MERISTAR HOSPITALITY CORPORATION
EARNINGS RELEASE
FINANCIAL INFORMATION
Three and Nine Months Ended
September 30, 2004
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004
2003
-------------------- --------------------
Revenue:
Hotel operations:
Rooms
$128,309 $121,037 $401,815 $ 384,329
Food and beverage
47,043 44,250 156,261 150,842
Other hotel operations
13,981 15,696 48,194
51,314
Office rental, parking and
other revenue
1,443 1,958 4,071
4,502
-------- -------- -------- ---------
Total revenue
190,776 182,941 610,341 590,987
Hotel operating expenses:
Rooms
35,295 32,856 102,072
95,097
Food and beverage
37,966 35,171 117,109 110,131
Other hotel operating
expenses
9,676 9,584 30,645
29,798
Office rental, parking and
other expenses
682 933 1,938
2,161
Other operating expenses:
General and
administrative, hotel
32,202 30,013 97,172
92,138
General and
administrative, corporate
2,547 2,617 9,653
8,721
Property operating costs
31,299 30,305 93,056
88,893
Depreciation and
amortization
25,779 24,587 76,829
72,959
Property taxes,
insurance and other
8,260 14,960 40,613
48,901
Loss on asset impairments
1,845 4,736 3,680
42,050
-------- -------- -------- ---------
Operating expenses
185,551 185,762 572,767 590,849
-------- -------- -------- ---------
Preferred return on
investment in MIP
1,600 1,600 4,800
5,769
Operating (loss) income
6,825 (1,221) 42,374
5,907
Minority interest
775 1,662 2,392
15,937
Interest expense, net
(30,994) (35,199) (95,586) (102,386)
(Loss) gain on early
extinguishments of debt
- 4,574 (7,903)
4,574
-------- -------- -------- ---------
Loss before income taxes and
discontinued operations
(23,394) (30,184) (58,723) (75,968)
Income tax (expense) benefit
281 159
705 (2,435)
-------- -------- -------- ---------
Loss from continuing
operations
(23,113) (30,025) (58,018) (78,403)
-------- -------- -------- ---------
Discontinued operations:
Loss from discontinued
operations before income
tax benefit
(3,703) (20,920) (20,804) (251,413)
Income tax (expense)
benefit
44 251
250 3,016
-------- -------- -------- ---------
Loss from discontinued
operations
(3,659) (20,669) (20,554) (248,397)
-------- -------- -------- ---------
Net loss
$(26,772) $(50,694) $(78,572) $(326,800)
======== ======== ======== =========
Basic loss per share:
Loss from continuing
operations $ (0.27) $
(0.63) $ (0.73) $ (1.69)
Loss from discontinued
operations
(0.04) (0.43) (0.26)
(5.35)
-------- -------- -------- ---------
Net loss per basic share $
(0.31) $ (1.06) $ (0.99) $ (7.04)
======== ======== ======== =========
Diluted loss per share:
Loss from continuing
operations $ (0.27) $
(0.64) $ (0.74) $ (1.93)
Loss from discontinued
operations
(0.04) (0.41) (0.25)
(5.06)
-------- -------- -------- ---------
Net loss per diluted share $ (0.31)
$ (1.05) $ (0.99) $ (6.99)
======== ======== ======== =========
RECONCILIATION
OF NET LOSS TO FUNDS FROM OPERATIONS (a)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004
2003
-------------------- --------------------
Funds From Operations:
Net Loss (b)
$(26,772) $(50,694) $(78,572) $(326,800)
Depreciation and
amortization of real
estate assets
24,614 25,244 72,734
80,900
Loss on disposal of
assets
2,232 2,772 13,762
2,772
Minority interest to
common OP unit holders
(735) (1,056) (2,469) (3,154)
-------- -------- -------- ---------
Funds from operations
$ (661) $(23,734)$ 5,455 $(246,282)
======== ======== ======== =========
Weighted average number of
shares of common stock
outstanding
89,662 47,709 82,060
46,445
======== ======== ======== =========
Funds from operations per
diluted share
$ (0.01)$ (0.50)$ 0.07 $
(5.30)
======== ======== ======== =========
Funds From Operations, as
adjusted:
Funds from operations
$ (661)$ (23,734)$ 5,455 $ (246,282)
Loss on asset impairments
2,581 21,000 10,022
285,677
Loss (gain) on early
extinguishments of debt
- (4,574) 7,903 (4,574)
Write off of deferred
financial fees
- 1,099 1,719
1,760
Minority interest to
common OP unit holders
- (661)
- (13,212)
-------- -------- -------- ---------
Funds from operations, as
adjusted
$ 1,920 $ (6,870)$ 25,099 $ 23,369
======== ======== ======== =========
Weighted average number of
shares of common stock and
common OP units outstanding 89,713
47,709 82,060 49,133
======== ======== ======== =========
Funds from operations per
diluted share, as adjusted $
0.02 $ (0.14)$ 0.31 $ 0.48
======== ======== ======== =========
(a) See the notes to the financial information for discussion
of non-GAAP measures.
(b) Net loss for the three and nine months ended September
30, 2004 includes adjustments of $4.5 million and $4.0 million, respectively,
relating to a change in accounting treatment for an equity compensation
plan. See "Equity Compensation Adjustment" in the notes to the financial
information.
