RYMAN HOSPITALITY PROPERTIES, INC. Ryman Hospitality Properties, Inc. ("Ryman") is aDelaware corporation that conducts its operations so as to maintain its qualification as a real estate investment trust ("REIT") for federal income tax purposes. The Company conducts its business through an umbrella partnership REIT, in which all of its assets are held by, and operations are conducted through,RHP Hotel Properties, LP , a subsidiary operating partnership (the "Operating Partnership").RHP Finance Corporation , aDelaware corporation ("Finco"), was formed as a wholly-owned subsidiary of theOperating Partnership for the sole purpose of being a co-issuer of debt securities with theOperating Partnership . Neither Ryman nor Finco has any material assets, other than Ryman's investment in theOperating Partnership and theOperating Partnership's owned subsidiaries. Neither theOperating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form 10-Q and Ryman's other reports, documents or other information filed with theSecurities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In this report, we use the terms the "Company," "we" or "our" to refer toRyman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year endedDecember 31, 2021 , included in our Annual Report on Form 10-K that was filed with theSEC onFebruary 25, 2022 .
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements concern our goals, beliefs, expectations, strategies, objectives,
plans, future operating results and underlying assumptions, and other statements
that are not necessarily based on historical facts. Without limitation, you can
identify these statements by the fact that they do not relate strictly to
historical or current facts, and these statements may contain words such as
"may," "will," "could," "should," "might," "projects," "expects," "believes,"
"anticipates," "intends," "plans," "continue," "estimate," or "pursue," or the
negative or other variations thereof or comparable terms. In particular, they
include statements relating to, among other things, future actions, strategies,
future performance, the outcome of contingencies such as legal proceedings and
future financial results. These also include statements regarding (i) the
anticipated impact of the novel coronavirus disease (COVID-19) pandemic on
future travel, transient and group demand, our results of operations and
liquidity, and efforts to rebook customers for future dates; (ii) the effect of
our election to be taxed as a REIT and maintain REIT status for federal income
tax purposes; (iii) the holding of our non-qualifying REIT assets in one or more
taxable REIT subsidiaries ("TRSs"); (iv) the suspension of our dividend and our
dividend policy, including the frequency and amount of any dividend we may pay;
(v) our strategic goals and potential growth opportunities, including future
expansion of the geographic diversity of our existing asset portfolio through
acquisitions and investment in joint ventures; (vi) Marriott
International, Inc.'s ("Marriott") ability to effectively manage our hotels and
other properties; (vii) our anticipated capital expenditures and investments;
(viii) the potential operating and financial restrictions imposed on our
activities under existing and future financing agreements including our credit
facility and other contractual arrangements with third parties, including
management agreements with Marriott; (ix) our use of cash during the remainder
of 2022; (x) our ability to borrow available funds under our credit facility;
(xi) our expectations about successfully amending the agreements governing our
indebtedness should the need arise; (xii) the effects of inflation and increased
costs on our business; and (xiii) any other business or operational matters. We
have based these forward-looking statements on our current expectations and
projections about future events.
We caution the reader that forward-looking statements involve risks and
uncertainties that cannot be predicted or quantified, and, consequently, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements include, among
other things, risks and uncertainties associated with the COVID-19 pandemic,
including the effects of the COVID-19 pandemic on us and the hospitality and
entertainment industries generally, the effects of the COVID-19 pandemic on the
demand for travel, transient and group business (including government-imposed
restrictions or guidelines), levels of consumer confidence in the safety of
travel and group gatherings as a result
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of COVID-19, the length and severity of the COVID-19 pandemic inthe United States and the pace of recovery following the COVID-19 pandemic, the duration and severity of the COVID-19 pandemic in the markets where our assets are located, the economic conditions affecting the hospitality business generally, the geographic concentration of our hotel properties, business levels at our hotels, the effects of inflation on our business, including the effects on costs of labor and supplies, our ability to remain qualified as a REIT, our ability to execute our strategic goals as a REIT, our ability to generate cash flows to support dividends, future board determinations regarding the timing and amount of dividends and changes to the dividend policy, our ability to borrow funds pursuant to our credit agreements and to refinance indebtedness and/or to successfully amend the agreements governing our indebtedness in the future, changes in interest rates, including future changes from the London Inter-Bank Offered Rate ("LIBOR") to a different base rate, and those factors described elsewhere in this Quarterly Report on Form 10-Q, including in Item 1A, "Risk Factors," and our Annual Report on Form 10-K for the year endedDecember 31, 2021 or described from time to time in our other reports filed with theSEC . Any forward-looking statement made in this Quarterly Report on Form 10-Q speaks only as of the date on which the statement is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements we make in this Quarterly Report on Form 10-Q, except as may be required by law.
