Enterprising Investor
2 years ago
CorePoint Lodging To Be Acquired By A Joint Venture Between Affiliates Of Highgate And Cerberus Capital Management, L.P. In $1.5 Billion All-Cash Transaction (10/08/21)
CorePoint Stockholders to Receive $15.65 Per-Share in Cash
IRVING, Texas, Nov. 08, 2021 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE: CPLG) (“CorePoint” or the “Company”), a pure play select-service hotel owner strategically focused on the midscale and upper-midscale segments, today announced that it has entered into a definitive agreement to be acquired through a joint venture between affiliates of Highgate and Cerberus Capital Management, L.P. (“Cerberus”).
Under the terms of the merger agreement, Highgate and Cerberus will acquire all outstanding shares of CorePoint common stock in an all-cash transaction valued at approximately $1.5 billion based on the $15.65 per share consideration, which reflects the assumption of current net debt and a $160 million buyer liability reserve for the Internal Revenue Service (“IRS”) matter detailed below. This price represents a premium of approximately 42% to CorePoint’s closing share price on July 13, 2021, the last trading day prior to the Company’s public announcement of its strategic alternatives process.
In addition to the $15.65 per share payable in cash at closing, CorePoint stockholders may receive incremental cash consideration per share pending timely resolution of the previously disclosed tax proceedings with the IRS related to an ongoing audit of CorePoint entities, which began prior to the Company’s 2018 spin-off from La Quinta Holdings, Inc. The amount of any potential additional cash consideration payable to CorePoint stockholders will be calculated based on the amount, if any, by which the settlement amount is less than a buyer liability reserve of $160 million agreed to by the parties. The Company received a settlement offer from the IRS with respect to the IRS matter on November 5, 2021, and expects to accept that offer and enter into an agreement with the IRS this week. The settlement offer provides for total payments by the Company of approximately $89.6 million plus statutory interest through the date of payment. Pursuant to this settlement offer, the Company estimates the total payment amount pursuant to the settlement will be approximately $155 million. As such, the Company currently expects that the amount of any such additional consideration will likely be approximately $0.10 per share. There can be no assurances that any additional consideration will be received by the Company’s stockholders.
Keith Cline, President and Chief Executive Officer of CorePoint, said, “Over the past few years, CorePoint has been executing on a disciplined asset disposition strategy that has transformed the Company’s portfolio and created substantial value. This transaction continues our strategy of maximizing value and represents a compelling opportunity to deliver immediate and certain cash value to our stockholders. Our portfolio has accomplished a great deal over the past several years, and I would like to thank the entire team at CorePoint along with Wyndham, especially their operations field leaders, general managers and hotel staff, for the dedication, hard work and commitment to CorePoint.”
Mitesh Shah, CorePoint’s Chairman of the Board, added, “The CorePoint Board, in consultation with our independent financial and legal advisors, conducted a comprehensive review of strategic alternatives and unanimously determined that this transaction maximizes value for our stockholders. The resilience and achievements of CorePoint’s entire team have unlocked substantial value through a deliberate, non-core disposition strategy, and today’s all-cash sale represents a successful culmination of these efforts.”
“Highgate has tremendous respect for CorePoint and its highly experienced team, having observed the Company strengthen, refine and cultivate a leading portfolio of select service hotels,” said Mahmood Khimji, Co-Chairman of Highgate. “We are thrilled to partner with our friends at Cerberus on another exciting transaction, through which Highgate will continue to enhance its capabilities in the select service space. We look forward to collaborating with the many associates and stakeholders involved towards a successful closing, and to working closely with the Wyndham Hotels team as we embark on the next chapter for this portfolio.”
Tom Wagner, Head of North American Real Estate at Cerberus, commented: “Since separating from La Quinta Holdings, Inc. in 2018, the CorePoint management team has done an excellent job running the business, navigating the unprecedented COVID-19 pandemic, and strategically repositioning its portfolio. Alongside Highgate, we are excited for the opportunity to build on these positive strides and establish the Company’s next chapter of growth as a private company.”
Timing and Approvals
The transaction is expected to close in the first quarter of 2022, subject to the approval of CorePoint’s stockholders and the satisfaction of other customary closing conditions. There is no financing condition to the transaction.
In connection with the transaction, affiliates of Blackstone Inc. which own approximately 30% of CorePoint’s total shares outstanding, have entered into a voting agreement under which they have agreed to vote all of their shares in favor of the transaction.
Upon successful completion of the transaction, CorePoint’s common stock will no longer be listed on the New York Stock Exchange, and the Company will be privately owned.
Third Quarter 2021 Earnings
In light of the pending transaction with Highgate and Cerberus, CorePoint will not hold an earnings conference call for the third quarter of 2021. The Company separately released its financial results for the third quarter this morning.
Advisors
J.P. Morgan Securities LLC is serving as lead financial advisor to CorePoint, Hodges Ward Elliott, LLC as co-advisor, and Simpson Thacher & Bartlett LLP as legal counsel to CorePoint.