RECONCILIATION OF NET LOSS TO EBITDA (a)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004
2003
-------------------- --------------------
EBITDA and Adjusted EBITDA:
Loss from continuing operations
$(23,113)$ (30,025)$ (58,018)$ (78,403)
Loss from discontinued operations
(3,659) (20,669) (20,554) (248,397)
-------- -------- -------- ---------
Net Loss (b)
$(26,772)$ (50,694)$ (78,572)$ (326,800)
======== ======== ======== =========
Loss from continuing
operations
$(23,113)$ (30,025)$ (58,018)$ (78,403)
Interest expense, net
30,994 35,199 95,586
102,386
Income tax (benefit) expense
(281) (159) (705)
2,435
Depreciation and amortization
(c)
25,779 24,587 76,829
72,959
-------- -------- -------- ---------
EBITDA from continuing
operations
33,379 29,602 113,692
99,377
Loss on asset impairments
1,845 4,736 3,680
42,050
Minority interest
(775) (1,662) (2,392) (15,937)
Loss (gain) on early
extinguishments of debt
- (4,574) 7,903
(4,574)
-------- -------- -------- ---------
Adjusted EBITDA from
continuing operations
$ 34,449 $ 28,102 $122,883 $ 120,916
======== ======== ======== =========
Loss from discontinued
operations
$ (3,659) $(20,669) $(20,554) $(248,397)
Interest expense, net
- 1,205 (478)
3,631
Income tax (benefit) expense
(44) (250) (250)
(3,016)
Depreciation and amortization
195 3,114 1,739
13,794
-------- -------- -------- ---------
EBITDA from discontinued
operations
(3,508) (16,600) (19,543) (233,988)
Loss on asset impairments
736 16,264 6,342
243,626
Loss on disposal of assets
2,231 2,772 13,762
2,772
-------- -------- -------- ---------
Adjusted EBITDA from
discontinued operations
$ (541) $ 2,436 $ 561 $
12,410
======== ======== ======== =========
Adjusted EBITDA, total
operations
$ 33,908 $ 30,538 $123,444 $ 133,326
======== ======== ======== =========
(a) See the notes to the financial information for discussion
of non-GAAP measures.
(b) Net loss for the three and nine months ended September
30, 2004 includes adjustments of $4.5 million and $4.0 million, respectively,
relating to a change in accounting treatment for an equity compensation
plan. See "Equity Compensation Adjustment" in the notes to the financial
information.
(c) Depreciation and amortization included the write-off
of deferred financing costs totaling $1.1 million for the three months
ended September 30, 2003, and $1.7 million and $1.8 million for the nine
months ended September 30, 2004 and 2003, respectively, related to our
early extinguishments of debt during these periods.
HOTEL OPERATIONAL DATA
SCHEDULE OF COMPARABLE HOTEL RESULTS (a)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004
2003
-------------------- -------------------
Number of hotels
61 61
61 61
Number of rooms
17,151 17,151 17,151
17,151
Operating profit margin under
GAAP (b)
3.6% (0.7%) 6.9%
1.0%
Comparable hotel adjusted
operating profit margin (c)
18.1% 17.2% 20.3%
21.4%
Comparable hotel revenues:
Rooms
$106,791 $102,791 $326,267 $313,897
Food and beverage
38,324 37,528 129,547 127,899
Other hotel operations
9,374 9,785 28,371
28,619
-------- -------- -------- --------
Comparable hotel
revenues (d) 154,489
150,104 484,185 470,415
-------- -------- -------- --------
Comparable hotel expenses:
Room
28,557 27,733 84,320
79,471
Food and beverage
30,144 29,836 96,183
93,200
Other
6,332 6,017 19,026
17,907
General and
administrative, hotel
26,970 25,419 81,272
76,660
Property operating costs
26,319 26,033 78,575
75,271
Property taxes, insurance
and other
8,265 9,216 26,652
27,255
-------- -------- -------- --------
Comparable
hotel
expenses (e) 126,587
124,254 386,028 369,764
-------- -------- -------- --------
Comparable Hotel Adjusted
Operating Income
27,902 25,850 98,157 100,651
Non-comparable results, net
(f)
6,051 1,311 25,508
18,715
Office rental, parking and
other revenue
1,443 1,958 4,071
4,502
General and administrative,
corporate
(2,547) (2,617) (9,653) (8,721)
Depreciation and amortization (25,779) (24,587)
(76,829) (72,959)
Loss on asset impairments
(1,845) (4,736) (3,680) (42,050)
Preferred return on investment
in MIP
1,600 1,600 4,800
5,769
-------- -------- -------- --------
Operating Profit (Loss)
$ 6,825 $ (1,221) $ 42,374 $ 5,907
======== ======== ======== ========
(a) See the notes to the financial information for discussion
of non-GAAP measures, and comparable hotel results and statistics.
(b) Operating profit margin under GAAP is calculated
as the operating income (loss) divided by the total revenues per the consolidated
statements of operations.
(c) Comparable hotel adjusted operating profit margin
is calculated as the comparable hotel adjusted operating income divided
by the comparable hotel revenues per the schedule above.