Overview
We operate as a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. Our core holdings include a network of five upscale, meetings-focused resorts totaling 9,917 rooms that are managed by Marriott under the Gaylord Hotels brand. These five resorts, which we refer to as ourGaylord Hotels properties, consist of theGaylord Opryland Resort & Convention Center inNashville, Tennessee ("Gaylord Opryland"), theGaylord Palms Resort & Convention Center nearOrlando, Florida ("Gaylord Palms"), theGaylord Texan Resort & Convention Center nearDallas, Texas ("Gaylord Texan"), theGaylord National Resort & Convention Center nearWashington D.C. ("Gaylord National"), and theGaylord Rockies Resort & Convention Center ("Gaylord Rockies"), which was previously owned by a joint venture (the "Gaylord Rockies joint venture"), in which we owned a 65% interest. OnMay 7, 2021 , we purchased the remaining 35% interest in the Gaylord Rockies joint venture. Our other owned hotel assets managed by Marriott include theInn at Opryland , an overflow hotel adjacent to Gaylord Opryland, and theAC Hotel atNational Harbor ,Washington D.C. ("AC Hotel "), an overflow hotel adjacent to Gaylord National. We also own and operate media and entertainment assets including theGrand Ole Opry , the legendary weekly showcase of country music's finest performers for 96 years; theRyman Auditorium , the storied live music venue and former home of theGrand Ole Opry located in downtownNashville ;WSM-AM , the Opry's radio home;Ole Red , a brand ofBlake Shelton -themed bar, music venue and event spaces; twoNashville -based assets managed by Marriott - theWildhorse Saloon and the General Jackson Showboat; and as ofMay 31, 2022 , Block 21, a mixed-use entertainment, lodging, office, and retail complex located inAustin, Texas ("Block 21"). We also own a 50% interest in a joint venture that creates and distributes a linear multicast and over-the-top channel dedicated to the country music lifestyle ("Circle"). See "OEG Transaction" below for additional disclosure regarding our sale of a 30% interest in the business effectiveJune 16, 2022 . Each of our award-winningGaylord Hotels properties incorporates not only high quality lodging, but also at least 400,000 square feet of meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, ourGaylord Hotels properties provide a convenient and entertaining environment for convention guests. OurGaylord Hotels properties focus on the large group meetings market inthe United States . See "Cautionary Note Regarding Forward-Looking Statements" in this Item 2 and Item 1A, "Risk Factors," in Part II of this Quarterly Report on Form 10-Q and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for important information regarding forward-looking statements made in this report and risks and uncertainties we face. 24 Table of Contents Impact of COVID-19 Pandemic The COVID-19 pandemic has been and continues to be a complex and evolving situation, causing unprecedented levels of disruption of our business. Although our assets are currently open and operating without capacity restrictions and business levels continue to recover, there remains significant uncertainty surrounding the full extent of the impact of the COVID-19 pandemic on our future results of operations and financial position. The majority of our businesses have been open and operating throughout 2021 and 2022. However, Gaylord National remained closed during the first half of 2021 and reopenedJuly 1, 2021 . TheGrand Ole Opry andRyman Auditorium reopened for full-capacity publicly attended performances inMay 2021 . In addition, subsequent to theDecember 2020 downtownNashville bombing, the Wildhorse saloon reopened inApril 2021 . Cancelled room nights in the six months endedJune 30, 2022 decreased 49% from the six months endedJune 30, 2021 . Occupancy and average daily rate ("ADR") increased 35.4 points of occupancy and 17.4%, respectively, in the six months endedJune 30, 2022 as compared to the same period in 2021. Outside-the-room spend in the six months endedJune 30, 2022 increased 246.8% compared to the same period in 2021. Group stays have steadily increased in 2021 and 2022 and group nights on the books atJune 30, 2022 for the next five years is approximately 98% of total group room nights that were on the books atJune 30, 2019 for the corresponding following five years. In addition, the ADR of group room nights on the books atJune 30, 2022 is almost 8% higher than the ADR of the corresponding group room nights atJune 30, 2019 . Throughout the COVID-19 pandemic, we have continued to pay all required debt service payments on our indebtedness, lease payments, taxes and other payables. AtJune 30, 2022 , we had$754.6 million available for borrowing under our revolving credit facility and the OEG revolving credit facility and$179.2 million in unrestricted cash on hand. Our regular quarterly dividend is currently suspended. Our board of directors will consider a future dividend as permitted by our credit agreement and subject to our board of directors' determinations as to the amount of distributions and the timing thereof.
For additional discussion of the impact of the COVID-19 pandemic on our
business, see "Risk Factors" under Part I, Item 1A of our Annual Report on Form
10-K for the year ended
OEG Transaction
As more fully described in Note 2, "OEG Transaction," to the condensed consolidated financial statements included herein, onJune 16, 2022 , we and certain of our subsidiaries, includingOEG Attractions Holdings, LLC , which directly or indirectly owns the assets that comprise our Entertainment Segment ("OEG"), consummated the transactions pursuant to an investment agreement (the "Investment Agreement") withAtairos Group, Inc. ("Atairos") andA-OEG Holdings, LLC , an affiliate of Atairos (the "OEG Investor") and pursuant to which OEG issued and sold to the OEG Investor, and the OEG Investor acquired, 30% of the equity interests of OEG for approximately$296.0 million (the "OEG Transaction"). The purchase price for the OEG Transaction may be increased by$30.0 million if OEG achieves certain financial objectives in 2023 or 2024. We retained a controlling 70% equity interest in OEG and will continue to consolidate OEG and the other subsidiaries comprising our Entertainment segment in our consolidated financial statements. After the payment of transaction expenses, we used substantially all of the net proceeds from the OEG Transaction, together with the net proceeds we received from the OEG Term Loan (as defined below), to repay the outstanding balance of our existing$300 million term loan A and to pay down substantially all borrowings outstanding under our revolving credit facility. In connection with the OEG Transaction,OEG Borrower, LLC ("OEG Borrower") andOEG Finance, LLC ("OEG Finance"), each a wholly owned direct or indirect subsidiary of OEG, entered into a credit agreement (the "OEG Credit Agreement") withJPMorgan Chase Bank, N.A . that provides for (i) a senior secured term loan facility in an aggregate principal amount of$300.0 million (the "OEG Term Loan") and (ii) a senior secured revolving credit facility in an aggregate principal amount not to exceed$65.0 million (the "OEG Revolver"). The OEG Term Loan matures onJune 16, 2029 and the OEG Revolver matures onJune 16, 2027 . The OEG Term Loan bears interest at a rate equal to either, 25
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at OEG Borrower's election, (i) the Alternate Base Rate plus 4.00% or (b) Adjusted Term SOFR plus 5.00% (all as specifically more described in the OEG Credit Agreement). The OEG Revolver bears interest at a rate equal to either, at OEG Borrower's election, (i) the Alternate Base Rate plus 3.75% or (b) Adjusted Term SOFR plus 4.75%, which shall be subject to reduction in the applicable margin based upon OEG's First Lien Leverage Ratio (all as specifically more described in the OEG Credit Agreement). The OEG Term Loan and OEG Revolver are each secured by substantially all of the assets of OEG Finance and each of its subsidiaries (other than Block 21 and Circle, as more specifically described in the OEG Credit Agreement). No revolving credit advances were made under the
OEG Revolver at closing. Block 21 Acquisition
OnMay 31, 2022 , we purchased Block 21 for a stated purchase price of$260 million , as subsequently adjusted to$255 million pursuant to the terms of the purchase agreement, which includes the assumption of approximately$136 million of existing mortgage debt. Block 21 is the home of theAustin City Limits Live atThe Moody Theater ("ACL Live"), a 2,750-seat entertainment venue that serves as the filming location for theAustin City Limits television series. The Block 21 complex also includes the 251-roomW Austin Hotel , the 3TEN at ACL Live club and approximately 53,000 square feet of other Class A commercial space. We funded the cash portion of the purchase price with cash on hand and borrowings under our revolving credit facility. Block 21 assets are reflected in our Entertainment segment as ofMay 31, 2022 .
