CorePoint Lodging Reports Third Quarter 2020 Results

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CorePoint Lodging (CPLG) reported a net loss of $(8) million, or $(0.14) per share, for Q3 2020, an improvement from $(12) million year-over-year. Comparable RevPAR dropped 42.2% to $37.35, with occupancy at 52.3%. Adjusted EBITDAre was $8 million, a decline of 78.9% from 2019. The company sold 20 non-core hotels for $97 million this quarter, totaling 51 hotels sold in 2020 for $233 million. They remain cautious about future performance amid ongoing pandemic impacts but are positioned for recovery in midscale segments.

Positive

Reduced net loss to $(8) million from $(12) million YoY, indicating improved financial performance.
Achieved RevPAR index market share gain of 798 basis points despite a 42.2% decline in comparable RevPAR.
Successfully disposed of 51 non-core hotels, generating $233 million in gross proceeds in 2020.

Negative

Total revenues fell by 50.2% to $107 million compared to Q3 2019.
Adjusted EBITDAre decreased by 78.9% to $8 million YoY.
Occupancy dropped 1,650 basis points from last year, driven by reduced hotel demand due to COVID-19.

11/05/2020 - 04:20 PM

IRVING, Texas , Nov. 05, 2020 (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 third quarter ended September 30, 2020.

Third Quarter 2020 and Subsequent Highlights

Net loss of $(8) million, or $(0.14) loss per fully diluted share
Comparable RevPAR of $37.35, a decrease of 42.2% from the same period in 2019 with 798 basis points of RevPAR Index market share gain
Adjusted EBITDAre of $8 million
Adjusted FFO attributable to common stockholders of $0 million
All of the Company’s hotels are currently open and operational
Hotel room demand was generally consistent during the quarter with comparable occupancy of 52.3%
Sold 20 non-core hotels for a combined gross sales price of approximately $97 million during the quarter
Subsequent to quarter end, sold one non-core hotel for a gross sales price of approximately $7 million, resulting in a total of 51 non-core hotels sold during 2020 for a combined gross sales price of approximately $233 million and a total of 95 non-core hotels sold since March 2019 for a combined gross sales price of approximately $410 million
An additional 22 hotels are under contract with qualified buyers, expected to generate approximately $110 million of gross proceeds, and expected to close by the end of the second quarter of 2021, subject to market and other conditions

“We continue to believe that our portfolio of select-service hotels predominately focused on the midscale segments is well positioned to capture the current levels of transient room demand,” noted Keith Cline, President and Chief Executive Officer of CorePoint. “Our portfolio footprint is mostly in suburban markets, as well as drive to destination markets and interstate adjacent locations. This portfolio positioning has enabled us to benefit from leisure travel and some recovery in certain segments of corporate travel related to essential businesses. When combined with our aggressive capital preservation and cost containment efforts at both the property and corporate level, we achieved a positive hotel level Adjusted EBITDAre of approximately $12 million for the third quarter resulting in a total company, excluding capital expenditures, operating cash break-even position for the quarter.”

“While we are encouraged by our third quarter results, we remain cautious about the uncertainty in the months ahead for the lodging industry as we continue to navigate the ongoing global pandemic. The fourth quarter and the first quarter have historically been part of our slower non-peak season. If those historical trends hold, we are cognizant of the potential for softening in operating metrics, but we are prepared to adjust our cost control initiatives as overall business conditions evolve.”

Mr. Cline added, “Throughout the quarter, we continued our successful execution of our real estate strategy. This strategy is a proven value creator for our business. Since the beginning of the year, we have closed on the sale of 51 hotels for gross proceeds of $233 million at attractive valuations and have paid down $160 million of debt.”