Deutsche Bank Securities Inc. is serving as financial advisor to Highgate and Cerberus. Additionally, Deutsche Bank and Bank of Montreal provided a debt financing commitment to Highgate and Cerberus on this transaction. Latham & Watkins LLP and Kirkland & Ellis LLP acted as legal counsel to Highgate and Cerberus.
About CorePoint
CorePoint Lodging Inc. (NYSE: CPLG) is the only pure-play publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels. CorePoint owns a geographically diverse portfolio in attractive locations primarily in or near employment centers, airports, and major travel thoroughfares. The portfolio consists of primarily La Quinta branded hotels. For more information, please visit CorePoint’s website at www.corepoint.com.
About Highgate
Highgate is a leading real estate investment and hospitality management company with over $15 billion of assets under management. Highgate has a 30-year track record as an investment manager, operating partner, and developer for REITs, private equity firms, sovereign wealth funds, high net worth individuals, and other institutional investors. With a particular focus in hospitality real estate, Highgate’s portfolio includes over 350 owned and/or managed hotels comprising over 65,000 rooms across the United States, Europe, Latin America, and the Caribbean. Highgate’s capabilities extend to adjacent real estate verticals including multifamily, short-term rentals, and diversified healthcare real estate, as well as investments in real estate-linked securities, technology platforms, and hospitality-related operating businesses. Highgate maintains corporate offices in New York, Dallas, London, Miami, Seattle, and Waikiki. www.highgate.com.
About Cerberus
Founded in 1992, Cerberus is a global leader in alternative investing with over $55 billion in assets across complementary credit, private equity, and real estate strategies. Cerberus invests across the capital structure where its integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Cerberus’ tenured teams have experience working collaboratively across asset classes, sectors, and geographies to seek strong risk-adjusted returns for its investors. For more information about its people and platforms, visit us at www.cerberus.com.
https://www.globenewswire.com/news-release/2021/11/08/2329007/0/en/CorePoint-Lodging-To-Be-Acquired-By-A-Joint-Venture-Between-Affiliates-Of-Highgate-And-Cerberus-Capital-Management-L-P-In-1-5-Billion-All-Cash-Transaction.html
Enterprising Investor
3 years ago
CorePoint Lodging Reports Second Quarter 2021 Results (8/05/21)
IRVING, Texas, Aug. 05, 2021 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE: CPLG) (“CorePoint” or the “Company”), a pure play select-service hotel owner strategically focused on the midscale and upper-midscale segments, today reported operational and financial results for the second quarter ended June 30, 2021.
Second Quarter 2021 and Subsequent Highlights
-Net income of $28 million, or $0.48 earnings per diluted share
-Comparable RevPAR of $58.99, an increase of 137.8% from the same period in 2020 and a decrease of 14.7% from the same period in 2019
-Adjusted EBITDAre of $31 million
-Adjusted FFO attributable to common stockholders of $24 million, or $0.41 per diluted share
-The Company exercised its second extension option on its CMBS Facility to extend the maturity date to June 2022, with borrower options to further extend the maturity date for three successive terms of one year each
-Sold 25 non-core hotels for a combined gross sales price of approximately $143 million during the quarter
-Repaid $130 million in total debt during the quarter
- Subsequent to quarter end, sold 8 non-core hotels for a gross sales price of approximately $44 million, resulting in a total of 147 non-core hotels sold since March 2019 for a combined gross sales price of approximately $680 million
- An additional 37 hotels are under contract with qualified buyers, expected to generate approximately $234 million of gross proceeds, and are generally expected to close by the end of the first quarter of 2022, subject to market and other conditions
-The Company announced in July 2021 that its Board of Directors has decided to explore a full range of available strategic alternatives, including a potential sale or other transactions, to maximize stockholder value
“The performance of our select service, leisure focused hotels has strengthened as we have moved through our historical peak season in the second and third quarters,” noted Keith Cline, President and Chief Executive Officer of CorePoint. “This positive momentum has allowed us to capture the pent up demand in suburban, drive-to destination, and interstate-adjacent markets resulting in $35 million of hotel Adjusted EBITDAre in the second quarter.”
Mr. Cline added, “Our non-core disposition program has been accelerating throughout 2021 as we have closed on the sale of 42 assets for $229 million in gross proceeds year to date and have an additional 37 hotels under contract expected to generate an additional $234 million in gross proceeds. Since the inception of our real estate disposition strategy, we have either sold or put under contract over 85% of the 210 hotels we identified as non-core.”
[tables deleted]
Second Quarter 2021 Financial and Operating Results
The Company reported net income of $28 million, or $0.48 earnings per diluted share, for the quarter ended June 30, 2021, compared to a net loss of $(107) million, or $(1.89) loss per basic and diluted share, for the quarter ended June 30, 2020. Increases in year-over-year revenues and lower operating and other expenses led to the increase in net income.
