Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13079
RYMAN HOSPITALITY PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
73-0664379
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification No.)
One Gaylord Drive
Nashville, Tennessee 37214
(Address of Principal Executive Offices)
(Zip Code)
(615) 316-6000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class
Trading Symbol(s)
Which Registered
Common stock, par value $.01
RHP
New 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, a 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.
Class
Outstanding as of October 31, 2024
Common Stock, par value $.01
59,901,169 shares
For the Quarter Ended September 30, 2024
INDEX
Page
Part I - Financial Information
3
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets (Unaudited) – September 30, 2024 and December 31, 2023
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - For the Three and Nine Months Ended September 30, 2024 and 2023
4
Condensed Consolidated Statements of Cash Flows (Unaudited) - For the Nine Months Ended September 30, 2024 and 2023
5
Condensed Consolidated Statements of Equity and Noncontrolling Interest (Unaudited) - For the Three and Nine Months Ended September 30, 2024 and 2023
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
48
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
49
SIGNATURES
50
2
PART I – FINANCIAL INFORMATION
ITEM 1. – FINANCIAL STATEMENTS.
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30,
December 31,
2024
2023
ASSETS:
Property and equipment, net
$
4,092,234
3,955,586
Cash and cash equivalents - unrestricted
534,931
591,833
Cash and cash equivalents - restricted
36,000
108,608
Notes receivable, net
56,635
61,760
Trade receivables, net
107,302
110,029
Deferred income tax assets, net
70,055
81,624
Prepaid expenses and other assets
189,084
154,810
Intangible assets, net
118,253
124,287
Total assets
5,204,494
5,188,537
LIABILITIES AND EQUITY:
Debt and finance lease obligations
3,373,442
3,377,028
Accounts payable and accrued liabilities
472,722
464,720
Distributions payable
68,005
67,932
Deferred management rights proceeds
164,860
165,174
Operating lease liabilities
130,289
129,122
Other liabilities
67,367
66,658
Total liabilities
4,276,685
4,270,634
Commitments and contingencies
Noncontrolling interest in consolidated joint venture
372,274
345,126
Equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding
—
Common stock, $.01 par value, 400,000 shares authorized, 59,901 and 59,712 shares issued and outstanding, respectively
599
597
Additional paid-in capital
1,478,406
1,502,710
Treasury stock of 689 and 668 shares, at cost
(22,766)
(20,508)
Distributions in excess of retained earnings
(888,144)
(894,259)
Accumulated other comprehensive loss
(16,219)
(19,387)
Total stockholders' equity
551,876
569,153
Noncontrolling interest in Operating Partnership
3,659
3,624
Total equity
555,535
572,777
Total liabilities and equity
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
Revenues:
Rooms
184,154
180,309
557,284
510,052
Food and beverage
224,835
202,850
719,304
616,562
Other hotel revenue
58,054
63,039
171,012
161,708
Entertainment
82,915
82,313
243,993
236,751
Total revenues
549,958
528,511
1,691,593
1,525,073
Operating expenses:
45,129
45,879
134,292
128,210
127,040
117,435
387,588
339,642
Other hotel expenses
123,716
122,748
360,298
330,397
Management fees, net
16,889
15,947
56,300
46,560
Total hotel operating expenses
312,774
302,009
938,478
844,809
61,659
56,222
173,806
164,744
Corporate
9,724
10,103
31,080
30,582
Preopening costs
870
168
3,361
425
Gain on sale of assets
(270)
Depreciation and amortization
59,051
58,086
174,806
154,700
Total operating expenses
444,078
426,588
1,321,261
1,195,260
Operating income
105,880
101,923
370,332
329,813
Interest expense
(54,546)
(58,521)
(171,566)
(150,228)
Interest income
7,219
6,112
21,805
13,977
Loss on extinguishment of debt
(2,319)
(2,252)
Income (loss) from unconsolidated joint ventures
9
(12,566)
224
(17,525)
Other gains and (losses), net
2,758
5,993
3,075
5,470
Income before income taxes
61,320
42,941
221,551
179,255
Provision for income taxes
(922)
(2,156)
(13,652)
(7,333)
Net income
60,398
40,785
207,899
171,922
Net (income) loss attributable to noncontrolling interest in consolidated joint venture
(997)
715
(3,688)
(1,656)
Net income attributable to noncontrolling interest in Operating Partnership
(390)
(273)
(1,339)
(1,176)
Net income available to common stockholders
59,011
41,227
202,872
169,090
Basic income per share available to common stockholders
0.99
0.69
3.39
2.96
Diluted income per share available to common stockholders
0.94
0.64
3.25
2.78
Comprehensive income, net of taxes
62,047
40,732
211,067
163,153
Comprehensive (income) loss, net of taxes, attributable to noncontrolling interest in consolidated joint venture
(625)
537
(3,647)
(2,190)
Comprehensive income, net of taxes, attributable to noncontrolling interest in Operating Partnership
(407)
(272)
(1,366)
(1,118)
Comprehensive income, net of taxes, available to common stockholders
61,015
40,997
206,054
159,845
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Amounts to reconcile net income to net cash flows provided by operating activities:
Provision for deferred income taxes
10,715
4,894
Amortization of deferred financing costs
7,995
7,989
(Income) loss from unconsolidated joint ventures
(224)
17,525
Stock-based compensation expense
10,724
11,480
Changes in:
Trade receivables
2,727
13,233
20,102
11,721
Other assets and liabilities
(24,864)
(23,535)
Net cash flows provided by operating activities
409,880
369,929
Cash Flows from Investing Activities:
Purchases of property and equipment
(317,323)
(122,150)
Collection of notes receivable
4,060
5,903
Purchase of JW Marriott Hill Country, net of cash acquired
(791,466)
Investment in Circle
(10,500)
Other investing activities, net
(161)
(9,998)
Net cash flows used in investing activities
(313,424)
(928,211)
Cash Flows from Financing Activities:
Borrowings under term loan B
18,861
500,000
Repayments under term loan B
(221,586)
(377,500)
Borrowings under OEG revolving credit facility
43,000
7,000
Repayments under OEG revolving credit facility
(32,000)
(7,000)
Borrowings under OEG term loan
299,250
Repayments under OEG term loan
(296,250)
(2,250)
Repayments under Block 21 CMBS loan
(2,153)
(2,054)
Repayments under Gaylord Rockies term loan
(800,000)
Issuance of senior notes
1,000,000
400,000
Deferred financing costs paid
(23,134)
(23,400)
Issuance of common stock, net
395,444
Payment of distributions
(199,759)
(115,861)
Payment of tax withholdings for share-based compensation
(12,131)
(4,249)
Other financing activities, net
(64)
(198)
Net cash flows provided by (used in) financing activities
(225,966)
769,932
Net change in cash, cash equivalents, and restricted cash
(129,510)
211,650
Cash, cash equivalents, and restricted cash, beginning of period
700,441
444,330
Cash, cash equivalents, and restricted cash, end of period
570,931
655,980
Reconciliation of cash, cash equivalents, and restricted cash to balance sheet:
543,076
112,904
CONDENSED CONSOLIDATED STATEMENTS OF EQUITYAND NONCONTROLLING INTEREST
Distributions
Accumulated
Noncontrolling
Additional
in Excess of
Other
Total
Interest in
Common
Paid-in
Treasury
Retained
Comprehensive
Stockholders'
Operating
Consolidated
Stock
Capital
Earnings
Loss
Equity
Partnership
Joint Venture
BALANCE, December 31, 2023
Net income (loss)
43,056
284
43,340
(579)
Adjustment of noncontrolling interest to redemption value
(9,318)
9,318
Other comprehensive income, net of income taxes
1,408
Dividends and distributions declared ($1.10 per share)
161
(66,335)
(66,174)
(435)
(66,609)
Restricted stock units and stock options surrendered
(12,055)
(12,053)
Equity-based compensation expense
3,862
BALANCE, March 31, 2024
1,485,360
(917,538)
(17,979)
529,934
3,473
533,407
353,865
100,805
665
101,470
3,270
(5,468)
5,468
111
163
(1,468)
(64,884)
(66,189)
(434)
(66,623)
41
3,383
BALANCE, June 30, 2024
1,483,479
(21,976)
(881,617)
(17,868)
562,617
3,704
566,321
362,603
390
59,401
997
(8,674)
8,674
1,649
164
(790)
(65,538)
(66,164)
(66,599)
(42)
3,479
BALANCE, September 30, 2024
BALANCE, December 31, 2022
552
1,102,733
(18,467)
(978,619)
(10,923)
95,276
625
95,901
311,857
437
61,757
(763)
(8,659)
8,659
Other comprehensive loss, net of income taxes
(6,292)
Dividends and distributions declared ($0.75 per share)
106
(41,900)
(41,794)
(296)
(42,090)
1
(4,080)
(4,079)
3,739
BALANCE, March 31, 2023
553
1,093,839
(959,199)
(17,215)
99,511
766
100,277
319,753
66,543
466
67,009
3,134
(4,762)
4,762
(2,424)
44
395,400
Dividends and distributions declared ($1.00 per share)
154
(60,285)
(60,131)
(395)
(60,526)
(103)
3,801
BALANCE, June 30, 2023
1,488,329
(952,941)
(19,639)
497,879
837
498,716
327,649
Net Income (loss)
273
41,500
(715)
(9,454)
9,454
Reallocation of noncontrolling interest in Operating Partnership
(2,401)
2,401
(53)
156
(60,281)
(60,125)
(396)
(60,521)
(69)
3,940
BALANCE, September 30, 2023
1,480,501
(971,995)
(19,692)
470,944
3,115
474,059
336,388
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
On January 1, 2013, Ryman Hospitality Properties, Inc. (“Ryman”) and its subsidiaries (collectively with Ryman, the “Company”) began operating as a real estate investment trust (“REIT”) for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of upscale, meetings-focused resorts that are managed by Marriott International, Inc. (“Marriott”) under the Gaylord Hotels brand. These five resorts, which the Company refers to as the Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”). The Company’s other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National, and effective June 30, 2023, the JW Marriott San Antonio Hill Country Resort & Spa (“JW Marriott Hill Country”).
The Company also owns a controlling 70% equity interest in OEG Attractions Holdings, LLC, a business comprised of a number of entertainment and media assets, known as the Opry Entertainment Group (“OEG”), which the Company reports as its Entertainment segment. These assets include the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces; Category 10, a Luke Combs-themed bar, music venue and event space that opened in November 2024; and Block 21, a mixed-use entertainment, lodging, office, and retail complex located in Austin, Texas (“Block 21”).
