Pearl Gray is a proprietary investment fund and independent market research firm specialising in systematic analysis.Our work on SA primarily covers: Bonds, Investment Funds, REITs, with an occasional drift.Primary Sectors: Financials and Real Estate.Mission: To discover actionable total return ideas at the nexus of rigorous academic theories, practical experience, and common sense.Kindly note that our published content is dispensed as Independent Analysis and Doesn't Constitute Financial Advice. For any co ...

I ventured into investing in high school in 2011, mainly in REITs, preferred stocks, and high-yield bonds, starting a fascination with markets and the economy that has not faded despite the years. More recently I have been combining long stock positions with covered calls and cash secured puts. I approach investing purely from a fundamental long-term point of view. On Seeking Alpha I mostly cover REITs and financials, with occasional articles on ETFs and other stocks driven by a macro trade idea.Analyst’s D ...

Revenue Performance - Total revenues increased by $3.7 million to $328.1 million for the three months ended March 31, 2025, compared to $324.4 million for the same period in 2024[119]. - Room revenue rose by $1.0 million to $267.7 million, driven by increased ADR from corporate and group travel[120]. - Average Daily Rate (ADR) increased to $204.38 in Q1 2025 from $200.17 in Q1 2024, while RevPAR rose to $141.39 from $139.13[121]. - Food and beverage revenue increased by $1.8 million to $37.5 million, primarily due to higher outlet and banquet revenue[122]. - Other revenue grew by $0.9 million to $23.0 million, mainly from increased parking, resort, and cancellation fees[123]. Expenses and Losses - Property operating expenses increased by $3.6 million to $217.1 million, attributed to a $3.9 million rise in expenses from comparable properties[124]. - Net income attributable to common shareholders was a loss of $2.9 million for Q1 2025, compared to a loss of $1.3 million in Q1 2024[118]. - Property operating expenses increased by $3.9 million to $215.1 million for the three months ended March 31, 2025, compared to $211.2 million in the same period of 2024, primarily due to higher wages and benefits, and increased sales and marketing expenses[125]. - Depreciation and amortization expense rose by $1.1 million to $45.8 million for the three months ended March 31, 2025, from $44.7 million in the same period of 2024, mainly due to recently renovated hotels[126]. - General and administrative expenses decreased by $2.5 million to $12.6 million for the three months ended March 31, 2025, compared to $15.1 million in the same period of 2024, primarily due to lower non-cash compensation expenses[128]. - Interest expense increased by $1.1 million to $27.6 million for the three months ended March 31, 2025, from $26.5 million in the same period of 2024, attributed to higher unhedged debt and the expiration of certain swaps[131]. Asset Management and Transactions - The company sold one hotel property for $24.3 million and refinanced a term loan to increase it to $300.0 million[112]. - The company recorded a net gain of $1.3 million from the sale of a hotel property for $24.3 million during the three months ended March 31, 2025, with no hotel sales in the same period of 2024[132]. - As of March 31, 2025, the company owned 95 hotel properties with approximately 21,200 rooms across 23 states and the District of Columbia[105]. Cash Flow and Financial Position - Funds from operations (FFO) decreased by $1.8 million to $41.7 million for the three months ended March 31, 2025, compared to $43.5 million in the same period of 2024[136]. - Adjusted FFO fell by $4.9 million to $46.9 million for the three months ended March 31, 2025, from $51.9 million in the same period of 2024[136]. - EBITDA increased by $2.1 million to $73.9 million for the three months ended March 31, 2025, compared to $71.7 million in the same period of 2024[141]. - Cash flow from operating activities totaled $16.3 million for the three months ended March 31, 2025, down from $20.8 million in the same period of 2024[144]. - As of March 31, 2025, the company had $372.4 million in cash, cash equivalents, and restricted cash reserves, a decrease from $433.3 million at December 31, 2024[143]. Debt and Interest Rate Management - As of March 31, 2025, the company had approximately $1.2 billion in total variable rate debt, representing 54.1% of total indebtedness, with a weighted-average interest rate of 5.09% per annum[153]. - The company held approximately $24.9 million in FF&E reserve accounts for future capital expenditures as of March 31, 2025[152]. - If market interest rates on variable rate debt increase by 1.00%, interest expense would decrease future earnings and cash flows by approximately $6.1 million annually[153]. - The estimated fair value of the company's fixed rate debt was $963.3 million as of March 31, 2025, with a potential decrease of approximately $25.1 million if interest rates rise by 1.00%[157]. - The company manages interest rate risk through fixed rate debt instruments and derivative financial instruments such as interest rate swaps[154]. - The total principal repayments for fixed rate debt as of March 31, 2025, amounted to $1,025 million, with a weighted-average interest rate of 3.90%[155]. - The total principal repayments for variable rate debt as of March 31, 2025, amounted to $1,206 million, with a weighted-average interest rate of 5.09%[155]. - The company aims to limit the impact of interest rate fluctuations on earnings and cash flows while lowering overall borrowing costs[154]. - The principal repayments for 2026 include a $300 million term loan, which was amended in April 2025[158]. - The company does not engage in derivative or interest rate transactions for speculative purposes[154].

