Rlj Lodging Trust · NYSE:RLJ
Rlj Lodging Trust — Evercore ISI Investor Lunch March 2022
40 slides from Rlj Lodging Trust's conference presentation, March 2022
Slide 1: Evercore ISI Investor Lunch March 2022
EVERCORE ISI INVESTOR LUNCH MARCH 2022
Slide 2: RLJ | Near-Term Catalysts
RLJ | NEAR-TERM CATALYSTS RLJ is well-positioned in the near-term, with significant external and internal growth catalysts HYATT CENTRIC ATLANTA MARCH 2022 2
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS RLJ has multiple channels of growth to drive EBITDA expansion throughout this cycle URBAN MARKET Urban markets are expected to drive the next leg of lodging recovery GROWTH ▪ Urban markets represent two-thirds of EBITDA(1) INTERNAL On track to generate $23M - $28M of incrementa
Slide 4: Incremental Earnings Growth
INCREMENTAL EARNINGS GROWTH RENAISSANCE PITTSBURGH MARCH 2022 4
Slide 5: $34M of Tangible Incremental EBITDA
TANGIBLE EBITDA GROWTH DRIVERS Accretive capital recycling, unlocking of embedded value creation opportunities and lean operating model positions RLJ to exceed 2019 Hotel EBITDA $34M OF TANGIBLE INCREMENTAL EBITDA From Complete / In-progress External + Internal Growth Initiatives $504M $484M $20M $7
Slide 6: Operating Performance
OPERATING PERFORMANCE THE KNICKERBOCKER HOTEL MARCH 2022 6
Slide 7: Recent Operating Performance
RECENT OPERATING PERFORMANCE March seeing continued surge in demand as the post-restriction environment improves mobility and overall confidence in travel RLJ’s urban markets are seeing broad-based acceleration through March ▪ Accelerating urban trends, especially during midweek with Occupancy at ~8
Slide 8: Weekly Trends | Occupancy
WEEKLY TRENDS | OCCUPANCY Weekly occupancy levels in March achieving new peaks of the pandemic, accelerating significantly from January and February Total Portfolio Weekly Occupancy vs % of 2019 (1) 80% Total Portfolio Total Portfolio as % of 2019 Christmas / NYE 76% Thanksgiving 75% 100% Labor Day
Slide 9: Weekly Trends | ADR
WEEKLY TRENDS | ADR ADR has reaccelerated since January and is nearing pre-pandemic levels Total Portfolio Weekly ADR vs % of 2019 (1) Total Portfolio Total Portfolio as % of 2019 120% Christmas / NYE $200 Thanksgiving $192 Labor Day 98% 100% $180 $160 80% $140 60% $120 40% $100 20% $80 $60 0% Jul.
Slide 10: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO RENAISSANCE PITTSBURGH MARCH 2022 10
Slide 11: 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 Focused-Service Occupancy 53% 43% Traditional Full-Servic
Slide 12: Portfolio Transformation
PORTFOLIO TRANSFORMATION We have significantly enhanced our portfolio quality since 2019 PRIOR CURRENT (1) ENHANCEMENT 78% Occupancy 79% +1.0% pts. $173 ADR $184 +6.5% $134 RevPAR $145 +7.9% $19K EBITDA / Key $21K +12.0% 32.8% EBITDA Margin 33.3% +50 bps (1) Based on 2019 for Pro forma hotel portfol
Slide 13: Diversified Portfolio
DIVERSIFIED PORTFOLIO RLJ’s footprint in top Urban markets is well-positioned to capture recovery in all segments ▪ Sunbelt markets represent 46% of RLJ’s Hotel EBITDA(1) Portland 5% Boston Chicago Pittsburgh New York City San Francisco CBD 4% Philadelphia 13% Denver Other NoCal Indianapolis 5% Wash
Slide 14: Portfolio Poised to Benefit from Urban Recovery
PORTFOLIO POISED TO BENEFIT FROM “URBAN” RECOVERY Two-thirds of RLJ’s portfolio is located in Urban markets, providing an outsized runway for growth in recovery of Business Transient and Group Urban markets are expected to drive the next leg of lodging recovery ▪ Elimination of restrictions and “ret
Slide 15: 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 portfolio has a strong, long-term growth profile ▪ Transactions since 2019 have improved RevPAR growth profile and market concentration ▪ Portfolio recycling improved absolu
Slide 16: Capital Recycling
CAPITAL RECYCLING HAMPTON INN & SUITES ATLANTA MIDTOWN MARCH 2022 16
Slide 17: Capital Recycling Enhancing Growth Profile
CAPITAL RECYCLING ENHANCING GROWTH PROFILE During 2021, RLJ accretively recycled ~$200M of capital into high-quality acquisitions Mature assets, in slower-growth markets, Younger, high-margin assets, in high-growth with high capital needs markets with no near-term capital needs $144 ~$200M $175 - $2
Slide 18: 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 e
Slide 19: 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 20: External Growth | Hampton Inn Atlanta Midtown
EXTERNAL GROWTH | HAMPTON INN ATLANTA MIDTOWN 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 universities ▪
Slide 21: 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 22: External Growth | Moxy Denver Cherry Creek
EXTERNAL GROWTH | MOXY DENVER CHERRY CREEK Acquired the recently built Moxy Denver Cherry Creek in December 2021 Top upscale, lifestyle submarket, positioned for growth ▪ Cherry Creek top submarket undergoing significant office, mixed-use, and residential development ‒ +2.8M SF of office space, 255K
Slide 23: External Growth | Moxy Denver Cherry Creek (cont.)
