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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2022

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                   to    
 
Commission File Number 001-35169

RLJ LODGING TRUST
(Exact Name of Registrant as Specified in Its Charter)

Maryland 27-4706509
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
3 Bethesda Metro Center, Suite 1000  
Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
(301) 280-7777
(Registrant’s Telephone Number, Including Area Code)
  

Securities registered pursuant to Section 12 (b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Common Shares of beneficial interest, par value $0.01 per shareRLJNew York Stock Exchange
$1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per shareRLJ-ANew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer  Accelerated filer 
Non-accelerated filer  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 
As of April 28, 2022, 166,843,586 common shares of beneficial interest of the Registrant, $0.01 par value per share, were outstanding.



TABLE OF CONTENTS
 
  Page
   
   
 
   
 Consolidated Financial Statements (unaudited) 
 
 
 
 
 
   
   
   
   
 
 

ii

PART I. FINANCIAL INFORMATION
 
Item 1.         Financial Statements
RLJ Lodging Trust
Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
(unaudited)
March 31, 2022December 31, 2021
Assets  
Investment in hotel properties, net$4,155,048 $4,219,116 
Investment in unconsolidated joint ventures6,644 6,522 
Cash and cash equivalents479,047 665,341 
Restricted cash reserves43,254 48,528 
Hotel and other receivables, net of allowance of $322 and $274, respectively37,876 31,091 
Lease right-of-use assets143,606 144,988 
Prepaid expense and other assets56,182 33,390 
Total assets$4,921,657 $5,148,976 
Liabilities and Equity  
Debt, net$2,210,725 $2,409,438 
Accounts payable and other liabilities129,962 155,136 
Advance deposits and deferred revenue21,434 20,047 
Lease liabilities122,326 123,031 
Accrued interest8,210 19,110 
Distributions payable8,208 8,347 
Total liabilities2,500,865 2,735,109 
Commitments and Contingencies (Note 10)
Equity 
Shareholders’ equity: 
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized
Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2022 and December 31, 2021366,936 366,936 
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 166,843,586 and 166,503,062 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively1,668 1,665 
Additional paid-in capital3,097,166 3,092,883 
Distributions in excess of net earnings(1,069,769)(1,046,739)
Accumulated other comprehensive income (loss)11,214 (17,113)
Total shareholders’ equity2,407,215 2,397,632 
Noncontrolling interests:  
Noncontrolling interest in the Operating Partnership6,209 6,316 
Noncontrolling interest in consolidated joint ventures7,368 9,919 
Total noncontrolling interests13,577 16,235 
Total equity2,420,792 2,413,867 
Total liabilities and equity$4,921,657 $5,148,976 

The accompanying notes are an integral part of these consolidated financial statements.
1

RLJ Lodging Trust
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Amounts in thousands, except share and per share data)
(unaudited)
 For the three months ended March 31,
 20222021
Revenues
Operating revenues
Room revenue$205,779 $102,772 
Food and beverage revenue20,901 6,242 
Other revenue16,219 10,538 
Total revenues242,899 119,552 
Expenses
Operating expenses
Room expense53,828 29,427 
Food and beverage expense16,169 4,556 
Management and franchise fee expense20,388 5,361 
Other operating expense68,654 49,120 
Total property operating expenses159,039 88,464 
Depreciation and amortization46,865 46,943 
Impairment losses 5,946 
Property tax, insurance and other22,513 20,081 
General and administrative14,134 10,800 
Transaction costs62 60 
Total operating expenses242,613 172,294 
Other income, net7,285 465 
Interest income172 384 
Interest expense(24,561)(27,895)
Gain on sale of hotel properties, net1,417 1,083 
Loss before equity in income (loss) from unconsolidated joint ventures(15,401)(78,705)
Equity in income (loss) from unconsolidated joint ventures122 (298)
Loss before income tax expense(15,279)(79,003)
Income tax expense(190)(114)
Net loss(15,469)(79,117)
Net loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership104 396 
Noncontrolling interest in consolidated joint ventures118 736 
Net loss attributable to RLJ(15,247)(77,985)
Preferred dividends(6,279)(6,279)
Net loss attributable to common shareholders$(21,526)$(84,264)
Basic and diluted per common share data:
Net loss per share attributable to common shareholders$(0.13)$(0.51)
Weighted-average number of common shares164,179,661 163,826,009 
2

