Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (January 2016)
25 slides from Diamondrock Hospitality's investor presentation, Jan 26, 2016
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: 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, tend” or other similar expressions. Forward-looking sta
Slide 3: Why DiamondRock?
Why DiamondRock? 1 Strategic Portfolio Transformation 2 3 4 Westin San Diego Hotel Rex Significantly upgraded portfolio through strategic capital recycling Average RevPAR of acquired assets >80% higher than sold assets Strategically diversified brands, managers, and geographic distribution Intense A
Slide 4: DiamondRock at a Glance
DiamondRock at a Glance KEY STATISTICS Hotels 29 Rooms 10,928 Enterprise Value $2.7B Enterprise Value / Key $251K Net Debt/EBITDA(1) 3.6x Based on 2015 EBITDA and 2015 year-end net debt. Current Company Guidance FY 2015 RevPAR Guidance: +4.25% – 5.00% FY 2015 EBITDA: $264M - $269M FY 2015 Margin Exp
Slide 5: Premier Portfolio With Urban and Resort Concentration
Premier Portfolio With Urban and Resort Concentration
Slide 6: Strategically Transformed Portfolio
Strategically Transformed Portfolio Strategically Enhanced Portfolio Brand Diversity Average 2015 RevPAR of Recent Acquisitions of ~$205 ~50% of Portfolio Managed by Third-Party Operators (2 hotels in 2008 to 16 in 2015) Enhanced Geographic Diversity Improved to >90% Urban and Resort & Destination H
Slide 7: Strong F&B Revenue and Profitability Growth
Strong F&B Revenue and Profitability Growth (360 bps margin growth in 3Q15) 2015 Hotel Adj. EBITDA Margin Expansion of >100 basis points Portfolio ROI Projects Expected to Deliver Outsized Growth (e.g., Boston Hilton, Boston Westin) 260 Basis Points Below Prior Peak Margins Equating to ~$24M of EBIT
Slide 8: Creating Value at the Chicago Marriott Downtown
Creating Value at the Chicago Marriott Downtown New, Modernized Guestrooms Rush Street Pantry: New grab-and-go F&B outlet Multi-Year Renovation Amended Management Agreement Creates Significant Long-term Value Amended management agreement to permanently reduce management and incentive fees owed Annua
Slide 9: The Gwen, A Luxury Collection Hotel (Starwood)
The Gwen, A Luxury Collection Hotel (Starwood) Hotel Converted to Starwood’s Luxury Collection in September as The Gwen, a Luxury Collection Hotel Received key money from Starwood as part of conversion $25M Multi-year phase renovation to complete repositioning to Luxury Collection Hotel Lobby and pu
Slide 10: Significant Upside Opportunity at Key West Suites
Significant Upside Opportunity at Key West Suites Opportunity to convert Sheraton Suites to independent hotel or potentially to a lifestyle brand Attractive Deal Metrics: $511K per key 7.1% Cap Rate on 2015F NOI 12.8x multiple on 2015F EBITDA One of the only hotels in Key West with direct beach acce
Slide 11: DRH Market Outlook for 2016
DRH Market Outlook for 2016 Market (Portfolio Weight by ’15 EBITDA) Market Strength DRH Relative Performance Key Notes Boston (14%) Market Perform PKF and STR projecting RevPAR growth of 5.5% and 4.0% respectively Strong annual convention calendar, but Q1 convention activity expected Chicago (12%) M
Slide 12: Unlocking Value with Unique Capital Structure
Unlocking Value with Unique Capital Structure Own 18 Hotels Free of Debt by YE 2016 (>$150M of Unencumbered EBITDA)(1) Recent Refinancings Generating Approx. $8M in Interest Savings Next Year No Recourse Debt; No Preferreds/Convertibles Well-Laddered Maturities with Minimal Near-Term Maturities Appr
Slide 13: Successfully Completed 2015-2016 Refinancing Activity
Entered into historically lowest fixed interest rate loan for DRH and amongst peers Locked in excess proceeds of $33M Lowered interest rate by 214 basis points Locked in excess proceeds of $27M Entered into largest new loan for DRH in current cycle Proceeds funded Chicago Marriott ~$200M debt maturi
