Category: Real Estate (page 1 of 2)

RLJ Lodging deal creates third largest REIT by enterprise value

BETHESDA, MD – RLJ Lodging Trust announced Monday that it has agreed to acquire FelCor Lodging Trust Inc. in a $1.2 billion all-stock transition.Screen Shot 2017-04-24 at 10.26.48 AM

Post-merger, RLJ is expected to have a total value of $7 billion, creating the largest public REIT by enterprise value. The combined company will have ownership in 160 hotels.

The deal will give RLJ significant growth in highly desirable markets and will broaden geographic and brand diversity.

“Merging with FelCor expands our geographic footprint in highly-desirable markets on the West Cost, while strengthening our presence in other coastal markets in the East and South,” said RLJ’s President and CEO Ross H. Bierkan.

RLJ, which is based in Bethesda, Maryland, said it expects to achieve cost savings of approximately $22 million by combining the two company’s operations.

RLJ’s shares opened Monday morning at $23.49, down 5.7 percent from Friday’s close, and FelCor’s shares opened at $7.85, up 7.24 percent from Friday’s close.

The filing can be found here.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Chesapeake Lodging CEO Francis compensation falls 6 percent

Chesapeake LodgingANNAPOLIS, MD – James Francis, president and chief executive of Chesapeake Lodging Trust, saw his compensation fall to $4.5 million in 2016, compared to $4.8 million in 2015, according to a filing with the Securities and Exchange Commission.

The drop in total compensation reflected a 50.8 percent decrease in the chief executive’s compensation from Chesapeake’s non-equity incentive plan. The incentives totaled only $323,000 for Francis in 2016, compared to $657,000 in 2015.

The cash bonus incentives are awarded to executives based on their achievement of pre-determined performance goals.

Chesapeake reported annual income of $76.7 million in 2016, but despite net income growth of 13.6 percent last year, the company performed below analysts’ income expectations in its three most recent quarters.

As a result, Chief Financial Officer Douglas Vicari and Chief Operating Officer D. Rick Adams also saw their total compensation fall in 2016, each by 4.8 percent. The executives each made $2.0 million in total compensation for the year.

Meanwhile, the company’s chief accounting officer, Graham Wootten, saw a slight uptick in his total compensation, which was slightly above $1.2 million for the year. His decrease in incentive-related compensation was offset by a $50,000 increase in share awards for the year.

Annapolis-based Chesapeake Lodging Trust is a self-advised real estate investment trust focused on investments in upscale hotels and select-service premium hotels. The company completed its initial public offering in January 2010 and now owns 22 properties across the nation.

Chesapeake Lodging will hold its annual shareholder meeting on May 17 at the Courtyard Washington Capitol Hill, its sole D.C. property. The company will release first-quarter earnings results on April 25.

Shares of Chesapeake Lodging’s stock closed at $23.22 on Friday, falling 2.0 percent on the day of the filing.

The filing can be found here.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Bethesda-based REIT First Potomac CEO’s compensation tripled in 2016

BETHESDA, MD – First Potomac Realty Trust CEO Robert Milkovich received $3.6 million in total compensation in 2016, up from a total of $978,000 in 2015, according to a filing with the Securities and Exchange Commission.

The CEO’s increase in compensation was driven primarily by a special equity award of 150,000 restricted common shares worth about $1.5 million.

CFO Andrew Blocher and General Counsel Samantha Gallagher each saw their total compensation more than double in 2016, also driven by awards of special equity.  First Potomac Realty Trust Logo

In total compensation, Blocher received $2.2 million in 2016, up from $987,000 in 2015, and Gallagher received $1.9 million, up from $812,000 in 2015.

Total compensation for executives at First Potomac is comprised of base salary, short and long term incentive compensation, and special equity awards.

In the past First Potomac has relied only upon base salary and incentive-based pay to retain executive talent.

In a proxy statement filed with the SEC, the company said that it has not made special equity awards in the past.

The company acknowledges that the significant jump in compensation “may appear outsized with respect to historical practices,” but maintains that the additional pay is necessary in light of increased responsibility.

The executives have had to take on more important roles in the company as leadership and strategic goals have changed dramatically in the past 18 months.

Milkovich was promoted in November 2015 from chief operating officer to the additional role of chief executive officer. He replaced Douglas J. Donatelli, one of the two founding partners, who resigned unexpectedly.

