Rlj Lodging Trust · NYSE:RLJ
Rlj Lodging Trust — NAREIT Conference 2019
33 slides from Rlj Lodging Trust's conference presentation, November 2019
Slide 1: NAREIT Conference
NAREIT Conference November 2019 RLJ: W ELL-POSITIONED FOR GROWTH AND SUCCESS JUNE 2018 1
Slide 2: RLJ Today – Key Statistics
RLJ TODAY – KEY STATISTICS $146 32.3% $4.2M $454M 108 23,179 PRO FORMA RevPAR1 HOTEL EBITDA EBITDA / HOTEL2 EBITDA2 Hotels Rooms MARGIN1 HYATT CENTRIC MIDTOWN ATLANTA 1 Year-to-date as of September 30, 2019 for the 108 hotel portfolio N O V E MB E R 2 0 1 9 2 2 Based on the midpoint of the 2019 full
Slide 3: RLJ Investment Highlights
RLJ INVESTMENT HIGHLIGHTS Well-positioned to create long-term shareholder value ▪ Differentiated investment strategy to drive superior risk adjusted returns ▪ High quality portfolio located in prime locations within long-term growth markets ▪ Significant embedded value in the portfolio ▪ Fortress ba
Slide 4: RLJ 3Q Highlights
RLJ 3Q HIGHLIGHTS Continue to build on the momentum from our portfolio transformation 3Q Financial Overview and Highlights ▪ Achieved relatively flat RevPAR in choppy environment ▪ Delivered Pro Forma Hotel EBITDA of $113.6M ▪ Attained strong Pro Forma Hotel EBITDA margin of 31.4% ▪ Fortress balance
Slide 5: Multiple Levers to Create Shareholder Value
MULTIPLE LEVERS TO CREATE SHAREHOLDER VALUE HYATT HOUSE EMERYVILLE N O V E MB E R 2 0 1 9 5
Slide 6: Multiple Levers to Drive Shareholder Value
MULTIPLE LEVERS TO DRIVE SHAREHOLDER VALUE Significant investment capacity of $1B with opportunity to deploy on several unique catalysts REINVESTMENT OPPORTUNITIES ▪ Expect to invest ▪ Green initiatives between $150 - $200 ▪ Space configuration ▪ Minimum low double digit unlevered IRR’s ROI Projects
Slide 7: Long-Term Value-Add Opportunities
LONG-TERM VALUE-ADD OPPORTUNITIES: FOCUS ON MINING EMBEDDED VALUE RLJ expects to invest $150M – $200M into “value-add” opportunities over next 3 – 5 years1 Value Added Projects SPACE GREEN INITIATIVES CONFIGURATION ▪ Lighting retrofits ▪ Adding keys/splitting suites ▪ Water conservation ▪ Adding mee
Slide 8: 2020 Capital Allocation Action Plan
2020 CAPITAL ALLOCATION ACTION PLAN RLJ has developed a 2020 action plan to start deploying the investment capacity generated from recent asset sales 2020 Capital Allocation Initiatives Wyndham Rebrandings $475M Senior Notes Refinancing - Significant long-term EBITDA/NAV ROI upside Initiatives - 6%
Slide 9: Strong Balance Sheet
STRONG BALANCE SHEET Dispositions provided over $1.0B of investment capacity Balance Sheet Highlights Credit Statistics2 ▪ No maturities before 20211 Total Debt $2.2B ▪ 89 unencumbered hotel assets Net Debt / LTM EBITDA 3.2x ▪ 100% of debt is fixed / hedged Weighted Average Maturity 3.8 years ▪ $600
Slide 10: Wyndham Rebranding Opportunity
WYNDHAM REBRANDING OPPORTUNITY THE MILLS HOUSE WYNDHAM GRAND HOTEL CHARLESTON N O V E MB E R 2 0 1 9 10
Slide 11: Wyndham Rebranding Opportunity
WYNDHAM REBRANDING OPPORTUNITY Significant upside from the rebranding of Wyndham hotels, representing 13% of EBITDA Transaction Benefits Heart of Demand Locations in Compelling Markets ▪ Hotels are located in prime locations in core urban markets ▪ Attractive hotel real estate The Mills House Wyndha