Gaylord Rockies Joint Venture
InMay 2021 , we purchased the remaining 35% ownership interest in the Gaylord Rockies joint venture. Prior toMay 2021 , we had a 65% ownership interest in the Gaylord Rockies joint venture, and our management concluded that the Company was the primary beneficiary of this previous variable interest entity ("VIE"). The financial position and results of operations of this previous VIE have been consolidated in the accompanying condensed consolidated financial statements included herein. We also purchased 130 acres of undeveloped land, adjacent to Gaylord Rockies inMay 2021 .
Gaylord Palms Expansion
InApril 2021 , we completed a$158 million expansion ofGaylord Palms , which includes an additional 302 guest rooms and 96,000 square feet of meeting space, an expanded resort pool and events lawn, and a new multi-level parking structure.
Circle
In 2019, we acquired a 50% equity interest in Circle, and we have made$27.0 million in capital contributions throughJune 30, 2022 . In addition, we intend to contribute up to an additional$6.0 million in the remainder of 2022 for working capital needs. Circle launched its broadcast network onJanuary 1, 2020 , with sixteen original shows and two major distribution partnerships. As ofJuly 2022 , Circle is available to more than 70% ofU.S. television households via over-the-air and cable television and is available through multiple online streaming services covering over 193 million monthly average users.
Our Long-Term Strategic Plan
Our goal is to be the nation's premier hospitality REIT for group-oriented meeting hotel assets in urban and resort markets.
Existing Hotel Property Design. OurGaylord Hotels properties focus on the large group meetings market inthe United States and incorporate meeting and exhibition space, signature guest rooms, food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so attendees' needs are met in one location. This strategy creates a better experience for both meeting planners and guests and has led to our currentGaylord Hotels properties claiming a place among the leading convention hotels in the country.
Expansion of
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alliances with one or more third parties. We will consider attractive investment
opportunities which meet our acquisition parameters, specifically,
group-oriented large hotels and overflow hotels with existing or potential
leisure appeal. We are generally interested in highly accessible upper-upscale
or luxury assets with over 400 hotel rooms in urban and resort group destination
markets. We also consider assets that possess significant meeting space or
present a repositioning opportunity and/or would significantly benefit from
capital investment in additional rooms or meeting space. We plan to expand the
geographic diversity of our existing asset portfolio through acquisitions.
Continued Investment in Our Existing Properties . We continuously evaluate and
invest in our current portfolio, and consider enhancements or expansions as part
of our long-term strategic plan. In 2021, we completed our $158 million
expansion of Gaylord Palms and we also completed our renovation of all of the
guestrooms at Gaylord National. In 2022, we began a re-concepting of the food
and beverage options at Gaylord National and have begun enhancements at Gaylord
Rockies to better position the property for our group customers.
Leverage Brand Name Awareness. We believe the Grand Ole Opry is one of the most
recognized entertainment brands in the United States . We promote the Grand Ole
Opry name through various media, including our WSM-AM radio station, the
Internet and television, and through performances by the Grand Ole Opry's
members, many of whom are renowned country music artists. As such, we have
alliances in place with multiple distribution partners in an effort to foster
brand extension. We believe that licensing our brand for products may provide an
opportunity to increase revenues and cash flow with relatively little capital
investment. We are continuously exploring additional products, such as
television specials and retail products, through which we can capitalize on our
brand affinity and awareness. To this end, we have invested in six Ole Red
locations, as well as Circle, and purchased Block 21. Further, as discussed
above, we recently completed the OEG Transaction, which we believe will expand
the distribution of our OEG brands.
Short-Term Capital Allocation. Prior to the COVID-19 pandemic, our short-term
capital allocation strategy focused on returning capital to stockholders through
the payment of dividends, in addition to investing in our assets and operations.
However, in March 2020 , we suspended our regular quarterly dividend payments.
Our board of directors will consider a future dividend as permitted by our
credit agreement. Any future dividend is subject to our board of directors'
determinations as to the amount and timing thereof.
Our Operations
Our ongoing operations are organized into three principal business segments:
? Hospitality, consisting of our
and the
Entertainment, consisting of the
?
? Corporate and Other, consisting of our corporate expenses.
For the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
Segment 2022 2021 2022 2021
Hospitality 85 % 79 % 86 % 81 %
Entertainment 15 % 21 % 14 % 19 %
Corporate and Other 0 % 0 % 0 % 0 %
Key Performance Indicators
The operating results of our Hospitality segment are highly dependent on the
volume of customers at our hotels and the quality of the customer mix at our
hotels, which are managed by Marriott. These factors impact the price that
Marriott can charge for our hotel rooms and other amenities, such as food and
beverage and meeting space. The following key
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performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
? hotel occupancy - a volume indicator calculated by dividing total rooms sold by
total rooms available;
? average daily rate ("ADR") - a price indicator calculated by dividing room
revenue by the number of rooms sold;
revenue per available room ("RevPAR") - a summary measure of hotel results
? calculated by dividing room revenue by room nights available to guests for the
period;
total revenue per available room ("Total RevPAR") - a summary measure of hotel
? results calculated by dividing the sum of room, food and beverage and other
ancillary service revenue by room nights available to guests for the period;
and
net definite group room nights booked - a volume indicator which represents the
? total number of definite group bookings for future room nights at our hotels
confirmed during the applicable period, net of cancellations.
For the three months and six months endedJune 30, 2022 and 2021, the method of calculation of these indicators has not been changed as a result of the COVID-19 pandemic and the Gaylord National closure and is consistent with historical periods. As such, performance metrics include closed hotel room nights available. We also use certain "non-GAAP financial measures," which are measures of our historical performance that are not calculated and presented in accordance with GAAP, within the meaning of applicableSEC rules. These measures include:
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization
? for Real Estate ("EBITDAre"), Adjusted EBITDAre and Adjusted EBITDAre,
Excluding Noncontrolling Interest in Consolidated Joint Venture, and
? Funds From Operations ("FFO") available to common shareholders and unit holders
and Adjusted FFO available to common shareholders and unitholders.
See "Non-GAAP Financial Measures" below for further discussion.
