CorePoint Lodging Inc. (CPLG)

[Enterprising Investor]

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 [phone] or [phone] 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 [phone] 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