On the day Hilton Worldwide announced Q1 2016 results that showed revenue increased more than expected, it also announced that effective May 16 Thomas Baltimore, Jr., will become president and CEO of its planned REIT. Hilton also named Sean Dell’Orto as financial chief of the REIT.
Hilton’s REIT will include about 70 properties, likely worth more than US$10 billion, and representing a little more than half of the company’s portfolio of owned or leased hotels.
R.W. Baird analyst David Loeb said the announcement should alleviate some Hilton investor uncertainty ahead of the Form 10 filing later this quarter that will outline the REIT’s expected portfolio, capital structure, and growth strategies.
Baltimore is a co-founder of RLJ with Robert Johnson and served as its CEO since its IPO in 2011. During Baltimore’s tenure at RLJ, it became one of the largest hotel REITs with 125 hotels in 21 states with nearly 21,000 rooms and an enterprise value in excess of US$4 billion. Under Baltimore’s leadership, RLJ has consistently focused on strong asset management, prudent capital allocation and maintaining a low levered balance sheet.
“It is bittersweet to be leaving RLJ Lodging Trust,” Baltimore said. “It has been an honor and privilege to work with and partner with Bob Johnson and the incredible team of men and women assembled over the last 17 years. I am proud of our achievements, especially over the last 5 years as a public company… Joining Hilton Worldwide as president and CEO of their planned hotel REIT is the only opportunity within our industry that could have compelled me to make this move. I look forward to the next chapter to work with Chris Nassetta and his superb team at Hilton.”
RLJ has appointed Ross Bierkan, executive vice president and CIO, as interim CEO.
Meanwhile, Hilton Worldwide reported on Wednesday that profits more than doubled in the first quarter, helped by an income tax benefit. In Q1, Hilton earned US$309 million, or 31 cents a share, compared with US$150 million, or 15 cents a share, a year ago. RevPAR rose a currency-adjusted 2.1% versus a forecast of 2% to 4%. The company expects RevPAR to increase between 3% and 5% in the second quarter.
The company also issued in-line guidance for earnings in the current quarter, projecting an adjusted profit per-share between 25 cents and 27 cents.