·

Adjusted Comparable Hotel RevPAR increased 7.0% to $150.12.

·

Adjusted Comparable Hotel EBITDA Margins increased 220 basis points to 26.2%.

·

Adjusted EBITDA increased 33.1% to $65.7 million.

·

Adjusted FFO available to common stockholders per diluted share increased 46.7% to $0.22.

·

Loss attributable to common stockholders decreased 59.2% to $3.3 million.

·

Loss attributable to common stockholders per diluted share decreased 50.0% to $0.02.  

(1)

Comparable Hotel RevPAR and Comparable Hotel EBITDA Margin information presented reflect the Company’s Comparable 30 Hotel Portfolio, which includes all hotels held for investment by the Company as of March 31, 2015,  and also includes prior ownership results as applicable for the Marriott Wailea acquired in July 2014. Adjusted Comparable Hotel RevPAR and Adjusted Comparable Hotel EBITDA Margin information include the Comparable Portfolio for the three months ended March 31, 2014 adjusted to conform to the industry’s Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition, which became effective in January 2015. Comparable Hotel EBITDA Margin and Adjusted Comparable Hotel EBITDA Margin information exclude non-current year net property tax related adjustments, but include the full impact of current year property tax related adjustments in the quarter such adjustments are realized. 

Three Months Ended March 31,

2015

2014

Change

Comparable Hotel RevPAR

$

$

%

Adjusted Comparable Hotel RevPAR (1)

%

Comparable Hotel Occupancy

%  

%  

bps

Comparable Hotel ADR

$

$

%

Adjusted Comparable Hotel ADR (1)

$

%

Comparable Hotel EBITDA Margin

%  

%  

bps

Adjusted Comparable Hotel EBITDA Margin (1)

%  

bps

Net Income (Loss)

$

$

Loss Attributable to Common Stockholders per Diluted Share

$

$

Adjusted EBITDA

$

$

Adjusted FFO Available to Common Stockholders

$

$

Adjusted FFO Available to Common Stockholders per Diluted Share

$

$

(1)

Presentation conforms to the industry’s Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition, which became effective in January 2015. 

Metric

Quarter Ended March 31, 2015 Guidance (1)

Quarter Ended March 31, 2015 Actual Results (unaudited)

Performance Relative to Prior Guidance Midpoint

Adjusted Comparable Hotel RevPAR Growth

+5.0% - 6.5%

7.0%

+1.2%

Net Income ($ millions) (2)

$2 - $5

$1

($3)

Adjusted EBITDA ($ millions)

$58 - $61

$66

+$6

Adjusted FFO Available to Common Stockholders ($ millions)

$37 - $40

$45

+$6

Adjusted FFO Available to Common Stockholders per Diluted Share

$0.18 - $0.19

$0.22

+$0.03

Diluted Weighted Average Shares Outstanding

206,600,000

207,000,000

400,000

(1)

Represents guidance presented on February 17, 2015.

(2)

Net income for the first quarter ended March 31, 2015 includes the effects of $0.7 million in property-level restructuring costs, and $0.3 million in lease termination costs. Excluding these items, first quarter net income would have been $2 million, or $2 million below the prior guidance midpoint.

·

Boston Park Plaza:  The Company has substantially completed the repositioning of the hotel’s first four floors, including the following: complete renovation of all public spaces and meeting rooms; the addition of 9,000 square feet of new meeting space; and the renovation and completion of approximately 30,000 square feet of formally unoccupied retail space, which has already been leased to third-party tenants. Additionally, the Company has substantially completed its investment to upgrade the hotel’s infrastructure, including HVAC systems, elevators, building façade and roofing systems. During the seasonally slower fourth quarter 2015 and first quarter 2016, the Company will commence and substantially complete the final phase of the renovation program, which includes the hotel’s guestrooms and suites, consistent with prior expectations.

·

Marriott Wailea:    In 2015, the Company plans to complete renovations of both the guestrooms and meeting spaces. The Company anticipates minimal revenue disruption in 2015. In 2016, the Company expects to complete a renovation of the resort’s public spaces, as well as the creation of comprehensive resort pool and recreation facilities.

