Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (September 2020)
37 slides from Diamondrock Hospitality's investor presentation, Sep 14, 2020
Slide 1: Investor Presentation | September 2020
Investor Presentation | September 2020 1 The Landing, Lake Tahoe
Slide 2: 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 3: Key Takeaways
Key Takeaways 3 (1)$364MM liquidity bal anc5e as of 6/30/2020 adjusted for $106MM net proceeds from subsequent preferred equity offering Q3 Burn Rate Nearly 10% Better Than Q2 Pace 4 27 of 30 Hotels Currently Open (88% of Rooms) 3 $470MM of Pro Forma Liquidity(1) as of 6/30/2020 2 Executed $110MM Cu
Slide 4: Recent Events
Recent Events • Reopened Chicago Marriott (1,200 rooms) and Westin Boston (793 rooms) • Closed on $110MM public offering of 8.25% Series A cumulative redeemable preferred shares ($25 par value, 4.4 million shares). Net proceeds of $106MM Signed agreement with Marriott to: • • • • • Convert five bran
Slide 5: DiamondRock at a Glance
DiamondRock at a Glance CREDIT FACILITY COMPLIANCE 4% San 3% Denver 4% Diego Washington DC 4% Other 4% San Francisco Independent 4% 9% 30% Resort 11% 11% Other CBD (5) Frenchman's Reef (6) Luxury Collection Westin Courtyard Autograph Renaissance 11% New York 76% 14% Boston 14% Chicago As of and for
Slide 6: DiamondRock Balance Sheet Profile
DiamondRock Balance Sheet Profile $584.3 Pro Forma liquidity available in cash and revolver capacity(2) 2020 2021 2022 2023 2024 2025 Secured Debt Term Loan Revolver Undrawn Revolver 10.4 4.7 AHT BHR HT INN PEB XHR DRH RLJ HST SHO (1) (2) (3) Does not reflect extension options; revolving credit faci
Slide 7: DRH Preferred Offering
DRH Preferred Offering $106MM DiamondRock executed a public offering of 4.4MM shares of 8.25% Series A Cumulative Redeemable Preferred Stock with $25/share liquidation preference Net Proceeds 8.25% 8.25% 23 ADDITIONAL RUNWAY MONTHS RUNW MONTHS general corporate purposes: IMPROVEMENTS CORP. PURPOSES
Slide 8: Covenant Waiver and Mortgage Extension
Covenant Waiver and Mortgage Extension • Successfully finalized an amendment on $400MM credit facility and $400MM in unsecured term loans: • Waiver of existing financial covenants Q2 2020 through Q1 2021 • Modified quarterly-tested covenants Q2 2021 through Q4 2021 using annualization of quarterly r
Slide 9: Operations Update
OPERATIONS UPDATE 9 Renaissance Charleston Historic District
Slide 10: New Franchise/Management Deal with Marriott
New Franchise/Management Deal with Marriott On 8/31/20, DRH entered into an agreement with Marriott to alter several brand and management contracts. Selected terms: The following hotels will be converted from brand-managed to franchised properties with agreed to renovation scope and timeline: • • •
Slide 11: Short Term Agreements Driving Value
Short Term Agreements Driving Value Note: Based on 2019 EBITDA (1)Agreements terminable at will. 11 BRAND 20192020 Encumbered(1) Independent Terminable Franchise(1) Highest percent of terminable agreements among any full-service lodging REIT peer 20192020 Encumbered(1) Unencumbered MANAGEMENT Only t
Slide 12: Resuming Hotel Operations
Resuming Hotel Operations (1) Current September July Nearly 90% of total rooms currently June operating(1) Hotel Emblem Operating Hotels Operating 12 (1) As of 9/14/2020 Boston Westin Chicago Marriott 15 Operating Urban Hotels Boston Hilton Burlington Hilton Lodge at Sonoma May Denver Courtyard Denv
Slide 13: Rebuilding Profitability