Donatelli had served as the company’s CEO since the company was founded by himself and Nicholas R. Smith in 1997. Smith also resigned from his position as chief investment officer in November 2015.

Donatelli and Smith resigned at a time when the company’s board wanted to implement significant strategic changes. The board sought to de-risk the portfolio, de-lever the balance sheet and maximize asset values.

In 2015 this strategy took the form of a $200 million reduction in underperforming assets, the proceeds from which were used to buy back shares.

The company also justified the special equity awards by the fact that they will vest over a five-year period in one-quarter increments, maximizing the potential for retention and long-term performance.

In 2016, Blocher received 75,000 shares of restricted common stock worth about $750,000, and Gallagher received 65,000 shares worth about $650,000.

All three executives saw their base salaries increase 2.75 percent for 2017.

In the fourth quarter of 2016 the company reported core funds from operations of 27 cents per share, beating the consensus expectation of 26 cents per share.

The company’s stock rose 7 cents to $10.59 in Friday afternoon trading.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

DiamondRock Hospitality buys two resorts in Sedona for $97 million

imgresBETHESDA, MD — DiamondRock Hospitality Co., a lodging-focused Maryland corporation operating as a real estate investment trust, announced that it has acquired two resorts in Sedona for $97 million, according to a filing Tuesday with the Securities and Exchange Commission.

The company upwardly revised its 2017 earnings guidance from 92 cents per share to 96 cents per share, reflecting an additional $7.5 million of expected earnings attributable to the acquisition.

DiamondRock’s primary business is to acquire, own and renovate full-service hotel properties. The company owns a portfolio of 28 hotels in the United States, consisting of over 9,600 rooms. Subsidiaries of the company’s partnership, DiamondRock Hospitality Limited Partnership, own the individual hotels.

The company’s most recent purchases, the 88-room L’Auberge and the adjacent 70-room Orchards Inn, include a combined 158 guest rooms, 5,000 square feet of meeting space, outdoor wedding venues and two restaurants.g72811mm01i002

Since 2015, the resorts have undergone $14 million in renovations, and DiamondRock plans to spend $5 million on renovations in the off-seasons over the next two years.

The company said it expects earnings driven by the labor productivity and lower food and beverage cost initiatives that it plans to implement to reach approximately $9.5 million over the next two to three years.

“This acquisition represents a rare opportunity to own two high-quality resort properties in a coveted, high barrier-to-entry resort market,” said Mark Brugger, president and chief executive officer of DiamondRock.

“While we believe the initial pricing of the deal is attractive, we have identified significant opportunities to increase profitability through the implementation of our well-proven asset management practices and thoughtful capital enhancements.”

The $97 million purchase price represents an 8 percent yield and 12.6 multiple on the resorts’ forecasted 2017 earnings before interest, taxes, depreciation and amortization. The yield is calculated by dividing the hotels’ net operating income by the purchase price.

In May 2011, DiamondRock announced a $72.6 million purchase price for JW Marriott Denver.

In December 2014, DiamondRock bought the Westin Beach Resort & Spa in Fort Lauderdale, Florida for $149 million. 

Investor demand for luxury resorts has recovered from the 2008 real estate crash partly because of little new construction in the industry. The Sedona market is one of the highest-growth markets in the U.S., with no new hotel supply under development in the near-term.

DiamondRock trades on the the New York Stock Exchange under the ticker “DRH.” Shares closed down 3 percent at $10.87 Tuesday with about 3.2 million shares trading hands. The company sees an average trading volume of 2.7 million shares.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

DiamondRock Hospitality misses revenue expectations

drhlogopressreleaseBETHESDA, MD — DiamondRock Hospitality Co., a lodging-focused real estate investment trust, reported fourth-quarter revenue of $206.6 million, missing Wall Street expectations of $212.3 million.

The Bethesda-based REIT posted funds from operations of $48.4 million, or 24 cents per share, in the period, beating analysts expectations of 23 cents per share.

Funds from operations is a key measure in the REIT industry that takes net income and adds back items such as amortization and depreciation.

The company reported fourth quarter net income of $23.9 million, or 12 cents per share, also surpassing analysts expectations by 1 cent per share.

