Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
-------------- --------------
2008 2007
2008 2007
---- ----
---- ----
Revenues:
Rooms
$117,533 $129,110 $534,342 $507,686
Food and beverage
80,746 93,272 324,829 327,701
Other hotel operating
revenue 28,962 30,022
110,364 108,760
------ ------ ------- -------
227,241 252,404 969,535 944,147
Lease revenue
1,170 6,076 5,387
23,405
----- ----- -----
------
Total revenues
228,411 258,480 974,922 967,552
------- ------- ------- -------
Operating Costs and Expenses:
Rooms
30,662 31,962 133,299 125,313
Food and beverage
54,925 60,970 225,884 222,016
Other departmental expenses
62,072 63,496 250,772 238,813
Management fees
7,758 9,398 38,265
37,131
Other hotel expenses
15,443 17,352 60,739
65,301
Lease expense
3,926 4,048 17,489
15,700
Depreciation and amortization
32,310 26,997 122,466 103,253
Impairment losses and
other
charges
265,141 14
361,820 7,372
Corporate expenses
5,472 9,109 27,009
30,179
----- ----- ------
------
Total operating
costs and
expenses
477,709 223,346 1,237,743 845,078
------- ------- --------- -------
Operating (loss) income (249,298) 35,134
(262,821) 122,474
Interest expense
(20,872) (23,889) (85,578) (87,246)
Interest income
317 882
1,814 2,715
Loss on early extinguishment
of debt
- -
- (7,845)
Equity in (losses) earnings
of joint ventures
(360) 132 2,810
8,344
Foreign currency exchange
loss (4,896) (156)
(814) (3,701)
Other expenses, net
(196) (716) (690)
(201)
---- ----
---- ----
(Loss) income before income
taxes,
minority interests,
distributions
in excess of minority
interest
capital, (loss)
gain on sale of
minority interests
in hotel
properties
and discontinued
operations
(275,305) 11,387 (345,279) 34,540
Income tax expense
(3,652) (39) (10,402)
(9,479)
Minority interest in SHR's
operating partnership
3,578 (188) 4,631
(351)
Minority interest in
consolidated affiliates
(983) (535) (3,870)
(1,363)
Distributions in excess
of
minority interest
capital
- -
(2,499) -
--- --- ------
---
(Loss) income before (loss)
gain
on sale of minority
interests
in hotel properties
and
discontinued operations
(276,362) 10,625 (357,419) 23,347
(Loss) gain on sale of
minority interests
in hotel
properties
- (134)
(46) 84,658
--- ----
--- ------
(Loss) income from continuing
operations
(276,362) 10,491 (357,465) 108,005
Income (loss) from
discontinued operations,
net
of tax and minority
interests 20
2,655 44,041 (38,847)
--- ----- ------
-------
Net (loss) income
$(276,342) $13,146 $(313,424) $69,158
Preferred shareholder
dividends
(7,722) (7,722) (30,886) (30,107)
------ ------ ------- -------
Net
(loss) income available
to common shareholders $(284,064)
$5,424 $(344,310) $39,051
========= ====== ========= =======
Basic (Loss) Income Per
Share:
(Loss) income
from continuing
operations
available to
common
shareholders per
share
$(3.78) $0.04 $(5.17)
$1.04
Income (loss)
from
discontinued
operations per
share
- 0.03
0.59 (0.52)
--- ----
---- -----
Net (loss)
income available
to common
shareholders per
share
$(3.78) $0.07 $(4.58)
$0.52
====== ===== ======
=====
Weighted average
common
shares
outstanding
75,146 74,803 75,140
75,075
====== ====== ======
======
Diluted (Loss) Income Per
Share:
(Loss) income
from continuing
operations
available to common
shareholders
per share $(3.78)
$0.04 $(5.17) $1.04
Income (loss)
from
discontinued
operations per
share
- 0.03
0.59 (0.52)
--- ----
---- -----
Net (loss)
income available
to common
shareholders per
share
$(3.78) $0.07 $(4.58)
$0.52
====== ===== ======
=====
Weighted average
common
shares
outstanding
75,146 75,001 75,140
75,324
====== ====== ======
======
Consolidated Balance Sheets
(in thousands, except share data)
December 31,
2008 2007
---- ----
Assets
Investment in hotel properties,
net $2,383,860 $2,427,273
Goodwill
120,329 462,536
Intangible assets, net
of accumulated
amortization of
$3,096 and $3,271
32,277 45,420
Investment in joint ventures
82,122 78,801
Cash and cash equivalents
80,954 111,494
Restricted cash and cash
equivalents
37,358 39,161
Accounts receivable, net
of allowance for
doubtful accounts
of $2,203 and $1,965 70,945
82,217
Deferred financing costs,
net of
accumulated amortization
of $6,787
and $4,809