Comprehensive income (loss):
Net loss$(15,469)$(79,117)
Unrealized gain on interest rate derivatives34,193 16,720 
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net(5,866) 
Comprehensive income (loss)12,858 (62,397)
Comprehensive loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership104 396 
Noncontrolling interest in consolidated joint ventures118 736 
Comprehensive income (loss) attributable to RLJ$13,080 $(61,265)
 
The accompanying notes are an integral part of these consolidated financial statements.
3


RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited) 
 Shareholders’ EquityNoncontrolling Interest 
 Preferred StockCommon Stock   
 SharesAmountSharesPar 
Value
Additional
Paid-in Capital
Distributions in excess of net earningsAccumulated Other Comprehensive
(Loss) Income
Operating
Partnership
Consolidated
Joint 
Ventures
Total 
Equity
Balance at December 31, 202112,879,475 $366,936 166,503,062 $1,665 $3,092,883 $(1,046,739)$(17,113)$6,316 $9,919 $2,413,867 
Net loss— — — — — (15,247)— (104)(118)(15,469)
Unrealized gain on interest rate derivatives— — — — — — 34,193 — — 34,193 
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net— — — — — — (5,866)— — (5,866)
Contributions from consolidated joint venture partners— — — — — — — — 156 156 
Distribution to consolidated joint venture partners— — — — — — — — (2,589)(2,589)
Issuance of restricted stock— — 432,779 4 (4)— — — —  
Amortization of share-based compensation— — — — 5,555 — — — — 5,555 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock— — (87,626)(1)(1,268)— — — — (1,269)
Forfeiture of restricted stock— — (4,629)  — — — —  
Distributions on preferred shares— — — — — (6,279)— — — (6,279)
Distributions on common shares and units— — — — — (1,504)— (3)— (1,507)
Balance at March 31, 202212,879,475 $366,936 166,843,586 $1,668 $3,097,166 $(1,069,769)$11,214 $6,209 $7,368 $2,420,792 
 
The accompanying notes are an integral part of these consolidated financial statements.

4

RLJ Lodging Trust
Consolidated Statements of Changes in Equity
(Amounts in thousands, except share data)
(unaudited)
 Shareholders’ EquityNoncontrolling Interest 
 Preferred StockCommon Stock   
 SharesAmountSharesPar 
Value
Additional 
Paid-in
Capital
Distributions in excess of net earningsAccumulated Other Comprehensive LossOperating
Partnership
Consolidated
Joint
Ventures
Total
Equity
Balance at December 31, 202012,879,475 $366,936 165,002,752 $1,650 $3,077,142 $(710,161)$(69,050)$7,869 $13,002 $2,687,388 
Net loss— — — — — (77,985)— (396)(736)(79,117)
Unrealized gain on interest rate derivatives— — — — — — 16,720 — — 16,720 
Contributions from consolidated joint venture partners— — — — — — — — 99 99 
Amortization of share-based compensation— — — — 2,944 — — — — 2,944 
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock— — (83,244)(1)(1,262)— — — — (1,263)
Forfeiture of restricted stock— — (1,382)— — — — — —  
Distributions on preferred shares— — — — — (6,279)— — — (6,279)
Distributions on common shares and units— — — — — (1,281)— (3)— (1,284)
Balance at March 31, 202112,879,475 $366,936 164,918,126 $1,649 $3,078,824 $(795,706)$(52,330)$7,470 $12,365 $2,619,208 

The accompanying notes are an integral part of these consolidated financial statements.