Rebuilding Profitability Hotels with Hotels with 13 (1) Estimated results Number of Positive EBITDA AprilMayJuneJulyAugust (1) 2 4 6 6 8 Number of Positive GOP AprilMayJuneJulyAugust (1) 5 7 10 14 14
Slide 14: Cash Burn Steadily Improving
Cash Burn Steadily Improving Effective cost containment and receipt of equity offering proceeds allowed DRH to extend cash runway by 33% (1) (2) (3) Based upon most current forecast of Q3 2020 financial performance. $364MM liquidity balance as of 6/30/2020 adjusted for $106MM net proceeds from subse
Slide 15: Hotel Occupancy Gradually Rebuilding
Hotel Occupancy Gradually Rebuilding 90% 80% 70% 60% 50% 40.4% 40% 30% 20% 10% 0% Mar Apr May Jun Jul Aug - Total Portfolio - open Portfolio - open Resorts Trailing 7 Day Average Portfolio Occupancy
Slide 16: Operating Trends Improving
Operating Trends Improving 16 * Based on operating hotels Week Ending Open Properties Open Resorts 5/2/2020 114 5/9/2020 114 5/16/2020 114 5/23/2020 125 5/30/2020 136 6/6/2020 146 6/13/2020 188 6/20/2020 199 6/27/2020 2210 7/4/2020 2311 7/11/2020 2311 7/18/2020 2412 7/25/2020 2412 8/1/2020 2512 8/8/
Slide 17: Group Cancellations Slowing
Group Cancellations Slowing $45,113,797 $32,749,668 $20,151,035 $13,729,159 $18,449,986 $16,856,928 $11,973,868 Cancellations 17 Four Weeks Ending % Share of Cancellations 3/23/2020 4/16/2020 5/14/2020 6/11/2020 7/9/2020 8/6/2020 9/3/2020 Totals To Date Feb-200%0%0%0%0%0%0%0% Mar-20 37% 3%0%0%0%0%0%
Slide 18: Group Business Lead Generation
Group Business Lead Generation Q3 2020 13.7% 12.6% 6.9% 12.1% Q1 2021 15.0% 26.1% 22.1% 15.3% Q3 2021 6.3% 7.0% 9.9% 14.0% 2022 & Thereafter 22.8% 28.6% 29.7% 34.8% Through August, DiamondRock generated 250K – 350K room nights of new business leads per month (1) Data for the total portfolio except t
Slide 19: Growth Opportunities
GROWTH OPPORTUNITIES 19 Hotel Emblem
Slide 20: Positioned To Capitalize Upon Distress On The Horizon
Positioned To Capitalize Upon Distress On The Horizon Select Service $98 Billion in 8,500+ CMBS Hotel Loans 2020-2023 Maturities: $24 Billion (over 2,000 loans) 20 Source: Trepp and Wells Fargo Securities, LLC 65-70%>70% Full Service 17% 13% Resorts 54% 15% Full Service Percent of Loans By Original
Slide 21: Emerging Pipeline of Opportunities
Emerging Pipeline of Opportunities Offered to purchase at discount to construction cost upon completion, 30% below market prices. Opportunity to consolidate operations with existing DRH hotel. Seller under distress. Opportunity to acquire 20%+ off pre-COVID acquisition pricing. The lender (insurance
Slide 22: Growth Oriented ROI Projects
Growth Oriented ROI Projects Lake Tahoe with entitlements that came with capture high-end Sonoma restaurant customers. increased rate with upgraded product and cottages. outdoor F&B venue with major outside pool 22 The Lodge at Sonoma Upgrade Nearing completion of new Michael Mina restaurant to Purs
Slide 23: ROI Projects Drive Shareholder Value
ROI Projects Drive Shareholder Value IRR(3) DRH has identified ~$25-$30MM of additional potential ROI projects (1) (2) (3) Estimated Capital Spend and Estimated Incremental EBITDA based upon management proformas Estimated Incremental Value is calculated by applying a 10.0x multiple to Estimated Incr
Slide 24: Corporate Citizenship
CORPORATE CITIZENSHIP 24 Cavallo Point, the Lodge at Golden Gate Bridge
Slide 25: Responsible Corporate Citizen