The Company consolidates the assets, liabilities and results of operations of OEG in the accompanying condensed consolidated financial statements. The portion of OEG that the Company does not own is recorded as noncontrolling interest in consolidated joint venture, which is classified as mezzanine equity in the accompanying condensed consolidated balance sheets, and any adjustment necessary to reflect the noncontrolling interest at its redemption value is shown in the accompanying condensed consolidated statements of equity and noncontrolling interest. See Note 3, “Income Per Share,” for further disclosure.
The condensed consolidated financial statements include the accounts of Ryman and its subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from this report pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year because of seasonal and short-term variations.
Newly Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures,” requiring public entities to provide disclosures of significant segment expenses and other segment items, as well as to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is applied retrospectively and will be effective for the Company for fiscal year 2024 and for interim periods beginning in fiscal year 2025. The Company is currently evaluating the impact of this ASU but does not anticipate this adoption to have a material impact on the Company’s financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures,” requiring public entities to provide additional information in the rate reconciliation, to disclose annually income taxes paid disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is applied prospectively, but with the option to apply retrospectively, and will be effective for the Company for fiscal year 2025. The Company is currently evaluating the impact of this ASU but does not anticipate this adoption to have a material impact on the Company’s financial statements.
2. REVENUES:
The Company’s revenues disaggregated by major source are as follows (in thousands):
Hotel group rooms
124,006
115,626
401,276
356,473
Hotel transient rooms
60,148
64,683
156,008
153,579
Hotel food and beverage - banquets
157,694
134,503
523,345
433,664
Hotel food and beverage - outlets
67,141
68,347
195,959
182,898
Hotel other
Entertainment admissions/ticketing
30,572
31,030
87,494
87,289
Entertainment food and beverage
30,573
27,706
90,430
80,413
Entertainment retail and other
21,770
23,577
66,069
69,049
The Company’s Hospitality segment revenues disaggregated by location are as follows (in thousands):
Gaylord Opryland
122,659
111,939
356,846
334,220
Gaylord Palms
68,242
63,885
222,504
222,260
Gaylord Texan
73,096
73,991
241,895
241,868
Gaylord National
69,751
72,124
226,394
221,910
Gaylord Rockies
72,658
68,203
213,316
199,377
JW Marriott Hill Country
54,273
50,026
167,064
50,747
AC Hotel
2,686
3,244
9,615
8,856
Inn at Opryland and other
3,678
2,786
9,966
9,084
Total Hospitality segment revenues
467,043
446,198
1,447,600
1,288,322
The majority of the Company’s Entertainment segment revenues are concentrated in Nashville, Tennessee; Austin, Texas; and Las Vegas, Nevada.
The Company records deferred revenues when cash payments are received in advance of its performance obligations, primarily related to advanced deposits on hotel rooms and advanced ticketing at its OEG venues. At September 30, 2024 and December 31, 2023, the Company had $181.1 million and $159.8 million, respectively, in deferred revenues, which are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. Of the amount outstanding at December 31, 2023, approximately $112.4 million was recognized in revenue during the nine months ended September 30, 2024.
3. INCOME PER SHARE:
The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):
Numerator:
Net income (loss) attributable to noncontrolling interest in consolidated joint venture
3,688
1,656
Net income available to common stockholders - if-converted method
60,008
40,512
206,560
170,746
Denominator:
Weighted average shares outstanding - basic
59,900
59,707
59,845
57,089
Effect of dilutive stock-based compensation
223
225
287
238
Effect of dilutive put rights
3,778
3,403
4,064
Weighted average shares outstanding - diluted
63,901
63,620
63,535
61,391
As more fully discussed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, although currently not exercisable, the minority investor of OEG has certain put rights (the “OEG Put Rights”) to require the Company to purchase the minority investor’s equity interest in OEG, which the Company may pay in cash or Company stock at the Company’s option. The Company calculated potential dilution for the OEG Put Rights based on the if-converted method, which assumes the OEG Put Rights were converted on the first day of the period or the date of issuance and the minority investor’s noncontrolling equity interest was redeemed in exchange for shares of the Company’s common stock.
The operating partnership units (“OP Units”) held by the noncontrolling interest holders in RHP Hotel Properties, LP (the “Operating Partnership”) have been excluded from the denominator of the diluted income per share calculation for the three and nine months ended September 30, 2024 and 2023 as there would be no effect on the calculation of diluted income per share because the income or loss attributable to the OP Units held by the noncontrolling interest holders would also be added or subtracted to derive net income available to common stockholders.
4. ACCUMULATED OTHER COMPREHENSIVE LOSS:
The Company’s balance in accumulated other comprehensive loss is comprised of amounts related to the Company’s frozen noncontributory defined benefit pension plan, interest rate derivatives designated as cash flow hedges related to the Company’s outstanding debt as discussed in Note 7, “Debt,” and amounts related to an other-than-temporary impairment of a held-to-maturity investment that existed prior to 2020 with respect to the notes receivable discussed in Note 6, “Notes Receivable,” to the condensed consolidated financial statements included herein.
10
Changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2024 and 2023 consisted of the following (in thousands):
Other-Than-
Minimum
Temporary
Pension
Impairment of
Interest Rate
Liability
Investment
Derivatives
Balance, December 31, 2023
(15,187)
(2,878)
(1,322)
Gains arising during period
3,299
1,278
4,577
Amounts reclassified from accumulated other comprehensive loss
227
158
(939)
(554)
Income tax expense
(855)
Net other comprehensive income
2,671
339
3,168
Balance, September 30, 2024
(12,516)
(2,720)
(983)
Balance, December 31, 2022
(18,021)
(3,087)
10,185
3,029
(220)
(11,734)
(11,798)
Net other comprehensive income (loss)
(8,705)
(8,769)
Balance, September 30, 2023
(18,241)
(2,931)
1,480
5. PROPERTY AND EQUIPMENT:
Property and equipment at September 30, 2024 and December 31, 2023 is summarized as follows (in thousands):
Land and land improvements
608,703
605,500
Buildings
4,505,403
4,396,302
Furniture, fixtures and equipment
1,262,410
1,138,769
Right-of-use finance lease assets
1,097
1,793
Construction-in-progress
188,486
122,923
6,566,099
6,265,287
Accumulated depreciation and amortization
(2,473,865)
(2,309,701)
6. NOTES RECEIVABLE:
As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, in connection with the development of Gaylord National, the Company holds two issuances of governmental bonds (“Series A bond” and “Series B bond”) with a total carrying value and approximate fair value of $56.6 million and $61.8 million at September 30, 2024 and December 31, 2023, respectively, net of credit loss reserve of $38.0 million at each of September 30, 2024 and December 31, 2023. The Company receives debt service and principal payments thereon, payable from property tax increments, hotel taxes and special hotel rental taxes generated from Gaylord National through the maturity dates of July 1, 2034 and September 1, 2037, respectively. The Company records interest income over the life of the notes using the effective interest method.
The Company has the intent and ability to hold these bonds to maturity. The Company’s quarterly assessment of credit losses considers the estimate of projected tax revenues that will service the bonds over their remaining terms. These tax revenue projections are updated each quarter to reflect updated industry projections as to future anticipated operations of the hotel. As a result of reduced tax revenue projections over the life of the bonds as well as certain cumulative priority payments due to others, the Series B bond is fully reserved. The Series A bond is of higher priority than other tranches which fall between the Company’s two issuances.
11
During the three months ended September 30, 2024 and 2023, the Company recorded interest income of $1.1 million and $1.2 million, respectively, on these bonds. During the nine months ended September 30, 2024 and 2023, the Company recorded interest income of $3.5 million and $3.7 million, respectively, on these bonds. The Company received payments of $8.8 million and $11.0 million during the nine months ended September 30, 2024 and 2023, respectively, relating to these bonds. Before consideration of the credit loss reserve, accrued interest receivable included as a component of the carrying value of notes receivable is $39.9 million and $41.0 million at September 30, 2024 and December 31, 2023, respectively.
7. DEBT:
The Company’s debt and finance lease obligations at September 30, 2024 and December 31, 2023 consisted of (in thousands):
$700M Revolving Credit Facility, interest at SOFR plus 1.50%, maturing May 18, 2027
Term Loan B, interest at SOFR plus 2.25%, maturing May 18, 2030
293,525
496,250
Senior Notes, interest at 4.75%, maturing October 15, 2027
700,000
Senior Notes, interest at 7.25%, maturing July 15, 2028
Senior Notes, interest at 4.50%, maturing February 15, 2029
600,000
Senior Notes, interest at 6.50%, maturing April 1, 2032
Gaylord Rockies Term Loan, interest at SOFR plus 2.50%, original maturity July 2, 2024
800,000
$80M OEG Revolver, interest at SOFR plus 3.50%, maturing June 28, 2029
16,000
5,000
OEG Term Loan, interest at SOFR plus 3.50%, maturing June 28, 2031
300,000
296,250
Block 21 CMBS Loan, interest at 5.58%, maturing January 5, 2026
129,718
131,871
Finance lease obligations
74
138
Unamortized deferred financing costs
(53,146)
(38,309)
Unamortized discounts and premiums, net
(12,729)
(14,172)
Total debt
Amounts due within one year of the balance sheet date consist of the amortization payments for the term loan B of 1.0% of the refinanced $295.0 million principal balance, amortization payments for the $300 million OEG term loan of 1.0% of the refinanced principal balance, and amortization of the Block 21 CMBS Loan based on a 30-year amortization.
At September 30, 2024, there were no defaults under the covenants related to the Company’s outstanding debt.
$1 Billion 6.50% Senior Notes due 2032
On March 28, 2024, the Operating Partnership and RHP Finance Corporation (collectively, the “issuing subsidiaries”) completed the private placement of $1.0 billion in aggregate principal amount of 6.50% senior notes due 2032 (the “$1 Billion 6.50% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Company’s credit agreement.
The $1 Billion 6.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank Trust Company, National Association, as trustee. The $1 Billion 6.50% Senior Notes have a maturity date of April 1, 2032 and bear interest at 6.50% per annum, payable semi-annually in cash in arrears on April 1 and October 1 each year, beginning on October 1, 2024. The $1 Billion 6.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the Company’s $700 million in aggregate principal amount of 4.75% senior notes due 2027, $400 million in aggregate principal amount of 7.25% senior notes due 2028 and $600 million in aggregate principal amount of 4.50% senior notes due 2029, and senior in right of payment to future subordinated indebtedness, if any.
The $1 Billion 6.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the
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applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $1 Billion 6.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $1 Billion 6.50% Senior Notes.