5

RLJ Lodging Trust
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
 For the three months ended March 31,
 20222021
Cash flows from operating activities  
Net loss$(15,469)$(79,117)
Adjustments to reconcile net loss to cash flow provided by (used in) operating activities:  
Gain on sale of hotel properties, net(1,417)(1,083)
Depreciation and amortization46,865 46,943 
Amortization of deferred financing costs1,684 1,321 
Other amortization403 (615)
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net(5,866) 
Equity in (income) loss from unconsolidated joint ventures(122)298 
Impairment losses 5,946 
Amortization of share-based compensation5,184 2,752 
Changes in assets and liabilities: 
Hotel and other receivables, net(6,946)(5,708)
Prepaid expense and other assets(4,254)(4,192)
Accounts payable and other liabilities(320)1,331 
Advance deposits and deferred revenue1,449 (3,966)
Accrued interest(10,900)7,082 
Net cash flow provided by (used in) operating activities10,291 (29,008)
Cash flows from investing activities  
Proceeds from sales of hotel properties, net34,125 3,990 
Improvements and additions to hotel properties(24,334)(9,901)
Contributions to unconsolidated joint ventures (165)
Net cash flow provided by (used in) investing activities9,791 (6,076)
Cash flows from financing activities  
Repayment of Revolver(200,000)(200,000)
Scheduled mortgage loan principal payments (900)
Repayments of Term Loans  (8,475)
Repurchase of common shares to satisfy employee tax withholding requirements(1,269)(1,263)
Distributions on preferred shares(6,279)(6,279)
Distributions on common shares(1,666)(1,650)
Distributions on and redemption of Operating Partnership units(3)(3)
Contributions from consolidated joint venture partners156 99 
Distribution to consolidated joint venture partners(2,589) 
Net cash flow used in financing activities(211,650)(218,471)
Net change in cash, cash equivalents, and restricted cash reserves(191,568)(253,555)
Cash, cash equivalents, and restricted cash reserves, beginning of year713,869 934,790 
Cash, cash equivalents, and restricted cash reserves, end of period$522,301 $681,235 

The accompanying notes are an integral part of these consolidated financial statements.
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RLJ Lodging Trust
Notes to the Consolidated Financial Statements
(unaudited)

1.              General

Organization
 
RLJ Lodging Trust (the "Company") was formed as a Maryland real estate investment trust ("REIT") on January 31, 2011. The Company is a self-advised and self-administered REIT that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company elected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2011.
 
Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through, RLJ Lodging Trust, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of March 31, 2022, there were 167,615,417 units of limited partnership interest in the Operating Partnership ("OP units") outstanding and the Company owned, through a combination of direct and indirect interests, 99.5% of the outstanding OP units.

As of March 31, 2022, the Company owned 97 hotel properties with approximately 21,400 rooms, located in 22 states and the District of Columbia.  The Company, through wholly-owned subsidiaries, owned a 100% interest in 95 of its hotel properties, a 95% controlling interest in one hotel property, and a 50% non-controlling interest in an entity owning one hotel property. The Company consolidates its real estate interests in the 96 hotel properties in which it holds a controlling interest, and the Company records the real estate interest in one hotel property in which it holds an indirect 50% non-controlling interest using the equity method of accounting. The Company leases 96 of the 97 hotel properties to its taxable REIT subsidiaries ("TRS"), of which the Company owns a controlling financial interest.

COVID-19

The global outbreak of the novel coronavirus, or COVID-19, and the public health measures that have been undertaken in response have had, and will likely continue to have, a material impact on the Company's financial results and liquidity. Since the extent to which the COVID-19 pandemic will continue to impact the Company's operations will depend on future developments that are highly uncertain, the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with reasonable certainty.
 
2.              Summary of Significant Accounting Policies
 
The Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on February 24, 2022 (the "Annual Report"), contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2021.

Basis of Presentation and Principles of Consolidation
 
The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the SEC applicable to financial information. The unaudited financial statements include all adjustments that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive income (loss), statements of changes in equity and statements of cash flows.

The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, included in the Annual Report.

The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interest in one hotel property in which it holds a 50% non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.
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Reclassifications
 
Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net loss and comprehensive income (loss), shareholders’ equity or cash flows.

Use of Estimates
 
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Given the additional and unforeseen effects from the COVID-19 pandemic, these estimates have become more challenging, and actual results could differ from those estimates.

Recently Issued Accounting Pronouncements
 
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate that was discontinued at the end of 2021 because of reference rate reform. The guidance was effective upon issuance and expires on December 31, 2022. Based on the Company's assessment, there was no material impact arising from this guidance and the Company did not elect to apply any of the optional expedients.

