Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (August 2017)
24 slides from Diamondrock Hospitality's investor presentation, Aug 23, 2017
Slide 1: Forward Looking Statements
Forward Looking Statements Certain statements made during this presentation are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements generally include the words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “project,” “will,” “intend” or other s
Slide 2: Why DiamondRock?
Why DiamondRock? 2 Premier Hotel Portfolio 1 4 5 Top-tier RevPAR portfolio among lodging REIT peers Strategically diversified brands, managers, and geographic distribution Intense Asset Management Focus Total hotel operating expense growth limited to 0.4%, excluding property taxes in Q2 YTD hotel ad
Slide 3: High Quality Portfolio With Urban and Resort Concentration
High Quality Portfolio With Urban and Resort Concentration
Slide 4: Capital Allocation Opportunities
6 CAPITAL ALLOCATION OPPORTUNITIES
Slide 5: Creating Value Throughout Cycle
Creating Value Throughout Cycle Cost of Capital Higher Lower Match-fund Near-term Accretive Acquisitions By Issuing Equity At or Above NAV Consider Opportunistically Raising Equity Above NAV, if appropriate Limit Non-core Asset Sales Sell Non-Core Assets Consider Accretive Acquisition Opportunities
Slide 6: Acquisitions to Power Performance
Acquisitions to Power Performance DRH Market Update Dry Powder $350M in dry powder $28M in potential EBITDA(1) Outperformance DRH stock outperformed following recent acquisitions by an average of nearly 400bps Targets Focus on supply-constrained markets Focus on deals with clear asset management and
Slide 7: Acquisition of L'Auberge de Sedona and Orchards Inn
Acquisition of L’Auberge de Sedona and Orchards Inn Sedona Iconic assets with immediate asset management upside in attractive, high-growth resort market #1 Conde-Nast rated hotel in Southwest Sourced in off-market deal Recycled capital from dispositions at a 12.8x multiple and $120 RevPAR into 12.6x
Slide 8: Acquisition of L'Auberge de Sedona and Orchards Inn
Acquisition of LAuberge de Sedona and O + Iconic assets with immediate asset management upside in attractive, high-growth resort market + #1 Conde-Nast rated hotel in Southwest + Sourced in off-market deal + Recycled capital from dispositions at a 12.8x multiple and $120 RevPAR into 12.6x multiple a
Slide 9: Proven Asset Management Track Record
Proven Asset Management Track Record (1) Peer group includes Chesapeake, Hersha, Host, LaSalle, Pebblebrook, and Sunstone. (1) Hotel Adj. EBITDA Margin GrowtH: 2013-2016 +355bps OUTSIZED REVPAR EXPANSION SINCE 2013 +12.6% (1) (1) New COO Tom Healy Brings New Initiatives Exploring new opportunities i
Slide 10: Recent Repositionings to Drive Value
Recent Repositionings to Drive Value Rebranded to Luxury Collection $27M renovation completed in April 2017 1,200bps market share opportunity $3M NOI upside opportunity The Gwen 4th phase of $100M renovation to be completed Winter 2017-18 2018 group pace up high single digits New model on room servi
Slide 11: Marriott - Starwood Combination Fuels Growth
Marriott - Starwood Combination Fuels Growth DRH Portfolio has 20 of 28 Hotels in new-Marriott brand family Marriott most powerful hotel brand company in the world: Largest reservation system: 1.2M hotel rooms worldwide Most powerful loyalty program: 100M members globally, growing at 1M members per
Slide 12: DRH to Benefit From Marriott-Starwood Merger
é DIAMONDROCK DRH to Benefit From Marriott-Starwood Merger DRH Portfolio has 20 of 28 Hotels in new-Marriott brand family + Marriott most powerful hotel brand company in the world: RGARCTICT BRANT FREAK TOUATS) — Largest reservation system: 1.2M hotel rooms worldwide ww Marriott Luxury 3% Collection
Slide 13: Renovations to Aid Performance
Renovations to Aid Performance Approximately $210 - $220M Invested in Portfolio from 2016 to 2017 Current Significant Capital Projects Property Project Approx. ’16-’17 Spend($M) Charleston Renaissance Guestroom Renovation $8M Chicago Marriott Guestroom, Fitness Center and Meeting Space Renovation $6