The net proceeds from the issuance of the $1 Billion 6.50% Senior Notes totaled approximately $983 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The Company used a portion of these net proceeds to prepay the indebtedness outstanding under its previous $800.0 million Gaylord Rockies term loan and used the remaining proceeds, together with cash on hand, to pay down $200.0 million under its existing senior secured term loan B (the “Term Loan B”).
The $1 Billion 6.50% Senior Notes are redeemable before April 1, 2027, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $1 Billion 6.50% Senior Notes will be redeemable, in whole or in part, at any time on or after April 1, 2027 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.250%, 101.625%, and 100.000% beginning on April 1 of 2027, 2028, and 2029, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
Previous $800 Million Gaylord Rockies Term Loan
In July 2019, Aurora Convention Center Hotel, LLC and Aurora Convention Center Hotel Lessee, LLC, the entities that comprise Gaylord Rockies, entered into a Second Amended and Restated Loan Agreement (the “Gaylord Rockies Loan”) with Wells Fargo Bank, National Association, as administrative agent. The Gaylord Rockies Loan consisted of an $800.0 million secured term loan facility, with a maturity date of July 2, 2024 with two, one-year extension options, subject to certain requirements in the Gaylord Rockies Loan, and bore interest at Adjusted Daily Simple SOFR plus 2.50%. The Company previously entered into an interest rate swap to fix the SOFR portion of the interest rate at 5.2105% for the fifth year of the loan. The Company designated this interest rate swap as an effective cash flow hedge.
On March 28, 2024, the Company paid off the Gaylord Rockies Loan with proceeds from the $1 Billion 6.50% Senior Notes discussed above and terminated the interest rate swap.
Term Loan B
Prior to the effectiveness of the Incremental Agreement (as hereinafter defined), the applicable interest rate margins for borrowings under the Term Loan B were, at our option, either (i) Term SOFR plus 2.75%, (ii) Daily Simple SOFR plus 2.75% or (iii) a base rate as set forth in the Credit Agreement plus 1.75%.
On April 12, 2024, the Company entered into an Incremental Tranche B Term Loan Agreement (the “Incremental Agreement”), which supplements the Company’s credit agreement and includes the addition of certain new lenders and the removal of certain other lenders. The Incremental Agreement reduces the applicable interest rate margins for the loans advanced under the refinanced Term Loan B. The applicable interest rate margins for the refinanced Term Loan B under the Incremental Agreement are (i) 2.25% for SOFR Loans (as defined in the Company’s credit agreement) and (ii) 1.25% for base rate loans. The Incremental Agreement did not change the maturity dates under the Company’s credit agreement or result in any increase in principal indebtedness. In addition, the Incremental Agreement confirms that the annual amortization under the Term Loan B is 1% of the refinanced $295.0 million outstanding principal amount, with the balance due at maturity.
OEG Credit Agreement
On June 28, 2024, OEG Borrower, LLC (“OEG Borrower”) and OEG Finance, LLC (“OEG Finance”), each a wholly owned direct or indirect subsidiary of OEG, entered into a certain First Amendment, which amends the Credit Agreement dated as of June 16, 2022 among OEG Borrower, as borrower, OEG Finance, certain subsidiaries of OEG Borrower from time to time party thereto as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Original OEG Credit Agreement”). As amended, the credit facility (the “Amended OEG
13
Credit Agreement”) includes certain amended terms including lower interest rates, extended maturities and modifications to various covenants.
The Amended OEG Credit Agreement provides for (i) a senior secured term loan facility in the aggregate 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 $80.0 million (the “OEG Revolver”). The OEG Term Loan refinances and replaces the former term loan in the outstanding principal amount of $294.8 million as of June 28, 2024 and the OEG Revolver refinances and replaces the senior secured revolving credit facility in an aggregate principal amount not to exceed $65.0 million. At September 30, 2024, $16.0 million was outstanding under the OEG Revolver.
The OEG Term Loan and the OEG Revolver are each secured by substantially all of the assets of OEG Finance and each of its subsidiaries (other than Block 21-related subsidiaries, as more specifically described in the Amended OEG Credit Agreement). The OEG Term Loan bears interest at a rate equal to either, at OEG Borrower’s election, as of the closing contemplated by the Amended OEG Credit Agreement: (a) the Alternate Base Rate plus 2.50% or (b) Adjusted Term SOFR plus 3.50% (all as more specifically described in the Amended OEG Credit Agreement). Borrowings under the OEG Revolver bear interest at a rate equal to either, at OEG Borrower’s election, as of the closing contemplated by the Amended OEG Credit Agreement: (a) the Alternate Base Rate plus the Applicable Rate (as defined in the Amended OEG Credit Agreement) or (b) Adjusted Term SOFR plus the Applicable Rate. Under the Amended OEG Credit Agreement, (i) the Applicable Rate for Alternative Base Rate loans will be between 2.75% and 2.25% and (ii) the Applicable Rate for Adjusted Term SOFR loans will be between 3.75% and 3.25%, in each of (i) and (ii) based upon the First Lien Leverage Ratio of OEG Finance and its consolidated subsidiaries (as more specifically described in the Amended OEG Credit Agreement). The Applicable Rate for borrowings as of September 30, 2024 is 2.50% for Alternative Base Rate Loans and 3.50% for Adjusted Term SOFR loans.
The OEG Term Loan matures on June 28, 2031 and the OEG Revolver matures on June 28, 2029. OEG Borrower used the proceeds of the OEG Term Loan, net of transaction expenses, to refinance the original term loan under the Original OEG Credit Agreement.
Interest Rate Derivatives
The Company has entered into or previously entered into interest rate swaps to manage interest rate risk associated with the previous Gaylord Rockies $800 million term loan and a portion of the $300 million OEG term loan. Each swap has been designated as a cash flow hedge whereby the Company receives variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount. The Company does not use derivatives for trading or speculative purposes and currently does not hold any derivatives that are not designated as hedges.
For derivatives designated as and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified to interest expense in the same period during which the hedged transaction affects earnings. These amounts reported in accumulated other comprehensive loss will be reclassified to interest expense as interest payments are made on the related variable-rate debt. The Company estimates that $0.7 million will be reclassified from accumulated other comprehensive loss to interest expense in the next twelve months.
In March 2024, as discussed above, the Company paid off the Gaylord Rockies Loan and subsequently terminated the associated interest rate swap. The Company received approximately $0.2 million from the counterparty to the swap, which has been recorded as a reduction in interest expense for the nine months ended September 30, 2024.
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The estimated fair value of the Company’s derivative financial instruments at September 30, 2024 and December 31, 2023 is as follows (in thousands):
Estimated Fair Value
Asset (Liability) Balance
Strike
Notional
Hedged Debt
Type
Rate
Index
Maturity Date
Amount
Gaylord Rockies Term Loan
Interest Rate Swap
5.2105%
Daily SOFR
July 2, 2024
-
(474)
OEG Term Loan
4.5330%
3-month SOFR
December 18, 2025
100,000
(984)
(848)
Derivative financial instruments in an asset position are included in prepaid expenses and other assets, and those in a liability position are included in other liabilities in the accompanying condensed consolidated balance sheets.
The effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations for the respective periods is as follows (in thousands):
Amount of Gain (Loss)
Recognized in OCI
Reclassified from Accumulated
on Derivatives
Location of Gain (Loss)
OCI into Income (Expense)
Reclassified from
Accumulated OCI
into Income (Expense)
Derivatives in Cash Flow Hedging Relationships:
Interest rate swaps
(1,048)
1,562
190
1,578
Total derivatives
Recognized in OCI on
939
11,734
Reclassifications from accumulated other comprehensive loss for interest rate swaps are shown in the table above and included in interest expense. Total consolidated interest expense for the three months ended September 30, 2024 and 2023 was $54.5 million and $58.5 million, respectively, and for the nine months ended September 30, 2024 and 2023 was $171.6 million and $150.2 million, respectively.
At September 30, 2024, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $1.0 million. As of September 30, 2024, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at the aggregate termination value of $1.0 million. In addition, the Company has an agreement with its derivative counterparty that contains a provision whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.
8. DEFERRED MANAGEMENT RIGHTS PROCEEDS:
On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand and rights to manage the Gaylord Hotels properties (the “Management Rights”) to Marriott for $210.0 million in cash. Effective October 1, 2012, Marriott assumed responsibility for managing the day-to-day operations of the Gaylord Hotels properties pursuant to a management agreement for each Gaylord Hotel property. The Company allocated $190.0 million of the purchase price to the Management Rights, based on the Company’s estimates of the fair values for the respective components. For
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financial accounting purposes, the amount related to the Management Rights was deferred and is amortized on a straight-line basis over the 65-year term of the hotel management agreements, including extensions, as a reduction in management fee expense.
9. LEASES:
The Company is a lessee of a 65.3-acre site in Osceola County, Florida on which Gaylord Palms is located; building or land leases for Ole Red Gatlinburg, Ole Red Orlando, Ole Red Tishomingo, Ole Red Nashville International Airport and Ole Red Las Vegas; and various warehouse, general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from five to ten years, with renewal options ranging from five to fifty-five years, at the Company’s discretion, with the exception of Ole Red Nashville International Airport, which has no extension option. Extension options were not considered reasonably assured to be exercised as of the date of the agreement and, as a result, are not included in the Company’s calculation of its right-of-use assets and lease liabilities.
The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms, and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company’s lease costs for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):
Operating lease cost
4,746
4,411
14,313
13,499
Finance lease cost:
Amortization of right-of-use assets
47
58
142
119
Interest on lease liabilities
18
Net lease cost
4,794
4,475
14,457
13,636
Future minimum lease payments under non-cancelable leases at September 30, 2024 are as follows (in thousands):
Finance
Leases
Year 1
9,939
Year 2
9,887
27
Year 3
9,849
Year 4
9,518
Year 5
9,071
Years thereafter
549,316
Total future minimum lease payments
597,580
75
Less amount representing interest
(467,291)
(1)
Total present value of minimum payments
The remaining lease term and discount rate for the Company’s leases are as follows:
Weighted-average remaining lease term:
Operating leases
42.7
years
Finance leases
1.6
Weighted-average discount rate:
7.0
%
2.2
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10. STOCK PLANS:
On May 9, 2024, the Company’s stockholders approved the Company’s 2024 Omnibus Incentive Plan (the “2024 Plan”). The 2024 Plan replaces the Company’s previous 2016 Omnibus Incentive Plan (the “2016 Plan”) and no new awards will be made under the 2016 Plan; however, awards granted under the 2016 Plan will continue to be governed by the 2016 Plan. At September 30, 2024, there were approximately 1.9 million shares of common stock available for issuance pursuant to future grants of awards under the 2024 Plan.