RLJ Lodging Trust (RLJ) Q1 2025 Earnings Call May 05, 2025 11:00 AM ET Company Participants Nikhil Bhalla - SVP - Finance & TreasurerLeslie D. Hale - President & CEOSean Mahoney - Executive VP & CFOTyler Batory - Executive DirectorTom Bardenett - EVP & COOFloris van Dijkum - Managing Director Conference Call Participants Michael Bellisario - Senior Research AnalystAustin Wurschmidt - Senior Equity Research AnalystChris Woronka - AnalystChris Darling - Senior Analyst Operator Welcome to the RLJ Lodging Trust ...

Financial Data and Key Metrics Changes - The company achieved RevPAR growth of 1.6% in Q1 2025, driven by a 2.1% increase in ADR, slightly offset by a 0.5% decline in occupancy [5][17] - First quarter occupancy was 69.1%, average daily rate was $204.31, and RevPAR was $141.23 [17] - Total revenue growth was 1.2%, benefiting from a 3.8% increase in out-of-room spend [18][20] - Adjusted EBITDA for Q1 was $77.6 million, and adjusted FFO per diluted share was $0.31 [20][22] Business Line Data and Key Metrics Changes - Group segment was the best performing, with revenue growth of 10% driven by strong citywide events [8][18] - Urban hotels achieved RevPAR growth of 3.6%, with weekday urban RevPAR growing by 4.9% [7][8] - The leisure segment saw a 2% increase in revenues, with urban leisure outperforming at 3% growth [9] Market Data and Key Metrics Changes - Strong RevPAR growth was noted in urban markets such as San Jose (14.1%), Houston CBD (9.9%), Philadelphia (26.4%), Pittsburgh (12.6%), and Louisville (10.3%) [18] - International demand remains soft, representing less than 3% of revenues, primarily in markets like New York and South Florida [13] Company Strategy and Development Direction - The company is focused on capital recycling and strengthening its balance sheet, including opportunistic asset sales and share repurchases [6][10] - The company is optimistic about the long-term outlook for lodging fundamentals, supported by consumer preferences for experiences and a favorable operating environment for urban markets [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that fundamentals have moderated and uncertainty persists due to macroeconomic risks, leading to an adjustment in full-year guidance [11][12] - The company expects RevPAR growth for 2025 to range between negative 1% and positive 1% [25] - The booking window has shortened, with a noted increase in cancellations primarily in the government segment [47][48] Other Important Information - The company ended Q1 with over $800 million in liquidity and $2.2 billion in debt, maintaining a strong balance sheet [22] - The company has a new $250 million share repurchase program approved by the Board [22] Q&A Session Summary Question: Can you provide insights on April's performance and how it compared to expectations? - Management indicated that April was expected to be slightly positive but came in lower than anticipated due to elongated spring break and softening government demand [30][31] Question: What is the current state of the balance sheet and capital markets? - The bank group market remains strong, with capacity for top-quality sponsors, while high-yield issuance has seen some widening in spreads [34][35] Question: What are the trends in the group segment and future bookings? - The group segment is performing well, with a healthy booking pace for the year, although cancellations were noted primarily in the government sector [78] Question: How is the company addressing the uncertainty in the transaction market? - The company is taking an opportunistic approach to asset sales, with one additional asset currently under consideration [92]

For the quarter ended March 2025, RLJ Lodging (RLJ) reported revenue of $328.12 million, up 1.1% over the same period last year. EPS came in at $0.31, compared to -$0.01 in the year-ago quarter.The reported revenue represents a surprise of -0.34% over the Zacks Consensus Estimate of $329.24 million. With the consensus EPS estimate being $0.30, the EPS surprise was +3.33%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine the ...

RLJ Lodging (RLJ) came out with quarterly funds from operations (FFO) of $0.31 per share, beating the Zacks Consensus Estimate of $0.30 per share. This compares to FFO of $0.33 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 3.33%. A quarter ago, it was expected that this hotel real estate investment trust would post FFO of $0.29 per share when it actually produced FFO of $0.33, delivering a surprise of 13.79%.Over the last four qu ...