The closure and pandemic-constrained business levels of ourGaylord Hotels properties have resulted in the significant decrease in performance reflected in these key performance indicators and non-GAAP financial measures for the three months and six months endedJune 30, 2021 , as compared to the current period and historical periods prior to 2020. The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions (and applicable room rates) have often been contracted for several years in advance, the level of attrition our hotels experience, and the level of transient business at our hotels during such period. Increases in costs, including labor costs, costs of food and other supplies, and energy costs can negatively affect our results, particularly during an inflationary economic environment. We rely on Marriott, as the manager of our hotels, to manage these factors and to offset any identified shortfalls in occupancy. 28
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Selected Financial Information
The following table contains our unaudited selected summary financial data for the three months and six months endedJune 30, 2022 and 2021. The table also shows the percentage relationships to total revenues and, in the case of segment operating income, its relationship to segment revenues (in thousands, except percentages). Unaudited Unaudited Three Months Ended June 30, Six Months Ended June 30, 2022 % 2021 % 2022 % 2021 % REVENUES: Rooms$ 161,506 34.3 %$ 61,971 36.3 %$ 263,099 34.2 %$ 90,199 35.4 % Food and beverage 188,083 40.0 % 45,619 26.7 % 300,199 39.0 % 63,794 25.0 % Other hotel revenue 52,213 11.1 % 28,098 16.4 % 99,615 12.9 % 51,497 20.2 % Entertainment 68,402 14.5 % 35,173 20.6 % 106,426 13.8 % 49,546 19.4 % Total revenues 470,204 100.0 % 170,861 100.0 % 769,339 100.0 % 255,036 100.0 % OPERATING EXPENSES: Rooms 41,238 8.8 % 15,039 8.8 % 71,374 9.3 % 24,516 9.6 % Food and beverage 97,489 20.7 % 33,748 19.8 % 168,818 21.9 % 53,077 20.8 % Other hotel expenses 99,284 21.1 % 61,365
35.9 % 185,927 24.2 % 115,922 45.5 % Hotel management fees, net
11,202 2.4 % 2,149 1.3 % 16,266 2.1 % 2,902 1.1 %
Entertainment 45,670 9.7 % 25,639 15.0 % 77,401 10.1 % 44,330 17.4 %
Corporate 12,417 2.6 % 8,978 5.3 % 21,974 2.9 % 16,506 6.5 %
Preopening costs 221 0.0 % 217 0.1 % 525 0.1 % 616 0.2 %Gain (loss) on sale of assets - - % - - % 469 0.1 % (317) (0.1) % Depreciation and amortization: Hospitality 52,016 11.1 % 50,487 29.5 % 104,287 13.6 % 99,635 39.1 % Entertainment 4,492 1.0 % 3,621 2.1 % 8,044 1.0 % 7,222 2.8 % Corporate and Other 207 0.0 % 565 0.3 % 412 0.1 % 1,131 0.4 % Total depreciation and amortization 56,715 12.1 % 54,673
32.0 % 112,743 14.7 % 107,988 42.3 % Total operating expenses
364,236 77.5 % 201,808 118.1 % 655,497 85.2 % 365,540 143.3 %
OPERATING INCOME (LOSS):
Hospitality 100,573 25.0 % (27,100) (20.0) % 116,241 17.5 % (90,562) (44.1) %
Entertainment 18,240 26.7 % 5,913 16.8 % 20,981 19.7 % (2,006) (4.0) %
Corporate and Other (12,624) (A) (9,543) (A) (22,386) (A) (17,637) (A)
Preopening costs (221) (0.0) % (217) (0.1) % (525) (0.1) % (616) (0.2) % Gain (loss) on sale of assets
- - % - - % (469) (0.1) % 317 0.1 %
Total operating income (loss) 105,968 22.5 % (30,947) (18.1) % 113,842 14.8 % (110,504) (43.3) %
Interest expense (33,958) (A) (29,847) (A) (65,895) (A) (60,643) (A)
Interest income 1,379 (A) 1,451 (A) 2,760 (A) 2,821 (A)Loss on extinguishment of debt (1,547) (A) - (A) (1,547) (A) (2,949) (A) Loss from unconsolidated joint ventures (3,001) (A) (1,910) (A) (5,628) (A) (3,519) (A) Other gains and (losses), net (283) (A) (173)
(A) 164 (A) 201 (A) Provision for income taxes (17,634) (A) (1,623) (A) (17,569) (A) (5,577) (A) Net income (loss) 50,924 (A) (63,049) (A) 26,127 (A) (180,170) (A) Net (income) loss attributable to noncontrolling interest in consolidated joint venture (280) (A) 4,708 (A) (280) (A) 16,501 (A) Net (income) loss attributable to noncontrolling interest in the Operating Partnership (360) (A) 422 (A) (184) (A) 1,229 (A) Net income (loss) available to common stockholders$ 50,284 (A)$ (57,919)
(A)
(A) These amounts have not been shown as a percentage of revenue because they
have no relationship to revenue.
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Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three months and
six months ended June 30, 2022 and 2021 (in thousands, except percentages and
per share data):
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Total revenues $ 470,204 $ 170,861 175.2 % $ 769,339 $ 255,036 201.7 %
Total operating expenses 364,236 201,808 80.5 % 655,497 365,540 79.3 %
Operating income (loss) 105,968 (30,947) 442.4 % 113,842 (110,504) 203.0 %
Net income (loss) 50,924 (63,049) 180.8 % 26,127 (180,170) 114.5 %
Net income (loss) available
to common stockholders 50,284 (57,919) 186.8 % 25,663 (162,440) 115.8 %
Net income (loss) available
to common stockholders per
share - diluted 0.91 (1.05) 186.7 % 0.46 (2.95) 115.6 %
Total Revenues
The increase in our total revenues for the three months ended June 30, 2022 , as
compared to the same period in 2021, is attributable to increases in our
Hospitality segment and Entertainment segment of $266.1 million and $33.2
million , respectively. The increase in our total revenues for the six months
ended June 30, 2022 , as compared to the same period in 2021, is attributable to
increases in our Hospitality segment and Entertainment segment of $457.4 million
and $56.9 million , respectively.
Total Operating Expenses
The increase in our total operating expenses for the three months endedJune 30, 2022 , as compared to the same period in 2021, is primarily the result of increases in our Hospitality segment and Entertainment segment of$136.9 million and$20.0 million , respectively. The increase in our total operating expenses for the six months endedJune 30, 2022 , as compared to the same period in 2021, is primarily the result of increases in our Hospitality segment and Entertainment segment of$246.0 million and$33.1 million , respectively.