(d) The reconciliation of total revenues per the consolidated
statements of operations to the comparable hotel sales is as follows (in
millions):
Three MonthsEnded Nine Months Ended
September 30, September 30,
2004 2003 2004
2003
---------------- -----------------
Revenues per the consolidated
statements of operations
$190.8 $182.9 $ 610.3 $ 591.0
Non-comparable hotel revenues
(34.9) (30.9) (122.0) (116.1)
Office rental, parking and other
revenue
(1.4) (1.9) (4.1) (4.5)
------ ------ ------- -------
Comparable hotel revenues
$154.5 $150.1 $ 484.2 $ 470.4
====== ====== ======= =======
(e) The reconciliation of operating costs per the consolidated
statements of operations to the comparable hotel expenses is as follows
(in millions):
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2003 2004 2003
---------------- ---------------
Operating expenses per the
consolidated statements of
operations
$185.6 $185.8 $572.8 $590.8
Non-comparable hotel expenses
(28.9) (29.6) (96.6) (97.2)
General and administrative, corporate (2.5)
(2.6) (9.7) (8.7)
Depreciation and amortization
(25.8) (24.6) (76.8) (73.0)
Loss on asset impairments
(1.8) (4.7) (3.7) (42.1)
------ ------ ------ ------
Comparable hotel expenses
$126.6 $124.3 $386.0 $369.8
====== ====== ====== ======
(f) Non-comparable results, net represent all revenues
and expenses, other than those of our comparable hotels, and specific revenues
and expenses identified above: office rental, parking and other revenue;
general and administrative, corporate; depreciation and amortization; loss
on asset impairments and preferred return on investment in MIP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
September 30, December 31,
2004
2003
---------------- -----------
ASSETS
Property and equipment
$ 2,572,234 $2,481,752
Accumulated depreciation
(490,435) (446,032)
--------------- ----------
2,081,799 2,035,720
Assets held for sale
7,786 51,169
Investment in affiliate
15,000 15,000
Prepaid expenses and other assets
44,333 47,934
Insurance claim receivable
63,071 -
Accounts receivable, net of allowance for
doubtful accounts
of $5,043 and $2,040
64,404 64,709
Restricted cash
59,710 42,523
Cash and cash equivalents - unrestricted
117,794 230,884
--------------- ----------
$ 2,453,897 $2,487,939
=============== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Long-term debt
$ 1,581,766 $1,638,028
Accounts payable and accrued expenses
89,884 83,458
Accrued interest
36,382 46,813
Due to Interstate Hotels & Resorts
19,362 16,411
Other liabilities
9,483 11,831
--------------- ----------
Total liabilities
1,736,877 1,796,541
--------------- ----------
Minority interests
14,541 37,785
Stockholders' equity:
Common stock, par value $0.01 per share
Authorized- 100,000 shares
Issued - 89,741 and 69,135 shares
897 691
Additional paid-in capital
1,465,373 1,338,959
Accumulated deficit
(720,665) (642,094)
Accumulated other comprehensive loss
- (977)
Common stock held in treasury - 2,371
and 2,345 shares
(43,126) (42,966)
--------------- ----------
Total stockholders' equity
702,479 653,613
--------------- ----------
$ 2,453,897 $2,487,939
=============== ==========
PORTFOLIO DATA
Portfolio Distribution at September 30, 2004 (a)
Market
Hotels Rooms % of Total Rooms
% of 2004
YTD Revenue
Washington DC
Metro
11 2,478
12.4% 17.5%
Southwest
Florida
6 1,026
5.1% 9.4%
New Jersey
4 1,120
5.6% 6.2%
Southern
California
4 1,519
7.6% 9.0%
Northern
California
3 968
4.8% 5.2%
Orlando
3 1,545
7.7% 5.3%
Tampa/Clearwater
3 1,111
5.5% 5.5%
Atlanta
2 650
3.2% 2.9%
Chicago
2 857
4.3% 3.7%
Colorado
2 736
3.7% 2.4%
Dallas
2 598
3.0% 2.1%
Houston
2 597
3.0% 3.2%
All other
markets
28 6,859
34.1% 27. 6%
Total Markets
72 20,064 100.0%
100.0%
Region
Hotels Rooms % of Total Rooms
% of 2004
YTD Revenue
South Atlantic
20 5,630
28.0% 28.4%
Middle Atlantic
17 4,084
20.3% 26.2%
South Central
11 3,281
16.4% 14.0%
Pacific
10 3,282
16.4% 17.8%
North Central
7 1,789
8.9% 7.0%
Mountain
6 1,798
9.0% 6.0%
New England
1 200
1.0% 0.6%
Total Regions
72 20,064
100.0% 100.0%
Brand
Hotels Rooms % of Total Rooms % of
2004
YTD Revenue
Hilton
Hilton
16 4,442
22.1% 22.6%
Doubletree
8 2,664
13.3% 8.6%
Embassy Suites
3 728
3.6% 3.1%
Starwood
Sheraton
5 1,229
6.1% 4.3%
Westin
3 972
4.8% 3.6%
Marriott
Marriott
4 1,696
8.5% 9.3%
Courtyard by
Marriott
3 587
2.9% 2.2%
Ritz-Carlton
1 366
1.8% 4.0%
Intercontinental
Holiday Inn
10 3,220
16.0% 16.1%
Crowne Plaza
1 495
2.5%
2.3%
Independent
9 1,431
7.1%
13.3%
Radisson
5 1,337
6.7%
6.1%
Other
4 897
4.5%
4.4%
Total Brands
72 20,064
100.0% 100.0%
Location
Hotels Rooms % of Total Rooms
% of 2004
YTD Revenue
Urban
20 5,299
26.4%
30.9%
Resort
15 4,207
21.0%
23.3%
Airport
13 4,236
21.1%
17.9%
Suburban
24 6,322
31.5%
27.9%
Total Locations
72 20,064
100.0% 100.0%
(a) Portfolio data includes all hotels owned less four
planned for disposition as of September 30, 2004.