Financial Performance - Comparable RevPAR increased by 1.6% to $141.23 compared to the prior year[4] - Total revenues for Q1 2025 were $328.1 million, reflecting a 1.1% increase from $324.4 million in Q1 2024[5] - Net income decreased by 33.2% to $3.2 million from $4.7 million in the same period last year[5] - Comparable Hotel EBITDA was $85.3 million, down 3.4% from $88.3 million in Q1 2024[5] - Adjusted EBITDA for Q1 2025 was $77.6 million, a decrease of 2.5% compared to $79.6 million in Q1 2024[5] - Funds from Operations (FFO) attributable to common shareholders for Q1 2025 was $41.7 million, down from $43.5 million in Q1 2024, a decrease of 4.1%[38] - Adjusted FFO for Q1 2025 was $46.9 million, compared to $51.9 million in Q1 2024, a decline of 9.6%[38] - Comparable Hotel EBITDA margin for Q1 2025 was 26.1%, down from 27.3% in Q1 2024[45] - The company reported a net loss attributable to common shareholders of $2.9 million for Q1 2025, compared to a loss of $1.3 million in Q1 2024[37] Revenue Outlook - The updated full-year 2025 outlook projects Comparable RevPAR growth between -1.0% to +1.0%[13] - The forecast for Comparable Hotel EBITDA is between $365.5 million to $395.5 million for FY 2025[13] - The company expects full-year 2025 EBITDA to range between $316.3 million and $346.3 million[46] - The projected Adjusted FFO per common share for full-year 2025 is estimated to be between $1.38 and $1.58[47] Liquidity and Debt - The company had approximately $847.5 million in total liquidity as of March 31, 2025[9] - Total assets as of March 31, 2025, were $4.8 billion, a slight decrease from $4.9 billion as of December 31, 2024[34] - Total liabilities decreased to $2.57 billion as of March 31, 2025, from $2.59 billion as of December 31, 2024[34] - Total mortgage debt amounts to $206 million with a weighted average interest rate of 4.74%[49] - Corporate debt totals $2.025 billion with a weighted average interest rate of 4.52%[49] - The company has a $500 million borrowing capacity on the Revolver, with an unused commitment fee of 0.25% annually[51] - In April 2025, the company repaid the $100 million outstanding balance on the Revolver using proceeds from upsizing the $200 million term loan to $300 million[51] - The $200 million term loan maturing in 2026 was refinanced to $300 million, extending the maturity to April 2030[52] - The weighted average interest rate for total debt is 4.54%[49] - The company has fixed-rate senior notes due 2026 and 2029, each totaling $500 million with interest rates of 3.75% and 4.00% respectively[49] - The floating interest rates are hedged with interest rate swaps[50] - The company has a total of $1.5 billion in term loans maturing in 2026 and 2027[49] - The company has two one-year extension options for the refinanced term loan, subject to certain conditions[52] Shareholder Actions - The company repurchased 2.7 million shares for approximately $24.3 million year-to-date[4] - The company sold a non-core hotel for $24.3 million, achieving an 18.0x multiple based on projected 2025 Hotel EBITDA[7]

Group 1 - The article discusses the author's long-term investment approach, focusing on REITs, preferred stocks, and high-yield bonds, which began in high school in 2011 [1] - The author combines long stock positions with covered calls and cash secured puts, indicating a strategy that balances risk and return [1] - The primary focus of the author's coverage on Seeking Alpha includes REITs and financials, with occasional insights on ETFs and macro-driven stock ideas [1] Group 2 - The author has a beneficial long position in RLJ shares, indicating confidence in the company's performance [2] - The article expresses the author's personal opinions and does not involve compensation from any company mentioned, ensuring an unbiased perspective [2] - Seeking Alpha clarifies that past performance does not guarantee future results, emphasizing the independent nature of the analysis provided [3]

