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].

EARNINGS SUPPLEMENTAL Q4 2024 FEBRUARY 2025 OVERVIEW | Key Statistics (1) (2) | | | --- | --- | | Properties | 95 | | Hotel Rooms | 21,156 | | Share Price | $10.21 | | Total Shares and Units Outstanding | 154.1 M | | Market Capitalization | $1.6 B | | Preferred Equity | $0.3 B | | Net Debt Outstanding | $1.8 B | | Total Enterprise Value (TEV) | $3.7 B | | Total Capitalization | $4.1 B | HOTEL TONNELLE NEW ORLEANS Debt Maturity Schedule (3) (1) For properties owned as of December 31, 2024; excludes Chateau L ...

RLJ Lodging Trust (NYSE:RLJ) Q4 2024 Earnings Conference Call February 26, 2025 10:00 AM ET Company Participants Nikhil Bhalla - Senior Vice President Finance and Treasurer Leslie Hale - President and CEO Sean Mahoney - Executive Vice President and CFO Tom Bardenett - Chief Operating Officer Conference Call Participants Michael Bellisario - Baird Jonathan Jenkins - Oppenheimer Austin Wurschmidt - KeyBanc Gregory Miller - Truist Dori Kesten - Wells Fargo Floris van Dijkum - Compass Point Chris Woronka - Deut ...

Core Insights - RLJ Lodging reported revenue of $329.99 million for Q4 2024, a year-over-year increase of 3.2% and exceeding the Zacks Consensus Estimate of $325.49 million by 1.38% [1] - The company achieved an EPS of $0.33, significantly up from $0.01 a year ago, with an EPS surprise of 13.79% compared to the consensus estimate of $0.29 [1] Revenue Breakdown - Other revenue was reported at $22.71 million, slightly below the average estimate of $23.05 million, reflecting a year-over-year increase of 2.9% [4] - Food and beverage revenue reached $39.59 million, surpassing the estimated $37.21 million, marking a 9.9% increase year-over-year [4] - Room revenue totaled $267.69 million, exceeding the average estimate of $264.21 million, with a year-over-year change of 2.3% [4] Stock Performance - RLJ Lodging's shares have declined by 7.9% over the past month, while the Zacks S&P 500 composite has decreased by 1.8% [3] - The stock currently holds a Zacks Rank of 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - RLJ Lodging reported quarterly funds from operations (FFO) of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, but down from $0.34 per share a year ago, representing an FFO surprise of 13.79% [1] - The company posted revenues of $329.99 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.38%, compared to $319.71 million in the same quarter last year [2] Market Performance - RLJ Lodging shares have declined approximately 9.1% since the beginning of the year, while the S&P 500 has gained 1.7% [3] - The current consensus FFO estimate for the upcoming quarter is $0.32 on revenues of $333.17 million, and for the current fiscal year, it is $1.57 on revenues of $1.4 billion [7] Industry Outlook - The REIT and Equity Trust - Other industry, to which RLJ Lodging belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of RLJ Lodging may be influenced by the overall outlook for the industry, as empirical research shows a strong correlation between near-term stock movements and trends in estimate revisions [5][8]

