In its Q1 2021 earnings report on Tuesday, Ryman Hospitality Properties reported it had agreed to acquire the remaining 35% ownership interest in Gaylord Rockies joint venture along with approximately 130 acres of undeveloped, adjacent land for US$210 million.
The all-in purchase price represents an approximate 7% to 7.5% capitalization rate on potential 2023E stabilized net operating income and a 12.5x to 13.0x forward multiple on potential 2023 estimated Adjusted EBITDAre. Excluding the purchase price for the land, the acquisition of the remaining 35% equates to an approximate 7.5% to 8% capitalization rate on potential 2023E stabilized net operating income and a 12x to 12.5x forward multiple on potential 2023 estimated Adjusted EBITDAre.
Funding for the transaction will be a combination of cash on hand and additional borrowings from the company’s revolving credit facility. The lodging REIT expects the transaction to close in May 2021.
Highlights from Q1 earnings:
- Through the end of first quarter 2021, rebooked 1.6 million room nights, or approximately 60% of total room nights cancelled as a result of COVID-19
- Average monthly cash burn for the first quarter of 2021 was approximately US$17.9 million, better than the expected range of US$23-26 million provided on 4Q-2020 earnings call
- Subsequent to quarter’s end, announced the anticipated July 1, 2021 reopening of Gaylord National
C. Patrick Scholes, Truist Securities wrote on Tuesday that adjusted EBITDAre (ex-non-controlling interest/Rockies) was (US$21.7M) versus its projection of (US$10.9M) and consensus of (US$11.1M, wide consensus). AFFO/share of (US$0.91) was below its estimate of (US$0.84) and consensus of (US$0.66, wide consensus). Rooms RevPAR was (73.1%) y/y versus its estimate of (55.2%). Same-store total RevPAR was (75.3%) y/y. The results compare to the U.S. luxury/upper upscale industry average (includes all customer segments) in 1Q of (43.1%) and U.S. industry-wide group business for luxury/upper upscale hotels of (79%).
Absolute RevPAR comparisons showed US$31.02 in 1Q21 versus US$115.36 in 1Q20, US$41.18 in 4Q20 (sequentially lower in part due to holiday programming in 4Q20, we assume, and likely one of the few companies in our coverage that will have sequentially worse results in 1Q21 vs. 4Q20) and US$151.61 (ex-Rockies) for 1Q19.
Scholes added, that Truist views the 1Q earnings miss driven by hospitality revenues: US$69.8M versus its US$76.8M projection. Consensus of three estimates including Truists was US$84.6M – the other two estimates were north of US$90M.
Colin Reed, chairman and CEO of Ryman Hospitality Properties, said, “I am very pleased with our performance this quarter and am encouraged by the steadily improving conditions for the travel industry. The United States vaccine rollout continues to progress, and we believe consumer confidence is growing. We are seeing increasing demand for our unique offerings, our conversations with meeting planners continue to be encouraging, and we are seeing fewer cancellations and continued rebooking activity.
“In light of this momentum and our positive long-term outlook on our business model, we are pleased to announce that we have reached an agreement to acquire the remaining 35% ownership interest in the Gaylord Rockies JV along with approximately 130 acres of undeveloped, adjacent land for $210 million. Despite having just one full year of results prior to COVID-19, we believe Gaylord Rockies is positioned to be a strong contributor to our future performance, and we are thrilled to take advantage of this tremendous opportunity.
“We were also pleased to have our resort pool enhancements at Gaylord Palms open in time for the Spring Break period and have received positive feedback from our guests. Our rooms and meeting space expansion was completed in April, and we look forward to hosting our first guests in the months ahead. Combined with our freshly refurbished room inventory at Gaylord National, which we anticipate completing prior to its July 1, 2021 reopening, we are in a prime position to welcome back groups across our portfolio.”