EXTERNAL GROWTH | MOXY DENVER CHERRY CREEK (cont.) Moxy Cherry Creek is accretive to RLJs portfolio metrics and expands footprint in Denver 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-ma
Slide 24: Internal Growth
INTERNAL GROWTH MARRIOTT LOUISVILLE DOWNTOWN MARCH 2022 24
Slide 25: Internal Growth | Unlocking Incremental Value
INTERNAL GROWTH | UNLOCKING INCREMENTAL VALUE $23M to $28M $9-11M+ of Incremental EBITDA (1) 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 26: 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 Investment (1) EBITDA(2) Creation (3) Unlevered IRR 2022 Conversions Wyndham Conversion to $10.0M to $11.0
Slide 27: 2022 Conversions | Wyndham Santa Monica
2022 CONVERSIONS | 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 sign
Slide 28: 2022 Conversions | Mills House Charleston
2022 CONVERSIONS | 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 Honor
Slide 29: 2022 Conversions | Embassy Suites Mandalay Beach
2022 CONVERSIONS | EMBASSY SUITES 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
Slide 30: Conversions | Incremental Opportunities
CONVERSIONS | INCREMENTAL OPPORTUNITIES Additional conversions to unlock significant embedded value REPRESENTS ~20%(1) OF PORTFOLIO Wyndham Portfolio (remaining 5) Conversion Opportunities Include: 8-10 additional opportunities ▪ Brand expirations ▪ Remix customer base ▪ Conversions with Boston reno
Slide 31: 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, ▪ Guestroom additions ▪ Pr
Slide 32: Margin Expansion | Management Agreement Amendments
MARGIN EXPANSION | MANAGEMENT AGREEMENT AMENDMENTS Amendments provide favorable terms with increased flexibility ~50 Harvest the embedded value at contract renewals IMPROVED to reduce fees + additional incentives MARGINS(1) bps ▪ ▪ Reduce base fees by 50 to 125 bps Additional incentives: – Key money
Slide 33: Strong Liquidity and Balance Sheet
STRONG LIQUIDITY AND BALANCE SHEET AC HOTEL BOSTON DOWNTOWN MARCH 2022 33
Slide 34: Strong and Flexible Balance Sheet
STRONG AND FLEXIBLE BALANCE SHEET 2021 financing initiatives have created significant flexibility to drive growth and further strengthen balance sheet Raised $1.0B of debt in 2021 resulting in improved laddering of debt maturities and reduced interest expense ▪ June 2021 | completed an oversubscribe
Slide 35: 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 MOXY DENVER CHERRY CREEK RLJ maintains best-in-class balance sheet ▪ ~$665M of cash as of December 31st – Repaid $200M of outstanding LOC balance in early 2022 ▪
Slide 36: Investment Highlights
INVESTMENT HIGHLIGHTS RLJ has multiple channels of growth to drive EBITDA expansion throughout this cycle URBAN MARKET Urban markets are expected to drive the next leg of lodging recovery GROWTH ▪ Urban markets represent two-thirds of EBITDA(1) INTERNAL On track to generate $23M - $28M of incrementa
Slide 37: Corporate Responsibility
CORPORATE RESPONSIBILITY HILTON CABANA MIAMI BEACH MARCH 2022 37
Slide 38: 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 efficiency
Slide 39: 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 guestrooms with digital thermostats Board, and committed to continuing r
Slide 40: 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 pand
RLJ Lodging Trust — Evercore ISI Investor Lunch March 2022 on 6ix