Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (June 2017)
28 slides from Diamondrock Hospitality's investor presentation, Jun 5, 2017
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: DiamondRock at a Glance
DiamondRock at a Glance KEY STATISTICS Hotels (Rooms) 28 (9,619) Enterprise Value $3.1B Market Cap $2.2B Enterprise Value / Key ~$325K Dividend Yield 4.5% Net Debt/EBITDA(1) 3.1x Based on PF 2017F EBITDA and 2017F year-end net debt. Pro forma for acquisition of L’Auberge de Sedona and Orchards Inn S
Slide 3: Why DiamondRock?
Why DiamondRock? 2 Premier Hotel Portfolio 1 4 5 Top-tier RevPAR portfolio among lodging REIT peers Strategically diversified brands, managers, and geographic distribution Intense Asset Management Focus Recently hired Tom Healy as COO and EVP of AM Hotel Operating costs held to only 1% in 1Q17 Pursu
Slide 4: High Quality Portfolio With Urban and Resort Concentration
High Quality Portfolio With Urban and Resort Concentration
Slide 5: Capital Allocation Opportunities
6 CAPITAL ALLOCATION OPPORTUNITIES
Slide 6: Creating Value Throughout Cycle
Creating Value 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, if appropriate Limit Non-core Asset Sales Sell Non-Core Assets Consider Accretive Acquisition Opportunities
Slide 7: Acquisitions to Power Performance
Acquisitions to Power Performance DRH Market Update Dry Powder $350M in dry powder $28M in potential EBITDA(1) Outperformance DRH stock outperformed following recent acquisitions by an average of 380bps Targets Focus on supply-constrained markets Focus on deals with clear asset management and value-
Slide 8: Acquisition of L'Auberge de Sedona and Orchards Inn Sedona
Acquisition of L’Auberge de Sedona and Orchards Inn Sedona Iconic assets with immediate asset management upside in attractive, high-growth resort market #1 Conde-Nast rated hotel in Southwest Sourced in off-market deal Recycled capital from dispositions at a 12.8x multiple and $120 RevPAR into 12.6x
Slide 9: Acquisition of L'Auberge de Sedona and Orchards Inn Sedona
Acquisition of L'Auberge de Sedona and Orchards Inn Sedona oan ncn + Iconic assets with immediate asset management upside in attractive, high-growth resort market + #1 Conde-Nast rated hotel in Southwest + Sourced in off-market deal + Recycled capital from dispositions at a 12.8x multiple and $120 R
Slide 10: Intense Asset Management
Intense Asset Management Hotel Adj. EBITDA Margin Growth ~600 bps Chicago Marriott New COO Tom Healy Brings New Initiatives: Exploring new opportunities in: Labor management Energy Food cost 1Q17 Expense Growth Held to 1% L’Auberge De Sedona 25.8% 31.8% 24% 26% 28% 30% 32% 2013 2016
Slide 11: Recent Repositionings to Drive Value
Recent Repositionings to Drive Value Rebranded to Luxury Collection $27M renovation completed in April 2017 1,200bps market share opportunity $3M NOI upside opportunity The Gwen 4th phase of $100M renovation to be completed Winter 2017-18 2018 group pace up ~15% New model on room service implemented
Slide 12: Significant Potential From Future Repositionings
Significant Potential From Future Repositionings Vail a prime, luxury market $300 rate discount to luxury comp set in-season $50 of FY ADR increase yields $3.5M in EBITDA Four years left on franchise agreement ~$1M IMF should reset in future Vail Marriott Mountain Resort Key West market runs mid-80%
Slide 13: Marriott - Starwood Combination Fuels Growth
Marriott - Starwood Combination Fuels Growth DRH Portfolio has 20 of 28 Hotels in new-Marriott brand family Marriott most powerful hotel brand company in the world: Largest reservation system: 1.2M hotel rooms worldwide Most powerful loyalty program: 100M members globally, growing at 1M members per
Slide 14: DRH to Benefit From Marriott-Starwood Merger
DIAMONDROCK DRH to Benefit From Marriott-Starwood Merger . DRH Portfolio has 20 of 28 Hotels in new-Marriott brand family + Marriott most powerful hotel brand company in the world MAR-HOT BRAND BREAKDOWN() — Largest reservation system: 1.2M hotel rooms worldwide aw emg Martiot__ Luxury — Most powerf
Slide 15: Renovations to Aid Performance
Renovations to Aid Performance Approximately $210 - $220M Invested in Portfolio from 2016 to 2017 Current Significant Capital Projects Property Project Approx. ’16-’17 Spend($M) Charleston Renaissance Guestroom Renovation $8M Chicago Marriott Guestroom, Fitness Center and Meeting Space Renovation $6