Comparable RevPAR for the second quarter of 2021 increased 137.8% over the same period of 2020 with 1,118 basis points of RevPAR Index market share decline. The growth in comparable RevPAR was driven by a 34.0% increase in comparable ADR and a 2,750 bps increase in comparable occupancy. The increases in comparable ADR and comparable occupancy were primarily due to increased demand in 2021 as compared to the COVID-19 pandemic impact in 2020. Top performing markets included Miami and Fort Lauderdale, Florida, Austin and San Antonio, Texas, and San Diego, California.
Adjusted EBITDAre for the second quarter of 2021 was $31 million as compared to $(8) million for the same period in 2020. The year-over-year increase was primarily due to increases in rooms revenue.
Operations Update and Measures to Mitigate Impact of COVID-19
For the three months ended June 30, 2021 all of our hotels were fully open and accepting transient guests. We have fully resumed operations for all of our hotels since August 2020.
The Company’s hotels’ room demand and increasing rate continued to benefit from leisure travel, certain segments of corporate travel related to essential businesses and being located in drive-to destinations.
The Company continues to implement certain cost containment measures with respect to hotel and corporate spending to mitigate the ongoing operational and financial impact from the COVID-19 pandemic
Dispositions
Since CorePoint announced its initial non-core disposition program of 78 hotels in March 2019, 72 of these hotels have been successfully sold for a combined gross sales price of approximately $287 million and an additional 3 phase one hotels are under contract with qualified buyers, expected to generate approximately $13 million in gross proceeds. The Company’s expanded non-core disposition program announced in March 2020 includes an additional phase two group of 132 hotels. Of the phase two hotels, 75 have been successfully sold for a combined gross sales price of approximately $393 million and an additional 34 phase two hotels are under contract with qualified buyers, expected to generate approximately $221 million in gross proceeds. There can be no assurance as to the timing of any future sales or whether such sales will be completed at all. The company is unable to forecast at this time the impact from the COVID-19 pandemic on the timing of or gross proceeds from asset sales.
Capital Investments
The Company invested approximately $5 million in capital improvements in the second quarter of 2021. As previously disclosed, CorePoint is currently deferring all non-essential capital investments and expenditures, with the exception of life safety or critical operational needs, resulting in an expected annual capital spend estimate of $15 million to $20 million, excluding any hurricane restoration costs which are predominantly covered by insurance proceeds.
Balance Sheet and Liquidity
As of June 30, 2021, the Company had total cash and cash equivalents of $159 million, excluding lender and other escrows of approximately $45 million.
As of June 30, 2021, the Company had total debt principal outstanding of $639 million, which consisted of the following:
Maturity date assumes the exercise of all borrower extension options. The next maturity date is June 2022, with borrower options to extend the maturity date for three successive terms of one year each. In June 2021, the Company extended the CMBS Facility to June 2022 under the second extension option. Amount shown represents gross principal balance outstanding.
As noted in the Hotel Disposition Summary table above, the Company used approximately $39 million of net proceeds from its asset sales to reduce the CMBS principal balance outstanding to $525 million as of today.
Subsequent to quarter end, the Company repaid $5 million to reduce the Revolving Credit Facility principal balance outstanding to $70 million as of today.
Dividends
As previously disclosed, the Company has currently suspended its common stock dividend, resulting in the preservation of approximately $11 million of cash per quarter, or approximately $45 million on an annualized basis. All future dividends will be at the sole discretion of CorePoint’s Board of Directors and will depend upon, among other things compliance with debt covenants and maintenance of our REIT qualification.
Earnings Call and Webcast
The Company will host a quarterly conference call for investors and other interested parties later today beginning at 5:00 p.m. Eastern Time.
The call may be accessed by dialing (866) 300-4611 or (703) 736-7439 and entering the passcode 6786007. Participants may also access the call by visiting our investor relations website at www.corepoint.com/investors. You are encouraged to dial into the call or link to the webcast at least 15 minutes prior to the scheduled start time. The replay of the call will be available from approximately 8:00 p.m. Eastern Time on August 5, 2021 through 8:00 p.m. Eastern Time on August 12, 2021. To access the replay, the dial-in number is (855) 859-2056 and the passcode is 6786007.
About CorePoint
CorePoint Lodging Inc. (NYSE: CPLG) is the only pure-play publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels. CorePoint owns a geographically diverse portfolio in attractive locations primarily in or near employment centers, airports, and major travel thoroughfares. The portfolio consists of primarily La Quinta branded hotels. For more information, please visit CorePoint’s website at www.corepoint.com.
https://www.globenewswire.com/news-release/2021/08/05/2276075/0/en/CorePoint-Lodging-Reports-Second-Quarter-2021-Results.html
Enterprising Investor
3 years ago
CorePoint Lodging Provides Second Quarter Business Update and Announces Exploration of Strategic Alternatives (7/13/21)
RVING, Texas, July 13, 2021 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE: CPLG) (“CorePoint” or the “Company”), a pure play select-service hotel owner strategically focused on the midscale and upper-midscale segments, today provided a business update for the second quarter ended June 30, 2021 and announced that its Board of Directors, working together with financial and legal advisors, has decided to explore strategic alternatives to maximize stockholder value.
