Rlj Lodging Trust · NYSE:RLJ
Rlj Lodging Trust — NAREIT Conference November 2021
35 slides from Rlj Lodging Trust's conference presentation, November 2021
Slide 1: NAREIT Conference November 2021
NAREIT CONFERENCE NOVEMBER 2021
Slide 2: Investment Highlights
INVESTMENT HIGHLIGHTS RLJ’s portfolio construct, embedded growth catalysts and capital recycling initiatives uniquely position the Company to drive outperformance throughout the cycle OPERATING ▪ Continued strong operating performance throughout recovery PERFORMANCE – Poised to benefit from the next
Slide 3: Operating Performance
OPERATING PERFORMANCE MARRIOTT LOUISVILLE DOWNTOWN NOVEMBER 2021 3
Slide 4: Q3 2021 Operating Performance Highlights
Q3 2021 | OPERATING PERFORMANCE HIGHLIGHTS Sequential growth during Q3 from the continuation of Leisure strength and improving Business Travel and Group Q3 performance improved sequentially from Q2 ▪ Open hotel (1) Occupancy achieved 79% of 2019 levels, and improved 310 bps over from 2Q – July recor
Slide 5: 2021 Weekly Occupancy Trends
2021 | WEEKLY OCCUPANCY TRENDS Reacceleration of lodging fundamentals that began in mid-September has continued into October Open Hotels Weekly Occupancy and as % of 2019(1) 75.0% 100% Open Hotels Open Hotels % '19 90% 70.0% 83% 80% 65.0% 63.6% 70% 60% 60.0% 50% 55.0% 40% 50.0% 30% 20% 45.0% 10% 40.
Slide 6: Q4 2021 Update
Q4 2021 | UPDATE Fundamentals began to reaccelerate during the second half of September, which has continued so far during the fourth quarter October trends reaccelerated from September (1) ▪ Open Hotels Occupancy of ~65% and ADR of ~$167 ahead of September and represent ~79% and ~87% of 2019 levels
Slide 7: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO RENAISSANCE PITTSBURGH NOVEMBER 2021 7
Slide 8: Portfolio Profile
PORTFOLIO PROFILE RLJ owns a geographically diversified portfolio of premium branded, high-margin, focused-service and compact full-service hotels Portfolio Overview(1) Property Types(2) Operating Metrics(3) 22 Compact Full-Service 79% States 43% Occupancy 53% Focused-Service Traditional Full-Servic
Slide 9: Diversified Portfolio
DIVERSIFIED PORTFOLIO RLJ’s footprint in top Urban markets is well-positioned to capture the recovery in all segments ▪ Sunbelt markets represent 46% of RLJ’s Hotel EBITDA(1) Portland Boston Chicago 5% New York City 4% Pittsburgh San Francisco CBD 4% Philadelphia Denver 13% Indianapolis 5% Washingto
Slide 10: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO RLJ’s market exposure and lean operating model position the Company for outperformance throughout the entire cycle Leisure expected to remain strong throughout this cycle ▪ RLJ’s portfolio is primarily transient oriented (~80% of revenues(1)) ▪ Drive-to markets (~35% of revenu
Slide 11: Positioned to Drive Above-Cycle Growth
POSITIONED TO DRIVE “ABOVE-CYCLE” GROWTH RLJ is uniquely positioned with multiple channels to drive “above-cycle” growth RLJ’s reshaped portfolio has an improved long-term growth profile and operating metrics ▪ RLJ’s non-core asset dispositions since 2019 have improved RevPAR growth profile and mark
Slide 12: Capital Recycling
CAPITAL RECYCLING HAMPTON INN & SUITES ATLANTA MIDTOWN NOVEMBER 2021 12
Slide 13: Capital Recycling Enhancing Growth Profile
CAPITAL RECYCLING ENHANCING GROWTH PROFILE RLJ is on track to accretively recycle ~$200M of capital into high quality acquisitions Mature assets, in slower-growth markets, Younger, high-margin assets, in high- with high capital needs growth markets with no near-term capital needs $144 ~$200M $175 -
Slide 14: External Growth | AC Hotel Boston Downtown
EXTERNAL GROWTH | AC HOTEL BOSTON DOWNTOWN Acquired the recently built AC Hotel Boston Downtown ▪ Boston expected to be among highest growth markets in the U.S. – Top life-sciences market, with strong concentration of educational institutions – 5th highest RevPAR market – Logan International Airport
Slide 15: External Growth | AC Hotel Boston Downtown (cont.)