During the nine months ended September 30, 2024, the Company granted 0.1 million restricted stock units with a weighted-average grant date fair value of $120.62 per unit. There were 0.4 million and 0.6 million restricted stock units outstanding at September 30, 2024 and December 31, 2023.
Compensation expense for the Company’s stock-based compensation plans was $3.5 million and $3.9 million for the three months ended September 30, 2024 and 2023, respectively, and $10.7 million and $11.5 million for the nine months ended September 30, 2024 and 2023, respectively.
11. INCOME TAXES:
The Company elected to be taxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company is not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company continues to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries (“TRSs”).
For the three months ended September 30, 2024 and 2023, the Company recorded an income tax provision of $0.9 million and $2.2 million, respectively, related to its TRSs. For the nine months ended September 30, 2024 and 2023, the Company recorded an income tax provision of $13.7 million and $7.3 million, respectively, related to its TRSs.
At September 30, 2024 and December 31, 2023, the Company had no unrecognized tax benefits.
12. COMMITMENTS AND CONTINGENCIES:
In connection with the purchase of Block 21, the Company provided limited guarantees to the Block 21 lenders under the Block 21 CMBS Loan via a guaranty agreement, a guaranty of completion agreement and an environmental indemnity.
The Company has entered into employment agreements with certain officers, which provide for severance payments upon certain events, including certain terminations in connection with a change of control.
On April 9, 2024, the Company received service of process in a lawsuit naming the Company and a subsidiary as co-defendants with Marriott, as the manager, and multiple contractors in a personal injury lawsuit filed by individual plaintiffs in Colorado state court. The lawsuit relates to a May 2023 incident at the Gaylord Rockies indoor pool amenity involving the collapse of HVAC equipment. The complaint requests an unspecified amount of damages related to alleged injuries to two guests. The Company intends to vigorously defend the lawsuit and believes it has strong defenses. The lawsuit is in its early stages so the Company cannot predict its likely outcome or estimate the range of possible loss, but the Company does not believe that the outcome will have a material impact on the Company’s financial position.
In addition, the Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of matters. It is the opinion of management that such contingencies will not have a material effect on the financial statements of the Company.
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13. EQUITY
Dividends
On February 22, 2024, the Company’s board of directors declared the Company’s first quarter 2024 cash dividend in the amount of $1.10 per share of common stock, or an aggregate of approximately $66.3 million in cash, which was paid on April 15, 2024 to stockholders of record as of the close of business on March 29, 2024.
On May 10, 2024, the Company’s board of directors declared the Company’s second quarter 2024 cash dividend in the amount of $1.10 per share of common stock, or an aggregate of approximately $66.3 million in cash, which was paid on July 15, 2024 to stockholders of record as of the close of business on June 28, 2024.
On September 4, 2024, the Company’s board of directors declared the Company’s third quarter 2024 cash dividend in the amount of $1.10 per share of common stock, or an aggregate of approximately $66.3 million in cash, which was paid on October 15, 2024 to stockholders of record as of the close of business on September 30, 2024. Any future dividend is subject to the Company’s board of directors’ determination as to the amount of distributions and the timing thereof.
Noncontrolling Interest in the Operating Partnership
The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP Units held by the noncontrolling limited partners are redeemable for cash, or if the Company so elects, in shares of the Company’s common stock on a one-for-one basis, subject to certain adjustments. At September 30, 2024, 0.4 million outstanding OP Units, or 0.7% of the outstanding OP Units, were held by the noncontrolling limited partners and are included as a component of equity in the accompanying condensed consolidated balance sheets. The Company owns, directly or indirectly, the remaining 99.3% of the outstanding OP Units.
14. FAIR VALUE MEASUREMENTS:
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The investments held by the Company in connection with its deferred compensation plan consist of mutual funds traded in an active market. The Company determined the fair value of these mutual funds based on the net asset value per unit of the funds or the portfolio, which is based upon quoted market prices in an active market. Therefore, the Company has categorized these investments as Level 1.
The Company’s interest rate swaps consist of over-the-counter swap contracts, which are not traded on a public exchange. The Company determines the fair value of these swap contracts based on a widely accepted valuation methodology of netting the discounted future fixed cash flows and the discounted expected variable cash flows, using interest rates derived from observable market interest rate curves and volatilities, with appropriate adjustments for any significant impact of non-performance risk of the parties to the swap contracts. Therefore, these swap contracts have been classified as Level 2.
The Company has consistently applied the above valuation techniques in all periods presented and believes it has obtained the most accurate information available for each type of instrument.
The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023, were as follows (in thousands):
Markets for
Observable
Unobservable
Identical Assets
Inputs
(Level 1)
(Level 2)
(Level 3)
Deferred compensation plan investments
37,065
Total assets measured at fair value
Variable to fixed interest rate swaps
984
Total liabilities measured at fair value
33,073
1,322
The remainder of the assets and liabilities held by the Company at September 30, 2024 are not required to be recorded at fair value, and financial assets and liabilities approximate fair value, except as described below.
The Company has outstanding $400.0 million in aggregate principal amount of $400 million 7.25% senior notes. The carrying value of these notes at September 30, 2024 was $394.7 million, net of unamortized deferred financing costs (“DFCs”). The fair value of these notes, based upon quoted market prices (Level 1), was $418.5 million at September 30, 2024.
The Company has outstanding $1,000.0 million in aggregate principal amount of $1,000.0 million 6.50% senior notes. The carrying value of these notes at September 30, 2024 was $984.0 million, net of unamortized DFCs. The fair value of these notes, based upon quoted market prices (Level 1), was $1,033.7 million at September 30, 2024.
15. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
The Company’s operations are organized into three principal business segments:
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The following information is derived directly from the segments’ internal financial reports used for corporate management purposes (amounts in thousands):
Hospitality
Corporate and Other
Depreciation and amortization:
51,488
52,466
152,271
137,987
7,336
5,400
21,842
16,067
220
693
646
Operating income (loss):
102,781
91,723
356,851
305,526
13,920
20,691
48,345
55,940
(9,951)
(10,323)
(31,773)
(31,228)
(870)
(168)
(3,361)
(425)
270
Total operating income
Total assets:
3,976,383
4,039,804
652,788
610,663
575,323
538,070
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Ryman Hospitality Properties, Inc. (“Ryman”) is a Delaware 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 (as defined below) 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, a Delaware corporation (“Finco”), was formed as a wholly-owned subsidiary of the Operating Partnership for the sole purpose of being a co-issuer of debt securities with the Operating Partnership. Neither Ryman nor Finco has any material assets, other than Ryman’s investment in the Operating Partnership and the Operating Partnership’s subsidiaries. Neither the Operating 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 the Securities 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 to Ryman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise.
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year ended December 31, 2023, included in our Annual Report on Form 10-K that was filed with the SEC on February 23, 2024.
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 may also include statements regarding (i) the future performance of our business, anticipated business levels and our anticipated financial results during future periods, and other business or operational issues; (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) 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 ability to borrow available funds under our credit facility; (x) our expectations about successfully amending the agreements governing our indebtedness should the need arise; (xi) the effects of inflation and increased costs on our business and on our customers, including group customers at our hotels; and (xii) 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 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 and effects on group customers at our hotels and customers in our OEG businesses, 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, and those factors described elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023 or described from time to time in our other reports filed with the SEC.
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 our Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”). Our other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National, and effective June 30, 2023, the JW Marriott San Antonio Hill Country Resort & Spa (“JW Marriott Hill Country”).
Each of our award-winning Gaylord 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, our Gaylord Hotels properties provide a convenient and entertaining environment for convention guests. Our Gaylord Hotels properties focus on the large group meetings market in the United States.
We also own a controlling 70% equity interest in a business comprised of a number of entertainment and media assets, known as the Opry Entertainment Group (“OEG”), which we report as our Entertainment segment. These assets include the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers for 99 years; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry located in downtown Nashville; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces; Category 10, a Luke Combs-themed bar, music venue and event space that opened in November 2024; and Block 21, a mixed-use entertainment, lodging, office, and retail complex located in Austin, Texas (“Block 21”).
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 ended December 31, 2023 for important information regarding forward-looking statements made in this report and risks and uncertainties we face.
22
Significant 2024 Activities
Significant activities we have undertaken in 2024 include (as well as where you can find more information herein or in the accompanying condensed consolidated financial statements):
Dividend Policy
Our board of directors has approved a dividend policy pursuant to which we will make minimum dividends of 100% of REIT taxable income annually, subject to the board of directors’ future determinations as to the amount of any distributions and the timing thereof. The dividend policy may be altered at any time by our board of directors (as otherwise permitted by our credit agreement) and certain provisions of our agreements governing our other indebtedness may prohibit us from paying dividends in accordance with any policy we may adopt.
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. Our Gaylord Hotels properties focus on the large group meetings market in the 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. We believe this strategy creates a better experience for both meeting planners and guests and has led to our current Gaylord Hotels properties claiming a place among the leading convention hotels in the country.
Expansion of Hotel Asset Portfolio. Part of our long-term growth strategy includes acquisitions or developments of other hotels, particularly in the group meetings sector of the hospitality industry, either alone or through joint ventures or 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 are consistently considering acquisitions that would expand the geographic diversity of our existing asset portfolio. To this end, we purchased JW Marriott Hill Country in June 2023.
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 2022, we completed a re-concepting of the food and beverage options at Gaylord National and began a $98 million multi-year interior and exterior enhancement project at Gaylord Rockies to better position the property for our group customers. In early 2024, we identified over $1 billion in capital investment opportunities across our entire hotel portfolio, comprised of projects that we anticipate completing in phases through 2027.
23
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, purchased Block 21, and in April 2023 announced a partnership with Luke Combs for Category 10, an entertainment venue concept that opened in November 2024. Further, in 2022, we completed a strategic transaction to sell a minority interest in OEG to an affiliate of Atairos Group, Inc. and its strategic partner NBCUniversal Media, LLC, who we believe will be able to help us expand the distribution of our OEG brands.
Short-Term Capital Allocation. Our short-term capital allocation strategy is focused on returning capital to stockholders through the payment of dividends, in addition to investing in our assets and operations. Our dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually, subject to the board of directors’ future determinations as to the amount of any distributions and the timing thereof.
Our Operations
Our operations are organized into three principal business segments:
For the three and nine months ended September 30, 2024 and 2023, our total revenues were divided among these business segments as follows:
Segment
85
84
86
0
24
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 performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
We also use certain “non-GAAP financial measures,” which are measures of our historical performance that are not calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), within the meaning of applicable SEC rules. These measures include:
See “Non-GAAP Financial Measures” below for further discussion.
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, seasonality, 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.