“The sequentially improving performance of our portfolio of select-service hotels has continued to demonstrate the benefits of our positioning predominantly in suburban, drive-to destination, and leisure markets, allowing us to capture growing demand,” noted Keith Cline, President and Chief Executive Officer of CorePoint. “We have created substantial value through the execution of our non-core disposition strategy. Having addressed over 80% of the 210 hotels we identified as non-core, and given the strong market interest in our assets, the Board has determined now is the proper time to explore strategic alternatives to fully maximize value for our stockholders.”
Second Quarter Business Update
[table deleted]
Information is based on comparable hotels, which consists of all of the 175 hotels owned by CorePoint as of June 30, 2021. Average daily rate (“ADR”) represents hotel room revenues divided by total number of rooms rented in a given period and revenue per available room (“RevPAR”) is defined as the product of ADR charged and the average daily occupancy achieved.
The Company continued to execute on its non-core disposition strategy with 25 non-core hotels sold in the second quarter, for a combined gross sales price of approximately $143 million during the quarter, resulting in 175 hotels owned as of June 30, 2021. An additional 36 hotels are under contract for sale to qualified buyers and are expected to generate approximately $220 million of gross proceeds.
The Company utilized proceeds from the dispositions to repay $125 million in CMBS debt during the quarter, resulting in $564 million of CMBS debt outstanding as of June 30, 2021, and paid down $5 million on its revolving credit facility for a balance outstanding of $75 million as of June 30, 2021.
CorePoint expects to report its second quarter financial results on August 5, 2021.
Exploration of Strategic Alternatives
The Board of Directors intends to consider a full range of available strategic alternatives to maximize stockholder value, including a potential sale of the Company or other transactions. There is no set timetable for the Board of Directors to review alternatives, and there can be no assurance that the exploration of strategic alternatives will result in any transaction or other action. Any potential transaction or other strategic alternative would be dependent on a number of factors that may be beyond the Company’s control. The Company does not intend to discuss or disclose further developments unless and until the Board of Directors approves a specific action or otherwise concludes the review of strategic alternatives.
J.P. Morgan Securities LLC is serving as lead financial advisor to CorePoint, Hodges Ward Elliott, LLC as co-advisor, and Simpson Thacher & Bartlett LLP as legal counsel to CorePoint.
About CorePoint
CorePoint Lodging Inc. (NYSE: CPLG) is the only pure-play publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels. CorePoint owns a geographically diverse portfolio in attractive locations primarily in or near employment centers, airports, and major travel thoroughfares. The portfolio consists of primarily La Quinta branded hotels. For more information, please visit CorePoint’s website at www.corepoint.com.
https://www.globenewswire.com/news-release/2021/07/13/2262350/0/en/CorePoint-Lodging-Provides-Second-Quarter-Business-Update-and-Announces-Exploration-of-Strategic-Alternatives.html
Enterprising Investor
5 years ago
Corepoint Lodging Reports Third Quarter 2018 Results (11/06/18)
IRVING, Texas, Nov. 06, 2018 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE: CPLG) (“CorePoint” or the “Company”), a pure play select-service hotel owner strategically focused on the midscale and upper midscale segments, today reported operational and financial results for the third quarter ended September 30, 2018.
Third Quarter 2018 Highlights
- Net loss attributable to CorePoint Lodging common stockholders of $13 million, or $0.22 loss per fully diluted share
- Comparable RevPAR of $63.00, an increase of 3.6% from the same period in 2017 with 390 bps of RevPAR Index market share growth
- Adjusted EBITDAre of $55 million
- Adjusted FFO of $37 million
- Completed the construction phase of one additional significant hotel renovation, bringing the total number of repositioning projects with construction complete to 49 hotels, as part of the Company’s strategic repositioning program
Third quarter dividend of $0.20 was paid on October 15, 2018 to common stockholders of record on October 1, 2018
“We are excited to have completed CorePoint’s first full quarter as a stand-alone lodging REIT,” said Keith Cline, President and Chief Executive Officer of CorePoint. “We are extremely pleased with the revenue and market share growth experienced for our portfolio this quarter. Our team is focused on executing a proactive asset management strategy to continue to drive RevPAR growth with a focus on our repositioned and hurricane-impacted hotels, to improve EBITDA margins and to optimize our overall portfolio. We are also hopeful that next year, once CorePoint is fully integrated into the Wyndham platform we will begin to see the benefit of its network distribution and scale.”
Cline continued, “As we move through the remainder of 2018, our key strategic priorities are driving growth in RevPAR and market share, reopening our hurricane effected properties, completing our hotel repositioning projects, executing a proactive asset management strategy to drive profit margins, and closely monitoring the transition and integration of the La Quinta brand and the management of our hotels to Wyndham Hotels & Resorts.”