Net Income (Loss)
Our net income of$50.9 million for the three months endedJune 30, 2022 , as compared to a net loss of$63.0 million for the same period in 2021, was primarily due to the changes in our revenues and operating expenses reflected above, and the following factors, each as described more fully below:
? A
? A
Our net income of
? A
? A
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Operating Results - Detailed Segment Financial Information
Hospitality Segment
Total Segment Results. The following presents the financial results of our
Hospitality segment for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 161,506 $ 61,971 160.6 % $ 263,099 $ 90,199 191.7 %
Food and beverage 188,083 45,619 312.3 % 300,199 63,794 370.6 %
Other hotel revenue 52,213 28,098 85.8 % 99,615 51,497 93.4 %
Total hospitality revenue 401,802 135,688 196.1 % 662,913 205,490 222.6 %
Hospitality operating expenses:
Rooms 41,238 15,039 174.2 % 71,374 24,516 191.1 %
Food and beverage 97,489 33,748 188.9 % 168,818 53,077 218.1 %
Other hotel expenses 99,284 61,365 61.8 % 185,927 115,922 60.4 %
Management fees, net 11,202 2,149 421.3 % 16,266 2,902 460.5 %Depreciation and amortization 52,016 50,487 3.0 % 104,287 99,635 4.7 % Total Hospitality operating expenses 301,229 162,788 85.0 % 546,672 296,052 84.7 % Hospitality operating income (loss) (1)$ 100,573 $ (27,100) 471.1 %$ 116,241 $ (90,562) 228.4 % Hospitality performance metrics (2): Occupancy 72.7 % 32.9 % 39.8 pts 60.1 % 24.7 % 35.4 pts ADR$ 234.50 $ 202.12 16.0 %$ 232.41 $ 197.97 17.4 % RevPAR (3)$ 170.46 $ 66.51 156.3 %$ 139.61 $ 48.98 185.0 % Total RevPAR (4)$ 424.07 $ 145.63 191.2 %$ 351.76 $ 111.58 215.3 % Net Definite Group Room Nights Booked (5) 413,042 371,540 11.2 %
578,710 337,831 71.3 %
Hospitality segment operating loss does not include preopening costs of
million and
gain on sale of assets of
See discussion of these items below.
(2) Hospitality segment metrics include the addition of 302 additional guest
rooms at Gaylord Palms beginning in
We calculate Hospitality RevPAR by dividing room revenue by room nights (3) available to guests for the period. Room nights available to guests include
nights the hotels are closed. Hospitality RevPAR is not comparable to
similarly titled measures such as revenues.
We calculate Hospitality Total RevPAR by dividing the sum of room, food and
beverage, and other ancillary services revenue (which equals Hospitality (4) segment revenue) by room nights available to guests for the period. Room
nights available to guests include nights the hotels are closed. Hospitality
Total RevPAR is not comparable to similarly titled measures such as revenues.
Net definite group room nights booked includes approximately 72,000 and
(5) 169,000 group room cancellations in the three months ended
2021, respectively, and 250,000 and 490,000 group room cancellations in the
six months ended
Total Hospitality segment revenues in the three months and six months endedJune 30, 2022 include$15.4 million and$35.0 million , respectively, in attrition and cancellation fee revenue, an increase of$7.8 million and$17.3 million , respectively, from the 2021 period. Since the beginning of 2020, we have recorded$116.3 million in attrition and cancellation fee revenue. 31
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The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Group 74 % 37 % 71 % 31 %
Transient 26 % 63 % 29 % 69 %
Other hotel expenses for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 ChangeAdministrative employment costs$ 37,604 $ 18,757 100.5 % $
70,816$ 36,379 94.7 % Utilities 9,690 6,542 48.1 % 17,237 12,151 41.9 % Property taxes 9,549 7,780 22.7 % 19,020 17,179 10.7 % Other 42,441 28,286 50.0 %
78,854 50,213 57.0 %
Total other hotel expenses
Administrative employment costs include salaries and benefits for hotel administrative functions, including, among others, senior management, accounting, human resources, sales, conference services, engineering and security. Administrative employment costs increased during the three months and six months endedJune 30, 2022 , as compared to the same periods in 2021, primarily due to an increase at Gaylord National, which reopened onJuly 1, 2021 , as well as increases at each of our otherGaylord Hotels properties associated with increased business levels. Utility costs increased during the three months and six months endedJune 30, 2022 , as compared to the same periods in 2021, primarily due to an increase at Gaylord National, which reopened onJuly 1, 2021 , as well as slight increases at our otherGaylord Hotels properties associated with increased usage. Property taxes increased during the three months and six months endedJune 30, 2022 , as compared to the 2021 periods, primarily due to an increase at Gaylord Palms as a result of increased property taxes related to the 2021 expansion. Other expenses, which include supplies, advertising, maintenance costs and consulting costs, increased during the three months and six months endedJune 30, 2022 , as compared to the same periods in 2021, primarily as a result of various increases at each of ourGaylord Hotels properties. Each of our management agreements with Marriott for ourGaylord Hotels properties, excluding Gaylord Rockies, requires us to pay Marriott a base management fee of approximately 2% of gross revenues from the applicable property for each fiscal year or portion thereof. Additionally, an incentive management fee is based on the profitability of ourGaylord Hotels properties, excluding Gaylord Rockies, calculated on a pooled basis. The Gaylord Rockies's management agreement with Marriott requires Gaylord Rockies to pay a base management fee of 3% of gross revenues for each fiscal year or portion thereof, as well as an incentive management fee based on the profitability of the hotel. In the three months endedJune 30, 2022 and 2021, we incurred$9.0 million and$2.9 million , respectively, and in the six months endedJune 30, 2022 and 2021, we incurred$14.6 million and$4.5 million , respectively, related to base management fees for our Hospitality segment. In the three months endedJune 30, 2022 and 2021, we incurred$3.0 million and$0 , respectively, and in the six months endedJune 30, 2022 and 2021, we incurred$3.2 million and$0 , respectively, related to incentive management fees for our Hospitality segment. Management fees are presented throughout this Quarterly Report on Form 10-Q net of the amortization of the deferred management rights proceeds discussed in Note 10, "Deferred Management Rights Proceeds," to the accompanying condensed consolidated financial statements included herein. Total Hospitality segment depreciation and amortization expense increased in the three months and six months endedJune 30, 2022 , as compared to the same period in 2021, primarily as a result of the expansion ofGaylord Palms and the rooms renovation at Gaylord National and the associated increase in depreciable asset levels. 32 Table of Contents
Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three months and six months endedJune 30, 2022 and 2021.The Gaylord Hotels properties experienced higher levels of attrition and cancellations and lower occupancy levels, which are directly related to the COVID-19 pandemic, in the three months and six months endedJune 30, 2021 . Therefore, the property-level financial results for the three months and six months endedJune 30, 2021 are not comparable to historical periods or the 2022 periods. Total revenue at each of ourGaylord Hotels properties was lower than that of historical periods for the three months and six months endedJune 30, 2021 due to the COVID-19 pandemic. Operating costs at each of ourGaylord Hotels properties were lower for the three months and six months endedJune 30, 2021 as a result of cost containment initiatives and lower variable costs due to lower occupancies due to the COVID-19 pandemic.