10,668 14,868
Deferred tax assets
38,260 41,790
Other assets
52,687 62,736
------ ------
Total assets
$2,909,460 $3,366,296
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Mortgages
and other debt payable
$1,301,535 $1,363,855
Exchangeable
senior notes, net of
discount
179,415 179,235
Bank credit
facility
206,000 109,000
Accounts payable
and accrued expenses 281,918
266,324
Distributions
payable
- 18,179
Deferred tax
liabilities
34,236 36,407
Deferred gain
on sale of hotels
104,251 114,292
------- -------
Total liabilities
2,107,355 2,087,292
Minority interests in SHR's
operating
partnership
5,330 11,512
Minority interests in
consolidated
affiliates
27,203 30,653
Shareholders' equity:
8.50% Series
A Cumulative Redeemable
Preferred
Stock ($0.01 par value;
4,488,750
shares issued and outstanding;
liquidation
preference $25.00 per share) 108,206
108,206
8.25% Series
B Cumulative Redeemable
Preferred
Stock ($0.01 par value;
4,600,000
shares issued and outstanding;
liquidation
preference $25.00 per share) 110,775
110,775
8.25% Series
C Cumulative Redeemable
Preferred
Stock ($0.01 par value;
5,750,000
shares issued and outstanding;
liquidation
preference $25.00 per share) 138,940
138,940
Common shares
($0.01 par value;
150,000,000
common shares authorized;
74,410,012
and 74,371,230 common shares
issued
and outstanding)
744 742
Additional
paid-in capital
1,208,221 1,201,503
Accumulated
deficit
(703,677) (304,922)
Accumulated
other comprehensive loss (93,637)
(18,405)
------- -------
Total shareholders' equity
769,572 1,236,839
------- ---------
Total liabilities and shareholders'
equity
$2,909,460 $3,366,296
========== ==========
FINANCIAL HIGHLIGHTS
Supplemental Financial Data
Three Months Ended
December 31, 2008
---------------------
Results vs. Previous Guidance
Actual Guidance
-----------------------------
------ --------
North American Total RevPAR growth
(13.0)% (15.0)% - (13.0)%
North American RevPAR growth
(13.3)% (14.0)% - (12.0)%
Comparable EBITDA (in millions)
$48.7 $ 41.9 - 47.9
Comparable FFO per diluted share
$0.17 $ 0.11 - 0.19
Weighted average diluted
shares (in thousands) (a)
76,122
(in thousands, except per share information)
December 31, 2008
-----------------
Pro Rata Share Consolidated
-------------- ------------
Capitalization
--------------
Common shares outstanding
74,410
74,410
Operating partnership units
outstanding
976
976
Stock options outstanding
885
885
Restricted stock units outstanding
1,304
1,304
-----
-----
Combined shares, options and units
outstanding
77,575
77,575
Common stock price at end of period
$1.68
$1.68
-----
-----
Common equity capitalization
$130,326
$130,326
Preferred equity capitalization
370,236
370,236
Consolidated debt
1,686,950 1,686,950
Pro rata share of unconsolidated
debt
282,385
-
Pro rata share of consolidated debt
(107,065)
-
Cash and cash equivalents
(80,954)
(80,954)
-------
-------
Total enterprise value
$2,281,878 $2,106,558
========== ==========
Net Debt / Total Enterprise Value
78.1%
76.2%
Preferred Equity / Total Enterprise
Value
16.2%
17.6%
Common Equity / Total Enterprise Value
5.7%
6.2%
Dividends Per Share
-------------------
Common dividends declared (holders
of record
on March 28, June 30 and September
30, 2008)
$0.24
=====
Preferred Series A dividends declared
(holders
of record on March 21, June
20, September 19
and December 19, 2008)
$0.53125
========
Preferred Series B dividends declared
(holders
of record on March 21, June
20, September 19
and December 19, 2008)
$0.51563
========
Preferred Series C dividends declared
(holders
of record on March 21, June
20, September 19
and December 19, 2008)
$0.51563
========
(a) The calculation of weighted average
diluted shares is consistent
with the guidance prescribed by the
National Association of Real
Estate Investment Trusts.
Discontinued Operations
The results of operations of hotels
sold are classified as discontinued
operations and segregated in the consolidated
statements of operations for
all periods presented. On July
2, 2008, we sold the Hyatt Regency Phoenix
for net sales proceeds of $89.6 million.
On December 28, 2007, we sold the
Hyatt Regency New Orleans for net
sales proceeds of $28.0 million.