[Tables deleted]
Third Quarter 2018 Financial and Operating Results
The Company reported net loss attributable to CorePoint Lodging stockholders of $13 million, or $0.22 loss per fully diluted share, for the quarter ended September 30, 2018, compared to net income attributable to CorePoint Lodging stockholders of $13 million, or $0.22 income per fully diluted share, for quarter ended September 30, 2017. The year-over-year difference is primarily due to higher hotel operating expenses, including management and royalty fees, and higher interest expense.
Comparable RevPAR for the third quarter of 2018 increased 3.6% over the same period of 2017, primarily driven by an increase of 3.5% in comparable ADR. Top performing markets included Boston, New Orleans, Phoenix, San Francisco, and West Texas.
Adjusted EBITDAre for the third quarter of 2018 was $55 million as compared to $58 million on a pro forma basis for the same period in 2017. Increases in rooms revenue during the third quarter of 2018 were more than offset by increases in hotel operating expenses, in particular rooms expense, including payroll, contract labor, sales team, and third-party travel agent commissions.
Hurricane disruption continued to have an impact on the Company’s business in the third quarter of 2018, posing significant challenges for certain hotels. The Company estimates that the impact of the hurricanes on third quarter 2018 results was a reduction of approximately $3 million in Adjusted EBITDAre, compared to Adjusted EBITDAre on a pro forma basis in the third quarter of 2017. The majority of these business interruption claims due to hurricane disruption are expected to be recovered in the future through the Company’s business interruption insurance coverage.
Hurricanes Harvey and Irma
During the third quarter of 2017, two major hurricanes made landfall impacting areas serviced by CorePoint hotels. Many of the hotels in affected areas sustained property damage and also experienced business interruption as a result not only of damage to the hotels themselves but also to damage to surrounding infrastructure.
As of September 30, 2018, approximately 1% of rooms remain out of service, primarily at three properties in Florida that remain closed. The Company currently expects two of the three closed hotels to be re-opened by the end of 2018. CorePoint expects that insurance proceeds, excluding any applicable insurance deductibles, will be sufficient to cover a significant portion of the property damage to the hotels and the related operating loss. Through September 30, 2018, the Company has received approximately $3 million in total business interruption insurance proceeds, which includes approximately $2 million received during the second quarter of 2018 that is excluded from Adjusted EBITDAre.
Hurricane Michael
During October 2018, Hurricane Michael made landfall and significantly impacted the Company’s hotel located in Panama City, Florida. It is currently anticipated that this hotel will be closed for up to nine months with an estimated property damage of $10 million to $15 million. CorePoint expects that insurance proceeds, excluding any applicable insurance deductibles, will be sufficient to cover a significant portion of the property damage to this hotel and its related operating loss.
Capital Investments and Hotel Strategic Repositioning Program
The Company invested approximately $40 million in the third quarter of 2018 on capital improvements, including approximately $13 million related to its ongoing hotel strategic repositioning program.
In the fourth quarter of 2016, the Company began execution of a significant capital investment plan to invest over $200 million in 54 hotels with a focus to reposition these assets upward within their local markets. The scope of these strategic repositioning projects includes, but is not limited to, enhancing guestrooms, expanding public areas and upgrading exterior elements. Renovations incorporated elements of the “Del Sol” prototype, which is the newest build and design package for the La Quinta brand and related assets. During the third quarter of 2018, the construction phase of one additional hotel renovation was completed. As a result, as of September 30, 2018, 49 of these hotels had completed the construction phase of the project. The Company expects to invest the substantial majority of the remaining approximately $7 million of capital spend associated with the strategic repositioning program in the fourth quarter of 2018.
Tax Matters Agreement Update
As previously disclosed, in connection with the spin-off and La Quinta merger transaction, the parties agreed to set aside $240 million as a reserve amount to pay certain taxes that will be due as a result of the spin-off and related transactions. If the tax amount due is less than $240 million, the remaining amount will be paid to CorePoint in cash. While the determination of the ultimate tax amount due is ongoing, CorePoint currently expects the $240 million reserve to be more than sufficient to cover such tax liability.
Balance Sheet and Liquidity
At the end of the third quarter of 2018, the Company had total debt principal outstanding of $1.035 billion.
Total cash and cash equivalents were $64 million as of September 30, 2018, excluding lender escrows of approximately $15 million. As of September 30, 2018, the Company had $150 million of availability on its revolving credit facility.
On July 3, 2018, the Company sold one hotel located in Huntsville, Texas for a total gross sales price of $2 million, substantially the same as the Company’s GAAP net carrying value for the property.
Dividend
On September 19, 2018, our Board of Directors authorized and the Company declared a cash dividend of $0.20 per share of common stock with respect to the third quarter of 2018. The third quarter dividend was paid on October 15, 2018 to stockholders of record as of October 1, 2018.