Gaylord Opryland Results. The results of Gaylord Opryland for the three months
and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 46,125 $ 22,832 102.0 % $ 76,531 $ 32,806 133.3 %
Food and beverage 42,469 12,519 239.2 % 69,508 17,906 288.2 %
Other hotel revenue 16,903 9,651 75.1 % 32,977 16,049 105.5 %
Total revenue 105,497 45,002 134.4 % 179,016 66,761 168.1 %
Operating expenses:
Rooms 11,461 4,990 129.7 % 19,703 8,196 140.4 %
Food and beverage 21,672 8,776 146.9 % 38,585 14,595 164.4 %
Other hotel expenses 28,324 18,831 50.4 % 51,174 34,857 46.8 %
Management fees, net 3,612 650 455.7 % 4,982 842 491.7 %
Depreciation and amortization 8,557 8,554 0.0 % 17,146 17,137 0.1 %
Total operating expenses (1) 73,626 41,801 76.1 % 131,590 75,627 74.0 % Performance metrics: Occupancy 75.1 % 40.2 % 34.9 pts 62.0 % 29.3 % 32.7 pts ADR$ 233.68 $ 216.09 8.1 %$ 236.06 $ 214.22 10.2 % RevPAR$ 175.51 $ 86.88 102.0 %$ 146.41 $ 62.76 133.3 % Total RevPAR$ 401.42 $ 171.23 134.4 %$ 342.46 $ 127.71 168.2 %
(1) Gaylord Opryland operating expenses do not include a gain on sale of assets
of $0.3 million in the six months ended June 30, 2021 .
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Gaylord Palms Results.
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 27,012 $ 14,643 84.5 % $ 49,024 $ 20,589 138.1 %
Food and beverage 32,046 13,056 145.5 % 59,442 16,774 254.4 %
Other hotel revenue 9,231 5,003 84.5 % 19,671 10,456 88.1 %
Total revenue 68,289 32,702 108.8 % 128,137 47,819 168.0 %
Operating expenses:
Rooms 5,556 3,001 85.1 % 10,047 4,654 115.9 %
Food and beverage 16,823 8,109 107.5 % 30,862 11,683 164.2 %
Other hotel expenses 20,317 13,178 54.2 % 39,135 24,394 60.4 %
Management fees, net 1,809 515 251.3 % 2,899 684 323.8 %
Depreciation and amortization 5,566 5,302 5.0 % 11,118 9,426 18.0 %
Total operating expenses (1) 50,071 30,105 66.3 % 94,061 50,841 85.0 % Performance metrics: Occupancy 74.6 % 52.2 % 22.4 pts 65.1 % 38.9 % 26.2 pts ADR$ 231.53 $ 199.63 16.0 %$ 241.99 $ 197.28 22.7 % RevPAR$ 172.78 $ 104.17 65.9 %$ 157.65 $ 76.82 105.2 % Total RevPAR$ 436.80 $ 232.64 87.8 %$ 412.07 $ 178.42 131.0 %
2021. See discussion of this item below.
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Gaylord Texan Results. The results of Gaylord Texan for the three months and six
months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 28,350 $ 14,672 93.2 % $ 49,258 $ 21,690 127.1 %
Food and beverage 38,979 13,013 199.5 % 65,129 18,122 259.4 %
Other hotel revenue 10,336 6,384 61.9 % 19,914 12,615 57.9 %
Total revenue 77,665 34,069 128.0 % 134,301 52,427 156.2 %
Operating expenses:
Rooms 6,401 3,162 102.4 % 11,361 5,143 120.9 %
Food and beverage 20,174 9,317 116.5 % 35,605 13,877 156.6 %
Other hotel expenses 17,533 11,618 50.9 % 33,160 21,795 52.1 %
Management fees, net 2,081 500 316.2 % 3,085 692 345.8 %
Depreciation and amortization 5,742 6,194 (7.3) % 12,440 12,423 0.1 %
Total operating expenses 51,931 30,791 68.7 % 95,651 53,930 77.4 % Performance metrics: Occupancy 74.3 % 43.7 % 30.6 pts 66.1 % 33.2 % 32.9 pts ADR$ 231.22 $ 203.43 13.7 %$ 226.94 $ 198.82 14.1 % RevPAR$ 171.74 $ 88.88 93.2 %$ 150.02 $ 66.06 127.1 % Total RevPAR$ 470.48 $ 206.39 128.0 %$ 409.04 $ 159.68 156.2 %
Gaylord National Results. Gaylord National was closed from lateMarch 2020 and reopenedJuly 1, 2021 . The results of Gaylord National for the three months and six months endedJune 30, 2022 and 2021 are as follows (in thousands, except percentages and performance metrics): Three Months Ended Six Months Ended June 30, June 30, % % 2022 2021 Change 2022 2021 Change Revenues: Rooms$ 29,317 $ - 100.0 %$ 43,281 $ - 100.0 % Food and beverage 36,316 34 106,711.8 % 50,869 57 89,143.9 % Other hotel revenue 6,590 2,277 189.4 % 10,660 3,511 203.6 % Total revenue (1) 72,223 2,311 3,025.2 % 104,810 3,568 2,837.5 % Operating expenses: Rooms 10,132 835 1,113.4 % 17,482 1,035 1,589.1 % Food and beverage 18,955 1,149 1,549.7 % 31,415 1,588 1,878.3 % Other hotel expenses 20,210 8,362 141.7 % 35,673 16,814 112.2 % Management fees, net 1,242 (157) 891.1 % 1,692 (334) 606.6 %
Depreciation and amortization 8,860 7,173 23.5 %
16,999 14,039 21.1 % Total operating expenses 59,399 17,362 242.1 % 103,261 33,142 211.6 % Performance metrics: Occupancy 64.2 % - % 64.2 pts 49.9 % - % 49.9 pts ADR$ 251.45 $ - 100.0 %$ 240.22 $ - 100.0 % RevPAR$ 161.40 $ - 100.0 %$ 119.80 $ - 100.0 % Total RevPAR$ 397.62 $ 12.72 3,025.9 %$ 290.11 $ 9.87 2,839.3 %
(1) Gaylord National revenue for the three months and six months ended
2021 consists primarily of attrition and cancellation fee revenue.