The following is a summary of income
(loss) from discontinued operations
for the three months and years ended
December 31, 2008 and 2007 (in
thousands):
Three Months Ended Years Ended
December 31, December 31,
2008 2007 2008
2007
---- ---- ----
----
Hotel operating revenues
$- $10,355 $24,275 $40,824
--- ------- ------- -------
Operating costs and expenses
(221) 5,875 16,043 29,977
Depreciation and amortization
- 686 1,151
2,838
Impairment losses
- -
- 37,716
--- --- ---
------
Total operating costs
and expenses (221) 6,561 17,194
70,531
---- ----- ------ ------
Operating income
(loss)
221 3,794 7,081 (29,707)
Interest expense
- -
- (2,483)
Interest income
- 3
1 1,058
Loss on early extinguishment of debt
- -
- (7,294)
Other expenses, net
- (119) (257)
(383)
Income tax (expense) benefit
(21) (968) 300
(524)
(Loss) gain on sale of assets
(180) - 37,482
-
Minority interests
- (55) (566)
486
--- --- ----
---
Income (loss) from discontinued
operations
$20 $2,655 $44,041 $(38,847)
=== ====== ======= ========
Investment in the Hotel del Coronado
(in thousands)
On January 9, 2006, we purchased a
45% interest in the joint venture that
owns the Hotel del Coronado.
We account for this investment using the
equity method of accounting.
Three Months Ended Years Ended
December 31, December 31,
------------ ------------
2008 2007 2008
2007
---- ---- ----
----
Total revenues (100%)
$32,484 $33,409 $150,808 $141,404
Property EBITDA (100%)
$11,148 $11,226 $56,846 $52,926
Equity in earnings of joint
venture (SHR 45% ownership)
Property EBITDA
$5,017 $5,052 $25,581 $23,817
Depreciation and amortization
(1,884) (1,707) (7,379) (6,844)
Gain (loss) on sale of
assets -
3 -
(239)
Interest expense
(3,710) (5,225) (15,204) (20,943)
Other expense, net
(1,240) (99) (1,378)
(227)
Income taxes
108 175 (284)
(545)
--- --- ----
----
Equity in (losses) earnings of
joint venture
$(1,709) $(1,801) $1,336 $(4,981)
======= ======= ====== =======
EBITDA Contribution from
investment in Hotel del Coronado
Equity in (losses) earnings of
joint venture
$(1,709) $(1,801) $1,336 $(4,981)
Depreciation and amortization
1,884 1,707 7,379
6,844
Interest expense
3,710 5,225 15,204
20,943
Income taxes
(108) (175) 284
545
---- ---- ---
---
EBITDA Contribution for
investment in Hotel del
Coronado
$3,777 $4,956 $24,203 $23,351
====== ====== ======= =======
FFO Contribution from investment
in Hotel del Coronado
Equity in (losses) earnings of
joint venture
$(1,709) $(1,801) $1,336 $(4,981)
Depreciation and amortization
1,884 1,707 7,379
6,844
----- ----- -----
-----
FFO Contribution for investment
in Hotel del Coronado
$175 $(94) $8,715
$1,863
==== ==== ======
======
Spread over
Debt
Interest Rate LIBOR Loan Amount
Maturity
----
------------- ----- -----------
---------
CMBS Mortgage and
Mezzanine
2.52% 208 bp
$610,000 January 2011 (a)
Revolving Credit
Facility
2.94% 250 bp
17,523 January 2011 (a)
------
627,523
Cash and cash
equivalents
43,597
------
Net Debt
$583,926
========
(a) Includes extension options.
Effective
Cap
Date LIBOR Cap Rate Notional
Amount Maturity
---
---- -------------- ---------------
--------
CMBS Mortgage
and Mezzanine
Loan and
Revolving
Credit
Facility Cap January 2006
5.5% $630,000
January 2009
CMBS Mortgage
and Mezzanine
Loan and
Revolving
Credit
Facility Cap January 2009
5.0% $630,000
January 2011
Summary of Residential Activity
(in thousands)
On January 9, 2006, we purchased a
45% interest in a joint venture that
owns the North Beach Venture development
adjacent to the Hotel del
Coronado. We account for this
investment using the equity method of
accounting. We own a 31% interest
in a joint venture that is developing
the Four Seasons Residence Club Punta
Mita (RCPM) adjacent to the Four
Seasons Punta Mita Resort. We
account for this investment using the
equity method of accounting.
In addition, we engage in certain
activities related to potential development
projects such as
condominium-hotel units, fractional
ownership units and other for-sale
residential units. During the
third quarter of 2007, a potential
condominium-hotel project at the Fairmont
Chicago was delayed
indefinitely due to market conditions.
We recorded a charge of
$1.2 million related to the costs
of this project.