Responsible Corporate Citizen GRESB ISS-ESG Corporate Ranking Annual Results Currently Ranked #2 DRH GRESB Peer Score Average(1) 57 58 51 69 of 174 US Real Estate Companies DiamondRock ranks in the top 5% of the Worldwide Real Estate Sector, earning an ISS ESG Prime designation (1) Lodging Peer Aver
Slide 26: DiamondRock Hospitality
DIAMONDROCK HOSPITALITY
Slide 27: Appendix
APPENDIX Havana Cabana Key West
Slide 28: Research Demonstrates Small Resorts Outperform
Research Demonstrates Small Resorts Outperform • According to CBRE/PKF research study, small resorts(1) have: • • • Less downside risk due to larger stream of reliable non-rooms revenue Preserved the most ADR through the recession of the early 2000s Achieved superior levels of ADR growth since 2009
Slide 29: DRH Lifestyle & Independent Strategy
DRH Lifestyle & Independent Strategy • To grow with shift towards experiential travel Lifestyle, Independents, & Soft Brands 22% • Reduces reliance on traditional brands Traditional Brands 78% • Balances portfolio • Greater opportunity for smaller deals • Target allocation will be achieved through a
Slide 30: Consumers Spending More on Experiences Than Material Goods
Consumers Spending More on Experiences Than Material Goods 5.0% 1,000 900 4.0% 800 700 Shift in Consumer Spending 3.0% 600 500 2.0% 400 300 1.0% 200 100 0.0% 19801985199019952000200520102015 Experiences (1) Motor Vehicles Jewelry and Watches Home Furnishings Motor Vehicles Jewelry and Watches Home F
Slide 31: Resort Thesis Already Proven Successful
Resort Thesis Already Proven Successful Note: Figures exclude Frenchman’s Reef, Cavallo Point and Barbary Beach House as these assets are either repositioned or currently under construction. 31 EBITDA Multiple @ EBITDA Increase Investment ($MM)PurchaseYE 2019$MM Burlington Hilton$6416.5x8.9x$3.9 Cha
Slide 32: Strong Resort Market Presence
Strong Resort Market Presence (Mamoct) Approximately 1/3 of portfolio located in destination resort markets. Westin Fort Lauderdale Beach Resort
Slide 33: Approximately 2/3 of portfolio located in top, gateway markets
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Slide 34: Non GAAP Measures
Non GAAP Measures The Company considers the following non-GAAP financial measures to be useful to investors as key supplemental measures of operating performance: EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA and Hotel Adjusted EBITDA. These measures should not be considered in isolation or as a s
Slide 35: Pro Forma Net Debt / 2019 EBITDA Reconciliation
Pro Forma Net Debt / 2019 EBITDA Reconciliation As of December 31, 2019 Actual Principal Balance Salt Lake City Marriott Downtown mortgage loan $53,273 The Lodge at Sonoma, a Renaissance Resort & Spa mortgage loan 26,963 Courtyard Manhattan / Midtown East mortgage loan 81,107 JW Marriott Denver at C
Slide 36: EBITDA and Hotel Adjusted EBITDA Reconciliation
EBITDA and Hotel Adjusted EBITDA Reconciliation Year Ended December 31, 2019 Interest expense 46,584 Real estate related depreciation and amortization 118,110 Corporate expenses 28,231 Loss on early extinguishment of debt 2,373 Severance costs (2) – Hotel EBIT DA $273,970 Hotel manager transition an
Slide 37: 2019 Adjusted EBITDA Reconciliation
2019 Adjusted EBITDA Reconciliation Year Ended December 31, 2019 Interest expense 46,584 Real estate related depreciation and amortization 118,110 Non-cash lease expense and other amortization 7,013 Hotel manager transition costs and pre-opening items (2) 6,460 Loss on early extinguishment of debt 2
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