25
Selected Financial Information
The following table contains our unaudited selected summary financial data for the three and nine months ended September 30, 2024 and 2023. 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
Three Months Ended September 30,
Nine Months Ended September 30,
REVENUES:
33.5
34.1
32.9
33.4
40.9
38.4
42.5
40.4
10.6
11.9
10.1
15.1
15.6
14.4
15.5
100.0
OPERATING EXPENSES:
8.2
8.7
7.9
8.4
23.1
22.2
22.9
22.3
22.5
23.2
21.3
21.7
Hotel management fees, net
3.1
3.0
3.3
11.2
10.3
10.8
1.8
1.9
2.0
0.2
0.0
(0.0)
9.4
9.9
9.0
1.3
1.0
1.1
Total depreciation and amortization
10.7
11.0
80.7
78.1
78.4
OPERATING INCOME (LOSS):
22.0
20.6
24.7
23.7
16.8
25.1
19.8
23.6
(A)
(0.2)
19.3
21.9
21.6
Net income attributable to noncontrolling interest in the Operating Partnership
26
Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages and per share data):
Change
4.1
10.9
10.5
3.9
12.3
48.1
20.9
43.1
20.0
Net income available to common stockholders per share - diluted
46.9
16.9
Total Revenues
The increase in our total revenues for the three months ended September 30, 2024, as compared to the same period in 2023, is primarily attributable to an increase in our Hospitality segment of $20.8 million, as presented in the tables below. The increase in our total revenues for the nine months ended September 30, 2024, as compared to the same period in 2023, is attributable to increases in our Hospitality segment and Entertainment segment of $159.3 million and $7.2 million, respectively, as presented in the tables below.
Total Operating Expenses
The increase in our total operating expenses for the three months ended September 30, 2024, as compared to the same period in 2023, is primarily the result of increases in our Hospitality segment and Entertainment segment of $10.8 million and $5.4 million, respectively, as presented in the tables below. The increase in our total operating expenses for the nine months ended September 30, 2024, as compared to the same period in 2023, is primarily the result of increases in our Hospitality segment and Entertainment segment of $93.7 million and $9.1 million, respectively, and an increase in depreciation expense of $20.1 million, as presented in the tables below.
Net Income
Our $19.6 million increase in net income for the three months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the changes in our revenues and operating expenses reflected above, and each of the following factors, each as described more fully below.
Our $36.0 million increase in net income for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to the changes in our revenues and operating expenses reflected above, and each of the following factors, each as described more fully below.
Factors and Trends Contributing to Performance and Current Environment
Important factors and trends contributing to our performance during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, were:
Important factors and trends contributing to our performance during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, were:
Other important factors and trends for the three and nine months ended, and as of, September 30, 2024 include:
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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 and nine months ended September 30, 2024 and 2023 (in thousands, except percentages and performance metrics):
2.1
9.3
16.7
(7.9)
5.8
Total hospitality revenue
4.7
12.4
Hospitality operating expenses:
(1.6)
14.1
0.8
9.1
5.9
(1.9)
10.4
Total Hospitality operating expenses
364,262
354,475
2.8
1,090,749
982,796
Hospitality operating income
12.1
Hospitality performance metrics
Occupancy
69.5
71.8
(2.3)
pts
70.0
72.3
ADR
252.42
239.00
5.6
254.72
240.53
RevPAR (1)
175.37
171.71
178.19
173.80
2.5
Total RevPAR (2)
444.77
424.91
462.87
439.00
5.4
Net Definite Group Room Nights Booked
477,121
572,574
(16.7)
1,315,138
1,273,161
Same-store Hospitality performance metrics (3):
69.1
(2.7)
69.7
(2.6)
244.71
230.50
6.2
248.05
237.74
4.3
168.99
165.58
173.00
171.80
0.7
430.91
413.58
4.2
448.86
435.39
457,856
546,724
(16.3)
1,206,193
1,247,311
(3.3)
The increase in total Hospitality segment revenue in the three months ended September 30, 2024, as compared to the same period in 2023, is primarily due to increases of $10.7 million, $4.5 million, $4.4 million and $4.2 million at Gaylord Opryland, Gaylord Rockies, Gaylord Palms and JW Marriott Hill Country, respectively, partially offset by a decrease of $2.4 million at Gaylord National, as presented in the tables below.
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The increase in total Hospitality segment revenue in the nine months ended September 30, 2024, as compared to the same period in 2023, is primarily due to the addition of $116.3 million in increased revenue from JW Marriott Hill Country, which we purchased on June 30, 2023, as well as increases of $22.6 million, $13.9 million and $4.5 million at Gaylord Opryland, Gaylord Rockies and Gaylord National, respectively, as presented in the tables below.
Total Hospitality segment revenues in the three and nine months ended September 30, 2024 include $7.9 million and $26.2 million, respectively, in attrition and cancellation fee revenue, a decrease of $3.8 million and $5.6 million, respectively, in attrition and cancellation fee collections from the 2023 periods.
The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Group
72
77
76
Transient
Rooms expenses decreased slightly in the three months ended September 30, 2024, as compared to the same period in 2023, primarily as a result of the decrease in occupancy. Rooms expenses increased in the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to JW Marriott Hill Country, as presented in the tables below.
Food and beverage expenses increased in the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to increases at Gaylord Opryland, Gaylord Rockies, Gaylord Palms and JW Marriott Hill Country, partially offset by a decrease at Gaylord Texan, as presented in the tables below. The increase in food and beverage expenses in the nine months ended September 30, 2024, as compared to the same period in 2023, is primarily due to JW Marriott Hill Country, as well as increases at Gaylord Opryland, Gaylord Rockies, Gaylord Palms and Gaylord National, partially offset by a decrease at Gaylord Texan, due to the changes in variable expenses associated with the changes in volume.
Other hotel expenses for the three and nine months ended September 30, 2024 and 2023 consist of the following (in thousands):
Administrative employment costs
46,355
44,312
4.6
141,475
122,988
15.0
Utilities
12,536
12,194
35,009
30,861
13.4
Property taxes
11,514
11,458
0.5
33,878
29,501
14.8
53,311
54,784
149,936
147,047
Total other hotel expenses
Each of the other hotel expense categories above increased in the nine months ended September 30, 2024, as compared to the same period in 2023, due to the addition of JW Marriott Hill Country. 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. The increase in administrative employment costs in the three and nine months ended September 30, 2024, as compared to the same periods in 2023, also includes increases at Gaylord Opryland, Gaylord Palms and Gaylord Texan related to increased employment costs within the marketing and engineering departments. The increase in utilities during the nine months ended September 30, 2024, as compared to the 2023 period, also includes an increase at Gaylord Texan due to increased rates. The increase in property taxes during the nine months ended September 30, 2024, as compared to the 2023 period, was partially offset by a decrease at Gaylord National due to a settlement of an appeal from prior tax years. The increase in other expenses, which include supplies,
30
advertising, maintenance costs and consulting costs, during the nine months ended September 30, 2024, as compared to the same period in 2023, was partially offset by a decrease at Gaylord Opryland due to a refund of Tennessee franchise tax for prior years caused by a change in tax law.
Each of our management agreements with Marriott requires us to pay Marriott a base management fee based on the gross revenues from the applicable property for each fiscal year or portion thereof. The applicable percentage for our Gaylord Hotels properties, excluding Gaylord Rockies, is approximately 2% of gross revenues, Gaylord Rockies is approximately 3% of gross revenues, and JW Marriott Hill Country is approximately 3.5% of gross revenues. Additionally, we pay Marriott an incentive management fee based on the profitability of our hotels. In the three months ended September 30, 2024 and 2023, we incurred $11.0 million and $10.5 million, respectively, and in the nine months ended September 30, 2024 and 2023, we incurred $34.0 million and $28.9 million, respectively, related to base management fees for our Hospitality segment. In the three months ended September 30, 2024 and 2023, we incurred $6.7 million and $6.2 million, respectively, and in the nine months ended September 30, 2024 and 2023, we incurred $24.6 million and $20.0 million, 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 8, “Deferred Management Rights Proceeds,” to the accompanying condensed consolidated financial statements included herein.
Total Hospitality segment depreciation and amortization expense decreased slightly in the three months ended September 30, 2024, as compared to the same period in 2023. Total Hospitality segment depreciation and amortization increased in the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to the depreciable assets associated with JW Marriott Hill Country, which we purchased on June 30, 2023.
Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three and nine months ended September 30, 2024 and 2023.