Hotel Properties and Operations - As of December 31, 2024, the company owned 96 hotel properties with approximately 21,300 rooms located in 23 states and the District of Columbia[20]. - Approximately 89.4% of the hotel properties operate under premium brands such as Marriott, Hilton, and Hyatt[29]. - The company aims to maximize returns by focusing on premium-branded, focused-service, and compact full-service hotels, which are expected to generate higher profit margins[25]. - The company intends to pursue a disciplined acquisition strategy, targeting properties priced below replacement cost and focusing on newly or recently built hotels[28]. - The company actively monitors hotel performance and collaborates with independent managers to enhance profitability and operational efficiency[30]. - The company has retained independent third-party hotel managers, with 30 agreements with Aimbridge Hospitality and 21 with Hilton as of December 31, 2024[68]. - The management companies are responsible for the operation of hotel properties, with 36 properties benefiting from franchise agreements with major brands like Hilton and Marriott[159]. - As of December 31, 2024, 57 hotels operated under franchise agreements with major brands, excluding 36 properties benefiting from franchise agreements through management agreements[166]. Financial Performance - Total revenues increased by $43.9 million to $1.4 billion for the year ended December 31, 2024, compared to $1.3 billion in 2023[210]. - Room revenue rose by $26.6 million to $1.1 billion, primarily due to a $25.6 million increase from comparable properties driven by corporate and group travel[211]. - Occupancy rate improved to 72.6% in 2024 from 71.8% in 2023, with an Average Daily Rate (ADR) of $199.22 and Revenue Per Available Room (RevPAR) of $144.66[212]. - Food and beverage revenue increased by $11.5 million to $153.1 million, attributed to higher outlet and banquet revenue[213]. - Other revenue, including parking and resort fees, grew by $5.8 million to $94.7 million[214]. - Net income attributable to common shareholders decreased by $8.4 million to $42.9 million for the year ended December 31, 2024[209]. - The company reported a gain of $8.3 million on the sale of hotel properties, compared to a loss of $34, indicating improved asset management[216]. Debt and Capital Management - As of December 31, 2024, the company had approximately $2.2 billion of debt outstanding, which could adversely affect operating performance and competitive positioning[85]. - The company has a $600.0 million unsecured revolving credit facility, which limits dividend payments under certain circumstances[188]. - The company anticipates that operating cash flow will only be adequate to repay a portion of its debt at maturity, necessitating refinancing or securities offerings[86]. - The company may face challenges in obtaining capital for acquisitions and improvements, which could adversely affect financial condition and results of operations[83]. - The company has fully repaid a $200.0 million maturing mortgage loan and entered into a new $500.0 million Term Loan to refinance existing debt[207]. Regulatory and Compliance Risks - The company is subject to various federal, state, and local regulations, ensuring compliance with safety and environmental standards[39]. - The company is required to distribute at least 90% of its REIT taxable income to maintain REIT qualification, limiting available cash for capital improvements and acquisitions[83]. - If the company fails to qualify as a REIT, it would be subject to U.S. federal income tax, which would reduce earnings and cash available for distribution to shareholders[127]. - The company may incur significant costs related to government regulation and litigation concerning environmental matters, which could adversely affect profitability and cash available for distribution to shareholders[123]. - The company is subject to various environmental, health, and safety laws that impose liability for contamination, potentially leading to unanticipated costs that could significantly reduce profitability[124]. Market and Competitive Environment - The lodging industry is highly competitive, with the company facing competition from institutional investors and other REITs for hotel acquisitions[33]. - The company believes that its affiliation with leading national brands provides a competitive advantage in attracting guests[32]. - The company may face significant competition from other lodging industry participants, which could adversely affect occupancy levels and average daily rates (ADRs)[84]. - The lodging industry is highly cyclical, with fluctuations in demand and operating performance significantly influenced by economic conditions and new hotel room supply[104]. - Labor shortages could slow growth or harm business operations, leading to increased labor costs due to competition for qualified employees[75]. Sustainability and Environmental Initiatives - The company has invested in over 300 efficiency projects since 2021, resulting in an 11% reduction in energy usage per square foot and a 22% reduction in greenhouse gas emissions per square foot as of 2023[51]. - The company is committed to reducing carbon emissions by 35% by 2030[51]. - The company is subject to risks associated with natural disasters and climate change, which could lead to significant repair costs and operational disruptions[108]. Shareholder Returns and Dividends - The company intends to make annual distributions of at least 90% of its REIT taxable income to maintain its REIT status[187]. - The company paid cash dividends of $0.10 per common share in Q1 and Q2 2024, and $0.15 in Q3 and Q4 2024, compared to $0.08 and $0.10 in the same quarters of 2023[180]. - The company has authorized a share repurchase program to repurchase up to $250.0 million of common and preferred shares, but there is no obligation to repurchase any specific dollar amount or number of shares[143]. - The company repurchased a total of 327,697 shares at an average price of $9.16 during the quarter ended October 31, 2024, with a remaining capacity to repurchase up to 25,904,232 shares under the 2024 Share Repurchase Program[192]. Cybersecurity and IT Risks - The company has a comprehensive cybersecurity risk management strategy, including a dedicated IT committee overseeing cybersecurity programs and continuous monitoring[145]. - The company maintains a cybersecurity incident response plan to address potential data incidents, ensuring timely and compliant responses[154]. - The company has not identified any cybersecurity threats that have materially affected its business strategy or financial condition[151]. - The company engages cybersecurity experts to analyze IT policies and infrastructure for effectiveness and improvement opportunities[147]. - The IT committee regularly assesses additional layers of security and evaluates new technologies for implementation to enhance cybersecurity[147]. - The company monitors third-party service providers to ensure compliance with privacy and cybersecurity policies[149].