Slide 14: 2017 Supply Outlook
2017 Supply Outlook Source: STR, DRH Estimates. DRH expecting approximately 2.5% supply growth in 2017, in line with peer average Many of DRH’s submarkets are well insulated to new supply with high barriers to entry and high development cost Bridging DRH Supply Misconceptions: Resort Markets with Hi
Slide 15: NYC Market Update
NYC Market Update NYC RevPAR Trending Positive Post-Airbnb Crackdown Q317 RevPAR tracking down 1.6% in NYC 35% increase in compression nights in 1H17 YoY NYC tracking down 0.7% YTD Q217 RevPAR was up 0.2% and Q117 was down 1.3% Recent Airbnb developments outlawing illegal rentals in NYC are a potent
Slide 16: NYC Long-Term Fundamentals Remains Strong
NYC Long-Term Fundamentals Remains Strong Strong NYC Growth from Trough-to-Peak Source: JLL. Note: Represents New York Upper Upscale, Luxury, and Independents in Luxury Class. Minimal Upscale / Luxury Supply Growth After 2018 From 2008 - 2016, ~8K new rooms entered the market in the upper-upscale/lu
Slide 17: NYC Long-Term Fundamentals Remains Strong
DIAMONDROCK + From 2008 - 2016, ~BK new rooms entered the Strong NYC Growth from Trough-to-Peak market in the upper-upscale/luxury segment but ‘occupancy stayed the same au ae E mstees nerietsreomencyendrauetcenend)| | * re ; ae 7 — NYChas historically had very strong trough-peak re RevPAR growth +
Slide 18: Fortress Balance Sheet
Fortress Balance Sheet 20 UNENCUMBERED HOTELS 8 Encumbered Hotels Boston Westin Courtyard Midtown East Salt Lake City Marriott Westin Washington, DC Sonoma Renaissance Westin San Diego Worthington Renaissance JW Marriott Cherry Creek Unencumbered Pool Hilton Boston The Gwen Vail Marriott Courtyard D
Slide 19: Fortress Balance Sheet
Recently entered into new, 5-year $200M term loan $300M Line of Credit with no outstanding borrowings ~$120 million cash post-acquisition of Sedona and recent financings Net Debt to EBITDA of 3.0x by YE17 Weighted average debt maturity of 6 years with 3.7% weighted average interest rate LEVERAGE AT
Slide 20: Creating Value Through Opportunistic Dispositions
Creating Value Through Opportunistic Dispositions Orlando Airport Marriott Hilton Minneapolis HGI Chelsea Weighted Average Total Consideration(2) $67M $143M $65M $275M 2015 RevPAR $92.21 $115.44 $219.97 $119.78 TTM NOI Cap Rate(3) 9.7% 7.6% 6.6% 7.8% TTM NOI Cap Rate w/ Capital(3) 7.5% 6.3% 5.9% 6.6
Slide 21: Renaissance Charleston: Creating Value by Identifying Next Hot Market
Renaissance Charleston Historic District Creating Value by Identifying Next Hot Market Increase from ‘10-’16 RevPAR ~45% RevPAR Index 4.5pts EBITDA ~50% EBITDA Margin >400bps Value Creation $30M - $40M NOI Yield >300bps PERFORMANCE SINCE ACQUISITION Off-market transaction acquired for $39M, or $235K
Slide 22: Westin Fort Lauderdale: Creating Value by Better Operator Selection
Westin Fort Lauderdale Beach Resort Creating Value by Better Operator Selection PERFORMANCE SINCE ACQUISITION Increase from ‘14-’16 RevPAR ~18% RevPAR Index 11.1pts EBITDA >90% EBITDA Margin >1600bps Value Creation $45M - $55M NOI Yield >300bps Acquired for $149M or $345K per key in late 2014 for 12
Slide 23: Key Takeaways
Key Takeaways Asset Management To Fuel Outperformance High Quality, Well Diversified Portfolio Portfolio Well-Positioned for 2017 Strategic Capital Allocation Creating Value Throughout Cycle ($350M in Investment Capacity) The Lexington New York City Hilton Garden Inn Times Square Westin Washington,
Slide 24: Key Takeaways
DIAMONDROCK v High Quality, Well Diversified Portfolio Y Strategic Capital Allocation Creating Value Throughout Cycle ($350M in Investment Capacity) ¥ Portfolio Well-Positioned for 2017 v Asset Management To Fuel Outperformance ¥ Unique, Low Levered Balance Sheet Westin Washington
DiamondRock Hospitality — Investor Presentation (August 2017) on 6ix