Slide 12: Wyndham Rebranding Highlights
WYNDHAM REBRANDING HIGHLIGHTS RLJ to receive $35M from Wyndham to terminate NOI guarantee and management agreements Transaction Highlights ▪ RLJ entered an agreement to terminate the Wyndham management agreement and Summary guarantee on eight hotels as of December 31, 2019 Consideration ▪ RLJ to rec
Slide 13: RLJ's Proven Conversion Track Record
RLJ’S PROVEN CONVERSION TRACK RECORD HUMBLE OIL BUILDING MARRIOTT COMPLEX N O V E MB E R 2 0 1 9 13
Slide 14: Extensive In-House Capabilities and Experience
EXTENSIVE IN-HOUSE CAPABILITIES AND EXPERIENCE RLJ has a proven track record of executing complex brand conversions which have created significant value ▪ In-house Design & Construction team with extensive conversion experience – Team has expertise in design, engineering, architecture and project/co
Slide 15: Case Study – Courtyard San Francisco
CASE STUDY – COURTYARD SAN FRANCISCO Property Profile Conversion Overview • Conversion from student housing facility to Courtyard by Marriott • Added 16 new rooms • Comprehensive renovation completed at a significant discount to replacement cost Before After Key Acquisition Metrics ▪ Year Built: 193
Slide 16: Case Study – SpringHill Suites Houston
CASE STUDY – SPRINGHILL SUITES HOUSTON DOWNTOWN CONVENTION CENTER Property Profile Conversion Overview • Conversion of Humble complex apartment tower into SpringHill Suites • Added 85 new guestrooms • Creatively added a public space lobby • Renovation completed at a significant discount to replaceme
Slide 17: Case Study – Fairfield Inn & Suites Washington DC
CASE STUDY – FAIRFIELD INN & SUITES WASHINGTON DC DOWNTOWN Property Profile Conversion Overview ▪ Conversion from Red Roof Inn to Fairfield Inn & Suites ▪ Compressed renovation timeframe to three months ▪ Conversion to vibrant modern design to complement the hotel’s location in the heart of Chinatow
Slide 18: Case Study – Hilton Garden Inn Los Angeles / Hollywood
CASE STUDY – HILTON GARDEN INN LOS ANGELES / HOLLYWOOD Property Profile Conversion Overview ▪ Conversion from Hollywood Heights independent hotel to Hilton Garden Inn ▪ Minimized revenue loss with hotel continuing to be in operation throughout the conversion ▪ Developed creative solutions for variou
Slide 19: Portfolio Transformation
PORTFOLIO TRANSFORMATION RENAISSANCE PITTSBURGH HOTEL N O V E MB E R 2 0 1 9 19
Slide 20: Strategic Evolution
STRATEGIC EVOLUTION Disposition of non-core hotels and termination of Wyndham are critical steps in RLJ’s long-term strategy to drive shareholder value ▪ Since 2017, RLJ has executed its strategy and disposed of 50 hotels for $1.4B, increased absolute RevPAR by 7%, reduced leverage to 3.2x1 and real
Slide 21: Portfolio Transformation
PORTFOLIO TRANSFORMATION Portfolio transformation enhanced growth profile and unlocked significant embedded value Sold slow-growth, low-RevPAR assets with meaningful capital needs, improving portfolio quality ▪ Disposed of 39 hotels for ~$490M at an accretive EBITDA multiple of 10.6x1, inclusive of
Slide 22: Enhanced Operating Metrics
ENHANCED OPERATING METRICS Sale of slow-growth, low-RevPAR assets is transformational 1H19 RevPAR growth for current 1H19 absolute RevPAR Efficiency improves with portfolio is 750 bps higher than 51% higher, representing average EBITDA / Hotel sold hotels ~$50 increasing to $4.3M 1.8% $148 $4.3 $98