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Gaylord Rockies Results. The results of Gaylord Rockies for the three months and
six months ended June 30, 2022 and 2021 are as follows (in thousands, except
percentages and performance metrics):
Three Months Ended Six Months Ended
June 30, 2022 June 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 24,648 $ 7,019 251.2 % $ 35,942 $ 11,134 222.8 %
Food and beverage 37,207 6,602 463.6 % 53,528 10,411 414.1 %
Other hotel revenue 8,900 4,717 88.7 % 16,072 8,763 83.4 %
Total revenue 70,755 18,338 285.8 % 105,542 30,308 248.2 %
Operating expenses:
Rooms 6,237 2,207 182.6 % 10,188 4,082 149.6 %
Food and beverage 19,091 6,008 217.8 % 30,986 10,747 188.3 %
Other hotel expenses 10,460 7,648 36.8 % 22,515 14,674 53.4 %
Management fees, net 2,102 133 1,480.5 % 3,124 588 431.3 %Depreciation and amortization 22,650 22,617 0.1 %
45,298 45,308 (0.0) % Total operating expenses 60,540 38,613 56.8 % 112,111 75,399 48.7 % Performance metrics: Occupancy 76.6 % 25.7 % 50.9 pts 58.0 % 21.6 % 36.4 pts ADR$ 235.69 $ 199.69 18.0 %$ 228.22 $ 189.92 20.2 % RevPAR$ 180.45 $ 51.38 251.2 %$ 132.29 $ 40.98 222.8 % Total RevPAR$ 518.01 $ 134.25 285.9 %$ 388.48 $ 111.55 248.3 % Entertainment Segment
Total Segment Results. Due to the COVID-19 pandemic, we temporarily closed our Entertainment segment assets inmid-March 2020 and they did not return to full capacity untilMay 2021 . In addition, subsequent to theDecember 2020 downtownNashville bombing, theWildhorse Saloon reopened inApril 2021 . Therefore, Entertainment segment financial results for the three months and six months endedJune 30, 2022 are not comparable to the corresponding 2021 period and the results for 2021 are not comparable to historical periods because of the COVID-19 pandemic. The following presents the financial results of our Entertainment segment for the three months and six months endedJune 30, 2022 and 2021 (in thousands, except percentages): Three Months Ended Six Months Ended June 30, June 30, % % 2022 2021 Change 2022 2021 Change Revenues$ 68,402 $ 35,173 94.5 %$ 106,426 $ 49,546 114.8 % Operating expenses 45,670 25,639 78.1 % 77,401 44,330 74.6 %
Depreciation and amortization 4,492 3,621 24.1 % 8,044 7,222 11.4 % Operating income (loss) (1)$ 18,240 $ 5,913 208.5 %$ 20,981 $ (2,006) 1,145.9 %
Entertainment segment operating income does not include preopening costs of
(1)
30, 2022, respectively. See discussion of this item below.
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Corporate and Other Segment
Total Segment Results. The following presents the financial results of our
Corporate and Other segment for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Operating expenses (1) $ 12,417 $ 8,978 38.3 % $ 21,974 $ 16,506 33.1 %Depreciation and amortization 207 565 (63.4) %
412 1,131 (63.6) %
Operating loss $ (12,624) $ (9,543) (32.3) % $ (22,386) $ (17,637) (26.9) %
(1) Corporate segment operating expenses do not include a loss on sale of assets
of
Corporate and Other operating expenses consist primarily of costs associated with senior management salaries and benefits, legal, human resources, accounting, pension, information technology, consulting and other administrative costs. Corporate and Other segment operating expenses increased in the three months and six months endedJune 30, 2022 , as compared to the prior year periods, primarily as a result of increased employment expenses.
Operating Results - Preopening Costs
Preopening costs during the three months and six months endedJune 30, 2022 primarily include costs associated withOle Red Nashville International Airport , which was completed inMay 2022 . Preopening costs during the three months and six months endedJune 30, 2021 primarily include costs associated with the Gaylord Palms expansion, which was completed inApril 2021 .
Operating Results - Gain (Loss) on Sale of Assets
Loss on sale of assets during the six months endedJune 30, 2022 includes the sale of a parcel of land inNashville, Tennessee . Gain on sale of assets during the six months endedJune 30, 2021 includes the sale of certain assets at Gaylord Opryland.
Non-Operating Results Affecting Net Income (Loss)
General
The following table summarizes the other factors which affected our net income
(loss) for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2022 2021 Change 2022 2021 Change
Interest expense $ 33,958 $ 29,847 13.8 % $ 65,895 $ 60,643 8.7 %
Interest income 1,379 1,451 (5.0) % 2,760 2,821 (2.2) %
Loss on extinguishment of debt (1,547) - (100.0) % (1,547) (2,949) 47.5 %
Loss from unconsolidated joint
ventures (3,001) (1,910) (57.1) % (5,628) (3,519) (59.9) %
Other gains and (losses), net (283) (173) (63.6) % 164 201 (18.4) %
Provision for income taxes (17,634) (1,623) (986.5) % (17,569) (5,577) (215.0) % Interest Expense
Interest expense increased
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CMBS loan, as well as the prior year including
Cash interest expense increased$2.3 million to$31.6 million in the three months and increased$2.0 million to$61.4 million in the six months endedJune 30, 2022 , as compared to the same periods in 2021. Non-cash interest expense, which includes amortization and write-off of deferred financing costs and is offset by capitalized interest, increased$1.8 million to$2.4 million in the three months and increased$3.2 million to$4.5 million in the six months endedJune 30, 2022 , as compared to the same periods in 2021. Our weighted average interest rate on our borrowings, excluding capitalized interest, but including the impact of interest rate swaps, was 4.5% and 4.3% for the three months endedJune 30, 2022 and 2021, respectively, and 4.4% and 4.5% for the six months endedJune 30, 2022 and 2021, respectively.
Interest Income
Interest income for the three months and six months endedJune 30, 2022 and 2021 primarily includes amounts earned on the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 8, "Notes Receivable," to the accompanying condensed consolidated financial statements included herein for additional discussion of interest income on these bonds.
Loss on Extinguishment of Debt
As a result of our repayment of our$300 million term loan A with the proceeds from the OEG Term Loan, we recognized a loss on extinguishment of debt of$1.5 million in the three months and six months endedJune 30, 2022 . InFebruary 2021 , we commenced a cash tender offer for any and all outstanding$400 million 5% senior notes due 2023 ("$400 Million 5% Senior Notes") at a redemption price of$1,005.00 per$1,000 principal amount. Pursuant to the tender offer,$161.9 million aggregate principal amount of these notes were validly tendered. As a result of our purchase of these tendered notes, and the subsequent redemption of all untendered$400 Million 5% Senior Notes, we recognized a loss on extinguishment of debt of$2.9 million in the six months endedJune 30, 2021 .
