. Instead it was 2.4%.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
