Rlj Lodging Trust · NYSE:RLJ
Rlj Lodging Trust — Investor Presentation (November 2023)
54 slides from Rlj Lodging Trust's investor presentation, November 2023
Slide 1: Santa Monica, November 2023
SANTA MONICA, NOVEMBER 2023 AC HOTEL BOSTON DOWNTOWN
Slide 2: Key Takeaways for Today
Key Takeaways for Today INTENTIONAL WELL-POSITIONED FOR HIGH QUALITY MULTIPLE CHANNELS EVOLUTION THE NEW NORMAL PORTFOLIO OF GROWTH We want you to We want you to have We want you to We want you to have know that RLJ’s clarity around how understand the confidence in our evolution has been our portfol
Slide 3: Our Presenters Today: Experienced and Talented Leadership Team
Our Presenters Today: Experienced And Talented Leadership Team Sean Mahoney Tom Bardenett Craig Amos EVP, CHIEF FINANCIAL OFFICER EVP, CHIEF OPERATING OFFICER EVP, DESIGN & CONSTRUCTION Leslie Hale JEFFREY DAURAY EVP, CO –CHIEF INVESTMENT OFFICER Kate B. Henriksen EVP, CO –CHIEF INVESTMENT OFFICER N
Slide 4: Intentional Evolution Over Last Several Years
RLJ EVOLUTION Intentional Evolution Over Last Several Years ACTIVE PORTFOLIO IDENTIFIED EXECUTED STRATEGIC POSITIONED BALANCE MANAGEMENT EMBEDDED VALUE ACQUISITIONS SHEET OPTIONALITY 4 HAMPTON INN & SUITES, MIDTOWN ATLANTA
Slide 5: Active Portfolio Management
PORTFOLIO 10 1100 bps Active Portfolio Assets Lower Margins Management Sold 65 non-core assets(1) – Sold non-rooms oriented, lower margin assets CORE – Sold capital intensive, ASSETS slower growth assets Added 50 bps to RevPAR growth profile 38% Accretive 14.8x Lower RevPAR TTM EBITDA Multiple 55 60
Slide 6: Unlocking Embedded Value
PORTFOLIO Unlocking Embedded Value Identified opportunities to unlock embedded growth in portfolio Assessed repositioning for each asset and brought Wyndham conversion opportunities forward Management team mined the portfolio for various revenue and margin enhancements Thoughtful execution to maximi
Slide 7: Portfolio of Opportunities Exceeding Initial Underwriting
2023 Pacing Ahead of U n d e r w r i t i n g a t $ 2 8 M (1) Portfolio of Opportunities Exceeding Initial Underwriting ~$9M ~$12M Conversions PHASE I Remaining U/W ($23M-$28M) Opportunities Revenue Enhancement Projects $7M Margin Enhancements HAMPTON INN & SUITES MIDTOWN ATLANTA 7 (1) Based on 2023
Slide 8: The Pierside Santa Monica
THE PIERSIDE SANTA MONICA 8
Slide 9: The Pierside Santa Monica Reimagined as an Independent Lifestyle Hotel
CASE STUDY The Pierside Santa Monica Reimagined as an Independent Lifestyle Hotel EXPECTED STABILIZATION vs. INITIAL UNDERWRITING $300 Achieving Underwriting $80 Ahead of Initial RevPAR(1) Stabilized REVPAR $8.0M +13% Stabilized EBITDA Incremental $2.7M of EBITDA(1) 60% +15% IRR (1) Compared to 2019
Slide 10: The Mills House Hotel, a Curio Collection Hotel
THE MILLS HOUSE HOTEL, A CURIO COLLECTION HOTEL THE MILLS HOUSE HOTEL CHARLESTON 10
Slide 11: The Mills House Hotel, a Curio Collection Hotel by Hilton
CASE STUDY The Mills House Hotel, a Curio Collection Hotel by Hilton EXPECTED STABILIZATION vs. INITIAL UNDERWRITING $310 +24% Stabilized REVPAR $60 Ahead of Underwriting $15.5M +55% Stabilized EBITDA $6M Ahead of Underwriting 150% 3.0x IRR of expected 50% IRR THE MILLS HOUSE HOTEL CURIO COLLECTION,
Slide 12: Strategic Acquisitions