Three Months Ended Years Ended
December 31, December 31,
-------------- --------------
North Beach Venture
2008 2007 2008
2007
---- ---- ----
----
Hotel condominium sales (100%)
$2,750 $15,405 $2,828 $110,212
Hotel condominium cost of sales
(100%)
$(1,912) $(11,575) $(2,221) $(77,223)
SHR's 45% share
Hotel condominium
sales $1,238
$6,932 $1,273 $49,595
Hotel condominium
cost of sales (860) (5,209) (999)
(34,750)
Other income, net
43 136
128 186
Income taxes
317 (775) 325
(6,475)
--- ---- ---
------
SHR's share of net income
$738 $1,084 $727
$8,556
==== ====== ====
======
Net income
$738 $1,084 $727
$8,556
Income taxes
(317) 775 (325)
6,475
---- --- ----
-----
EBITDA Contribution for investment
in North Beach Venture
$421 $1,859 $402
$15,031
==== ====== ====
=======
---- ------ ----
------
FFO Contribution for investment
in North Beach Venture
$738 $1,084 $727
$8,556
==== ====== ====
======
Three Months Ended Years Ended
December 31, December 31,
-------------- --------------
RCPM
2008 2007 2008
2007
---- ---- ----
----
SHR's 31% share
Sales
$1,602 $1,264 $4,914 $3,366
====== ====== ====== ======
EBITDA Contribution for
investment in RCPM
$691 $455 $1,545
$528
==== ==== ======
====
FFO Contribution for investment
in RCPM
$460 $281 $987
$232
==== ==== ====
====
Three Months Ended Years Ended
December 31, December 31,
-------------- --------------
2008 2007 2008
2007
---- ---- ----
----
Other Residential Activity
$- $-
$- $(1,184)
SHR's share of total residential
activity:
Sales
$2,840 $8,196 $6,187 $52,961
====== ====== ====== =======
EBITDA
$1,112 $2,314 $1,947 $14,375
====== ====== ====== =======
FFO
$1,198 $1,365 $1,714 $7,604
====== ====== ====== ======
Leasehold Information
(in thousands)
Three Months Ended Years Ended
December 31, December 31,
------------- -------------
2008 2007 2008
2007
---- ---- ----
----
Paris Marriott Champs Elysees:
Property EBITDA
$3,874 $4,250 $21,248 $18,679
Revenue (a)
$3,874 $4,701 $21,248 $18,287
Lease Expense
(2,831) (2,897) (12,536) (11,145)
Less: Deferred Gain on Sale Leaseback
(1,091) (1,215) (4,933) (4,613)
------ ------ ------ ------
Adjusted Lease Expense
(3,922) (4,112) (17,469) (15,758)
---- ---- ------ ------
EBITDA Contribution from Leasehold
$(48) $589 $3,779 $2,529
==== ==== ====== ======
Marriott Hamburg:
Property EBITDA
$1,406 $1,556 $6,247 $5,806
Revenue (a)
$1,170 $1,375 $5,387 $5,118
Lease Expense
(1,095) (1,151) (4,953) (4,555)
Less: Deferred Gain on Sale Leaseback
(50) (104) (228)
(234)
--- ---- ----
----
Adjusted Lease Expense
(1,145) (1,255) (5,181) (4,789)
--- ---- ----
----
EBITDA Contribution from Leasehold
$25 $120 $206
$329
=== ==== ====
====
Total Leaseholds:
Property EBITDA
$5,280 $5,806 $27,495 $24,485
Revenue (a)
$5,044 $6,076 $26,635 $23,405
Lease Expense
(3,926) (4,048) (17,489) (15,700)
Less: Deferred Gain on Sale Leaseback
(1,141) (1,319) (5,161) (4,847)
------ ------ ------ ------
Adjusted Lease Expense
(5,067) (5,367) (22,650) (20,547)
---- ---- ------ ------
EBITDA Contribution from Leasehold
$(23) $709 $3,985 $2,858
==== ==== ====== ======
December 31,
------------
Security Deposits (b):
2008 2007
---- ----
Paris Marriott Champs Elysees
$15,507 $14,509
Marriott Hamburg
6,984 7,299
----- -----
Total
$22,491 $21,808
======= =======
(a) Effective January 1, 2008, the
operating results for the Paris
Marriott Champs Elysees were
consolidated in our financial statements.
For the three months and year
ended December 31, 2008, Revenue for the
Paris Marriott Champs Elysees
represents Property EBITDA. For the three
months and year ended December
31, 2007, Revenue for the Paris Marriott
Champs Elysees represents lease
revenue. For the three months and years
ended December 31, 2008 and
2007, Revenue for the Marriott Hamburg
represents lease revenue.
(b) The security deposits are recorded
in other assets on the consolidated
balance sheets.
Non-GAAP Financial Measures
In addition to REIT hotel income,
six other non-GAAP financial measures
are presented for the Company
that we believe are useful to management
and investors as key measures
of our operating performance: Funds from
Operations (FFO); FFO - Fully
Diluted; Comparable FFO; Earnings Before
Interest Expense, Taxes, Depreciation
and Amortization (EBITDA); Adjusted
EBITDA; and Comparable EBITDA.