Slide 23: Enhanced Portfolio Quality
ENHANCED PORTFOLIO QUALITY Selling these non-core hotels further highlights the underlying quality of our portfolio 1H19 RevPAR growth Absolute RevPAR improves EBITDA / Hotel increases improves by ~95 bps by 6%, representing ~$8 by ~20% $148 $4.3 1.8% $140 $3.6 0.9% Pre-Sale Portfolio Current Portfo
Slide 24: Enhanced Geographic Footprint
ENHANCED GEOGRAPHIC FOOTPRINT Increased concentration in high quality, long-term growth markets ▪ NoCal and SoCal now represent ~29% of EBITDA1 ▪ Reduced exposure to certain slow-growth, low-RevPAR submarkets of Denver, Austin and Louisville Change in RLJ Markets % EBITDA Sold 2018 20191 Impact Hote
Slide 25: RLJ Today Is Closely Aligned With Our Long-Term Vision
RLJ TODAY IS CLOSELY ALIGNED WITH OUR LONG-TERM VISION HOMEWOOD SUITES SEATTLE LYNNWOOD N O V E MB E R 2 0 1 9 25
Slide 26: High Quality Portfolio
HIGH QUALITY PORTFOLIO RLJ’s current portfolio of rooms oriented, high margin, premium branded hotels is aligned with its vision of owning hotels that drive significant NAV appreciation over time Geographically diverse portfolio, with prime locations in growth oriented markets ▪ Concentrated in urba
Slide 27: Attractive Market Exposure
ATTRACTIVE MARKET EXPOSURE RLJ’s current portfolio is broadly diversified with ~75% of EBITDA generated in Top 25 markets ▪ NoCal and SoCal represent 29% of EBITDA ▪ Increased concentration in markets that are expected to outperform long-term Chicago 3% Boston NoCal 5% 6% New York (San Francisco) De
Slide 28: Differentiated Operating Model
DIFFERENTIATED OPERATING MODEL Portfolio of premium branded, rooms oriented hotels with high operating margins ▪ Average of 100 to 300 rooms ▪ Lean operating model that generates >80% of revenues from rooms, which drives high margins ▪ Historically lower capex requirements on a per key basis compare
Slide 29: High-RevPAR, High-Margin Portfolio
HIGH-RevPAR, HIGH-MARGIN PORTFOLIO Our portfolio RevPAR is inline with full-service hotels and RLJ has an attractive margin profile, similar to select-service hotels ▪ Absolute RevPAR within ~6% of the U.S. Full-Service hotels1 ▪ EBITDA margins are 480 bps higher than U.S. Full-Service hotels1 and o
Slide 30: Valuation Opportunity
VALUATION OPPORTUNITY HILTON CABANA MIAMI BEACH N O V E MB E R 2 0 1 9 30
Slide 31: Strategic Execution Will Drive Earnings
STRATEGIC EXECUTION WILL DRIVE EARNINGS Successful execution of RLJ’s strategy has significantly improved Revenue, EBITDA and FFO growth potential ▪ Disposition of lower growth assets ▪ Asset management initiatives Revenue ▪ Renovations in higher growth markets ▪ Wyndham rebrandings Growth Drivers ▪
Slide 32: Attractive Relative Valuation vs. Peers
ATTRACTIVE RELATIVE VALUATION VS. PEERS TEV/2019E EBITDA1 TEV/2020E EBITDA1 13.4x 13.0x 13.0x 13.9x 12.4x 12.2x 12.0x 12.7x 12.5x 12.4x 12.3x 12.1x 11.3x 11.1x 10.8x 10.7x 11.7x 11.4x 11.4x 11.2x 10.6x 10.1x 10.9x 10.7x PEB INN HT CLDT DRH XHR AHT SHO APLE RLJ PK HST PEB HT CLDT DRH INN XHR APLE SHO
Slide 33: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Forward-Looking Statements This presentation 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 wh