EXECUTION Strategic Acquisitions AC HOTEL BOSTON DOWNTOWN AC HOTEL BOSTON DOWNTOWN Enhanced Portfolio Quality / Metrics Acquired four young assets for $257M at attractive stabilized yields of 8.0% - 8.5% in high growth markets: Atlanta Boston Denver Cherry Creek Nashville MOXY DENVER CHERRY CREEK MO
Slide 13: AC Hotel Boston Downtown
CASE STUDY AC Hotel Boston Downtown Acquired in October 2021 Outperforming underwriting with current NOI yield of 8.5% vs initial underwritten of 7.5% - 8.0% +$25 ADR +25% Ahead of 11% Ahead of Underwriting Underwriting +$1.5M EBITDA ~$261 ADR(1) ~$7.5M EBITDA(1) 13 (1) Based on projected 2023 perfo
Slide 14: Balance Sheet Optionality
Balance Sheet 2018 to Present Optionality $1.1B $300M Total Liquidity stock repurchases 93% ~13% Fixed / Hedged Debt % of float bought back 3.97% 25-30% Average Interest Rate Free Cash Flow as % of Hotel EBITDA MARRIOTT LOUISVILLE DOWNTOWN 14
Slide 15: Multiple Channels to Drive Growth
PORTFOLIO Multiple Channels to Drive Growth BALANCE SHEET Optionality FUTURE Pipeline of Conversions INITIAL Conversions/ URBAN CENTRIC PORTFOLIO Acquisitions Organic Growth MOXY DENVER CHERRY CREEK 15
Slide 16: RLJ Today
AC HOTEL BOSTON DOWNTOWN RLJ HYATT PLACE WASHINGTON DC / WHITE HOUSE Today COURTYARD AUSTIN DOWNTOWN/ CONVENTION CENTER THE PIERSIDE SANTA MONICA THE MILLS HOUSE HOTEL CHARLESTON ZACHARI DUNES MANDALAY BEACH
Slide 17: Urban, Growth Oriented Portfolio
Urban Urban Urban, Growth Lifestyle Gateway Oriented Portfolio Repositioning Hotels 96(1) Lift(2) ADR $185 +7% RevPAR $146 +9% EBITDA/Key $21k +11% Margins 34% +125 bps COURTYARD / RESIDENCE INN / SPRINGHILL SUITES MOXY DENVER CHERRY CREEK HOUSTON DTWN CONV CTR Urban Footprint 66% Resort Urban Metro
Slide 18: Affiliated with Global Brands
Affiliated with Global Brands WORLDWIDE RESERVATION LOYALTY SYSTEM PROGRAM Target premium brands STRONG GLOBAL CUSTOMER Attain strong market AWARENESS DISTRIBUTION share EFFECTIVE BRAND Consistently command SEGMENTATION RevPAR premiums 18 HYATT HOUSE CHARLOTTE
Slide 19: Expansion into Lifestyle Brands
POSITIONING Expansion into Lifestyle Brands AC Hotels, Moxy and Curio Collection remains consistent with our strategy of rooms-focused, high-margin hotels HIGH LEVEL OF SERVICE/COST STRUCTURE LOW ECONOMY/MIDSCALE UPPER MIDSCALE UPSCALE UPPER UPSCALE LUXURY STR CHAINSCALE 19
Slide 20: We Own a Rooms Oriented Portfolio
CASE STUDY We Own a Rooms Oriented Portfolio % O F R E V E N U E (1) M A R G I N S (1) Rooms ~83% ~75% F&B ~11% ~27% Other Income 6% ~78% (1) Projected for 2023 HILTON CABANA MIAMI BEACH 20
Slide 21: Lean Operating Model
Lean Operating Model On average our hotels have: Rooms revenue and limited food and beverage drive superior margins and free cash flow < 300 Keys Superior EBITDA Margins <10,000 sq ft 34.0% of Meeting Space 29.8% Limited F&B 27.0% High Margins (1) RLJ Portfolio Full-Service STR Peers (2) Full-Servic
Slide 22: High Margin Assets with RevPAR Approaching Full-Service Hotels
High Margin Assets with RevPAR Approaching Full-Service Hotels Relative RevPAR $152 $146 C SO. MCP O M P V C VSO. MCP O M P HOMEWOOD SUITES RENAISSANCE THE WESTIN WASHINGTON DC WASHINGTON DC WASHINGTON DC RevPAR $173.21 RevPAR $181.69 RevPAR $178.26 RLJ Portfolio STR EBITDA/Key $26k EBITDA/Key $30k