Slide 14: Strategically Allocating Capital Throughout Cycle
Strategically Allocating Capital 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 Limit Non-core Asset Sales Sell Non-Core Assets Consider All Options for Use of Disposition
Slide 15: Strategically Allocating Capital Throughout Cycle
Strategically Allocating Capital Throughout Cycle Value Creation Playbook + Match-fund Near-term Accretive Acquisitions By Issuing Equity At or Above NAV + Consider Opportunistically Raising Equity Above NAV + Limit Non-core Asset Sales + Sell Non-Core Assets Consider All Options for Use of Disposit
Slide 16: Compelling Valuation Presents Opportunity
Compelling Valuation Presents Opportunity Source: Bloomberg; FactSet Consensus. Data as of 1/21/16. Peer group includes Chesapeake, Host, LaSalle, Pebblebrook, Hersha, Sunstone, Ashford Prime, and Ashford Trust. 2015 EBITDA Multiple based upon midpoint of guidance. 2016 EBITDA multiple based upon co
Slide 17: Significant Value Embedded in Unencumbered Asset Pool
Significant Value Embedded in Unencumbered Asset Pool EBITDA Multiple Implied Value per Share of Unencumbered Hotels NOI Cap Rate Current Share Price: $8.06 Westin Fort Lauderdale Beach Resort & Spa Vail Marriott Mountain Resort 18 Unencumbered Hotels Hotels (Rooms) 18 (5,849) 2015F EBITDA ~$164M 20
Slide 18: Key Takeaways
Key Takeaways Asset Management Fueled Outperformance High Quality, Well Diversified Portfolio Unique, Low Levered Balance Sheet Strategic Capital Allocation Creating Value Throughout Cycle The Lexington New York City Hilton Garden Inn Times Square Westin Washington, D.C.
Slide 19: Macroeconomic & Lodging Overview
Macroeconomic & lodging Overview
Slide 20: Strong Economic Data Supports Continued Growth
Strong Economic Data Supports Continued Growth GDP GROWTH EXPECTED TO REMAIN STEADY UNEMPLOYMENT RATE EXPECTED TO CONTINUE TO STAY HISTORICALLY LOW Source: FactSet Consensus. Source: FactSet Consensus. Industry Fundamentals Support Continued Room for Growth in Lodging Cycle Demand, Which Historicall
Slide 21: Positive US Lodging Industry Outlook
Positive US Lodging Industry Outlook RevPAR growth expected to remain strong, with considerable room left in the cycle Occupancies have exceeded all-time highs in many markets and continue to rise ADR will continue to drive growth as occupancies rise Supply Growth Remains Below Long-Run Average (Ex.
Slide 22: RevPAR growth expected to remain strong
RevPAR growth expected to remain strong, with considerable room left in the cycle + Occupancies have exceeded all-time highs in many markets and continue to rise + ADR will continue to drive growth as ‘occupancies rise ‘Supply Growth Remains Below Long-Run Average (Ex. NYC) Rising corporate profits,
Slide 23: NYC Portfolio Outperforming Market
NYC Portfolio Outperforming Market DRH’s NYC portfolio has outperformed NYC market RevPAR growth for 3 consecutive quarters and by over 250 bps YTD The Lexington and HGI Times Square represent approx. 63% of DRH’s NYC EBITDA concentration HGI Times Square Central on Track to Achieve 9% Yield ($11M E
Slide 24: Differentiated Resort & Destination Portfolio
Differentiated Resort & Destination Portfolio Resort & Destination Hotels Command Rate & Margin Premium DRH 2015F Resort RevPAR of $193, represents premium of >10% to broader portfolio >82% average occupancy; ~200bps higher occupancy than broader portfolio 5 of 8 resorts run margins higher than port
Slide 25: Premier Resort & Destination Portfolio
Koy DIAMONDR®: eer ee, LCC CCl PREMIER RESORT & DESTINATION PORTFOLIO ~ DRH 2015F Resort RevPAR of $193, represents premium of >10% to broader portfolio ’ = >82% average occupancy; ~200bps higher occupancy than broader portfolio = 5.0f8 resorts run margins higher than portfolio average 2. Diverse Mi
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