EXTERNAL GROWTH | AC HOTEL BOSTON DOWNTOWN (cont.) AC Boston accretive to RLJs portfolio metrics and expands footprint in Boston In line with RLJ’s investment parameters… Premium brand High growth market Strong RevPAR Heart of demand location Rooms-oriented Young asset High margins Off-market transa
Slide 16: External Growth | Hampton Inn Atlanta Midtown
EXTERNAL GROWTH | HAMPTON INN ATLANTA MIDTOWN Recently acquired the newly-built Hampton Inn & Suites Atlanta Midtown ▪ Atlanta is ranked as a top growth market for both population and corporate relocations – Ranks 3rd in largest concentration of Fortune 500 headquarters – Home to globally ranked uni
Slide 17: External Growth | Hampton Inn Atlanta Midtown (cont.)
EXTERNAL GROWTH | HAMPTON INN ATLANTA MIDTOWN (cont.) Acquisition is expected to be accretive to RLJ’s RevPAR, EBITDA margins and growth profile In line with RLJ’s investment parameters… Premium brand High growth market Strong RevPAR Heart of demand location Rooms-oriented Young asset High margins O
Slide 18: Internal Growth
INTERNAL GROWTH MARRIOTT LOUISVILLE DOWNTOWN NOVEMBER 2021 18
Slide 19: Internal Growth | Unlocking Incremental Value
INTERNAL GROWTH | UNLOCKING INCREMENTAL VALUE $23M to $28M of Incremental EBITDA (1) $9-11M+ RLJ IS UNLOCKING SIGNIFICANT EBITDA(1) EMBEDDED VALUE across three areas of opportunity creating ~$325M REVENUE ENHANCEMENTS of value(2) $7-10M+ EBITDA(1) 2022 CONVERSIONS $7M+ EBITDA(1) MARGIN EXPANSION (1)
Slide 20: Internal Growth | Value Creation Strategy
INTERNAL GROWTH | VALUE CREATION STRATEGY Conversions, Revenue Enhancement and Margin Expansion opportunities represent a significant source of value creation Incremental Value Property Project EBITDA(2) Unlevered IRR Investment (1) Creation (3) 2022 Conversions Wyndham Conversion to $10.0M to $11.0
Slide 21: Conversion | Wyndham Santa Monica
CONVERSION | WYNDHAM SANTA MONICA KEY HIGHLIGHTS ▪ Santa Monica is a top leisure market in the U.S. ▪ Hotel located at the entrance of Santa Monica Pier ▪ Expect significant lift in ADR – Position as a “Lifestyle” hotel to capture higher ADR already in the market ▪ Expected to also unlock significan
Slide 22: Conversion | Mills House Charleston
CONVERSION | MILLS HOUSE CHARLESTON KEY HIGHLIGHTS ▪ Charleston is a top leisure, drive-to market – Over 7M annual visitors ▪ Location in Charleston Historic District ▪ Expect significant lift in ADR – Reposition as a Curio Collection to capture higher ADR – Curio will attract top Hilton Honors memb
Slide 23: Conversion | Mandalay Beach
CONVERSION | MANDALAY BEACH KEY HIGHLIGHTS ▪ Beachfront location between Los Angeles and Santa Barbara ▪ Physical configuration consistent with high-end destination resort experience ▪ Expect significant lift in ADR – Reinvented as a “curated” lifestyle resort – Curio collection will attract higher
Slide 24: Conversions | Incremental Opportunities
CONVERSIONS | INCREMENTAL OPPORTUNITIES Additional conversions to unlock significant embedded value REPRESENTS ~20%(1) OF PORTFOLIO Wyndham Portfolio (remaining 6) Conversion Opportunities Include: 8-10 additional opportunities ▪ Brand expirations ▪ Remix customer base ▪ Conversions with Boston reno
