DiamondRock Hospitality Company Reports Operating Results (10-Q)

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Jul 27, 2010
DiamondRock Hospitality Company (DRH, Financial) filed Quarterly Report for the period ended 2010-06-18.

Diamondrock Hospitality Company has a market cap of $1.45 billion; its shares were traded at around $9.58 with a P/E ratio of 15.7 and P/S ratio of 2.5. Diamondrock Hospitality Company had an annual average earning growth of 6.4% over the past 5 years.DRH is in the portfolios of Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, David Williams of Columbia Value and Restructuring Fund, Richard Pzena of Pzena Investment Management LLC, Jim Simons of Renaissance Technologies LLC, Manning & Napier Advisors, Inc.

Highlight of Business Operations:

As of June 18, 2010, we had $155.4 million of unrestricted corporate cash. We believe that we maintain a reasonable amount of fixed interest rate mortgage debt. As of June 18, 2010, we had $783.8 million of mortgage debt outstanding with a weighted average interest rate of 5.9 percent and a weighted average maturity date of approximately 5.6 years, with no maturities until late 2014. In addition, we currently have eleven hotels unencumbered by debt and no corporate-level debt outstanding.

Acquisitions. On May 24, 2010, we acquired the $69.0 million senior mortgage loan secured by the 443-room Allerton Hotel in Chicago, Illinois (the Allerton Loan) for approximately $60.5 million. The Allerton Loan earns a blended interest rate of LIBOR plus 692 basis points, which includes 5 percentage points of default interest. The Allerton Loan matured in January 2010 and is currently in default. As of June 18, 2010, the Allerton Loan had a principal balance of $69.0 million and unrecorded accrued interest of approximately $1.8 million.

Follow-on Public Offering. We completed a follow-on public offering of our common stock during the second quarter. We sold 23,000,000 shares of common stock, including the underwriters overallotment of 3,000,000 shares, at an offering price of $8.40 per share. The net proceeds to us, after deduction of offering costs, were approximately $184.8 million.

Controlled Equity Offering Program. During the first quarter ended March 26, 2010, we completed our previously announced $75 million controlled equity offering program by selling 2.8 million shares at an average price of $9.13 per share, raising net proceeds of $25.1 million.

Our net income for the fiscal quarter ended June 18, 2010 was $0.8 million compared to $2.5 million for the fiscal quarter ended June 19, 2009.

Our total revenues increased $7.5 million, or 5.2%, from $143.6 million for the fiscal quarter ended June 19, 2009 to $151.1 million for the fiscal quarter ended June 18, 2010, reflecting the improvement in lodging fundamentals. The increase reflects a 6.1 percent increase in RevPAR, which is the result of a 3.7 percentage point increase in occupancy and 0.6 percent increase in ADR. The following are the key hotel operating statistics for our hotels for the fiscal quarters ended June 18, 2010 and June 19, 2009, respectively.

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