CHESAPEAKE LODGING TRUST Reports Operating Results (10-Q)
Chesapeake Lodging Trust has a market cap of $154 million; its shares were traded at around $16.48 . CHSP is in the portfolios of Ron Baron of Baron Funds.
Highlight of Business Operations: Revenues Total revenue was $11.8 million, which includes rooms revenue of $8.8 million, food and beverage revenue of $2.7 million, and other revenue of $0.3 million.
Hotel operating expenses Hotel operating expenses, excluding depreciation and amortization, were $7.3 million. Direct hotel operating expenses included rooms expense of $1.8 million, food and beverage expense of $1.8 million, and other direct expenses of $0.2 million. Indirect hotel operating expenses, which includes management and franchise fees, real estate taxes, insurance, utilities, repairs and maintenance, advertising and sales, and general and administrative expenses, were $3.4 million.
Hotel operating expenses Hotel operating expenses, excluding depreciation and amortization, were $9.1 million. Direct hotel operating expenses included rooms expense of $2.3 million, food and beverage expense of $2.2 million, and other direct expenses of $0.2 million. Indirect hotel operating expenses, which includes management and franchise fees, real estate taxes, insurance, utilities, repairs and maintenance, advertising and sales, and general and administrative expenses, were $4.3 million.
For the six months ended June 30, 2010, net cash flows from operating activities were $3.8 million, net cash flows used in investing activities were $161.7 million, of which $113.1 million was used to acquire the Hyatt Regency Boston hotel and $46.0 million was used to acquire the Hilton Checkers Los Angeles hotel, and net cash flows provided by financing activities were $169.1 million, of which $169.4 million were proceeds generated from the IPO, private placement transactions, and the exercise of the underwriters over-allotment option, net of underwriting fees and offering costs. As of June 30, 2010, we had cash and cash equivalents of approximately $11.2 million. We currently expect that our operating cash flows will be sufficient to fund our continuing operations and, given that we expect to generate taxable income for the year, we also expect to make a distribution to shareholders, as required to maintain our REIT status, in the second half of 2010.
On July 30, 2010, we entered into a credit agreement to obtain a $115 million, two-year secured revolving credit facility with a syndicate of banks. Also on July 30, 2010, we made an initial borrowing of $105.0 million under the revolving credit facility to fund the acquisitions of the Courtyard Anaheim at Disneyland Resort hotel for approximately $25.1 million and the Boston Marriott Newton hotel for approximately $77.2 million. As of July 30, 2010, we had approximately $10 million of cash and cash equivalents in addition to $10.0 million of remaining borrowing capacity under our revolving credit facility. The amount that we can borrow under our revolving credit facility is based on the value of our hotel properties included in the borrowing base, as defined in the credit agreement. We intend to invest our remaining cash and cash equivalents and additional borrowing capacity under the revolving credit facility through a new hotel acquisition, although we have not yet identified a particular property for this purpose.
On January 21, 2010, a Form S-11 Registration Statement (SEC File No. 333-162184) relating to our IPO was declared effective by the SEC. The managing underwriters of the IPO were J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. The offering was closed on January 27, 2010. All 7,500,000 common shares registered under the registration statement were sold at a price to the public of $20 per share. On February 24, 2010, we sold an additional 85,854 common shares as a result of the exercise of an over-allotment option that we granted to the underwriters. The aggregate gross proceeds from the common shares sold by us were $151.7 million. The aggregate net proceeds to us from the offering were approximately $140.9 million after deducting approximately $9.1 million in initial and deferred underwriting fees and approximately $1.8 million in other expenses incurred in connection with the offering. All of the common shares were sold by us and there were no selling shareholders in the offering.
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