Selected Statistical and Financial Data
(Unaudited, $ in millions, except RevPAR and ADR)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2020				2019				% Change		2020				2019				% Change
Net loss	$	(8	)		$	(12	)		33.3	%	$	(136	)		$	(58	)		(134.5	%)
Total revenues	$	107			$	215			(50.2	%)	$	325			$	642			(49.4	%)

Adjusted EBITDAre	$	8			$	38			(78.9	%)	$	10			$	127			(92.1	%)
Adjusted FFO attributable to common stockholders	$	—			$	28			(100.0	%)	$	(14	)		$	81			(117.3	%)

Comparable Occupancy ⁽¹⁾	52.3			%	68.8			%	(1,650) bps		47.9			%	69.0			%	(2,110) bps
Comparable ADR ⁽¹⁾	$	71.42			$	93.95			(24.0	%)	$	78.07			$	94.52			(17.4	%)
Comparable RevPAR ⁽¹⁾	$	37.35			$	64.67			(42.2	%)	$	37.38			$	65.25			(42.7	%)
Comparable Hotel Adjusted EBITDAre margin ⁽¹⁾	12.2			%	22.5			%	(1,030) bps		8.5			%	25.2			%	(1,670) bps

____________________

(1)

Comparable Hotels includes 213 hotels of the total 220 hotels owned as of September 30, 2020.

Third Quarter 2020 Financial and Operating Results

The Company reported net loss of $(8) million, or $(0.14) loss per fully diluted share, for the quarter ended September 30, 2020, compared to net loss of $(12) million, or $(0.22) loss per fully diluted share, for the quarter ended September 30, 2019. Decreases in year-over-year revenues were offset by lower operating and other expenses.

Comparable RevPAR for the third quarter of 2020 decreased 42.2% over the same period of 2019 with 798 basis points of RevPAR Index market share gains. The decline in comparable RevPAR was driven by a 24.0% decrease in comparable ADR and 1,650 bps decrease in comparable occupancy. The decline in occupancy was primarily driven by a significant reduction in hotel demand resulting from the impact of the COVID-19 pandemic. Top performing markets included Sacramento, California, Phoenix, Arizona, Tampa-St. Petersburg, Florida and Central Florida.

Adjusted EBITDAre for the third quarter of 2020 was $8 million as compared to $38 million for the same period in 2019. The year-over-year decrease was primarily due to decreases in rooms revenue, including the impact of sold hotels and a reduction in room demand due to the COVID-19 pandemic.

Operations Update and Measures to Mitigate Impact of COVID-19

Due to the operational and financial impact from the COVID-19 pandemic and requirements from state and local government and public health authorities, CorePoint, along with its third-party manager, temporarily did not accept transient guests or most other reservations at 30 of the Company’s hotels, beginning in late March, 2020, in order to minimize ongoing operating expenses and conserve cash. By early August 2020, the Company had resumed operations at all of its locations.

Comparable occupancy by month during the third quarter of 2020 reflected consistent hotel room demand as the Company’s hotels benefited from leisure travel, certain segments of corporate travel related to essential businesses and being located in drive-to destinations. The following table summarizes select operating statistics for the months of July, August, and September of 2020:

	Comparable Occupancy		Comparable ADR		Comparable RevPAR
July 2020	53.1	%	$	71.27	$	37.86
August 2020	52.7	%	$	71.95	$	37.94
September 2020	51.0	%	$	71.01	$	36.21

The Company continues to implement the following measures to control costs and preserve capital to mitigate the ongoing operational and financial impact from the COVID-19 pandemic:

Reducing staffing levels, eliminating non-essential amenity offerings, minimizing spending at all hotels, and closing sections and / or floors at some hotels to maximize efficiencies.
Deferring all non-essential capital investments and expenditures for the balance of 2020, with the exception of life safety and critical operational needs.
Implementing cost containment measures with respect to all other corporate spending.
Related to Board and executive compensation, CorePoint’s Board of Directors will be paid their board fees for the remainder of 2020 in the form of deferred stock units and Mr. Cline has agreed to take a portion of his compensation for the remainder of 2020 in the form of restricted stock in lieu of cash.

Dispositions

Since CorePoint commenced its initial non-core disposition program of 78 hotels in March 2019, 66 of these hotels have been successfully sold for a combined gross sales price of approximately $265 million and an additional 5 of these hotels are under contract with qualified buyers, expected to generate approximately $19 million of gross proceeds. The Company’s expanded non-core disposition program includes an additional phase two group of 132 hotels. Of the phase two hotels, 29 have been successfully sold for a combined gross sales price of approximately $145 million and an additional 17 phase two hotels are under contract with qualified buyers, expected to generate approximately $91 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.

Hotel Disposition Summary ($ in millions):

Phase 1

Phase 2

Total

Total number of non-core hotels:

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