Slide 16: 2017 DRH Key Market Drivers
2017 DRH Key Market Drivers Market (% of 2017F EBITDA) DRH Asset Outlook Demand(1) Supply(1) DRH / Market Notes as of Q1: Boston (16%) 4.0% 3.4% Weaker group pace as market absorbs supply; roughly flat RevPAR Chicago (13%) 2.6% 3.0% Chicago Marriott: Group pace: +6%; outperformance from renovation r
Slide 17: 2017 Guidance Building Blocks
2017 Guidance Building Blocks Macro Drivers: Top 25 markets to underperform broader US RevPAR of 0% to 2% by 100 to 150bps Elevated supply of 2.8% in top 25 markets in 2017(1) Does not include any potential upside from a reacceleration in growth due to tax reform, stimulus, or deregulation Top-Line
Slide 18: 2017 Supply Outlook
2017 Supply Outlook Source: STR, DRH Estimates. DRH expecting approximately 2.5% supply growth in 2017, in line with peer average Many of DRH’s submarkets are well insulated to new supply with high barriers to entry and high development cost Bridging DRH Supply Misconceptions: Resort Markets with Hi
Slide 19: NYC Market Update
Airbnb law signed NYC Market Update NYC RevPAR Trending Positive Post-Airbnb Crackdown Q217 RevPAR tracking up 2.1% in NYC Q117 was down 1.3% NYC RevPAR turned positive in Q4 2016 Recent Airbnb developments outlawing illegal rentals in NYC are a potential positive catalyst for market Now illegal to
Slide 20: NYC Long-Term Fundamentals Remains Strong
NYC Long-Term Fundamentals Remains Strong Strong NYC Growth from Trough-to-Peak Source: JLL. Note: Represents New York Upper Upscale, Luxury, and Independents in Luxury Class. Minimal Upscale / Luxury Supply Growth After 2018 From 2008 - 2016, ~8K new rooms entered the market in the upper-upscale/lu
Slide 21: + From 2008 - 2016, ~8K new rooms entered the
+ From 2008 - 2016, ~8K new rooms entered the market in the upper-upscale/luxury segment but ‘occupancy stayed the same — Illustrates market's resiliency and robust demand growth — NYC has historically had very strong trough-peak RevPAR growth + Beyond 2018, the new supply pipeline in Manhattan is p
Slide 22: Fortress Balance Sheet
Fortress Balance Sheet 20 UNENCUMBERED HOTELS 8 Encumbered Hotels Boston Westin Courtyard Midtown East Salt Lake City Marriott Westin Washington, DC Sonoma Renaissance Westin San Diego Worthington Renaissance JW Marriott Cherry Creek Unencumbered Pool Hilton Boston The Gwen Vail Marriott Courtyard D
Slide 23: Fortress Balance Sheet
DIAMONDROCK + Recently entered into new, 5-year $200M term loan 20 UNENCUMBERED HOTELS Unencumbered Poot encumbered Hott + $300M Line of Credit with no outstanding ‘Haton Boston ‘Boston Westin borrowings = cour com Eas Mauer Westin Washington, OC + ~$120 million cash post-acquisition of Sedona and o
Slide 24: Creating Value Through Opportunistic Dispositions
Creating Value Through Opportunistic Dispositions Orlando Airport Marriott Hilton Minneapolis HGI Chelsea Weighted Average Total Consideration(2) $67M $143M $65M $275M 2015 RevPAR $92.21 $115.44 $219.97 $119.78 TTM NOI Cap Rate(3) 9.7% 7.6% 6.6% 7.8% TTM NOI Cap Rate w/ Capital(3) 7.5% 6.3% 5.9% 6.6
Slide 25: Renaissance Charleston Historic District
Renaissance Charleston Historic District Creating Value by Identifying Next Hot Market Increase from ‘10-’16 RevPAR ~45% RevPAR Index 4.5pts EBITDA ~50% EBITDA Margin >400bps Value Creation $30M - $40M NOI Yield >300bps PERFORMANCE SINCE ACQUISITION Off-market transaction acquired for $39M, or $235K
Slide 26: Westin Fort Lauderdale Beach Resort
Westin Fort Lauderdale Beach Resort Creating Value by Better Operator Selection PERFORMANCE SINCE ACQUISITION Increase from ‘14-’16 RevPAR ~18% RevPAR Index 11.1pts EBITDA >90% EBITDA Margin >1600bps Value Creation $45M - $55M NOI Yield >300bps Acquired for $149M or $345K per key in late 2014 for 12
Slide 27: Key Takeaways
Key Takeaways Asset Management To Fuel Outperformance High Quality, Well Diversified Portfolio Portfolio Well-Positioned for 2017 Strategic Capital Allocation Creating Value Throughout Cycle ($350M in Investment Capacity) The Lexington New York City Hilton Garden Inn Times Square Westin Washington,
Slide 28: DiamondRock
DIAMONDROCK v High Quality, Well Diversified Portfolio ¥ Asset Management To Fuel Outperformance ¥ Unique, Low Levered Balance Sheet Westin Washingt
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