On August 1, 2024, RLJ Lodging Trust (RLJ, Financial) released its 8-K filing for the second quarter of 2024. RLJ Lodging Trust is a real estate investment trust that acquires focused-service and compact full-service hotels. Its portfolio consists of hotels in various states across the United States and the District of Columbia, under the Marriott, Hilton, and Hyatt brand names. These hotels are concentrated in urban areas, dense suburban markets, and business districts within metropolitan areas. The company derives the substantial majority of its revenue from the operation of hotels.
Performance Overview
RLJ Lodging Trust reported total revenue of $369.3 million for Q2 2024, surpassing the analyst estimate of $365.65 million and marking a 3.5% increase from the same period last year. However, the company's net income of $37.3 million represented a 10.6% decline from the previous year. The adjusted funds from operations (FFO) per diluted common share and unit stood at $0.51, surpassing the quarterly estimate of $0.17 per share.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Total Revenue | $369.3 million | $357.0 million | 3.5% |
| Net Income | $37.3 million | $41.7 million | -10.6% |
| Adjusted FFO per Share | $0.51 | $0.56 | -8.9% |
| Comparable RevPAR | $157.30 | $153.26 | 2.6% |
Operational Highlights
RLJ Lodging Trust's portfolio comparable revenue per available room (RevPAR) increased by 2.6% year-over-year to $157.30. The company also reported a comparable average daily rate (ADR) of $205.20 and a comparable occupancy rate of 76.7%, reflecting a 2.1% increase in occupancy from the previous year.
During the quarter, RLJ Lodging Trust acquired Hotel Teatro in Denver for $35.5 million and sold a non-core Residence Inn hotel in Indiana for $8.1 million. The company also repurchased 0.3 million shares for approximately $3.1 million at an average price of $9.72 per share.
Financial Achievements and Challenges
Despite the revenue growth, RLJ Lodging Trust faced challenges with declining net income and adjusted FFO. The company's comparable hotel EBITDA decreased by 4.0% to $118.6 million, and the comparable hotel EBITDA margin contracted by 245 basis points to 32.0%. These declines were attributed to increased operating expenses and a competitive market environment.
“We were encouraged to see industry RevPAR growth improve during the second quarter despite a choppy backdrop. Relative to this environment, we were pleased with our solid second quarter performance, which was driven by strong gains in a number of our urban markets that benefitted from growth in business and group segments,” commented Leslie D. Hale, President and Chief Executive Officer.
Balance Sheet and Liquidity
As of June 30, 2024, RLJ Lodging Trust had approximately $771.1 million in total liquidity, including $371.1 million in unrestricted cash and $400.0 million available under its revolving credit facility. The company had $2.2 billion in debt outstanding. In April 2024, RLJ Lodging Trust drew $200.0 million under its revolving credit facility to repay maturing mortgage debt and extended the maturities of $181.0 million of mortgage loans to April 2025.
Dividend and Outlook
RLJ Lodging Trust's Board of Trustees declared a second-quarter cash dividend of $0.10 per common share and announced an increase in the quarterly dividend to $0.15 per share starting in the third quarter of 2024. The company updated its full-year outlook, projecting comparable RevPAR growth of 1.0% to 2.5%, comparable hotel EBITDA of $382.5 million to $402.5 million, and adjusted EBITDA of $346.5 million to $366.5 million.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from RLJ Lodging Trust for further details.