A reconciliation of these measures to net
income (loss) available to common
shareholders, the most directly
comparable GAAP measure, is
set forth in the following tables.
We compute FFO in accordance
with standards established by the National
Association of Real Estate Investment
Trusts, or NAREIT, which adopted a
definition of FFO in order to
promote an industry-wide standard measure
of REIT operating performance.
NAREIT defines FFO as net income (or loss)
(computed in accordance with
GAAP) excluding losses or gains from sales
of depreciable property plus
real estate-related depreciation and
amortization, and after adjustments
for our portion of these items
related to unconsolidated partnerships
and joint ventures. We also
present FFO - Fully Diluted,
which is FFO plus minority interest expense
on convertible minority interests.
We also present Comparable FFO, which
is FFO - Fully Diluted excluding
the impact of any gains or losses on
early extinguishment of debt,
impairment losses, foreign currency
exchange gains or losses and
other non-recurring charges. We believe that
the presentation of FFO, FFO
- Fully Diluted and Comparable FFO provides
useful information to management
and investors regarding our results of
operations because they are
measures of our ability to fund capital
expenditures and expand our
business. In addition, FFO is widely used in
the real estate industry to
measure operating performance without regard
to items such as depreciation
and amortization. We also present
Comparable FFO per diluted share
as a non-GAAP measure of our
performance. We calculate
Comparable FFO per diluted share for a given
operating period as our Comparable
FFO (as defined above) divided by the
weighted average of fully diluted
shares outstanding. Comparable FFO per
diluted share, in accordance
with NAREIT, is adjusted for the effects of
dilutive securities. Dilutive
securities may include shares granted
under share-based compensation
plans, operating partnership units and
exchangeable debt securities.
No effect is shown for securities that are
anti-dilutive.
EBITDA represents net income
(loss) available to common shareholders
excluding: (i) interest expense,
(ii) income tax expense, including
deferred income tax benefits
and expenses applicable to our foreign
subsidiaries and income taxes
applicable to sale of assets; and (iii)
depreciation and amortization.
EBITDA also excludes interest expense,
income tax expense and depreciation
and amortization of our equity method
investments. EBITDA is presented
on a full participation basis, which
means we have assumed conversion
of all convertible minority interests of
our operating partnership into
our common stock and includes preferred
dividends. We believe
this treatment of minority interest provides more
useful information for management
and our investors and appropriately
considers our current capital
structure. We also present Adjusted
EBITDA, which eliminates the
effect of realizing deferred gains on our
sale leasebacks. We also
present Comparable EBITDA, which eliminates the
effect of gains or losses on
sales of assets, early extinguishment of
debt, impairment losses, foreign
currency exchange gains or losses and
other non-recurring charges.
We believe EBITDA, Adjusted EBITDA and
Comparable EBITDA are useful
to management and investors in evaluating
our operating performance because
they provide management and investors
with an indication of our ability
to incur and service debt, to satisfy
general operating expenses,
to make capital expenditures and to fund
other cash needs or reinvest
cash into our business. We also believe they
help management and investors
meaningfully evaluate and compare the
results of our operations from
period to period by removing the impact of
our asset base (primarily depreciation
and amortization) from our
operating results. Our management
also uses EBITDA, Adjusted EBITDA and
Comparable EBITDA as measures
in determining the value of acquisitions
and dispositions.
We caution investors that amounts
presented in accordance with our
definitions of FFO, FFO - Fully
Diluted, Comparable FFO, EBITDA, Adjusted
EBITDA and Comparable EBITDA
may not be comparable to similar measures
disclosed by other companies,
since not all companies calculate these
non-GAAP measures in the same
manner. FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, Adjusted
EBITDA and Comparable EBITDA should not
be considered as an alternative
measure of our net income or operating
performance. FFO, FFO - Fully
Diluted, Comparable FFO, EBITDA, Adjusted
EBITDA and Comparable EBITDA
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 FFO, FFO - Fully
Diluted, Comparable FFO, EBITDA,
Adjusted EBITDA and Comparable EBITDA
can enhance your understanding
of our financial condition and results of
operations, these non-GAAP financial
measures, when viewed individually,
are not necessarily a better
indicator of any trend as compared to
comparable GAAP measures such
as net income (loss) available to common
shareholders. In addition, you
should be aware that adverse economic and
market conditions might negatively
impact our cash flow. Below, we have
provided a quantitative reconciliation
of FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, Adjusted
EBITDA and Comparable EBITDA to the most
directly comparable GAAP financial
performance measure, which is net
income (loss) available to common
shareholders, and provide an
explanatory description by footnote
of the items excluded from FFO, FFO -
Fully Diluted, EBITDA and Adjusted
EBITDA.