Loss from
The loss from unconsolidated joint ventures for the three months and six months
ended
Other Gains and (Losses), net
Other gains and (losses), net for the three months and six months ended
Provision for Income Taxes
As a REIT, we generally are not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that we distribute to our stockholders. We are required to pay federal and state corporate income taxes on earnings of our TRSs.
For each of the three months and six months ended
For the three months and six months endedJune 30, 2021 , we recorded an income tax provision of$1.6 million and$5.6 million , respectively. The income tax provision for the six months endedJune 30, 2021 includes the recording of a valuation allowance of$3.6 million related to our reassessment of the realizability of our deferred tax assets due to the impact of the COVID-19
pandemic.
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Non-GAAP Financial Measures
We present the following non-GAAP financial measures, which we believe are useful to investors as key measures of our operating performance:
EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture Definition
We calculate EBITDAre, which is defined by theNational Association of Real Estate Investment Trusts ("NAREIT") in itsSeptember 2017 white paper as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property or the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
Adjusted EBITDAre is then calculated as EBITDAre, plus to the extent the following adjustments occurred during the periods presented:
? Preopening costs; ? Non-cash lease expense;
? Equity-based compensation expense;
? Impairment charges that do not meet the NAREIT definition above;
? Credit losses on held-to-maturity securities;
? Any transactions costs of acquisitions;
? Loss on extinguishment of debt;
? Pension settlement charges;
? Pro rata adjusted EBITDAre from unconsolidated joint ventures; and
? Any other adjustments we have identified herein.
We then exclude the pro rata share of Adjusted EBITDAre related to noncontrolling interests in consolidated joint ventures to calculate Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture.
We use EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture to evaluate our operating performance. We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our operating performance and debt leverage metrics, and that the presentation of these non-GAAP financial measures, when combined with the primary GAAP presentation of net income, is beneficial to an investor's complete understanding of our operating performance. We make additional adjustments to EBITDAre when evaluating our performance because we believe that presenting Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture provides useful information to investors regarding our operating performance and debt leverage metrics.
FFO, Adjusted FFO, and Adjusted FFO available to common shareholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in itsDecember 2018 white paper as net income (calculated in accordance with GAAP) excluding depreciation and amortization (excluding amortization of deferred financing costs and debt discounts), gains and losses from the sale of certain real estate assets, gains and losses from a change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciated real estate held by the entity, income (loss) from consolidated joint ventures attributable to noncontrolling interest, and pro rata adjustments for unconsolidated joint
ventures.
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To calculate Adjusted FFO available to common shareholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
? Right-of-use asset amortization;
? Impairment charges that do not meet the NAREIT definition above;
? Write-offs of deferred financing costs;
? Amortization of debt discounts or premiums and amortization of deferred
financing costs;
? Loss on extinguishment of debt;
? Non-cash lease expense;
? Credit loss on held-to-maturity securities;
? Pension settlement charges;
? Additional pro rata adjustments from unconsolidated joint ventures;
? (Gains) losses on other assets;
? Transactions costs on acquisitions;
? Deferred income tax expense (benefit); and
? Any other adjustments we have identified herein.
FFO available to common shareholders and unit holders and Adjusted FFO available
to common shareholders and unit holders exclude the ownership portion of the
Gaylord Rockies joint venture not controlled or owned by the Company.
We believe that the presentation of FFO available to common shareholders and
unit holders and Adjusted FFO available to common shareholders and unit holders
provides useful information to investors regarding the performance of our
ongoing operations because they are a measure of our operations without regard
to specified non-cash items such as real estate depreciation and amortization,
gain or loss on sale of assets and certain other items, which we believe are not
indicative of the performance of our underlying hotel properties. We believe
that these items are more representative of our asset base than our ongoing
operations. We also use these non-GAAP financial measures as measures in
determining our results after considering the impact of our capital structure.
We caution investors that amounts presented in accordance with our definitions
of Adjusted EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO
available to common shareholders and unit holders, and Adjusted FFO available to
common shareholders and unit holders may not be comparable to similar measures
disclosed by other companies, because not all companies calculate these non-GAAP
measures in the same manner. These non-GAAP financial measures, and any related
per share measures, should not be considered as alternative measures of our Net
Income (Loss), operating performance, cash flow or liquidity. These non-GAAP
financial measures may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds for capital
expenditures and property acquisitions and other commitments and uncertainties.
Although we believe that these non-GAAP financial measures can enhance an
investor's understanding of our results of operations, these non-GAAP financial
measures, when viewed individually, are not necessarily better indicators of any
trend as compared to GAAP measures such as Net Income (Loss), Operating Income
(Loss), or cash flow from operations.
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The following is a reconciliation of our consolidated GAAP net income (loss) to EBITDAre and Adjusted EBITDAre for the three months and six months endedJune 30, 2022 and 2021 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net income (loss)$ 50,924 $ (63,049) $ 26,127 $ (180,170) Interest expense, net 32,579 28,396 63,135 57,822 Provision for income taxes 17,634 1,623 17,569 5,577 Depreciation and amortization 56,715 54,673 112,743 107,988 (Gain) loss on sale of assets (142) - 327 (317) Pro rata EBITDAre from unconsolidated joint ventures 23 19 45 34 EBITDAre 157,733 21,662 219,946 (9,066) Preopening costs 221 217 525 616 Non-cash lease expense 1,108 1,085 2,281 2,173
Equity-based compensation expense 3,654 3,146 7,440 5,668 Pension settlement charge 853 566 853 566 Interest income on Gaylord National bonds 1,339 1,404 2,679 2,725 Loss on extinguishment of debt 1,547 - 1,547 2,949 Transaction costs of acquisitions 1,170 75 1,348 75 Adjusted EBITDAre 167,625 28,155 236,619 5,706 Adjusted EBITDAre of noncontrolling interest in consolidated joint venture (1,131) 273 (1,131) 1,017 Adjusted EBITDAre, excluding noncontrolling interest in consolidated joint venture$ 166,494 $ 28,428 $ 235,488 $ 6,723 The following is a reconciliation of our consolidated GAAP net income (loss) to FFO and Adjusted FFO for the three months and six months endedJune 30, 2022 and 2021 (in thousands):
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