DETAILED OPERATING STATISTICS
BY MARKET, REGION AND LOCATION
Comparable hotels, same store basis (a)
3rd Quarter 2004
Market
Hotels Rooms ADR
Occ% RevPAR
----------------------------------------------
------------- -------
Washington DC Metro (b)
10 2,112 $121.97 78.9% $ 96.19
New Jersey
4 1,120 $124.99 59.4% $ 74.26
Southern California (b)
3 1,034 $109.03 82.3% $ 89.68
Northern California
3 968 $130.68 84.2% $110.04
Orlando (c)
2 1,231 $ 69.13 78.6% $ 54.31
Tampa/Clearwater (c)
2 685 $ 70.03 54.7% $ 38.31
Atlanta
2 650 $ 84.31 78.5% $ 66.15
Chicago
2 857 $105.64 72.7% $ 76.80
Colorado
2 736 $ 84.01 69.8% $ 58.67
Dallas
2 598 $ 88.79 63.9% $ 56.75
Houston
2 597 $101.82 67.8% $ 69.07
All other markets
27 6,563 $ 87.65 68.2% $ 59.79
All Markets
61 17,151 $ 98.02 71.5% $ 70.12
------------------------
3rd Quarter 2003
--------------------------
Percent
Change
in
Market
ADR Occ% RevPAR RevPAR
---------------------------------- ----------------
---------------
Washington DC Metro (b)
$ 109.44 76.4% $ 83.63 15.0%
New Jersey
$ 118.06 61.8% $ 72.94 1.8%
Southern California (b)
$ 104.28 74.3% $ 77.44 15.8%
Northern California
$ 122.59 83.4% $ 102.24 7.6%
Orlando (c)
$ 59.86 76.2% $ 45.64 19.0%
Tampa/Clearwater (c)
$ 71.77 51.7% $ 37.10 3.2%
Atlanta
$ 75.14 83.8% $ 62.96 5.1%
Chicago
$ 104.36 70.6% $ 73.69 4.2%
Colorado
$ 81.37 69.7% $ 56.74 3.4%
Dallas
$ 81.13 62.6% $ 50.81 11.7%
Houston
$ 103.75 68.2% $ 70.76 -2.4%
All other markets
$ 85.58 67.6% $ 57.87 3.3%
All Markets
$ 92.68 70.3% $ 65.16 7.6%
3rd Quarter 2004
Region
Hotels Rooms ADR
Occ% RevPAR
----------------------------------------------
------------- -------
Middle Atlantic (b)
16 3,718 $122.54 73.1% $ 89.54
South Atlantic (c)
11 3,568 $ 76.77 71.0% $ 54.51
South Central
11 3,281 $ 90.31 65.9% $ 59.49
Pacific (b)
9 2,797 $115.54 75.8% $ 87.60
North Central
7 1,789 $ 94.57 72.4% $ 68.51
Mountain
6 1,798 $ 75.80 71.2% $ 53.97
New England
1 200 $ 77.81 75.1% $ 58.42
All Regions
61 17,151 $ 98.02 71.5% $ 70.12
-----------------------
3rd Quarter 2003
Percent
Change
in
Region
ADR Occ% RevPAR RevPAR
---------------------------------- ----------------
---------------
Middle Atlantic (b)
$ 113.12 71.9% $ 81.31 10.1%
South Atlantic (c)
$ 70.39 71.4% $ 50.25 8.5%
South Central
$ 88.92 62.9% $ 55.95 6.3%
Pacific (b)
$ 110.65 72.8% $ 80.52 8.8%
North Central
$ 92.33 71.8% $ 66.27 3.4%
Mountain
$ 74.99 71.4% $ 53.51 0.9%
New England
$ 71.08 85.7% $ 60.93 -4.1%
All Regions
$ 92.68 70.3% $ 65.16 7.6%
3rd Quarter 2004
Location
Hotels Rooms ADR
Occ% RevPAR
----------------------------------------------
------------- -------
Urban (b)
19 4,933 $112.95 79.1% $ 89.35
Resort (c)
6 2,145 $ 76.22 67.6% $ 51.50
Airport (b)
12 3,751 $ 82.82 71.4% $ 59.10
Suburban
24 6,322 $100.96 66.9% $ 67.59
All Locations
61 17,151 $ 98.02 71.5% $ 70.12
3rd Quarter 2003
Percent
Change
in
Location
ADR Occ% RevPAR RevPAR
---------------------------------- ----------------
-------- ------
Urban (b)
$ 108.05 75.3% $ 81.42 9.7%
Resort (c)
$ 68.98 67.8% $ 46.75 10.2%
Airport (b)
$ 77.24 70.9% $ 54.79 7.9%
Suburban
$ 96.98 66.9% $ 64.84 4.2%
All Locations
$ 92.68 70.3% $ 65.16 7.6%
(a) See notes to financial information for discussion
of comparable hotel operating results and statistics.