Slide 23: Geographically Diversified Portfolio
Geographically Diversified Portfolio Urban Centric Seattle Portland ~75% Minneapolis Madison 5% Boston of RLJ’s EBITDA is Greater San Francisco New York City Chicago San Francisco CBD 4% Pittsburgh Philadelphia generated in the Silicon Valley Indianapolis 5% Washington, D.C. Top 25 Hotel Markets 3%
Slide 24: Target Market Characteristics
TARGET MARKETS Multiple demand generators Characteristics 7-Day a Strong week economic demand backdrop drivers Market Characteristics We Seek Balanced High drive to/fly barriers to to market entry access Key West Charleston RLJ Identified FL SC and Entered a Number of Top Markets Early Austin TX THE
Slide 25: Charleston, SC
EARLY MARKET ADOPTER Charleston, SC +63% Growth(1) Long-term Growth Market – Outsized organic demand growth – Large corporate relocations and airport expansion – Population growth – Top drive-to leisure market 2022 Limited supply, due to historic preservation laws 2012 High ADR and RevPAR Market Rev
Slide 26: 7 Day a Week Demand Drivers
HEART OF DEMAND LOCATIONS 7 Day a Week Demand Drivers Oracle Campus 1.0 Mile Benefit from balanced Weekday / Weekend State Capitol 0.3 Miles Demand Bankers Alley Hotel Proximate to multiple demand generators - Sports/Entertainment, Corporate and Government Nissan Stadium Broadway – 0.4 Miles 0.4 Mil
Slide 27: Ideal Portfolio Mix
PORTFOLIO Ideal Portfolio Mix HYATT PLACE WASHINGTON DC / WHITE HOUSE RLJ’s portfolio is: Rooms High oriented Growth Markets ZACHARI DUNES MANDALAY BEACH RENAISSANCE PITTSBURGH High Heart of demand Margin locations , High 7-day a week DOUBLETREE GRAND KEY RESORT RevPAR demand 27 EMBASSY SUITES ATLAN
Slide 28: High Quality Portfolio
HILTON CABANA MIAMI BEACH High Quality ZACHARI DUNES MANDALAY BEACH Portfolio FAIRFIELD INN AND SUITES WASHINGTON DC DOWNTOWN THE MILLS HOUSE HOTEL CHARLESTON THE KNICKERBOCKER NYC MARRIOTT LOUISVILLE DOWNTOWN
Slide 29: High Quality Portfolio
High Quality Portfolio Urban Urban Resort Urban Lifestyle Gateway Metro COURTYARD / RESIDENCE INN / SPRINGHILL MOXY DENVER CHERRY CREEK SUITES HOUSTON DTWN CONV CTR HILTON CABANA MIAMI BEACH HYATT PLACE MADISON DOWNTOWN 33 32 11 20 # of Hotels # of Hotels # of Hotels # of Hotels 39% 36% 14% 11% of E
Slide 30: Urban Lifestyle
Urban Lifestyle Properties in top urban HYATT AC HOUSE HOTEL SANTA BOSTON CLARA DOWNTOWN THE KNICKERBOCKER EMBASSY NYC SUITES MINNEAPOLIS AIRPORT MARRIOTT LOUISVILLE DOWNTOWN markets that benefit from seven-day-a-week demand and “bleisure” with ‘live, work, play’ demand, represent 39% of EBITDA(1) H
Slide 31: Moxy Denver Cherry Creek
URBAN LIFESTYLE Moxy Denver Cherry Creek Heart of Demand Benefits from High barriers 34% $205 86% location in Denver’s corporate, lifestyle, to entry upscale Cherry leisure demand Creek submarket throughout the week EBITDA Margin(1) ADR(1) Rooms Revenue(1) 31 (1) Projected for 2023
Slide 32: Urban Gateway
Urban Gateway Properties located in key HILTON GARDEN INN NEW ORLEANS COURTYARD NEW YORK HYATT PLACE WASHINGTON DC / WHITE HOUSE CONVENTION CENTER MANHATTAN UPPER EAST SIDE gateway hotel markets in the U.S., that are also the nation’s top economic centers represent 36% of EBITDA(1) FAIRFIELD INN & S
Slide 33: Hyatt Place Washington DC / White House