Reconciliation of Net (Loss)
Income Available to Common Shareholders
to EBITDA, Adjusted EBITDA and Comparable EBITDA
(in thousands)
Three Months Ended Years Ended
December 31, December 31,
------------- --------------
2008 2007 2008
2007
---- ---- ----
----
Net (loss) income available
to common shareholders
$(284,064) $5,424 $(344,310) $39,051
Depreciation and amortization
- continuing operations
32,310 26,997 122,466 103,253
Depreciation and amortization
- discontinued operations
- 686 1,151
2,838
Interest expense - continuing
operations
20,872 23,889 85,578
87,246
Interest expense -
discontinued operations
- -
- 2,483
Income taxes - continuing
operations
3,652 39 10,402
9,479
Income taxes - discontinued
operations
21 968
(300) 524
Minority interests
(3,578) 243 (4,065)
(135)
Adjustments from consolidated
affiliates
(2,096) (2,367) (8,354) (5,063)
Adjustments from
unconsolidated affiliates
5,276 7,155 22,985
30,603
Preferred shareholder
dividends
7,722 7,722 30,886
30,107
----- ----- ------
------
EBITDA
(219,885) 70,756 (83,561) 300,386
Realized portion of deferred
gain on sale leasebacks
(1,141) (1,319) (5,161) (4,847)
------ ------ ------
------
Adjusted EBITDA
(221,026) 69,437 (88,722) 295,539
-------- ------ ------- -------
Gain on sale of assets -
continuing operations
(4) (18) (151)
(18)
Loss (gain) on sale of assets
- discontinued operations
180 - (37,482)
-
Loss (gain) on sale of
minority interests in hotel
properties
- 134
46 (84,658)
(Gain) loss on sale of assets
- unconsolidated affiliates
- (4)
- 239
Impairment losses -
discontinued operations
- -
- 37,716
Impairment losses and other
charges - continuing
operations
265,141 14 361,820
7,372
Foreign currency exchange
loss (a)
4,896 156
814 3,701
Hyatt Regency La Jolla
minority interest (b)
(530) (1,127) (4,593) (1,127)
Distributions in excess of
minority interest capital
- -
2,499 -
Termination costs -
discontinued operations (c)
- -
- (400)
Planning costs - New Orleans
Jazz District
- -
- 227
Loss on early extinguishment
of debt - continuing
operations
- -
- 7,845
Loss on early extinguishment
of debt - discontinued
operations
- -
- 7,294
--- ---
--- -----
Comparable EBITDA
$48,657 $68,592 $234,231 $273,730
======= ======= ======== ========
(a) Foreign currency exchange loss
applicable to third-party and
inter-company debt and certain
balance sheet items held by foreign
subsidiaries.
(b) The minority interest partner's
share of the Hyatt Regency La Jolla's
property EBITDA is not deducted
from net (loss) income available to
common shareholders under GAAP
accounting rules.
(c) Termination costs included in discontinued
operations related to the
termination of the management
agreement at the Marriott Rancho Las
Palmas property.
Reconciliation of Net (Loss) Income
Available to Common Shareholders to
Funds From
Operations (FFO), FFO - Fully Diluted and Comparable FFO
(in thousands, except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------- --------------
2008 2007 2008
2007
---- ---- ----
----
Net (loss) income available to
common shareholders
$(284,064) $5,424 $(344,310) $39,051
Depreciation and amortization -
continuing operations
32,310 26,997 122,466 103,253
Depreciation and amortization -
discontinued operations
- 686 1,151
2,838
Corporate depreciation
(305) (265) (1,201)
(265)
Gain on sale of assets -
continuing operations
(4) (18) (151)
(18)
Loss (gain) on sale of assets -
discontinued operations
180 - (37,482)
-
Loss (gain) on sale of minority
interests in hotel properties
- 134
46 (84,658)
Realized portion of deferred
gain on sale leasebacks
(1,141) (1,319) (5,161) (4,847)
Deferred tax expense on realized
portion of deferred gain on
sale
leasebacks
333 379 1,530
1,439
Minority interests adjustments
(437) (379) (1,677) (1,449)
Adjustments from consolidated
affiliates
(1,372) (1,342) (5,376) (2,797)
Adjustments from unconsolidated
affiliates
1,884 1,703 7,379
7,083
----- ----- -----
-----
FFO
(252,616) 32,000 (262,786) 59,630
Convertible minority interests
(3,141) 622 (2,388)
1,314
------ --- ------
-----
FFO - Fully Diluted
(255,757) 32,622 (265,174) 60,944
Impairment losses - discontinued
operations
- -
- 37,716
Impairment losses and other
charges - continuing operations
265,141 14 361,820
7,372
Foreign currency exchange loss,
net of tax (a)
3,556 569
439 4,062
Hyatt Regency La Jolla minority
interest (b)
(61) (329) (2,620)
(329)
Distributions in excess of
minority interest capital
- -
2,499 -
Termination costs, net of tax -
discontinued operations (c)
- -
- (244)
Planning costs, net of tax - New
Orleans Jazz District
- -
- 166
Loss on early extinguishment of
debt - continuing operations
- -
- 7,845
Loss on early extinguishment of
debt - discontinued operations
- -
- 7,294
--- ---
--- -----
Comparable FFO
$12,879 $32,876 $96,964 $124,826
======= ======= ======= ========
Comparable FFO per diluted share
$0.17 $0.43 $1.27
$1.64
===== ===== =====
=====
Weighted average diluted shares
76,122 75,977 76,192
76,300
====== ====== ======
======
(a) Foreign currency exchange loss
applicable to third-party and
inter-company debt and certain
balance sheet items held by foreign
subsidiaries.