Metric

Quarter Ended    June 30, 2015     Guidance

Comparable Hotel RevPAR Growth

+ 6.0% - 7.5%

Net Income ($ millions)

$47 - $51

Adjusted EBITDA ($ millions)

$103 - $107

Adjusted FFO Available to Common Stockholders ($ millions)

$83 - $87

Adjusted FFO Available to Common Stockholders per Diluted Share

$0.40 - $0.42

Diluted Weighted Average Shares Outstanding

207,800,000

Metric

Prior Full Year 2015               Guidance (1)

Revised Full Year 2015               Guidance

Change in Full Year 2015 Guidance Midpoint

Comparable Hotel RevPAR Growth

+ 5.0% - 7.0%

+ 5.0% - 7.0%

0.0%

Net Income ($ millions)

$117 - $139

$109 - $123

$(12)

Adjusted EBITDA ($ millions)

$336 - $356

$344 - $356

+$4

Adjusted FFO Available to Common Stockholders ($ millions)

$254 - $274

$262 - $274

+$4

Adjusted FFO Available to Common Stockholders per Diluted Share

$1.22 - $1.32

$1.26 - $1.32

+$0.02

Diluted Weighted Average Shares Outstanding

207,400,000

207,700,000

300,000

(1)

Reflects guidance presented on February 17, 2015.

·

Full year guarantee payment of $2 million related to the Marriott Wailea.

·

Full year Comparable Hotel EBITDA Margin (as compared to 2014 adjusted for the USALI Eleventh Revised Edition) expansion of approximately 50 to 100 basis points, which excludes any guarantee payments.

·

Full year corporate overhead expense (excluding stock amortization and one-time expenses related to acquisition closing costs and severance charges) of approximately $22.5 million to $23.5 million.

·

Full year interest expense of approximately $66 million to $67 million, including approximately $3 million in amortization of deferred financing fees.

·

Full year expense of approximately $0.7 million in one-time costs related to the Boston Park Plaza retail, meeting space and lobby relaunch, and $0.3 million in one-time costs related to an early lease termination at the Boston Park Plaza.  

·

Full year hotel revenue disruption of $0.5 million to $1.0 million related to cancellations resulting from civil unrest in Baltimore, Maryland.

·

Full year preferred dividends of $9.2 million for the Series D cumulative redeemable preferred stock.

·

Proactive portfolio management;

·

Intensive asset management;

·

Disciplined external growth; and

·

Continued balance sheet strength.

·

Amortization of favorable and unfavorable contracts:  we exclude the non-cash amortization of the favorable management contract asset recorded in conjunction with our acquisition of the Hilton Garden Inn Chicago Downtown/Magnificent Mile, along with the favorable and unfavorable tenant lease contracts, as applicable, recorded in conjunction with our acquisitions of the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hilton New Orleans St. Charles, the Hyatt Regency San Francisco and the Marriott Wailea. The amortization of favorable and unfavorable contracts does not reflect the underlying performance of our hotels.

·

Ground rent adjustments: we exclude the non-cash expense incurred from straightlining our ground lease obligations as this expense does not reflect the underlying performance of our hotels.

·

Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.

·

Acquisition costs: under GAAP, costs associated with completed acquisitions are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company.

·

Non-controlling interests: we deduct the non-controlling partner’s pro rata share of any EBITDA or FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership,  as well as any preferred dividends earned by investors from an entity that owns the Doubletree Guest Suites Times Square, including related administrative fees.  

·

Cumulative effect of a change in accounting principle:  from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments because they do not reflect our actual performance for that period.

·

Impairment losses: we exclude the effect of impairment losses because we believe that including them in Adjusted EBITDA and Adjusted FFO Available to Common Stockholders is not consistent with reflecting the ongoing performance of our remaining assets.

·

Other adjustments: we exclude other adjustments such as executive severance costs, lawsuit settlement costs, prior year property tax assessments and/or credits, management company transition costs, lease buyouts, and restructurings and departmental closing costs, including severance, because we do not believe these costs reflect our actual performance for that period and/or the ongoing operations of our hotels.

March 31,

December 31,

2015

2014

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

$

Restricted cash

Accounts receivable, net

Inventories

Prepaid expenses

Total current assets

Investment in hotel properties, net

Deferred financing fees, net

Goodwill

Other assets, net

Total assets

$

$

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

$

$

Accrued payroll and employee benefits

Dividends payable

Other current liabilities

Current portion of notes payable

Total current liabilities

Notes payable, less current portion

Capital lease obligations, less current portion

Other liabilities

Total liabilities

Commitments and contingencies

 —

 —

Equity:

Stockholders' equity:

Preferred stock, $0.01 par value, 100,000,000 shares authorized.

