REITs display second-quarter strength

Similar to the branded hotel operators in the second quarter, the majority of which reported propitious numbers, real estate investment trusts are displaying similar rosy reports.

Today, we learned results for four REITs: Chatham Lodging Trust, Chesapeake Lodging Trust, Strategic Hotels & Resorts, Sotherly Hotels and Ryman Hospitality Properties.

Chatham's RevPAR increased 9.6 percent to $133 for Chatham's 29 wholly owned hotels. Adjusted FFO advanced 71 percent to $15.0 million, while EBITDA rose 58 percent to $21.7 million.

"Continuing a pattern from the first quarter, 45 percent of our portfolio produced double-digit RevPAR gains, reinforcing our acquisition strategy of focusing on specific markets where economic growth is strong," said Jeffrey Fisher, Chatham's president and CEO, listing Anaheim, Calif., Boston, Dallas, Houston, Nashville, Tenn., San Antonio and Silicon Valley as the REITs strongest markets in the second quarter.

"Corporate demand continues to strengthen in our markets, whether it is the individual or group traveler, and since our hotel portfolio is predominantly reliant on corporate business, we continue to see strong occupancy growth in our hotels and in our markets. This bodes well for our portfolio as the cycle matures and a greater proportion of RevPAR growth is expected to be attributable to rate increases."

Dennis Craven, Chatham's CFO, added that the Cerberus/Chatham joint venture of Inkeepers turned its initial $37-million investment into distributions of approximately $117 million and profits of approximately $80 million.

Chesapeake's RevPAR had a pro forma increase of 7 percent for the 17-hotel portfolio and 3.4-percent pro forma increase for the 20-hotel portfolio over the same period in 2013.

Total revenue was $128.9 million.

"Our 17-hotel portfolio achieved an occupancy level of over 87 percent, which allowed our hotel managers to increase daily rates resulting in RevPAR growth at the top end of our guidance range," said James Francis, Chesapeake Lodging Trust’s president and CEO.

In the quarter, Chesapeake renovated its W Chicago – Lakeshore and commenced the renovations and rebrandings of the former W New Orleans and the former Holiday Inn New York City Midtown – 31st Street, which are scheduled to be completed in the Fall. "We expect these three newly renovated hotels will provide outsized growth and add significant value to our overall hotel portfolio," Francis said.

Chicago-based Strategic Hotels reported second-quarter FFO of $48 million compared with $28.7 million a year ago. Net earnings for the quarter were $80.8 million, compared with $3.3 million.

Revenue for the quarter was up 21.6% at $276.2 million, compared with $227 million in the prior year. 

"Building upon the positive momentum from the first quarter, we drove continued high performance among all our key metrics in the first half of 2014, perhaps most notably within group room nights and related ancillary spend," said Raymond "Rip" Gellein, chairman and CEO of Strategic Hotels & Resorts. "From a transactional perspective, the company has completed nearly $2.7 billion in gross transactions since the beginning of the year."

Strategic's predominantly upper-upscale and luxury portfolio clocked in ADR at close to $300.

Sotherly Hotels' adjusted FFO of $6.3 million for the quarter was an increase of 31 percent—approximately $1.5 million over the second quarter 2013.

RevPAR for the company's wholly-owned properties increased 9.7 percent over the second quarter 2013 to $103.52 driven by a 4.6-percent increase in occupancy and a 4.9-percent increase in ADR.

Ryman's EBITDA increased 15.1 percent to $81.6 million. Net income increased 70.9 percent to $28 million. Total revenue increased 5.2 percent to $257.9 million.

Colin Reed, chairman, CEO and president of Ryman Hospitality Properties said, "Our company performed very well in the second quarter of 2014 and drove record performances in profitability and future advanced group bookings. These performances signal that the transition-related issues our business endured in 2013 are now predominantly behind us. Our hospitality business delivered these results despite the shift of the Easter holiday this year and 15,700 room nights out of service at Gaylord Texan due to the ongoing rooms renovation.

"In addition to record-breaking profitability, we reported record second quarter gross advanced group bookings for all future years of approximately 640,000 room nights and net advanced group bookings for all future years of approximately 476,000 room nights, which bodes well for our hotel business going forward."