(b) The minority interest partner's
share of the Hyatt Regency La Jolla's
property FFO is not deducted
from net (loss) income available to common
shareholders under GAAP accounting
rules.
(c) Termination costs, net of tax,
included in discontinued operations
related to the termination of
the management agreement at the Marriott
Rancho Las Palmas property.
Debt Summary
(dollars in thousands)
Loan
Debt
Interest Rate Spread (a) Amount
Maturity (b)
----
-------------- ---------- ------ -------------
Punta Mita land
parcel promissory
note
N/A N/A
$16,527 August 2009
Bank credit facility
1.69% 125 bp
206,000 March 2011
Westin St. Francis
1.14% 70 bp
220,000 August 2011
Fairmont Scottsdale
Princess
1.00% 56 bp
180,000 September 2011
InterContinental
Chicago
1.50% 106 bp
121,000 October 2011
InterContinental
Miami
1.17% 73 bp
90,000 October 2011
InterContinental
Prague (c)
4.09% 120 bp (c) 145,277
March 2012
Loews Santa Monica
Beach Hotel
1.07% 63 bp
118,250 March 2012
Ritz-Carlton Half
Moon Bay
1.11% 67 bp
76,500 March 2012
Exchangeable senior
notes
3.50% Fixed
179,415 April 2012
Fairmont Chicago
1.14% 70 bp
123,750 April 2012
Hyatt Regency La
Jolla
1.44% 100 bp
97,500 September 2012
Marriott London
Grosvenor Square (d)
3.87% 110 bp (d) 112,731
October 2013
-------
$1,686,950
==========
(a) Spread over LIBOR (0.44% at December
31, 2008).
(b) Includes extension options, excluding
the conditional option to
extend the bank credit facility.
(c) Principal balance of euro 104,000,000
at December 31, 2008. Spread
over three-month EURIBOR (2.89%
at December 31, 2008).
(d) Principal balance of 77,250,000
pounds at December 31, 2008. Spread
Over three-month GBP LIBOR (2.77%
at December 31, 2008).
U.S. Interest Rate Swaps
Fixed Pay Rate Notional
Swap Effective Date
Against LIBOR Amount Maturity
-------------------
------------- ------ --------
April 2005
4.42% $75,000 April 2010
April 2005
4.59% 75,000 April 2012
June 2005
4.12% 50,000 June 2012
June 2006
5.50% 75,000 June 2013
August 2006
5.34% 100,000 August 2011
August 2006
5.42% 100,000 August 2013
September 2006
5.08% 100,000 February 2011
September 2006
5.10% 100,000 December 2010
September 2006
5.09% 100,000 September 2009
March 2007
4.81% 100,000 December 2009
March 2007
4.84% 100,000 July 2012
---- -------
4.99% $975,000
==== ========
European Interest Rate Swap
Fixed Pay Rate Notional
Swap Effective Date
Against GBP LIBOR Amount
Maturity
-------------------
----------------- ------
--------
October 2007
5.72% 77,250 pounds October 2013
Fixed Pay Rate Notional
Swap Effective Date
Against EURIBOR Amount
Maturity
-------------------
--------------- ------
--------
September 2008
4.53% euro 104,000 March 2012
Forward-Starting Interest Rate Swaps
Fixed Pay Rate Notional
Swap Effective Date
Against LIBOR Amount Maturity
-------------------
------------- ------ --------
September 2009
4.90% $100,000 September 2014
December 2009
4.96% 100,000 December 2014
April 2010
5.42% 75,000 April 2015
December 2010
5.23% 100,000 December 2015
February 2011
5.27% 100,000 February 2016
-------
$475,000
========
At December 31, 2008, future scheduled
debt principal payments (including
non-conditional extension options)
are as follows:
Years ended
Amount
December 31,
(in thousands)
------------
--------------
2009
$16,527
2010
7,364
2011
824,364
2012
734,982
2013
103,713
Thereafter
-
---
Total
$1,686,950
==========
Percent of fixed rate debt including
U.S. and European swaps 84.7%
Weighted average interest rate including
U.S. and European swaps 4.87%
Weighted average maturity of fixed
rate debt (debt with maturity
of greater than one year)
4.20
Under Construction and Completed Capital Projects
(images of completed projects available on the Company's website)
Hotel
Project Description
Completed
-----
-------------------
---------
Fairmont
Chicago
ENO, wine tasting room *
Q2 08
Lobby renovation
Q2 08
Guest room renovation
Q2 08
Spa and fitness center
Q1 08
Gold lounge
Q4 06
Sushi bar
Q4 06
Fairmont
Scottsdale
Princess
Main building guest room renovation
Q4 08
Michael Mina operated Bourbon Steak Restaurant
Q1 08
Midnight Oil operated Stone Rose Bar
Q1 08
Gold room renovation
Q1 08
GM house conversion - 1 room addition
Q1 08
Four Seasons
Mexico City
Guest room renovation
Q1 06
Four Seasons
Punta Mita
Lobby bar
Q1 08
Oasis room and river pool - 23 room addition
Q2 07
Fitness center expansion
Q1 07
Coral suite - 5 room addition
Q1 07
Retail expansion
Q4 06
Tamai pool
Q4 06
Tamai garden
Q4 06
Beachfront restaurant addition
Q4 06
Arena suite - 5 room addition
Q1 06
Four Seasons
Washington,
D.C.