(b) Excludes hotels acquired during the second quarter.
(c) Excludes hotels significantly affected by the hurricanes
in Florida during the third quarter.
DETAILED OPERATING STATISTICS BY
MARKET, REGION AND LOCATION Comparable hotels,
same store basis (a)
September 2004 YTD
Market
Hotels Rooms ADR OCC%
RevPAR
-----------------------------------------------
------------- ------
Washington DC Metro (b)
10 2,112 $ 124.69 77.5% $96.78
New Jersey
4 1,120 $ 127.78 62.9% $80.32
Southern California (b)
3 1,034 $ 109.76 78.2% $85.82
Northern California
3 968 $ 118.45 78.2% $92.63
Orlando (c)
2 1,231 $ 76.31 76.3% $58.24
Tampa/Clearwater (c)
2 685 $ 78.02 64.9% $50.65
Atlanta
2 650 $ 82.70 81.2% $67.17
Chicago
2 857 $ 99.04 69.7% $69.07
Colorado
2 736 $ 82.35 64.1% $52.75
Dallas
2 598 $ 88.58 61.3% $54.28
Houston
2 597 $ 110.04 72.3% $79.52
All other markets
27 6,563 $ 92.85 69.4% $64.47
All Markets
61 17,151 $ 99.87 71.5% $71.38
----------------------
September 2003 YTD
---------------------------
Percent
Change
in
Market
ADR Occ%
RevPAR RevPAR
----------------------------- ---------------------
---------------
Washington DC Metro (b)
$ 115.71 72.6% $
84.05 15.2%
New Jersey
$ 122.51 60.6% $
74.25 8.2%
Southern California (b)
$ 106.93 70.8% $
75.73 13.3%
Northern California
$ 113.91 76.6% $
87.31 6.1%
Orlando (c)
$ 71.54 75.9% $
54.30 7.3%
Tampa/Clearwater (c)
$ 80.56 62.3% $
50.20 0.9%
Atlanta
$ 77.60 82.3% $
63.83 5.2%
Chicago
$ 101.04 69.1% $
69.84 -1.1%
Colorado
$ 77.75 65.3% $
50.81 3.8%
Dallas
$ 85.01 63.2% $
53.72 1.1%
Houston
$ 105.45 70.8% $
74.69 6.5%
All other markets
$ 91.09 68.5% $
62.43 3.3%
All Markets
$ 96.19 69.7% $
67.05 6.5%
September 2004 YTD
Region
Hotels Rooms ADR Occ%
RevPAR
-----------------------------------------------
------------- ------
Middle Atlantic (b)
16 3,718 $ 125.24 73.1% $91.57
South Atlantic (c)
11 3,568 $ 84.35 73.5% $61.98
South Central
11 3,281 $ 95.91 66.8% $64.07
Pacific (b)
9 2,797 $ 112.17 73.9% $82.89
North Central
7 1,789 $ 90.30 70.0% $63.17
Mountain
6 1,798 $ 77.83 69.5% $54.10
New England
1 200 $ 75.64 78.8% $59.63
All Regions
61 17,151 $ 99.87 71.5% $71.38
-----------------------
September 2003 YTD
-----------------------
Percent
Change
in
Region
ADR Occ%
RevPAR RevPAR
----------------------------- ---------------------
---------------
Middle Atlantic (b)
$ 118.25 69.0% $
81.54 12.3%
South Atlantic (c)
$ 80.49 72.7% $
58.51 5.9%
South Central
$ 93.50 66.0% $
61.73 3.8%
Pacific (b)
$ 109.38 70.9% $
77.57 6.9%
North Central
$ 90.57 69.3% $
62.78 0.6%
Mountain
$ 75.42 69.1% $
52.11 3.8%
New England
$ 75.21 83.1% $
62.48 -4.6%
All Regions
$ 96.19 69.7% $
67.05 6.5%
September 2004 YTD
Location
Hotels Rooms ADR Occ%
RevPAR
-----------------------------------------------
------------- ------
Urban (b)
19 4,933 $ 114.50 76.0% $87.02
Resort (c)
6 2,145 $ 89.73 72.0% $64.40
Airport (b)
12 3,751 $ 83.45 73.7% $61.48
Suburban
24 6,322 $ 101.16 66.3% $67.03
All Locations
61 17,151 $ 99.87 71.5% $71.38
September 2003 YTD
----------------------
Percent
Change
in
Location
ADR Occ%
RevPAR RevPAR
----------------------------- ---------------------
-------- ------
Urban (b)
$ 110.77 72.4% $
80.17 8.6%
Resort (c)
$ 85.64 71.7% $
61.43 5.2%
Airport (b)
$ 80.89 72.1% $
58.29 5.5%
Suburban
$ 97.50 65.5% $
63.91 5.0%
All Locations
$ 96.19 69.7% $
67.05 6.5%
(a) See notes to financial information for discussion
of comparable hotel operating results and statistics.
(b) Excludes hotels acquired during the second quarter.
(c) Excludes hotels significantly affected by the hurricanes
in Florida during the third quarter.