On November 5, 2018, our Board of Directors authorized and the Company declared a cash dividend of $0.20 per share of common stock with respect to the fourth quarter of 2018. The fourth quarter dividend will be paid on January 15, 2019 to stockholders of record as of December 31, 2018. All future dividends will be at the sole discretion of CorePoint’s Board of Directors.
Outlook
CorePoint has updated its 2018 outlook that was provided on August 13, 2018.
The 2018 outlook range incorporates the impact of disruption caused by Hurricanes Harvey, Irma, and Michael on the Company’s operating results. The majority of these business interruption claims are expected to be recovered in the future through the Company’s business interruption insurance coverage. Factoring in recent expense growth trends, the Company currently estimates its hurricane disruption hotels will provide an incremental hotel EBITDAre contribution of approximately $13 million to $17 million in 2019.
Pro Forma Adjusted EBITDAre assumes an annual run rate of approximately $20 million for corporate general and administrative expenses, excluding stock-based compensation expense and separation costs related to the spin-off.
The Company’s achievement of anticipated full-year 2018 operating results is subject to risks and uncertainties, including those disclosed in the Company’s filings with the Securities and Exchange Commission (the “SEC”).
A reconciliation of anticipated full-year 2018 Pro Forma Adjusted EBITDAre to the closest GAAP financial measure is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for the spin-off and other related expenses, impairment charges, gains or losses on sales of assets, and the timing and magnitude of other amounts in its reconciliation of historic numbers. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results.
Webcast and Earnings Call
The Company will host a quarterly conference call for investors and other interested parties on Tuesday, November 6, 2018 beginning at 10:00 a.m. Eastern Time.
The call may be accessed by dialing (866) 300-4611, or (703) 736-7439 for international participants, and entering the passcode 4685437. Participants may also access the call via webcast by visiting the Company's investor relations website at www.corepoint.com/investors. You are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. The replay of the call will be available from approximately 10:00 a.m. Eastern Time on November 7, 2018 through midnight Eastern Time on November 14, 2018. To access the replay, the domestic dial-in number is (855) 859-2056, the international dial-in number is (404) 537-3406, and the passcode is 4685437. The archive of the webcast will be available on the Company's website for a limited time.
About CorePoint
CorePoint Lodging Inc. (NYSE: CPLG) is the only pure-play publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels. CorePoint owns a geographically diverse portfolio of 315 hotels and more than 40,000 rooms across 41 states in attractive locations primarily in or near employment centers, airports, and major travel thoroughfares. The portfolio consists of all La Quinta branded hotels, except for one Baymont branded hotel. For more information, please visit CorePoint’s website at www.corepoint.com.
http://globenewswire.com/news-release/2018/11/06/1645829/0/en/Corepoint-Lodging-Reports-Third-Quarter-2018-Results.html
Enterprising Investor
6 years ago
CorePoint Lodging Reports Second Quarter 2018 Results (8/13/18)
IRVING, Texas, Aug. 13, 2018 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE:CPLG) ("CorePoint" or the "Company"), a pure play select-service hotel owner strategically focused on the midscale and upper midscale segments, today reported operational and financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Highlights
- Completed spin-off from La Quinta Holdings Inc. ("La Quinta") on May 30, 2018
- Began trading on the New York Stock Exchange as a stand-alone public company on May 31, 2018 and rang the NYSE Opening Bell® to honor the occasion
- Net loss attributable to common stockholders of $48 million; loss from continuing operations of $28 million
- Comparable RevPAR of $63.29, an increase of 5.6% from the same period in 2017 with 230 bps of RevPAR Index market share growth
- Pro Forma Adjusted EBITDAre of $58 million
- Pro Forma Adjusted FFO of $42 million
- Completed the construction phase of 9 significant hotel renovations, bringing the total number of repositioning projects with construction complete to 48 hotels, as part of the Company's strategic repositioning program
- Entered into a new $1.035 billion CMBS facility loan and a new $150 million revolving credit facility
"We are extremely pleased to have completed the spin-off of CorePoint Lodging from La Quinta, which positioned us as the only publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper midscale select-service hotels," said Keith Cline, President and Chief Executive Officer of CorePoint. "We have assembled a highly experienced team to execute on our strategic priorities of proactive asset management, value-enhancing investments, disciplined capital allocation, and maintaining a strong balance sheet. We believe CorePoint is well-positioned to capture imbedded growth opportunities for value creation in the near-to-medium term and to grow and diversify its portfolio over time."
[Tables deleted]
Second Quarter 2018 Financial and Operating Results
The Company reported net loss attributable to common stockholders of $48 million, or $0.82 loss per fully diluted share, for the quarter ended June 30, 2018, compared to net income attributable to common stockholders of $17 million, or $0.29 income per fully diluted share, in the quarter ended June 30, 2017. The year over year difference is primarily due to higher corporate general and administrative expenses, loss on extinguishment of debt, and loss from discontinued operations, each associated with the Company's spin-off completed in the second quarter of 2018.
