DiamondRock Hospitality Announces Sale Of Oak Brook Hills Resort

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Apr 15, 2014, 04:38 ET

BETHESDA, Md., April 15, 2014 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of premium hotels in the United States, announced today that it has completed the sale of the Oak Brook Hills Resort which is located in a suburb of Chicago.

"Over the past few years, we have transformed our portfolio through strategic divestitures and targeted acquisitions to sharpen our focus on premium lodging assets in urban gateway markets. We are pleased to announce the sale of the suburban Oak Brook Hills Hotel, illustrating our commitment to continuously prune the bottom-tier of our portfolio. The hotel was our least profitable hotel and had the lowest average revenue per available room within the portfolio. Our enhanced portfolio is well positioned to deliver strong returns across the entire lodging cycle," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company.

The Company sold the 386-room Oak Brook Hills Resort to an unaffiliated third party for $30.1 million, including $4.0 million of seller financing. The Oak Brook Hills Resort generated approximately $1.0 million of Hotel Adjusted EBITDA and had negative net operating income during the trailing twelve months period ending March 31, 2014. The Hotel's Adjusted EBITDA was approximately $2.0 million for the full year in 2013.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. The Company owns 25 premium quality hotels with over 10,700 rooms. The Company has strategically positioned its hotels to generally be operated under leading global brands such as Hilton, Marriott, and Westin. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "anticipate," "position," and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to those risks and uncertainties associated with our business described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on February 25, 2014. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA ($000s)
	2013 Actual	Trailing Twelve Months Ending March 31, 2014 (Estimated)

Net Income (Loss)	$ 271	$ (794)
Depreciation Expense	1,265	1,396
EBITDA	1,536	602
Favorable Lease Assets	431	430

Adjusted EBITDA	$ 1,967	$ 1,032

EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization. We believe it is a useful financial performance measure for us and for our stockholders and is a complement to net income and other financial performance measures provided in accordance with GAAP. We use EBITDA to measure the financial performance of our operating hotels because it excludes expenses such as depreciation and amortization, income taxes and interest expense, which are not indicative of operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on a variety of factors unrelated to the hotels' financial performance, we can more accurately assess the financial performance of our hotels. Under GAAP, hotels are recorded at historical cost at the time of acquisition and are depreciated on a straight-line basis. By excluding depreciation and amortization, we believe EBITDA provides a basis for measuring the financial performance of hotels unrelated to historical cost. However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our fixed assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as calculated by us, may not be comparable to EBITDA reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile it to net income (loss) which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.

We adjust EBITDA when evaluating our performance because we believe that the exclusion of certain additional recurring and non-recurring items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA, when combined with GAAP net income and EBITDA, is beneficial to an investor's complete understanding of our operating performance. We adjust EBITDA to exclude the non-cash amortization of favorable lease assets.

SOURCE DiamondRock Hospitality Company