CAPITAL STRUCTURE
Total Enterprise Value
(In thousands, except per share information, ratios
and percentages)
As of As of
September 30, December 31,
2004 2003
Common shares outstanding, net
87,370 66,790
Operating partnership units
2,954 3,510
---------- ----------
Combined shares and units
90,324 70,300
Common stock price at end of period
$ 5.45 $ 6.51
---------- ----------
Common equity capitalization
$ 492,266 $ 457,653
Consolidated debt
1,584,109 1,638,028
Total cash
(177,504) (273,407)
---------- ----------
Total enterprise value (TEV)
$1,898,871 $1,822,274
========== ==========
TEV per room
$ 90 $
74
Rooms owned
21,210 24,729
Total Debt
Total debt as of September 30, 2004 and December 31,
2003 consisted of the following:
Encumbered Maturity Interest September December
Hotels
Rate 30,
31,
2004 2003
Convertible Notes
- 2004 4.75%$
3,705 $ 3,705
Senior Subordinated
Notes
- 2007 8.75%
33,953 82,768
Secured Revolver
6 2007 LIBOR +
- -
450 bps
Senior Unsecured
Notes
- 2008 9.00% 270,100
299,459
Senior Unsecured
Notes
- 2009 10.50% 223,295
248,848
CMBS
19 2009 LIBOR + 304,539
309,035
444 bps
Convertible Notes
- 2010 9.50% 170,000
170,000
Senior Unsecured
Notes
- 2011 9.13% 353,075
396,437
Mortgage Debt and
other
3 Various Various 125,762
27,011
CMBS
4 2013 6.88%
99,680 100,765
----------
---------- ----------
1,584,109 1,638,028
Fair value
adjustment for
interest rate swap
(2,343) -
---------- ----------
32
$1,581,766 $1,638,028
==========
========== ==========
Average Maturity
5.3 years
Average Interest
Rate
8.39%
CAPITAL EXPENDITURES SUMMARY
(In thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2003 2004 2003
Capital expenditures
$32,047 $5,902 $79,911 $18,186
Percent of total revenue
17% 3% 13%
3%
Summary of significant capital expenditure projects for
the
Nine months ended September 30, 2004:
Hotel
State Amount
Description of
Spent Renovation
Doral Forrestal
New Jersey $ 5,049 Guest rooms
(casegoods and
softgoods), guest
bathrooms, HVAC
system upgrade
South Seas Resort
Florida 4,453
Fiber-optic cable
installation
Hilton Cocoa Beach
Florida 4,089
Mechanical systems
replacement,
commencement of
guest rooms
renovation
Hilton Sacramento
California 3,388 Guest
rooms
(casegoods and
softgoods), guest
bathrooms, lobby
Hilton Crystal City Virginia
3,292 Guest rooms
(casegoods and
softgoods), guest
bathrooms
Marriott Somerset
New Jersey 3,049 Guest
rooms
(casegoods and
softgoods), guest
bathrooms
Doubletree Universal Florida
2,834 Hotel conversion:
lobby renovation,
parking lot
surfacing, meeting
rooms, pool
Hilton Houston Westchase Texas
2,582 Guest rooms
(casegoods and
softgoods), guest
bathrooms
Sheraton Safari Lake Florida
2,521 Mechanical systems
Buena Vista
replacement, roof
replaced
Hilton Arlington, TX Texas
2,426 Guest rooms
(casegoods and
softgoods), guest
bathrooms, public
areas
Doubletree Tampa
Florida 2,137
Guest rooms
(casegoods and
softgoods), guest
bathrooms, public
areas, exterior
paint
Radisson Chicago
Illinois 2,043
Guest rooms
(casegoods and
softgoods), guest
bathrooms
Crowne Plaza Chicago Illinois
1,929 Exterior concrete
O'Hare
repair,
landscaping, lobby
Doubletree Indianapolis Indiana
1,858 Guest rooms
(casegoods and
softgoods), guest
bathrooms,
corridors, roofs
Doubletree Dallas
Texas
1,781 Hotel conversion:
guest rooms
(casegoods and
softgoods), guest
bathrooms, lobby,
restaurant, meeting
space
Hilton Durham
North Carolina 1,780 Guest rooms
(casegoods and
softgoods), guest
bathrooms, ballroom
Hilton Detroit
Michigan 1,702
Guest rooms
(casegoods and
softgoods), guest
bathrooms
Hilton Irvine
California 1,573 Ballroom,
lounge,
public restrooms
Westin Oklahoma City Oklahoma
1,572 Guest rooms
(casegoods and
softgoods), guest
bathrooms,
corridors,
mechanical HVAC
Doubletree Austin
Texas
1,553 Guest rooms
(casegoods and
softgoods), guest
bathrooms,
corridors, public
areas
Sheraton Great Valley Pennsylvania
1,510 Guest rooms
(casegoods and
softgoods), guest
bathrooms, lobby
Holiday Inn Walt Disney Florida
1,386 Hotel conversion:
World Village
atrium, guest rooms
(casegoods and
softgoods)
Sheraton San Francisco California
1,129 Pool deck, Sweet
Sleepers (sm),
TV's, equipment
Radisson Annapolis
Maryland 1,124
Guest rooms
(casegoods and