Comparable RevPAR for the second quarter of 2018 increased 5.6% over the same period of 2017, primarily driven by an increase of 4.7% in comparable ADR. Top performing markets included Atlanta, Dallas Fort Worth, West Texas, and New Orleans.
Pro Forma Adjusted EBITDAre for the second quarter of 2018 was $58 million as compared to $68 million on a pro forma basis for the same period in 2017. Increases in rooms revenue during the second quarter of 2018 were offset by increases in rooms expense, including to payroll and third-party travel agent commissions. With respect to rooms expense, the Company continues to experience competitive wage pressures and an increased need for contract labor. A portion of the payroll expense increase also relates to labor investments made to grow the sales force across the portfolio. The year over year variance in Pro Forma Adjusted EBITDAre is primarily due to a prior year positive insurance expense adjustment of approximately $9 million recognized in the second quarter of 2017.
Hurricane disruption continued to have an impact on the Company's business in the second quarter of 2018, posing significant challenges for certain hotels. The Company estimates that the impact of the hurricanes on second quarter 2018 results was a reduction of approximately $3 million, net of approximately $1 million of business interruption proceeds received, in Adjusted EBITDAre as compared to the same period in 2017. The majority of these losses are expected to be recovered in the future through the Company's business interruption insurance coverage as noted further below.
Hurricanes Harvey and Irma
During the third quarter of 2017, two major hurricanes made landfall impacting areas serviced by CorePoint hotels. Many of the Company's hotels in affected areas were impacted by the storms, sustaining property damage, damage to infrastructure surrounding the hotels, and business interruption.
As of June 30, 2018, approximately 1,000 rooms remain out of service, including approximately 540 rooms at five properties in Florida that remain closed. The Company currently expects four of the five closed hotels to be re-opened by the end of 2018. CorePoint expects that insurance proceeds, excluding any applicable insurance deductibles, will be sufficient to cover a significant portion of the property damage to the hotels and the related operating loss.
Capital Investments and Hotel Strategic Repositioning Program
The Company invested $45 million in the second quarter of 2018 on capital improvements, including approximately $18 million related to its ongoing hotel strategic repositioning program.
In the fourth quarter of 2016, the Company began execution of a significant capital investment plan to invest over $200 million in 54 hotels with a focus to reposition these assets upward within their local markets. The scope of these strategic repositioning projects includes, but is not limited to, enhancing guestrooms, expanding public areas and upgrading exterior elements. Renovations incorporated elements of the "Del Sol" prototype, which is the newest build and design package for the La Quinta brand and related assets. During the second quarter of 2018, the construction phase of an additional 9 hotel renovations was completed. As a result, as of June 30, 2018, 48 of these hotels had completed the construction phase of the project and have been, or are now in the process of being, reintroduced to their markets with encouraging early results. The Company expects to invest the substantial majority of the remaining approximately $20 million of capital spend associated with the strategic repositioning program in the second half of 2018.
Tax Matters Agreement Update
As previously disclosed, in connection with the spin-off and La Quinta merger transaction, the parties agreed to set aside $240 million as a reserve amount to pay certain taxes that will be due as a result of the spin-off and related transactions. If the tax amount due is less than $240 million, the remaining amount will be paid to CorePoint in cash.
As of the May 30, 2018 spin-off date, CorePoint and its tax advisors estimated that CorePoint would receive approximately $56 million based on estimated tax gain valuations. These valuations involve complex analysis and assumptions, including the estimate for an adjusted tax basis of CorePoint's assets and liabilities. Due to the complex nature of the analysis, CorePoint recently engaged a second tax advisor to review the calculation and perform its own independent analysis. As a result of this ongoing work, while CorePoint expects the $240 million reserve to be more than sufficient to cover the ultimate tax liability, it now believes that the tax due may be substantially higher than the original estimate, which could significantly reduce the cash payment to CorePoint.
Total cash and cash equivalents were $80 million as of June 30, 2018, excluding lender escrows of approximately $15 million. As of June 30, 2018, the Company had $125 million of availability on its revolving credit facility. Subsequent to June 30, 2018, the Company used a portion of its cash and cash equivalents to repay the $25 million drawn on its revolving credit facility, thereby increasing its total availability to $150 million.
Subsequent to June 30, 2018, the Company sold one hotel located in Huntsville, Texas for a total gross sales price of $2 million, substantially the same as the GAAP carrying value.
Dividend
On August 6, 2018, the Board of Directors declared a cash dividend of $0.067 per share of common stock with respect to the second quarter of 2018, which represents an anticipated regular quarterly dividend of $0.20 per share of common stock prorated for the period of the completion of CorePoint's spin-off from La Quinta on May 30, 2018 through the last day of the second quarter. The second quarter dividend is payable on September 14, 2018 to stockholders of record as of August 30, 2018. All future dividends will be at the sole discretion of CorePoint's Board of Directors.