Gaylord Opryland Results. The results of Gaylord Opryland for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
48,487
46,812
3.6
142,165
139,285
57,020
47,876
19.1
163,779
143,179
17,152
17,251
(0.6)
50,902
51,756
(1.7)
Total revenue
9.6
6.8
10,707
11,351
(5.7)
31,215
31,981
(2.4)
29,760
25,566
16.4
84,884
75,076
13.1
Other hotel expenses (1)
31,715
31,819
(0.3)
86,400
92,435
(6.5)
5,652
5,170
17,723
15,923
11.3
8,203
8,484
24,535
25,550
(4.0)
86,037
82,390
4.4
244,757
240,965
36,622
29,549
23.9
112,089
93,255
20.2
Performance metrics:
72.7
(0.9)
70.8
72.2
(1.4)
254.05
242.37
4.8
253.83
244.82
3.7
RevPAR
182.49
176.18
179.66
176.66
1.7
Total RevPAR
461.65
421.30
450.95
423.91
6.4
31
Gaylord Palms Results. The results of Gaylord Palms for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
21,511
22,812
75,777
83,332
(9.1)
37,730
30,891
22.1
120,271
111,525
7.8
9,001
10,182
(11.6)
26,456
27,403
(3.5)
0.1
5,867
6,003
18,503
18,438
0.4
20,292
17,902
62,792
58,389
7.5
21,527
22,154
(2.8)
64,285
64,510
1,915
2,927
(34.6)
8,038
8,915
(9.8)
6,318
5,650
11.8
18,078
16,803
7.6
55,919
54,636
2.3
171,696
167,055
12,323
9,249
33.2
50,808
55,205
(8.0)
61.0
67.4
(6.4)
66.0
74.2
(8.2)
223.10
214.22
243.86
239.56
136.09
144.33
160.98
177.67
(9.4)
431.76
404.19
472.68
473.89
Gaylord Texan Results. The results of Gaylord Texan for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
29,676
28,485
91,534
86,662
35,055
35,962
(2.5)
124,963
128,270
8,365
9,544
(12.4)
25,398
26,936
(1.2)
6,444
6,540
(1.5)
19,375
19,287
19,381
20,752
(6.6)
65,447
67,024
19,389
18,302
57,232
54,563
4.9
3,465
3,172
9.2
11,443
10,092
5,720
5,670
0.9
17,355
17,154
1.2
54,399
54,436
(0.1)
170,852
168,120
18,697
19,555
(4.4)
71,043
73,748
(3.7)
73.0
74.6
75.0
(0.4)
247.51
233.92
246.78
233.19
177.82
170.68
184.16
175.00
5.2
437.99
443.36
486.68
488.40
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Gaylord National Results. The results of Gaylord National for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
28,092
28,486
89,680
88,481
1.4
35,550
35,430
0.3
117,942
110,390
6,109
8,208
(25.6)
18,772
23,039
(18.5)
9,980
10,543
(5.3)
31,029
32,014
(3.1)
21,806
21,164
67,964
65,658
3.5
19,953
20,655
(3.4)
61,617
62,352
1,068
1,492
(28.4)
4,490
4,084
8,451
8,415
25,257
24,966
61,258
62,269
190,357
189,074
8,493
9,855
(13.8)
36,037
32,836
9.7
63.5
71.5
66.3
68.9
240.73
216.85
247.47
235.67
5.0
152.98
155.12
163.98
162.38
379.84
392.76
413.96
407.24
Gaylord Rockies Results. The results of Gaylord Rockies for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
28,980
27,092
78,363
75,447
36,496
32,365
12.8
114,201
101,379
12.6
7,182
8,746
(17.9)
22,551
6.5
6,426
6,164
17,803
18,215
21,758
19,383
64,292
59,314
11,782
11,454
2.9
32,920
33,022
2,172
2,031
6.9
6,369
5,927
14,475
14,201
42,454
42,370
56,613
53,233
6.3
163,838
158,848
16,045
14,970
7.2
49,478
40,529
80.8
79.9
75.2
75.9
(0.7)
259.76
245.52
253.23
242.57
209.86
196.19
190.54
184.12
526.16
493.90
518.67
486.56
6.6
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JW Marriott Hill Country Results. The results of JW Marriott Hill Country for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except percentages and performance metrics):
Change (1)
22,278
21,702
2.7
63,732
193.7
22,155
19,373
75,363
289.0
9,840
8,951
27,969
9,672
189.2
8.5
229.2
4,152
3,853
11,859
207.8
13,160
11,867
39,657
234.2
17,126
16,128
51,400
16,621
209.2
2,286
801
185.4
7,159
793.8
7,573
9,501
(20.3)
22,441
136.2
44,297
42,150
5.1
132,516
42,643
210.8
9,976
7,876
26.7
34,548
8,104
326.3
73.8
72.0
327.27
327.17
321.73
241.68
235.43
232.14
588.74
542.67
608.50
550.50
Entertainment Segment
Total Segment Results. The following presents the financial results of our Entertainment segment for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):
Revenues
Operating expenses (1)
(61,659)
(56,222)
(173,806)
(164,744)
5.5
(7,336)
(5,400)
35.9
(21,842)
(16,067)
Operating income (2)(3)
(32.7)
(13.6)
Revenues increased in our Entertainment segment in the three and nine months ended September 30, 2024, as compared to the prior year periods, as incremental revenue from Ole Red Las Vegas, which opened in January 2024, was partially offset by the Wildhorse Saloon being temporarily closed as it was being rebranded as Category 10 and a decrease at the W Austin primarily as a result of the disruption caused by the ongoing construction of enhancements at the property.
Entertainment segment operating expenses increased in the 2024 periods, as compared to the 2023 periods, primarily due
34
to the opening of Ole Red Las Vegas, partially offset by the temporary closure of the Wildhorse Saloon. The nine-month 2024 period also includes a refund of Tennessee franchise tax for prior years caused by a change in tax law.
Depreciation and amortization increased in the 2024 periods, as compared to the 2023 periods, primarily due to the depreciable assets associated with the opening of Ole Red Las Vegas.
Corporate and Other Segment
Total Segment Results. The following presents the financial results of our Corporate and Other segment for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):
Operating expenses
(3.8)
3.2
7.3
Operating loss (1)
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 decreased in the three months and increased in the nine months ended September 30, 2024, respectively, as compared to the prior year periods, primarily as a result of changes in employment expenses.
Operating Results – Preopening Costs
Preopening costs during the three and nine months ended September 30, 2024 primarily include costs associated with Category 10, which opened November 2024. Preopening costs during the three and nine months ended September 30, 2023 primarily include costs associated with Ole Red Las Vegas, which opened in January 2024.
Operating Results – Gain on Sale of Assets
Gain on sale of assets during the nine months ended September 30, 2024 includes the sale of miscellaneous corporate assets.
Non-Operating Results Affecting Net Income
The following table summarizes the other factors which affected our net income for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):
54,546
58,521
(6.8)
171,566
150,228
14.2
18.1
56.0
(3.0)
100.1
101.3
(54.0)
(43.8)
57.2
(86.2)
35
Interest Expense
The following presents interest expense associated with our outstanding borrowings, including the impact of interest rate swaps, for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):
RHP Revolving Credit Facility
1,028
1,019
3,027
3,165
RHP Term Loan B
5,982
10,464
(42.8)
22,231
20,854
RHP Senior Notes
39,736
21,498
84.8
103,671
55,279
87.5
15,102
(100.0)
15,495
39,804
(61.1)
7,148
8,409
(15.0)
23,779
24,412
OEG Revolver
473
326
45.1
1,593
1,002
59.0
Block 21 CMBS Loan
2,110
2,135
6,321
6,373
(0.8)
Other (1)
(1,931)
(432)
(347.0)
(4,551)
(661)
(588.5)
Total interest expense
Our weighted average interest rate on our borrowings, excluding capitalized interest, but including the impact of interest rate swaps, was 6.5% and 6.8% for the three months ended September 30, 2024 and 2023, respectively, and 6.8% and 6.4% for the nine months ended September 30, 2024 and 2023, respectively.
Interest Income
Interest income for the three and nine months ended September 30, 2024 primarily includes amounts earned on our cash balances, as well as the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 6, “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 the June 2024 refinancing of the OEG credit agreement, the April 2024 repricing of the RHP term loan B, and the March 2024 repayment of the Gaylord Rockies $800 million term loan (see “Principal Debt Agreements” below), we recognized a loss on extinguishment of debt of $2.3 million in the nine months ended September 30, 2024.
As a result of the May 2023 refinancing of our credit facility and the extension of the Gaylord Rockies $800 million term loan, we recognized a loss on extinguishment of debt of $2.3 million in the nine months ended September 30, 2023.
Income (Loss) from Unconsolidated Joint Ventures
The loss from unconsolidated joint ventures for the three and nine months ended September 30, 2023 represents our equity method share of losses associated with our previous investment in Circle, a joint venture that we and our joint venture partner agreed to wind down at the end of 2023.
Other Gains and (Losses), net
Other gains and (losses), net for the three and nine months ended September 30, 2024 and 2023 primarily includes a gain of $3.2 million and $6.1 million, respectively, from a fund associated with the Gaylord National bonds to reimburse us for certain marketing and maintenance expenses.
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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 the three months ended September 30, 2024 and 2023, we recorded an income tax provision of $0.9 million and $2.2 million, respectively, and for the nine months ended September 30, 2024 and 2023, we recorded an income tax provision of $13.7 million and $7.3 million, respectively, related to our TRSs. The change in the income tax provision for the 2024 periods, as compared to the 2023 periods, relates to both changes in income at our TRSs in the 2024 periods and the effect of changes in valuation allowance in the 2023 periods.
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 the National Association of Real Estate Investment Trusts (“NAREIT”) in its September 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 in 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:
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.
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FFO, Adjusted FFO, and Adjusted FFO available to common stockholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in its December 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.
To calculate Adjusted FFO available to common stockholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
FFO available to common stockholders and unit holders and Adjusted FFO available to common stockholders and unit holders exclude the ownership portion of the joint ventures not controlled or owned by the Company.
We believe that the presentation of FFO available to common stockholders and unit holders and Adjusted FFO available to common stockholders 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 in Consolidated Joint Venture, FFO available to common stockholders and unit holders, and Adjusted FFO available to common stockholders 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, 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 to EBITDAre, Adjusted EBITDAre, and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Interest expense, net
47,327
52,409
149,761
136,251
922
2,156
13,652
7,333
Pro rata EBITDAre from unconsolidated joint ventures
EBITDAre
167,699
153,441
545,853
470,228
Non-cash lease expense
1,046
1,495
2,904
4,495
Pension settlement charge
Interest income on Gaylord National bonds
1,113
1,201
3,503
3,742
2,319
2,252
Pro rata adjusted EBITDAre from unconsolidated joint ventures
10,629
Adjusted EBITDAre
174,803
170,874
569,063
503,251
Adjusted EBITDAre of noncontrolling interest in consolidated joint venture
(6,735)
(7,686)
(22,119)
(20,801)
Adjusted EBITDAre, excluding noncontrolling interest in consolidated joint venture
168,068
163,188
546,944
482,450
The following is a reconciliation of our consolidated GAAP net income to FFO and Adjusted FFO for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Net income available to common stockholders and unit holders
204,211
170,266
59,004
58,028
174,664
154,581
Adjustments for noncontrolling interest
(2,201)
(1,620)
(6,553)
(4,820)
Pro rata adjustments from joint ventures
69
FFO available to common stockholders and unit holders
116,205
97,931
372,325
320,096
Right-of-use asset amortization
Gain on other assets
2,647
2,682
Amortization of debt discounts and premiums
545
637
1,852
1,688
(902)
(3,616)
(2,020)
(4,898)
Deferred tax provision
51
1,463
Adjusted FFO available to common stockholders and unit holders
120,235
111,279
396,361
347,264
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Liquidity and Capital Resources
Cash Flows Provided By Operating Activities. Cash flow from operating activities is the principal source of cash used to fund our operating expenses, interest payments on debt, maintenance capital expenditures, and dividends to stockholders. During the nine months ended September 30, 2024, our net cash flows provided by operating activities were $409.9 million, primarily reflecting our net income before depreciation expense, amortization expense and other non-cash charges of $411.9 million, partially offset by unfavorable changes in working capital of $2.0 million.
During the nine months ended September 30, 2023, our net cash flows provided by operating activities were $369.9 million, primarily reflecting our net income before depreciation expense, amortization expense and other non-cash charges of $368.5 million and favorable changes in working capital of $1.4 million.
Cash Flows Used In Investing Activities. During the nine months ended September 30, 2024, our primary uses of funds for investing activities were purchases of property and equipment, which totaled $317.3 million, and consisted primarily of enhancements at Gaylord Rockies to construct a new events pavilion, enhance the grand lodge and reposition its food and beverage outlets; the conversion of the Wildhorse Saloon to Category 10; a rooms renovation at the W Austin and common area enhancements at Block 21; the completion of Ole Red Las Vegas; enhancements to meeting spaces at Gaylord Opryland; a rooms and lobby renovation at Gaylord Palms; and ongoing maintenance capital expenditures for each of our existing properties.