softgoods), fitness
center
Hilton Grand Rapids Michigan
1,105 Guest rooms
(casegoods and
softgoods), guest
bathrooms,
restaurant, lobby
Westin Key Largo
Florida 1,061
Guest rooms, ADA
upgrades
Sheraton Bellevue
Washington 1,031 Public
areas
ACQUISITIONS AND DISPOSITIONS
For the period from December 31, 2003 through
September 30, 2004
(Dollars in thousands)
Acquisitions
Total
Property
Date Acquired Rooms Investment
The Ritz-Carlton, Pentagon City
May 10, 2004 366 $ 92,908
Marriott Irvine
June 25, 2004 485 93,540
--------- --------
Total Acquisitions
851 $186,448
========= ========
Dispositions
Total Gross
Sales Price
Property
Date Disposed Rooms Per Quarter
Holiday Inn Select Bucks County January 7,
2004 215
Ramada Plaza Meriden
January 7, 2004 150
Westin Morristown New Jersey
January 7, 2004 199
Sheraton Dallas Brookhollow February
12, 2004 348
Ramada Plaza Shelton
February 26, 2004 155
Hilton Midland
February 27, 2004 249
Holiday Inn DFW Airport West
March 1, 2004 243
Crowne Plaza Phoenix
March 1, 2004 250
Hilton Hartford
March 8, 2004 388
Howard Johnson Resort Key Largo March
26, 2004 100
Holiday Inn Colorado Springs
Garden of Gods
March 31, 2004 200
-------------
Total Dispositions in First
Quarter 2004
2,497 $ 74,075
-----------
Park Plaza Cleveland
April 28, 2004 237
Courtyard Century City
May 4, 2004 134
Park Plaza Arlington Heights
May 11, 2004 247
Sheraton Guildford
June 4, 2004 278
-------------
Total Dispositions in Second
Quarter 2004
896 $ 30,798
----------
Wyndham San Jose
July 8, 2004 355
Hilton Hotel Toledo
July 16, 2004 213
Holiday Inn Select DFW South September
7, 2004 409
-------------
Total Dispositions in Third
Quarter 2004
977 $ 14,450*
------------
Total Dispositions Year-to-
Date in 2004
4,370 $ 119,323*
========= ==========
* Does not include $11 million of debt release on Holiday
Inn Select DFW South.
FORECASTED RECONCILIATION OF NET LOSS
TO FUNDS FROM OPERATIONS
(In thousands, except per share amounts)
Three Months Ending
December 31, 2004
Low-end High-end
of range of range
--------- ---------
Forecasted Funds from Operations:
Net loss (a)
$(18,274) $(14,816)
Adjustments to forecasted net loss:
Depreciation and amortization
of real estate
assets
24,638 24,638
Minority interest to common
OP unit holders (488)
(396)
-------- --------
Funds from operations
$ 5,876 $ 9,426
======== ========
Weighted average diluted shares of common stock
and common OP units
outstanding
89,718 89,718
-------- --------
Funds from operations per diluted share
$ 0.07 $ 0.11
======== ========
Funds from operations, as adjusted:
Funds from operations
$ 5,876 $ 9,426
Loss on early extinguishments
of debt
- -
Loss on asset impairment
- -
Write off of deferred financing
fees
- -
-------- --------
Funds from operations, as adjusted
$ 5,876 $ 9,426
======== ========
Weighted average diluted shares of common stock
and common OP units
outstanding
89,718 89,718
-------- --------
Funds from operations per diluted share, as
adjusted
$ 0.07 $ 0.11
======== ========
Year Ending
December 31, 2004
Low-end High-end
of range of range
--------- ---------
Forecasted Funds from Operations:
Net loss (a)
$(96,847) $(93,389)
Adjustments to forecasted net loss:
Depreciation and amortization
of real estate
assets
97,372 97,372
Minority interest to common
OP unit holders (3,021) (2,929)
Loss on disposal of assets
13,762 13,762
-------- --------
Funds from operations
$ 11,266 $ 14,816
Weighted average number of shares of common stock
and common OP units outstanding
84,073 84,073
-------- --------
Funds from operations per share
$ 0.13 $ 0.18
======== ========
Funds from operations, as adjusted:
Funds from operations
$ 11,266 $ 14,816
Loss on early extinguishments
of debt 7,903
7,903
Loss on asset impairment
10,022 10,022
Write off of deferred financing
fees
1,719 1,719
-------- --------
Funds from operations, as adjusted
$ 30,910 34,460
======== ========
Weighted average diluted shares of common stock
outstanding and common OP units outstanding
84,073 84,073
-------- --------
Funds from operations per diluted share, as
adjusted
$ 0.37 $ 0.41
======== ========
(a) Forecasted net loss does not include any possible
future losses on asset impairments or gains or losses on the sale of assets.