URBAN GATEWAY Hyatt Place Washington DC / White House Heart of demand location Benefits from corporate, 36% $230 92% in downtown DC, located government, and right on K St leisure demand EBITDA Margin(1) ADR(1) Rooms Revenue(1) 33 (1) Projected for 2023
Slide 34: Resort
Resort Properties located in resort destinations with a high EMBASSY SUITES DEERFIELD BEACH RESORT DOUBLETRREE GRAND KEY RESORT leisure mix represent 14% of EBITDA(1) ZACHARI DUNES MANDALAY BEACH COURTYARD WAIKIKI 34 (1) Based on pro forma FY 2019 for Hotels owned as of September 30, 2023
Slide 35: Embassy Suites Deerfield Beach Resort
RESORT Embassy Suites Deerfield Beach Resort Midweek High barrier to Benefits from corporate business and entry location strong Leisure demand 35% $240 80% weekend leisure EBITDA Margin(1) ADR(1) Rooms Revenue(1) demand 35 (1) Projected for 2023
Slide 36: Urban Metro
Urban Metro Properties located in HYATT HOUSE SANTA CLARA EMBASSY SUITES MINNEAPOLIS AIRPORT niche submarkets within major U.S. Urban metros represent 11% of EBITDA(1) MARRIOTT CHICAGO MIDWAY EMBASSY SUITES DALLAS LOVE FIELD HYATT PLACE MADISON DOWNTOWN 36 (1) Based on pro forma FY 2019 for Hotels o
Slide 37: Hyatt Place Madison Downtown
URBAN METRO Hyatt Place Madison Downtown Brand A+ location, near Submarket that 39% $190 93% recognition in university and functions like an the market government Urban market EBITDA Margin(1) ADR(1) Rooms Revenue(1) 37 (1) Projected for 2023
Slide 38: RLJ Portfolio Built to Capture New Normal
PORTFOLIO RLJ Portfolio Built to Capture New Normal CONSUMER TRENDS RLJ PORTFOLIO Increased “Bleisure” allowed by Hybrid Live, work, play locations work Experiential focus with increased desire Increased mix of lifestyle, boutique hotels for unique accommodations Nature of assets and proximity to de
Slide 39: Growth
HYATT CENTRIC MIDTOWN ATLANTA Growth HILTON CABANA MIAMI BEACH ZACHARI DUNES MANDALAY BEACH MARRIOTT UNION SQUARE SAN FRANCISCO EMBASSY SUITES MILPITAS THE BANKERS ALLEY HOTEL NASHVILLE
Slide 40: Multiple Channels to Drive Growth
PORTFOLIO Multiple Channels BALANCE SHEET Optionality to Drive Growth • Strong Liquidity • Generate Significant Free Cash Flow • Optionality to drive external / internal FUTURE growth Pipeline of Conversions • Ability to return capital to shareholders • Targeting two conversions per year • Executing
Slide 41: Organic Growth
URBAN CENTRIC Organic Growth THE PIERSIDE SANTA MONICA Urban demand growth expected to significantly outpace new supply New supply in Urban markets projected to remain low for multiple years INDUSTRY ~110 BPS URBAN ~270 BPS Demand Demand MARRIOTT LOUISVILLE DOWNTOWN exceeding exceeding Supply Supply
Slide 42: Phase I Value Creation
2023 VALUE CREATION $34M Phase I Value Creation AT STABILIZATION $28M +$6M 2023 PACE (1) Incremental EBITDA(2) $23-$28M +$3M +$3M 2021 U/W Incremental EBITDA(2) Incremental EBITDA(2) $25M $25M $25M $25M Initial Phase 1(2) Initial Phase 1(2) Initial Initial Phase Phase 1 1(2) U/W U/W U/W U/W (1) Base
Slide 43: Converting Hotels to Drive Incremental EBITDA
PHASE 2 2023 CONVERSIONS Converting Hotels to Drive Incremental EBITDA Doubletree Suites Houston, formerly Wyndham Hotel Tonnelle a Marriott Tribute Portfolio Hotel, New Orleans Garden District, formerly Hotel Indigo The Bankers Alley Hotel Nashville, Tapestry Collection by Hilton, formerly 21C +$