3.              Investment in Hotel Properties
 
Investment in hotel properties consisted of the following (in thousands):
March 31, 2022December 31, 2021
Land and improvements$972,633 $975,688 
Buildings and improvements3,964,442 4,001,875 
Furniture, fixtures and equipment689,967 691,057 
5,627,042 5,668,620 
Accumulated depreciation(1,471,994)(1,449,504)
Investment in hotel properties, net$4,155,048 $4,219,116 
 
For the three months ended March 31, 2022 and 2021, the Company recognized depreciation expense related to its investment in hotel properties of approximately $46.7 million and $46.8 million, respectively.

Impairments

During the three months ended March 31, 2021, the Company evaluated the recoverability of two hotel properties and recorded impairment losses of $5.9 million to adjust the hotels' carrying amounts to their estimated fair values. The fair values were determined based on the contractual sales price pursuant to an executed purchase and sale agreement (a Level 2 measurement in the fair value hierarchy). The sales of these hotel properties closed in May 2021. There was no impairment recorded during the three months ended March 31, 2022.

4.            Sale of Hotel Properties  

In connection with the sale of hotel properties for the three months ended March 31, 2022 and 2021, the Company recorded a net gain of $1.4 million and $1.1 million, respectively.

During the three months ended March 31, 2022, the Company sold the following hotel property for a sales price of approximately $35.5 million:

Hotel Property NameLocationSale DateRooms
Marriott Denver Airport @ Gateway ParkAurora, COMarch 8, 2022238 

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During the three months ended March 31, 2021, the Company sold the following hotel property for a sales price of approximately $4.4 million:
Hotel Property NameLocationSale DateRooms
Courtyard Houston SugarlandStafford, TXJanuary 21, 2021112 

5.          Revenue

For the three months ended March 31, 2022For the three months ended March 31, 2021
Room RevenueFood and Beverage RevenueOther RevenueTotal RevenueRoom RevenueFood and Beverage RevenueOther RevenueTotal Revenue
South Florida$37,411 $4,739 $2,222 $44,372 $20,827 $2,364 $1,756 $24,947 
Southern California23,591 1,661 2,158 27,410 11,905 339 1,407 13,651 
Northern California20,207 1,613 1,037 22,857 8,844 218 700 9,762 
Chicago8,960 1,622 460 11,042 6,392 683 358 7,433 
Houston8,528 569 867 9,964 5,323 98 668 6,089 
Austin8,382 671 740 9,793 3,607 223 478 4,308 
Washington DC8,326 117 590 9,033 4,135 29 284 4,448 
New York City7,662 789 473 8,924 3,238 17 129 3,384 
Atlanta7,685 385 825 8,895 3,148 68 493 3,709 
New Orleans7,856 164 697 8,717 2,350  383 2,733 
Denver6,552 1,727 321 8,600 2,202 398 330 2,930 
Charleston6,738 1,196 502 8,436 3,177 300 402 3,879 
Orlando6,507 595 1,045 8,147 2,847 133 825 3,805 
Tampa6,492 766 606 7,864 2,847 384 313 3,544 
Louisville4,845 1,993 879 7,717 1,781 368 355 2,504 
Other36,037 2,294 2,797 41,128 20,149 620 1,657 22,426 
Total$205,779 $20,901 $16,219 $242,899 $102,772 $6,242 $10,538 $119,552 



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6.              Debt
 
The Company's debt consisted of the following (in thousands):
March 31, 2022December 31, 2021
Senior Notes, net$987,534 $986,942 
Revolver 200,000 
Term Loans, net815,439 815,004 
Mortgage loans, net407,752 407,492 
Debt, net$2,210,725 $2,409,438 

Senior Notes

As of March 31, 2022 and December 31, 2021, respectively, the Company's Senior Notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
Carrying Value at
Interest RateMaturity DateMarch 31, 2022December 31, 2021
Senior Notes due 2029 4.00%September 2029$500,000 $500,000 
Senior Notes due 2026 3.75%July 2026500,000 500,000 
1,000,000 1,000,000