8.0% Series D Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at March 31, 2015 and December 31, 2014, stated at liquidation preference of $25.00 per share

Common stock, $0.01 par value, 500,000,000 shares authorized, 207,518,510 shares issued and outstanding at March 31, 2015 and 204,766,718 shares issued and outstanding at December 31, 2014

Additional paid in capital

Retained earnings

Cumulative dividends

Total stockholders' equity

Non-controlling interests in consolidated joint ventures

Total equity

Total liabilities and equity

$

$

Three Months Ended March 31,

2015

2014

(unaudited)

Revenues

Room

$

$

Food and beverage

Other operating

Total revenues

Operating expenses

Room

Food and beverage

Other operating

Advertising and promotion

Repairs and maintenance

Utilities

Franchise costs

Property tax, ground lease and insurance

Property general and administrative

Corporate overhead

Depreciation and amortization

Total operating expenses

Operating income

Interest and other income

Interest expense

Income (loss) before income taxes

Income tax provision

Net income (loss)

Income from consolidated joint ventures attributable to non-controlling interests

Preferred stock dividends

Loss attributable to common stockholders

$

$

Basic and diluted per share amounts:

Basic and diluted loss attributable to common stockholders per common share

$

$

Basic and diluted weighted average common shares outstanding

Dividends declared per common share

$

$

Three Months Ended March 31,

2015

2014

Net income (loss)

$

$

Operations held for investment:

  Depreciation and amortization

  Amortization of lease intangibles

  Interest expense

  Income tax provision

Non-controlling interests:

  Income from consolidated joint ventures attributable to non-controlling interests

  Depreciation and amortization

  Interest expense

EBITDA

Operations held for investment:

  Amortization of deferred stock compensation

  Amortization of favorable and unfavorable contracts, net

  Non-cash straightline lease expense

  Capital lease obligation interest - cash ground rent

  Gain on sale of assets

 —

  Closing costs - completed acquisitions

 —

  Prior year property tax adjustments, net

  Boston Park Plaza relaunch costs

 —

  Lease termination costs

 —

  Costs associated with CEO severance

 —

Non-controlling interests:

  Non-cash straightline lease expense

  Prior year property tax adjustments, net

 —

Adjusted EBITDA

$

$

Three Months Ended March 31,

2015

2014

Net income (loss)

$

$

Operations held for investment:

  Real estate depreciation and amortization

  Amortization of lease intangibles

  Gain on sale of assets

 —

Non-controlling interests:

  Income from consolidated joint ventures attributable to non-controlling interests

  Real estate depreciation and amortization

FFO

Operations held for investment:

  Preferred stock dividends

  Amortization of favorable and unfavorable contracts, net

  Non-cash straightline lease expense

  Non-cash interest related to gain on derivatives, net

 —

  Closing costs - completed acquisitions

 —

  Prior year property tax adjustments, net

  Boston Park Plaza relaunch costs

 —

  Lease termination costs

 —

  Costs associated with CEO severance

 —

  Amortization of deferred stock compensation associated with CEO severance

 —

Non-controlling interests:

  Non-cash straightline lease expense

  Prior year property tax adjustments, net

 —

Adjusted FFO available to common stockholders

$

$

FFO per diluted share

$

$

Adjusted FFO available to common stockholders per diluted share

$

$

Basic weighted average shares outstanding

Shares associated with unvested restricted stock awards

Diluted weighted average shares outstanding

Quarter Ended

June 30, 2015

Low

High

Net income

$

$

  Depreciation and amortization

  Amortization of lease intangibles

  Interest expense

  Income tax provision

  Non-controlling interests

  Amortization of deferred stock compensation

  Non-cash straightline lease expense

  Capital lease obligation interest - cash ground rent

Adjusted EBITDA

$

$

Net income

$

$

  Real estate depreciation and amortization

  Amortization of lease intangibles

  Non-controlling interests

  Preferred stock dividends

  Non-cash straightline lease expense

Adjusted FFO available to common stockholders

$

$

Adjusted FFO available to common stockholders per diluted share

$

$

Diluted weighted average shares outstanding

Year Ended

December 31, 2015

Low

High

Net income

$

$

  Depreciation and amortization

  Amortization of lease intangibles

  Interest expense

  Income tax provision

  Non-controlling interests

  Amortization of deferred stock compensation

  Non-cash straightline lease expense

  Capital lease obligation interest - cash ground rent

  Prior year property tax adjustments, net

  Boston Park Plaza relaunch costs

  Lease termination costs

  Costs associated with CEO severance

Adjusted EBITDA

$

$

Net income

$

$

  Real estate depreciation and amortization

  Amortization of lease intangibles

  Non-controlling interests

  Preferred stock dividends

  Non-cash straightline lease expense

  Prior year property tax adjustments, net

  Boston Park Plaza relaunch costs

  Lease termination costs

  Costs associated with CEO severance

  Amortization of deferred stock compensation associated with CEO severance

Adjusted FFO available to common stockholders

$

$

Adjusted FFO available to common stockholders per diluted share

$

$

Diluted weighted average shares outstanding

Three Months Ended

March 31, 2015

Three Months Ended March 31, 2014

Actual/Comparable (1)

Actual (2)

Acquisition (3)

Comparable (4)

Number of Hotels

Number of Rooms

Hotel EBITDA Margin (5)

Hotel EBITDA Margin adjusted for non-current year property tax related adjustments, net (6)

Hotel Revenues

    Room revenue

$

$

$

$

    Food and beverage revenue

    Other operating revenue

Total Hotel Revenues

Hotel Expenses

    Room expense

    Food and beverage expense

    Other hotel expense

    General and administrative expense

Total Hotel Expenses

Hotel EBITDA

Non-current year property tax related adjustments, net

 —

Hotel EBITDA adjusted for non-current year property tax related adjustments, net

Non-hotel operating income

 —

Amortization of lease intangibles

 —

Amortization of favorable and unfavorable contracts, net

 —

Non-cash straightline lease expense

 —

Capital lease obligation interest - cash ground rent

 —

Non-current year property tax related adjustments, net

 —

Boston Park Plaza relaunch costs

 —

 —

 —

Lease termination costs

 —

 —

 —

Corporate overhead

 —

Depreciation and amortization

Operating Income

Interest and other income

 —

Interest expense

 —

Income tax provision

 —

Net Income (Loss)

$

$

$

$

(1)

Actual/Comparable represents the Company's ownership results for the 30 hotels held for investment as of March 31, 2015.

(2)

Actual represents the Company's ownership results for the 29 hotels held for investment as of March 31, 2014, adjusted to conform to the industry's Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition, which became effective January 1, 2015. In addition, the room count has been adjusted to include four rooms, two rooms and one room added by the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Courtyard by Marriott Los Angeles and the Hyatt Regency San Francisco, respectively, during the second quarter of 2014, two rooms added by the Renaissance Los Angeles Airport during the third quarter of 2014, and two rooms and one room added by the Hilton New Orleans and the Hyatt Regency San Francisco, respectively, during the first quarter of 2015.

(3)

Acquisition for the three months ended March 31, 2014 represents prior ownership results for the Marriott Wailea acquired July 17, 2014, along with the Company's pro forma adjustment for depreciation expense. The room count has been adjusted to temporarily remove three rooms from the Marriott Wailea during the third quarter of 2014.

(4)

Comparable represents the Company's ownership results, prior ownership results and the Company's pro forma adjustment for depreciation expense as applicable for the 30 Comparable Hotels.

(5)

Hotel EBITDA Margin is calculated as Hotel EBITDA divided by Total Hotel Revenues.

(6)

Hotel EBITDA Margin for the three months ended March 31, 2015 includes the additional net benefit of $0.2 million related to prior year property tax related adjustments. Excluding these non-current year adjustments, Actual/Comparable Hotel EBITDA margin for the three months ended March 31, 2015 would have been 26.2%. Hotel EBITDA Margin for the three months ended March 31, 2014 includes the additional net benefit of $2.9 million related to prior year property tax related adjustments. Excluding these non-current year adjustments, Actual and Comparable Hotel EBITDA margins for the three months ended March 31, 2014 would have been 23.0% and 24.0%, respectively.