“In 2016 DiamondRock implemented rigorous cost controls, resulting in zero growth in total hotel expenses, a record for the company,” said Mark W. Brugger, chief executive officer of DiamondRock Hospitality. “The company also executed on its strategic priority to create $450 million of investment capacity through asset sales and financings in 2016, which positions DiamondRock to be opportunistic headed into 2017.”

For the year, DiamondRock Hospitality reported funds from operations of $206.3 million, or $1.02 per share. Revenue was reported as $896.6 million.

The company owns a portfolio of 26 hotels and resorts throughout North America and the U.S. Virgin Islands that consists of over 10,925 guest rooms. Its primary business is to acquire, own, asset manage and renovate full-service hotel properties in gateway cities and destination resort locations.

DiamondRock Hospitality expects full-year funds of operations in the range of 92 cents to 97 cents per share.

The company’s shares are trading Wednesday afternoon at $11.36, down 12 cents or 1.09 percent.

The Securities and Exchange Commission filing can be found here.

This is a story from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism.

Bethesda real estate company raises $4.5 million for Northern Virginia office building

MDBW-logo-draft-yellow-transbgBETHESDA, MD – A Bethesda, Maryland-based real estate investment and development company has raised $4.5 million from 16 investors in a private stock offering, according to a Securities and Exchange Commission filing dated Feb. 9.

Dulles Creek Holdings LLC filed the Form D, signed by Robert Merrick Pinkard, on Feb. 9. Pinkard, founder and principal at Bethesda’s The Pinkard Group, is listed as Dulles Creek’s principal along with Peter Colten Kleeblatt, who also serves as principal at The Pinkard Group.

The filing coincides with The Pinkard Group’s recent acquisition of Dulles Creek, a Class A office building in the Dulles Corner submarket of Herndon, Virginia. The acquisition was announced on Feb. 5 – just days before the offering’s filing date.

The Pinkard Group is currently investing on behalf of its Pinkard Fund II, which is focused on investment opportunities in the greater Washington D.C. area. The Thursday filing from Dulles Creek Holdings lists PF II Dulles Creek as its managing member.

“The Pinkard Group is excited to kick off Pinkard Fund II with the acquisition of Dulles Creek” Kleeblatt said in a statement released to citybizlist.com. “This is our fourth office acquisition in Northern Virginia, and we are big believers in this dynamic market going forward.”

The Pinkard Group did not disclose how much it paid for Dulles Creek, but said it plans to strategically invest in the office property “in order to enhance the building’s superior features and attract additional high quality tenants from Herndon’s diversified tenant base.”

The first iteration of the Pinkard Fund comprised similar office building acquisitions in Northern Virginia beginning in 2014, including the November 2014 acquisition of Dulles Metro Center in Herndon – less than one mile away from the newly acquired Dulles Creek office building.

The date of the offering’s first sale is listed as Jan. 19, and the minimum investment accepted from any outside investor is $100,000.

Companies relying on a Reg D exemption do not have to register their offering of securities with the SEC, but they must file what’s known as a Form D electronically with the SEC after they first sell their securities.

The form can be found here.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Walker & Dunlop earnings beat expectations

BETHESDA, MD — Walker & Dunlop Inc. announced a fourth-quarter profit of $36.8 million, or $1.16 per share, surpassing analysts expectations due to increased gains from mortgage banking activities and growth in servicing feeslogo-walker-dunlop-sq

The Bethesda-based real estate finance company’s profits grew 80 percent from $20.4 million, or 67 cents per share, a year ago. Earnings beat analysts expectations of 74 cents per share by 42 cents.

Walker & Dunlop reported fourth quarter revenue of $178.4 million, a 47 percent increase from the company’s fourth quarter 2015 revenue of $121.4 million.

“Walker & Dunlop’s growth and financial performance continue to outpace the market by broad margins,” said Willy Walker, Chairman and CEO.  “This was the second consecutive year adding $1.00 or more in EPS, reflective of the highly profitable business model that underpins Walker & Dunlop’s growth.”

For the year, the company reported profit of $113.9 million, or $3.65 per diluted share, up 39 percent over 2015. Total revenues were listed as $575.3 million, up 23 percent from a year ago.