FORECASTED RECONCILIATION OF NET LOSS TO EBITDA
(In thousands)
Three Months Ending
December 31, 2004
Low-end of High-end
range of range
---------- ---------
EBITDA and Adjusted EBITDA:
Net loss (a)
$ (18,274) $(14,816)
Interest expense, net
31,110 31,107
Income tax benefit
(278) (226)
Depreciation and amortization
25,888 25,888
--------- --------
EBITDA
38,446 41,953
Minority interest to common OP
unit holders (488)
(396)
--------- --------
Adjusted EBITDA
$ 37,958 $ 41,557
========= ========
Year Ending December
31, 2004
Low-end of High-end
range of range
----------- ---------
EBITDA and Adjusted EBITDA:
Net loss (a)
$ (96,847) $(93,389)
Interest expense, net
126,218 126,215
Write off of deferred financing
fees
1,719 1,719
Income tax benefit
(1,233) (1,180)
Depreciation and amortization
102,736 102,736
---------- --------
EBITDA
132,593 136,101
Loss on early extinguishments
of debt 7,903
7,903
Loss on asset impairments
10,022 10,022
Loss on disposal of assets
13,762 13,762
Minority interest to common
OP unit holders (2,880) (2,788)
---------- --------
Adjusted EBITDA
$ 161,400 $165,000
========== ========
(a) Forecasted net loss does not include any possible
future losses on asset impairments or gains or losses on the sale of assets.
HOTEL PORTFOLIO LISTING
Hotel
Location Guest
Rooms
Arizona
Embassy Suites Tucson
Tucson 204
California
Courtyard by Marriott Marina del Ray
Marina Del Rey 276
Crowne Plaza San Jose
San Jose 239
Doral Palm Springs
Palm Springs 285
Hilton Irvine
Irvine 289
Hilton Monterey
Monterey 204
Hilton Sacramento
Sacramento 331
Marina Hotel San Pedro
San Pedro 226
LA Marriott Downtown
Los Angeles 469
Marriott Irvine
Irvine 485
Sheraton Fisherman's Wharf
San Francisco 525
Colorado
Embassy Suites Denver
Englewood 236
Sheraton Colorado Springs
Colorado
Springs 500
Connecticut
Doubletree Hotel Bradley International
Windsor Locks
Airport
200
Florida
Best Western Sanibel Island Resort
Sanibel Island 46
Doubletree Hotel Westshore
Tampa
496
Doubletree Universal
Orlando 742
Hilton Clearwater
Clearwater 426
Hilton Hotel Cocoa Beach
Cocoa Beach 296
Holiday Inn Fort Lauderdale Beach
Ft. Lauderdale 240
Holiday Inn Walt Disney World Village
Lake Buena
Vista 314
Safety Harbor Resort and Spa
Safety Harbor 189
Sanibel Inn
Sanibel Island 96
Seaside Inn
Sanibel Island 32
Sheraton Beach Resort Key Largo
Key Largo 200
Sheraton Safari Lake Buena Vista
Lake Buena
Vista 489
Song of the Sea
Sanibel Island 30
South Seas Plantation Resort & Yacht Harbor
Captiva 579
Sundial Beach Resort
Sanibel Island 243
Georgia
Doubletree Atlanta
Atlanta 155
Westin Atlanta
Atlanta 495
Wyndham Marietta
Marietta 218
Illinois
Crowne Plaza Chicago O'Hare
Rosemont 507
Radisson Chicago
Chicago 350
Indiana
Doubletree Indianapolis
Indianapolis 137
Kentucky
Hilton Seelbach
Louisville 321
Radisson Lexington
Lexington 367
Louisiana
Hilton Lafayette
Lafayette 327
Holiday Inn Select New Orleans
Kenner 303
Hotel Maison de Ville
New Orleans 23
Maryland
Radisson Annapolis
Annapolis 219
Radisson Cross Keys
Baltimore 148
Sheraton Columbia
Columbia 287
Michigan
Hilton Detroit
Romulus 151
Hilton Hotel Grand Rapids
Grand Rapids 224
New Jersey
Courtyard by Marriott Secaucus
Secaucus 165
Doral Forrestal
Princeton 290
Marriott Somerset
Somerset 440
Sheraton Crossroads Hotel Mahwah
Mahwah 225
New Mexico
Doubletree Albuquerque
Albuquerque 295
Wyndham Albuquerque Airport Hotel
Albuquerque 276
North Carolina
Courtyard by Marriott Durham
Durham 146
Hilton Hotel Durham
Durham 194
Sheraton Charlotte Airport
Charlotte 222
Oklahoma
Westin Oklahoma City
Oklahoma City 395
Pennsylvania
Embassy Suites Philadelphia
Philadelphia 288
Sheraton Great Valley
Frazer 198
Texas
Doubletree Austin
Austin 350
Doubletree Hotel Dallas Galleria
Dallas 289
Hilton Arlington
Arlington 309
Hilton Austin
Austin 320
Hilton Houston Westchase
Houston 295
Marriott West Loop Houston
Houston 302
Sheraton Houston*
Houston 382
Utah
Hilton Salt Lake City Airport
Salt Lake City 287
Virginia
Hilton Arlington
Arlington 209
Hilton Crystal City
Arlington 386
Holiday Inn Historic District Alexandria
Alexandria 178
Radisson Old Town Alexandria
Alexandria 253
The Ritz-Carlton, Pentagon City
Arlington 366
Washington
Sheraton Bellevue
Bellevue 179
Washington, D.C.
Georgetown Inn
Washington, D.C. 96
Hilton Embassy Row
Washington, D.C. 193
Latham Georgetown
Washington, D.C. 143
Wisconsin
Crowne Plaza Madison
Madison 226
Holiday Inn Madison
Madison 194
-------
Total Rooms
21,210
* Represents properties that are held for sale and included
in discontinued operations. |