During the nine months ended September 30, 2023, our primary use of funds for investing activities were the use of $791.5 million to purchase JW Marriott Hill Country and purchases of property and equipment, which totaled $122.2 million. Purchases of property and equipment consisted primarily of enhancements at Gaylord Rockies to better position the property for our group customers, the construction of Ole Red Las Vegas, a rooms, restaurant and meeting space renovation at Gaylord Palms, enhancements to the offerings at Block 21, and ongoing maintenance capital expenditures for each of our existing properties.
Cash Flows Provided By (Used In) Financing Activities. Our cash flows from financing activities primarily reflect the incurrence and repayment of long-term debt and the payment of cash dividends. During the nine months ended September 30, 2024, our net cash flows used in financing activities were $226.0 million, primarily reflecting the issuance of $1 billion in 6.50% senior notes, offset by the prepayment of the Gaylord Rockies $800.0 million term loan, the net repayment of $202.7 million under our term loan B, the payment of $199.8 million in cash dividends and the payment of $23.1 million in deferred financing costs.
During the nine months ended September 30, 2023, our net cash flows provided by financing activities were $769.9 million, primarily reflecting the issuance of the $400 Million 7.25% Senior Notes (as defined below), $395.4 million in net proceeds from the issuance of approximately 4.4 million shares of our common stock, and the net borrowing of $122.5 million under our credit facility, partially offset by the payment of $115.9 million in cash dividends, and the payment of $23.4 million in deferred financing costs.
Liquidity
At September 30, 2024, we had $534.9 million in unrestricted cash and $759.7 million available for borrowing in the aggregate under our revolving credit facility and the OEG revolving credit facility. During the nine months ended September 30, 2024, we issued $1 billion in 6.50% senior notes, repaid the $800.0 million Gaylord Rockies term loan, repaid $202.7 million under our term loan B, incurred capital expenditures of $317.3 million and paid $199.8 million in cash dividends. These changes, partially offset by the cash flows provided by operations discussed above, were the primary factors in the decrease in our cash balance from December 31, 2023 to September 30, 2024.
We anticipate investing in our operations during the remainder of 2024 by spending between approximately $80 million and $130 million in capital expenditures, which includes projects at Gaylord Rockies to enhance the grand lodge and reposition its food and beverage outlets; enhancements to meeting spaces at Gaylord Opryland to further appeal to our target group customers; a rooms renovation at the W Austin and common area enhancements at Block 21; a rooms renovation at Gaylord Palms; and ongoing maintenance capital for each of our current facilities. Further, our dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually. Future dividends are
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subject to our board of directors’ future determinations as to amount and timing. We currently have no debt maturities until January 2026. We believe we will be able to refinance our debt agreements prior to their maturities.
We believe that our cash on hand and cash flow from operations, together with amounts available for borrowing under each of our revolving credit facility and the OEG revolving credit facility, will be adequate to fund our general short-term commitments, as well as: (i) current operating expenses, (ii) interest expense on long-term debt obligations, (iii) financing lease and operating lease obligations, (iv) declared dividends and (v) the capital expenditures described above. Our ability to draw on our credit facility and the OEG revolving credit facility is subject to the satisfaction of provisions of the credit facility and the OEG revolving credit facility, as applicable.
Our outstanding principal debt agreements are described below. At September 30, 2024, there were no defaults under the covenants related to our outstanding debt.
Principal Debt Agreements
Credit Facility. On May 18, 2023, we entered into a Credit Agreement (as supplemented, the “Credit Agreement”) among the Company, as a guarantor, the Operating Partnership, as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, which replaced the Company’s previous credit facility.
The Credit Agreement provides for a $700.0 million revolving credit facility (the “Revolver”) and a senior secured term loan B (the “Term Loan B”) (in the original principal amount of $500.0 million, which was reduced to $295.0 million on March 28, 2024), as well as an accordion feature that will allow us to increase the facilities following the closing date by an aggregate total of up to $475 million, which may be allocated between the Revolver and the Term Loan B at our option.
Each of the Revolver and the Term Loan B is guaranteed by us, each of our subsidiaries that own the Gaylord Hotels properties and certain of our other subsidiaries. Each of the Revolver and the Term Loan B is secured by equity pledges of our subsidiaries that are the fee owners of Gaylord Opryland and Gaylord Texan, their respective direct and indirect parent entities, and the equity of Ryman Hotel Operations Holdco, LLC, a wholly owned indirect subsidiary of the Company. Assets and equity of OEG are not subject to the liens of the Credit Agreement.
In addition, each of the Revolver and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The material financial covenants, ratios or tests contained in the Credit Agreement are as follows:
If an event of default shall occur and be continuing under the Credit Agreement, the commitments under the Credit Agreement may be terminated and the principal amount outstanding under the Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
Revolving Credit Facility. The maturity date of the Revolver is May 18, 2027, with the option to extend the maturity date for a maximum of one additional year through either (i) a single 12-month extension option or (ii) two individual 6-
month extensions. Borrowings under the Revolver bear interest at an annual rate equal to, at our option, either (i) Adjusted Term SOFR plus the applicable margin ranging from 1.40% to 2.00%, (ii) Adjusted Daily Simple SOFR plus the applicable margin ranging from 1.40% to 2.00% or (iii) a base rate as set forth in the Credit Agreement plus the applicable margin ranging from 0.40% to 1.00%, with each option dependent upon our funded debt to total asset value ratio (as defined in the Credit Agreement). Principal is payable in full at maturity, and the Revolver was undrawn at closing.
For purposes of the Revolver, Adjusted Term SOFR is calculated as the sum of Term SOFR plus an adjustment of 0.10% (all as more specifically described in the Credit Agreement), subject to a floor of 0.00%. Adjusted Daily Simple SOFR is calculated as the sum of SOFR plus an adjustment of 0.10% (all as more specifically described in the Credit Agreement), subject to a floor of 0.00%.
At September 30, 2024, no amounts were outstanding under the Revolver, and the lending banks had issued $4.3 million of letters of credit under the Credit Agreement, which left $695.7 million of availability under the Revolver (subject to the satisfaction of debt incurrence tests under the indentures governing our $1 Billion 6.50% Senior Notes, our $700 million in aggregate principal amount of senior notes due 2027 (the “$700 Million 4.75% Senior Notes”), our $600 million in aggregate principal amount of senior notes due 2029 (the “$600 Million 4.50% Senior Notes”) and our $400 million in aggregate principal amount of senior notes due 2028 (the “$400 Million 7.25% Senior Notes”), which we met at September 30, 2024).
Term Loan B. The Term Loan B has a maturity date of May 18, 2030. Prior to the effectiveness of the Incremental Agreement (as hereinafter defined), the applicable interest rate margins for borrowings under the Term Loan B were, at our option, either (i) Term SOFR plus 2.75%, (ii) Daily Simple SOFR plus 2.75% or (iii) a base rate as set forth in the Credit Agreement plus 1.75%. In addition, if for any fiscal year, there is Excess Cash Flow (as defined in the Credit Agreement), an additional principal amount is required. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed.
On April 12, 2024, we entered into an Incremental Tranche B Term Loan Agreement (the “Incremental Agreement”), which supplements the Credit Agreement and includes the addition of certain new lenders and the removal of certain other lenders. The Incremental Agreement reduces the applicable interest rate margins for the loans advanced under the refinanced Term Loan B. The applicable interest rate margins for the refinanced Term Loan B under the Incremental Agreement are (i) 2.25% for SOFR Loans (as defined in the Credit Agreement) and (ii) 1.25% for base rate loans. At September 30, 2024, the interest rate on the Term Loan B was Term SOFR plus 2.25%. The Incremental Agreement did not change the maturity dates under the Credit Agreement or result in any increase in principal indebtedness. In addition, the Incremental Agreement confirms that the annual amortization under the Term Loan B is 1% of the refinanced $295.0 million outstanding principal amount, with the balance due at maturity. At September 30, 2024, $293.5 million in borrowings were outstanding under the Term Loan B.
For purposes of the Term Loan B, each of Term SOFR and Daily Simple SOFR are subject to a floor of 0.00%.
$1 Billion 6.50% Senior Notes. On March 28, 2024, the Operating Partnership and Finco (collectively, the “issuing subsidiaries”) completed the private placement of $1.0 billion in aggregate principal amount of 6.50% senior notes due 2032 (the “$1 Billion 6.50% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $1 Billion 6.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank Trust Company, National Association, as trustee. The $1 Billion 6.50% Senior Notes have a maturity date of April 1, 2032 and bear interest at 6.50% per annum, payable semi-annually in cash in arrears on April 1 and October 1 each year, beginning October 1, 2024. The $1 Billion 6.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $700 Million 4.75% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $1 Billion 6.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $1 Billion 6.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value
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of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $1 Billion 6.50% Senior Notes.
The net proceeds from the issuance of the $1 Billion 6.50% Senior Notes totaled approximately $983 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. We used a portion of these net proceeds to prepay the indebtedness outstanding under our previous $800.0 million Gaylord Rockies term loan and used the remaining proceeds, together with cash on hand, to repay $200.0 million under the Term Loan B.
$700 Million 4.75% Senior Notes. In September 2019, the Operating Partnership and Finco completed the private placement of $500.0 million in aggregate principal amount of senior notes due 2027 (the “$500 Million 4.75% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $500 Million 4.75% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank Trust Company, National Association as trustee. The $500 Million 4.75% Senior Notes have a maturity date of October 15, 2027 and bear interest at 4.75% per annum, payable semi-annually in cash in arrears on April 15 and October 15 each year. The $500 Million 4.75% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $1 Billion 6.50% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $500 Million 4.75% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $500 Million 4.75% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $500 Million 4.75% Senior Notes.
In October 2019, we completed a tack-on private placement of $200.0 million in aggregate principal amount of 4.75% senior notes due 2027 (the “additional 2027 notes”) at an issue price of 101.250% of their aggregate principal amount plus accrued interest from the September 19, 2019 issue date for the $500 Million 4.75% Senior Notes. The additional 2027 notes and the $500 Million 4.75% Senior Notes constitute a single class of securities (collectively, the “$700 Million 4.75% Senior Notes”). All other terms and conditions of the additional 2027 notes are identical to the $500 Million 4.75% Senior Notes.