Financial Performance - Fourth Quarter Comparable RevPAR increased by 2.2% to $137.53, while Total Revenues rose by 3.2% to $330.0 million[4] - Full Year Comparable RevPAR increased by 2.0% to $144.72, with Total Revenues reaching $1.4 billion, a 3.3% increase[4] - Adjusted EBITDA for the fourth quarter was $81.1 million, reflecting a 2.4% increase year-over-year[4] - For the three months ended December 31, 2024, total revenues increased to $329,989,000 from $319,708,000 in the same period of 2023, representing a growth of approximately 0.4%[36] - Room revenue for the year ended December 31, 2024, was $1,121,586,000, up from $1,095,028,000 in 2023, indicating an increase of about 2.4%[36] - Net income for the three months ended December 31, 2024, was $5,511,000, a decrease of 31.5% from $8,040,000 in the same period of 2023[43] - EBITDA for the year ended December 31, 2024, was $344,655,000, up 2.4% from $337,414,000 in 2023[43] - Total revenue for the three months ended December 31, 2024, was $329,989,000, an increase of 3.99% compared to $319,708,000 in 2023[47] - Comparable Hotel EBITDA Margin for the year ended December 31, 2024, was 29.1%, down from 30.3% in 2023[47] Net Income and Loss - The Company reported a net loss attributable to common shareholders of $0.9 million for the fourth quarter, compared to a net income of $1.7 million in the prior year[6] - Net income attributable to common shareholders for the year ended December 31, 2024, was $42,906,000, down from $51,290,000 in 2023, a decline of about 16.3%[36] - The Company reported a net loss attributable to common shareholders of $903,000 for the three months ended December 31, 2024, compared to a net income of $1,656,000 in the same period of 2023[36] Shareholder Returns - The Board declared a quarterly cash dividend of $0.15 per common share for the fourth quarter, payable on January 15, 2025[12] - The Company repurchased 2.3 million shares for $22.0 million at an average price of $9.39 per share during 2024[10] - The Company has approximately $217.3 million remaining capacity in its share buyback program[10] Liquidity and Debt - The Company ended the year with $0.9 billion in liquidity, including approximately $409.8 million in unrestricted cash[11] - The company reported a consolidated debt balance of $2,231,000,000 as of December 31, 2024, with a weighted average interest rate of 4.58%[52] - The company has a borrowing capacity of $500,000,000 on its Revolver, with an unused commitment fee of 0.25% annually[53] Acquisitions and Market Strategy - The Company completed two acquisitions in 2024, including the Hotel Teatro for $35.5 million and the Wyndham Boston Beacon Hill for $125.0 million[7] - The company plans to continue its market expansion and new product development strategies in 2025[48] Future Projections - The Company expects Comparable RevPAR growth of 1.0% to 3.0% and Adjusted EBITDA between $345.0 million and $375.0 million for FY 2025[14] - Adjusted EBITDA for the year ended December 31, 2025, is projected to be between $345,000,000 and $375,000,000[48] - Funds from Operations (FFO) for the year ended December 31, 2025, is expected to range from $206,000,000 to $234,000,000[49] - Adjustments related to joint ventures for the year ended December 31, 2025, are estimated at $1,400,000[48] Asset and Liability Changes - Total assets decreased to $4,883,879,000 as of December 31, 2024, from $4,919,295,000 in 2023, a reduction of approximately 0.7%[34] - The Company’s total liabilities increased slightly to $2,585,602,000 as of December 31, 2024, compared to $2,568,505,000 in 2023, an increase of about 0.7%[34] - The Company’s cash and cash equivalents decreased to $409,809,000 as of December 31, 2024, from $516,675,000 in 2023, a decline of approximately 20.7%[34] Impact of Sales - The Company sold the Residence Inn Merrillville in May 2024 and the Fairfield Inn & Suites Denver Cherry Creek in September 2024, impacting comparable hotel adjustments[32] - The Company acquired Hotel Teatro in June 2024, which is included in the comparable adjustments for the three and twelve months ended December 31, 2024[30]

Core Viewpoint - RLJ Lodging Trust is identified as a strong value stock, currently undervalued based on various financial metrics, and holds a favorable earnings outlook [3][7]. Valuation Metrics - RLJ Lodging Trust has a P/E ratio of 6.21, significantly lower than the industry average of 14.85 [3]. - The company has a PEG ratio of 1.98, compared to the industry average of 2.05, indicating a favorable earnings growth outlook [4]. - RLJ's P/B ratio stands at 0.78, which is attractive against the industry's average P/B of 1.75 [5]. - The P/CF ratio for RLJ is 5.34, well below the industry average of 15.74, suggesting it is undervalued based on cash flow [6]. Investment Outlook - The combination of RLJ's strong valuation metrics and positive earnings outlook positions it as one of the market's strongest value stocks [7].

Group 1 - The article discusses the investment potential of preferred shares in hotel REITs, specifically highlighting RLJ Lodging Trust as an interesting option [1] - RLJ Lodging Trust is identified as a US-based hotel REIT, with a focus on capital gains and dividend income for continuous cash flow [1] - The investment group European Small Cap Ideas offers exclusive research on appealing Europe-focused investment opportunities, emphasizing high-quality small-cap ideas [1] Group 2 - The article mentions the existence of two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1] - An active chat room is available for discussions on the latest developments of the portfolio holdings [1]

Core Viewpoint - The upgrade of RLJ Lodging to a Zacks Rank 2 (Buy) reflects a positive outlook on its earnings potential, which could lead to an increase in its stock price [2][5]. Earnings Estimates and Revisions - For the fiscal year ending December 2024, RLJ Lodging is expected to earn $1.53 per share, representing a decrease of 7.8% from the previous year [11]. - Over the past three months, the Zacks Consensus Estimate for RLJ Lodging has increased by 2%, indicating a trend of rising earnings estimates [11]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks based on earnings estimate revisions, with RLJ Lodging positioned in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns [12][13]. - The Zacks rating system has a strong track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. Market Impact - The correlation between earnings estimate revisions and stock price movements is significant, as institutional investors often adjust their valuations based on these estimates, leading to stock price fluctuations [3][9]. - The upgrade in RLJ Lodging's rating is indicative of an improvement in its underlying business, which is expected to be recognized by investors through increased stock prices [4].