Slide 25: Revenue Enhancement | Opportunities
REVENUE ENHANCEMENT | OPPORTUNITIES Revenue ROI opportunities expected to generate incremental EBITDA PIPELINE TOTAL COMPLETED $6M $9M $3M EBITDA(1) + $8M to = $11M to EBITDA(1) EBITDA(1) RECENTLY COMPLETED PIPELINE TOTAL REVENUE ENHANCING ▪ Additional rooms in Emeryville, Buckhead, ▪ Guestroom addi
Slide 26: Margin Expansion | Management Agreement Amendments
MARGIN EXPANSION | MANAGEMENT AGREEMENT AMENDMENTS Amendments provide favorable terms with increased flexibility ▪ Harvest the embedded value at contract renewals ~50 Margins Improved (1) to reduce fees + additional incentives • Reduce base fees by 50 to 125 bps bps • Additional incentives: • Key mo
Slide 27: Margin Expansion | Completed and Pipeline
MARGIN EXPANSION | COMPLETED AND PIPELINE Represents ~50 bps of incremental margins, including ~30 bps of recently completed initiatives and ~20 bps from 2022 - 2023 renewals Portfolio Margin Lift(1) | Completed vs. Pipeline COMPLETED PIPELINE +20 bps 32.3% +30 bps 32.1% 31.8% 2019 Recent Amendments
Slide 28: Strong Liquidity and Balance Sheet
STRONG LIQUIDITY AND BALANCE SHEET RENAISSANCE PITTSBURGH NOVEMBER 2021 28
Slide 29: Strong and Flexible Balance Sheet
STRONG AND FLEXIBLE BALANCE SHEET Recent financing initiatives have created significant flexibility to drive growth and further strengthened balance sheet Raised $1.0B of debt in 2021 resulting in improved laddering of debt maturities and reduced interest expense ▪ June: completed an oversubscribed,
Slide 30: Best-in-Class Balance Sheet
BEST-IN-CLASS BALANCE SHEET RLJ has solid liquidity, low leverage and a well-staggered maturity profile with no debt maturities until 2023 RLJ maintains best-in-class balance sheet ▪ Entered 2020 with Net Debt to EBITDA of 3.1x, below peer average ▪ ~$625M of cash as of September 30th ▪ Nearest debt
Slide 31: Investment Highlights
INVESTMENT HIGHLIGHTS RLJ’s portfolio construct, embedded growth catalysts and capital recycling initiatives uniquely position the Company to drive outperformance throughout the cycle OPERATING ▪ Continued strong operating performance throughout recovery PERFORMANCE – Poised to benefit from the next
Slide 32: ESG Update
ESG UPDATE HILTON CABANA MIAMI BEACH NOVEMBER 2021 32
Slide 33: RLJ ESG | Corporate Responsibility
RLJ ESG | CORPORATE RESPONSIBILITY Our sustainability strategy aligns our ESG objectives with our commitment to all stakeholders ▪ In recognition of the strategic importance of increasing environmental efficiency we… – Achieved cost reductions through investment in energy, carbon and water efficienc
Slide 34: RLJ ESG | Corporate Responsibility Impact
RLJ ESG | CORPORATE RESPONSIBILITY IMPACT Our longstanding commitment to ESG is evidenced by… ENVIRONMENTAL SOCIAL GOVERNANCE ▪ 77% of our properties have equipped Associate Ethnicity ▪ Maintain a highly diverse and independent Board, guestrooms with digital thermostats and committed to continuing r
Slide 35: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This information contains certain statements, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, measures being taken in response to the COVID-19 pandem