Founded in 1937 and headquartered in Bethesda, Walker & Dunlop is one of the largest commercial real estate finance companies in the U.S. The company’s 25 offices across the county provide both financing and investment sales to owners of multifamily and commercial properties.

Walker & Dunlop’s shares closed at $37.46 on Friday, up 29 cents or 0.78 percent.

The form can be found here.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism.

Alex Brown Realty plans to raise $50 million

BALTIMORE, MD. — Alex Brown Realty plans to raise $50 million in an investment fund, according to a filing with the Securities and Exchange Commission.

The company filed the Form D on Feb. 9, 2017. The first sale has yet to occur, and the minimum investment accepted from outside investors is $1 million.

The offering is not intended to last more than one year, and is not being made in connection with a business combination transaction, according to the filing.

Eaton Partners will receive an estimated sales compensation of $3.25 million. This offering is one of several offering that comprise the ABR Chesapeake Fund V, which has a total target offering of $400 million.

Founded in 1972, Alex Brown Realty is privately-owned and has 31 employees. It invests in mid-sized properties throughout the U.S. that typically require an equity commitment of $5 million to $15 million and total costs between $20 million and $40 million.

The form can be found here.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Omega Healthcare announces potential DOJ investigations

Omega HealthcareHUNT VALLEY, Md. — Omega Healthcare announced on-going questioning by the Department of Justice and clarification on its recent private equity offerings during its fourth quarter conference call Thursday morning.

CEO Taylor Pickett said some of its regional operators have received requests for information from the DOJ concerning Medicare billing. Two of the operators are on Omega’s top 10 operators list.

One analyst, Nick Yulico of UBS, estimated during the call the two operators must represent at least 10 percent of Omega’s revenue.

Pickett denied the potential investigations were material enough to merit inclusion in the annual report. Due by early March, the 10-K won’t recognize them “until there’s any views as to what the potential liability is,” Pickett said and whether it will affect the company’s rental business. He said the company is more concerned with potential money and time any investigations may take from the business.

Over the 2016 calendar year, Omega made investments totaling $1.3 billion. It has cash and revolving credit availability of $1.2 billion available for future investments and capital funds for its existing tenants, Chief Operating Officer Dan Booth said in the earnings call.

Booth also gave context to the five private equity offerings filed with the securities and exchange commission Monday. In November, the company announced a $50 million investment in Second Spring Healthcare Investments partnered with an investment from Lindsay Goldberg LLC. Omega owns 15 percent of health care investment, and Lindsay Goldberg owns the remaining majority.

The company also reported the sale of 38 facilities during the calendar year and releasing of eight others.

The company’s stock price fell 5.56 percent Thursday to $30.76, just one day after beating analyst earnings expectations by more than 31 percent.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

Omega Healthcare earnings smashes analyst expectations

HUNT VALLEY, MD — Omega Healthcare Investors Inc., a Hunt Valley-based health care REIT, reported an earnings increase that far exceeded analyst expectations.

Omega HealthcareThe real estate investor’s fourth-quarter earnings reached $129.9 million, or 63 cents per share, a 104 percent increase from the same quarter one year prior. The results, reported Wednesday, beat analyst expectations of 48 cents per share by 31.3 percent.

The company’s funds from operations, a measure of income typical of REITs, reached $171.5 million, or $84 cents. That increased 34.6 percent from last year.

Yearly earnings were $383.4 million, or $1.90 per share, up 64.3 percent from last year.

“We share the industry leadership and investor concerns that increasing labor and liability costs and evolving reimbursement models may put near term financial strain on many operators within our industry,” said Taylor Pickett, chief executive officer, in a statement.  

But he emphasized the strength of the company’s operations for overcoming “an increasingly difficult operating environment.”

The report fleshed out Omega’s Equity shelf program and dividend reinvestment and common stock purchase plan, a financing strategy it began in its fourth quarter, selling 1 million shares and generating $30.4 million.

The earnings report release comes days after the company reported five separate private equity offerings under the subsidiary company names LG-OHI 1, 2, 3, 4 and Parent REIT, raising Omega a combined total of $625,000.

The company’s stock price grew to $32.57 Wednesday, up 0.56 percent, or 18 cents, from Tuesday.

Omega’s conference call for its fourth quarter earnings results will be Thursday, Feb. 9, 2017 at 10 a.m., the press release reported.

This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism

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