Outlook
CorePoint anticipates that its full-year 2018 operating results will be in the following range:
Comparable RevPAR Growth
3.00% - 4.25%
Pro Forma Adjusted EBITDAre
$177 - $187
The Company currently estimates the impact of the ongoing disruption caused by Hurricanes Harvey and Irma to result in a reduction of approximately $18 million to $22 million of Pro Forma Adjusted EBITDAre for the full-year 2018, which is captured in its outlook range. The majority of these losses are expected to be recovered in the future through the Company's business interruption insurance coverage.
Pro Forma Adjusted EBITDAre assumes an annual run rate of approximately $20 million for corporate general and administrative expenses, excluding stock-based compensation expense and separation costs related to the spin-off.
The Company's achievement of anticipated full-year 2018 operating results is subject to risks and uncertainties, including those disclosed in the Company's filings with the Securities and Exchange Commission (the "SEC").
A reconciliation of anticipated full-year 2018 Pro Forma Adjusted EBITDAre to the closest GAAP financial measure is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and low visibility with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for the spin-off and other related expenses, impairment charges, gains or losses on sales of assets, and the timing and magnitude of other amounts in its reconciliation of historic numbers. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results.
Webcast and Earnings Call
The Company will provide prepared remarks in a call for investors and other interested parties on Monday, August 13, 2018 beginning at 5:00 p.m. Eastern Time.
The call may be accessed by dialing (866) 435-7430, or (409) 350-3281 for international participants, and entering the passcode 5695467. Participants may also access the call via webcast by visiting the Company's investor relations website at www.corepoint.com/investors. You are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. The replay of the call will be available from approximately 8:00 a.m. Eastern Time on August 14, 2018 through midnight Eastern Time on August 21, 2018. To access the replay, the domestic dial-in number is (855) 859-2056, the international dial-in number is (404) 537-3406, and the passcode is 5695467. The archive of the webcast will be available on the Company's website for a limited time.
About CorePoint
CorePoint Lodging Inc. (NYSE:CPLG) is the only pure-play publicly traded U.S. lodging REIT strategically focused on the ownership of midscale and upper-midscale select-service hotels. CorePoint owns a geographically diverse portfolio of 315 hotels and more than 40,000 rooms across 41 states in attractive locations primarily in or near employment centers, airports, and major travel thoroughfares. The portfolio consists of all La Quinta branded hotels, except for one Baymont branded hotel. For more information, please visit CorePoint's website at www.corepoint.com.
https://www.nasdaq.com/press-release/corepoint-lodging-reports-second-quarter-2018-results-20180813-00845
Enterprising Investor
6 years ago
CorePoint Lodging Inc. Announces Completion of Spin-Off From La Quinta Holdings (5/31/18)
CorePoint to ring the NYSE Opening Bell® and begin “regular way” trading on May 31
IRVING, Texas, May 31, 2018 (GLOBE NEWSWIRE) -- CorePoint Lodging Inc. (NYSE:CPLG) ("CorePoint") today announced the completion of its spin-off from La Quinta Holdings Inc. (“La Quinta”) into a stand-alone public company that holds a geographically diverse portfolio of 316 hotels that were previously owned by La Quinta. CorePoint elected to become a real estate investment trust (REIT), effective following the completion of the spin-off.
CorePoint will begin "regular way" trading on the New York Stock Exchange (NYSE) today, May 31, 2018, under the ticker symbol “CPLG.” To honor the occasion, Keith Cline, CorePoint President & Chief Executive Officer, will ring the NYSE Opening Bell®.
“Today we are excited to announce the creation of CorePoint Lodging, the only publicly traded U.S. lodging REIT strategically focused on serving the midscale and upper-midscale select service segments,” said Mr. Cline. “We believe CorePoint is well-positioned within its segment and has imbedded growth opportunities for value creation in the near and long term. In addition, CorePoint’s experienced leadership team is strategically focused on proactive asset management, value-enhancing investments, disciplined capital allocation and maintaining a solid balance sheet and conservative capital structure, which we believe will position CorePoint to generate premium long term total returns for our stockholders.”
Upon completion of the spin-off, La Quinta’s remaining franchise and management business was acquired by Wyndham Worldwide® (NYSE:WYN). La Quinta also effected a previously-announced 1-for-2 reverse stock split, prior to the close of the transaction.
CorePoint Lodging and La Quinta were provided financial advice by J.P. Morgan. Simpson Thacher & Bartlett LLP is acting as legal advisor to CorePoint and La Quinta.
ABOUT COREPOINT LODGING INC.
CorePoint Lodging Inc. is the only pure-play publicly-traded U.S. REIT strategically focused on select-service midscale and upper-midscale lodging. CorePoint Lodging owns a geographically diverse portfolio of 316 hotels and more than 40,000 rooms across 41 states in attractive locations primarily in or near employment centers, airports and major travel thoroughfares. For more information, please visit CorePoint’s website at www.corepoint.com.
https://globenewswire.com/news-release/2018/05/31/1514556/0/en/CorePoint-Lodging-Inc-Announces-Completion-of-Spin-Off-From-La-Quinta-Holdings.html
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