Slide 44: Phase 2 | 2024 Conversions
Phase 2 | 2024 Conversions Coming soon Autograph Pittsburgh Downtown, +$15-$20 Avg ADR(1) from Renaissance Iconic building in prime CBD location Autograph Collection expected to capture higher ADR guests +$2M-$3M Total Incremental EBITDA(1) Courtyard at the University of Pittsburgh, from Wyndham Ben
Slide 45: Phase 2 Expectations
PHASE 2 Phase 2 Expectations Phase 2 projects expected to generate incremental stabilized EBITDA of : $2M $9M-$11M Revenue Enhancement Projects During 2024 - 2026 $7M - $9M Phase 2 Conversions ZACHARI DUNES MANDALAY BEACH | 45
Slide 46: Incremental EBITDA from Internal Growth Catalysts
COMBINED PHASE 1 & 2 Incremental EBITDA from Internal Growth Catalysts ~$44M At Midpoint $6M Phase 2 - $10M Incremental $8 M Phase 1 - $6M $28M $2 M Incremental $34M Total Phase 1 2024 2025 2026 Phase 1 Phases 1 & 2 2023 Actual Incremental $14M - $18M of Stabilized Hotel EBITDA 2026 Stabilized from
Slide 47: Embedded Pipeline of Opportunities
OPPORTUNITIES Embedded Pipeline of Opportunities Expect to execute two conversions per year Boston Incremental 10-to-15 conversion and value-add opportunities in portfolio NYC Pittsburgh Philadelphia Los Angeles Brand expirations San Diego Atlanta Charleston Conversions with renovations Austin Embed
Slide 48: Balance Sheet Optionality
Balance Sheet 2018 to Present Optionality $1.1B $300M Total Liquidity stock repurchases 93% ~13% Fixed / Hedged Debt % of float bought back 3.97% ~$400M Average Interest Rate 2024–2026 Forecasted Aggregate Free Cash Flow MARRIOTT LOUISVILLE DOWNTOWN 48
Slide 49: Portfolio Hotel EBITDA Expectations
HOTEL EBITDA BRIDGE Portfolio Hotel EBITDA Expectations $505M $14M Acquisitions $14 M $10 M Phase 2 $10M $34 M(1) Phase 1 $34M $447M 2023 Pace $28M Incremental 2024 – 2026 $6M $447M 2019 Hotel EBITDA Phase 1 Phase 2 2019 2021-2022 Projected Hotel EBITDA $42M - $46M Aggregate Stabilized EBITDA from A
Slide 50: Multiple Channels to Drive Growth
PORTFOLIO Multiple Channels BALANCE SHEET Optionality to Drive Growth • Strong Liquidity • Generate Significant Free Cash Flow • Optionality to drive external / internal FUTURE growth Pipeline of Conversions • Ability to return capital to shareholders • Targeting two conversions per year • Executing
Slide 51: Consensus Adjusted EBITDA CAGR 2023-2025
LEADING GROWTH Consensus Adjusted EBITDA CAGR 2023-2025 6.3% 5.6% 4.9% 4.2% 4.1% 4.0% 3.5% 3.3% 2.5% 2.3% 2.1% 1.0% 0.1% RLJ INN APLE SHO PK CLDT HST PEB DRH XHR Peer Average Full-Service Select-Service Average Average 51 Based on FactSet Analyst Consensus figures as of August 24, 2023
Slide 52: Key Takeaways for Today
Key Takeaways for Today INTENTIONAL WELL-POSITIONED FOR HIGH QUALITY MULTIPLE CHANNELS EVOLUTION THE NEW NORMAL PORTFOLIO OF GROWTH We want you to We want you to have We want you to We want you to have know that RLJ’s clarity around how understand the confidence in our evolution has been our portfol
Slide 53: Thank You
THANK YOU AC HOTEL DOWNTOWN BOSTON
Slide 54: 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, and the assumptions upon which those statements are b
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