The $700 Million 4.75% Senior Notes are currently redeemable, in whole or in part, at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 101.188%, and 100.000% beginning on October 15 of 2024 and 2025, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
We completed a registered offer to exchange the $700 Million 4.75% Senior Notes for registered notes with substantially identical terms as the $700 Million 4.75% Senior Notes in July 2020.
$600 Million 4.50% Senior Notes. In February 2021, the Operating Partnership and Finco completed the private placement of $600.0 million in aggregate principal amount of 4.50% senior notes due 2029, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $600 Million 4.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank Trust Company, National Association as trustee. The $600 Million 4.50% Senior Notes have a maturity date of February 15, 2029 and bear interest at 4.50% per annum, payable semi-annually in cash in arrears on February 15 and August 15 each year. The $600 Million 4.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured
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indebtedness, including the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes and the $400 Million 7.25% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $600 Million 4.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $600 Million 4.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $600 Million 4.50% Senior Notes.
The $600 Million 4.50% Senior Notes are currently redeemable, in whole or in part, at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.250%, 101.500%, 100.750%, and 100.000% beginning on February 15 of 2024, 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
$400 Million 7.25% Senior Notes. On June 22, 2023, the Operating Partnership and Finco completed the private placement of $400.0 million in aggregate principal amount of 7.25% senior notes due 2028, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $400 Million 7.25% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank Trust Company, National Association as trustee. The $400 Million 7.25% Senior Notes have a maturity date of July 15, 2028 and bear interest at 7.25% per annum, payable semi-annually in cash in arrears on January 15 and July 15 each year. The $400 Million 7.25% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes and the $600 Million 4.50% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $400 Million 7.25% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $400 Million 7.25% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $400 Million 7.25% Senior Notes.
The $400 Million 7.25% Senior Notes are redeemable before July 15, 2025, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $400 Million 7.25% Senior Notes will be redeemable, in whole or in part, at any time on or after July 15, 2025 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.625%, 101.813% and 100.000% beginning on July 15 of 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
The net proceeds from the issuance of the $400 Million 7.25% Senior Notes totaled approximately $393 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. We used these proceeds to pay a portion of the purchase price for JW Marriott Hill Country.
Each of the indentures governing the $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes, the $600 Million 4.50% Senior Notes and the $400 Million 7.25% Senior Notes contain certain covenants which, among other things and subject to certain exceptions and qualifications, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase some or all of the senior notes at 101% of their principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.
Previous $800 Million Gaylord Rockies Term Loan. In July 2019, Aurora Convention Center Hotel, LLC and Aurora Convention Center Hotel Lessee, LLC the entities that comprise Gaylord Rockies, entered into a Second Amended and Restated Loan Agreement (the “Gaylord Rockies Loan”) with Wells Fargo Bank, National Association, as
administrative agent. The Gaylord Rockies Loan consisted of an $800.0 million secured term loan facility, with a maturity date of July 2, 2024 with two, one-year extension options remaining, subject to certain requirements in the Gaylord Rockies Loan, and bore interest at Adjusted Daily Simple SOFR plus 2.50%. We previously entered into an interest rate swap to fix the SOFR portion of the interest rate at 5.2105% for the fifth year of the loan. We designated this interest rate swap as an effective cash flow hedge.
On March 28, 2024, we paid off the Gaylord Rockies Loan with proceeds from the $1 Billion 6.50% Senior Notes discussed above and terminated the interest rate swap.
OEG Credit Agreement. On June 28, 2024, OEG Borrower, LLC (“OEG Borrower”) and OEG Finance, LLC (“OEG Finance”), each a wholly owned direct or indirect subsidiary of OEG, entered into a certain First Amendment, which amends the Credit Agreement dated as of June 16, 2022 among OEG Borrower, as borrower, OEG Finance, certain subsidiaries of OEG Borrower from time to time party thereto as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Original OEG Credit Agreement”). As amended, the credit facility (the “Amended OEG Credit Agreement”) includes certain amended terms including lower interest rates, extended maturities and modifications to various covenants.
The OEG Term Loan matures on June 28, 2031 and the OEG Revolver matures on June 28, 2029. OEG Borrower used the proceeds of the OEG Term Loan to refinance the original term loan under the Original OEG Credit Agreement.
Block 21 CMBS Loan. At the closing of the purchase of Block 21 in May 2022, a subsidiary of the Company assumed the $136 million, ten-year, non-recourse term loan secured by a mortgage on Block 21 (the “Block 21 CMBS Loan”). The Block 21 CMBS Loan has a fixed interest rate of 5.58% per annum, payable monthly, matures January 5, 2026, and payments are due monthly based on a 30-year amortization. At September 30, 2024, $129.7 million was outstanding under the Block 21 CMBS Loan.
The Block 21 CMBS Loan contains customary financial covenants and other restrictions, including sponsor net worth and liquidity requirements, and debt service coverage ratio targets that Block 21 must meet in order to avoid a “Trigger Period,” the occurrence of which does not constitute a default. The disruption caused by a significant renovation of the rooms and public spaces at the W Hotel, which is nearing completion, negatively impacted the results of Block 21 and resulted in the Trigger Period expected to be effective starting September 30, 2024. During the Trigger Period, cash in excess of operating expenses, debt service, certain reserves and operating expenses is deposited in a reserve account and held until Block 21 exits the Trigger Period by achieving a specified minimum debt service coverage ratio on a trailing twelve-month basis, at which time the reserved cash will be released to Block 21 and its owner.
45
Additional Debt Limitations. Pursuant to the terms of the management agreements and pooling agreement with Marriott for our Gaylord Hotels properties, excluding Gaylord Rockies, we are subject to certain debt limitations described below.
The management agreements provide for the following limitations on indebtedness encumbering a hotel:
The pooled limitations on Secured Debt (as defined in the pooling agreement) are as follows:
Gaylord Rockies is not a Pooled Hotel for this purpose.
Estimated Interest on Principal Debt Agreements
Based on the stated interest rates on our fixed-rate debt and the rates in effect at September 30, 2024 for our variable-rate debt after considering interest rate swaps, our estimated interest obligations through 2028 are $805.3 million. These estimated obligations are $52.1 million for the remainder of 2024, $208.1 million in 2025, $201.1 million in 2026, $192.3 million in 2027, and $151.6 million in 2028. Variable rates, as well as outstanding principal balances, could change in future periods. See “Principal Debt Agreements” above for a discussion of our outstanding long-term debt. See “Supplemental Cash Flow Information” in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the interest we paid during 2023, 2022 and 2021.
Inflation
Inflation has had a more meaningful impact on our business during recent periods than in historical periods. However, favorable ADR and outside-the-room spend in our Hospitality segment and business levels in our Entertainment segment in recent periods have reduced the impact of increased operating costs, including increased insurance, utilities and other costs, on our financial position and results of operations.
Additionally, increased interest rates have driven higher interest expense on our debt. In an effort to mitigate the impact of increased interest rates, at September 30, 2024, 85% of our outstanding debt is fixed-rate debt, after considering the impact of interest rate swaps.
We continue to monitor inflationary pressures and may need to consider potential mitigation actions in future periods. A prolonged inflationary environment could adversely affect our operating costs, customer spending and bookings, and our financial results.
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Supplemental Guarantor Financial Information
The Company’s $1 Billion 6.50% Senior Notes, the $700 Million 4.75% Senior Notes, $600 Million 4.50% Senior Notes and $400 Million 7.25% Senior Notes were each issued by the Operating Partnership and Finco (collectively, the “Issuers”), and are guaranteed on a senior unsecured basis by the Company (as the parent company), each of the Operating Partnership’s subsidiaries that own the Gaylord Hotels properties and certain other of the Company’s subsidiaries, each of which also guarantees the Credit Agreement, as amended (such subsidiary guarantors, together with the Company, the “Guarantors”). The Guarantors are 100% owned by the Operating Partnership or the Company, and the guarantees are full and unconditional and joint and several. The guarantees rank equally in right of payment with each Guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to all future subordinated indebtedness, if any, of such Guarantor. Not all of the Company’s subsidiaries have guaranteed these senior notes, and the guarantees are structurally subordinated to all indebtedness and other obligations of such subsidiaries that have not guaranteed these senior notes.
The following tables present summarized financial information for the Issuers and the Guarantors on a combined basis. The intercompany balances and transactions between these parties, as well as any investments in or equity in earnings from non-guarantor subsidiaries, have been eliminated (amounts in thousands).
Other assets
3,409,885
Net payables due to non-guarantor subsidiaries
219,960
3,210,655
3,430,615
Total noncontrolling interest
September 30, 2024
Revenues from non-guarantor subsidiaries
428,506
Operating expenses (excluding expenses to non-guarantor subsidiaries)
125,798
Expenses to non-guarantor subsidiaries
18,457
284,251
Interest income from non-guarantor subsidiaries
1,865
154,408
149,381
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with GAAP. Certain of our accounting policies, including those related to impairment of long-lived and other assets, credit losses on financial assets, income taxes, acquisitions and purchase price allocations, and legal contingencies, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” presented in our Annual Report on Form 10-K for the year ended December 31, 2023. There were no newly identified critical accounting policies in the first nine months of 2024, nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our quantitative and qualitative market risks since December 31, 2023. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
There has been no change in our internal control over financial reporting that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a party to certain litigation in the ordinary course, as described in Note 12, “Commitments and Contingencies,” to our condensed consolidated financial statements included herein and which our management deems will not have a material effect on our financial statements.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Inapplicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. MINE SAFETY DISCLOSURES.
ITEM 5. OTHER INFORMATION.
During the fiscal quarter ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).
ITEM 6. EXHIBITS.
Exhibit Number
Description
Amended and Restated Certificate of Incorporation of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 1, 2012).
Second Amended and Restated Bylaws of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K filed February 24, 2023).
List of Parent and Subsidiary Guarantors (incorporated by reference to Exhibit 22 to the Company’s Quarterly Report on Form 10-Q filed August 1, 2024).
31.1*
Certification of Mark Fioravanti pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2*
Certification of Jennifer Hutcheson pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1**
Certification of Mark Fioravanti and Jennifer Hutcheson pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101*
The following materials from Ryman Hospitality Properties, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited) at September 30, 2024 and December 31, 2023, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine months ended September 30, 2024 and 2023, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2024 and 2023, (iv) Condensed Consolidated Statements of Equity and Noncontrolling Interest (unaudited) for the three months and nine months ended September 30, 2024 and 2023, and (v) Notes To Condensed Consolidated Financial Statements (unaudited).
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 5, 2024
By:
/s/ Mark Fioravanti
Mark Fioravanti
President and Chief Executive Officer
/s/ Jennifer Hutcheson
Jennifer Hutcheson
Executive Vice President, Chief Financial
Officer and Chief Accounting Officer