Lobby renovation
Q1 09
Michael Mina operated Bourbon Steak Restaurant
Q1 09
Presidential suite renovation
Q1 09
11 room expansion
Q1 09
Hotel del
Coronado
Retail reconfiguration / renovation
Q2 08
ENO, wine tasting room *
Q1 08
Guest room renovation
Q2 07
Restaurant renovation
Q2 07
Beach Village - 78 room addition
Q2 07
Spa & fitness center / beach club
Q1 07
InterContinental
Chicago
Starbucks
Q3 07
Meeting space addition
Q3 07
ENO, wine tasting room *
Q4 06
InterContinental
Miami
Spa and fitness center
Q3 08
Starbucks
Q3 06
InterContinental
Prague
Partial guest room renovation
Q2 07
Loews Santa
Monica
Partial guest room renovation
Q4 08
Restaurant renovation
Q4 04
Marriott London
Grosvenor
Square
Basement reorganization
Q4 08
Gordon Ramsay operated Maze Grill Restaurant
Q2 08
Concierge lounge
Q2 08
Guest room renovation
Q1 08
Renaissance
Paris Hotel
Le Parc
Trocadero
Renaissance brand conversion
Q1 08
Ritz-Carlton
Half Moon Bay ENO,
wine tasting room expansion*
Q3 08
Restaurant and lounge renovation
Q3 08
Suite renovation
Q1 08
Outdoor patios / guest room fireplaces
Q3 06
Ocean terrace addition
Q2 06
Restaurant expansion
Q4 05
ENO, wine tasting room*
Q3 05
Retail expansion
Q3 05
Ritz-Carlton
Laguna Niguel Meeting
space renovation
Q4 07
Suite renovation / conversion - 3 room addition Q2 07
ENO, wine tasting room *
Q1 07
Westin St.
Francis
Guest room and corridor renovation
In Construction
Lobby bar
Q3 08
* Strategic's branded wine room concept
Operating Statistics by Geographic Region
Operating results have been adjusted
to show hotel performance on a
comparable period basis.
Adjustments are the (i) exclusion of
unconsolidated Hotel del Coronado,
(ii) exclusion of Renaissance Paris
Hotel Le Parc Trocadero results
for the years ended December 31, 2008 and
2007, (iii) exclusion of Hyatt
Regency Phoenix and Hyatt Regency New
Orleans as these properties'
results of operations were reclassified to
discontinued operations for
the three months and years ended December 31,
2008 and 2007 and (iv) presentation
of the hotels without regard to
either ownership structure or
leaseholds.
United States Hotels (as of December
31, 2008)
11 Properties
5,982 Rooms
Three Months Ended
Years Ended
December 31,
December 31,
----------------------- -----------------------
2008 2007 Change
2008 2007 Change
---- ---- ------
---- ---- ------
Average Daily
Rate
$234.61 $242.46 -3.2% $244.17
$240.57 1.5%
Average
Occupancy
65.6% 73.2% (7.6) pts 71.8%
76.1% (4.3) pts
RevPAR
$153.94 $177.51 -13.3% $175.24
$183.01 -4.2%
Total RevPAR $310.83 $356.98
-12.9% $335.35 $350.78
-4.4%
Property
EBITDA
Margin
20.7% 25.5% (4.8) pts 23.2%
25.2% (2.0) pts
Mexican Hotels (as of December 31,
2008)
2 Properties
413 Rooms
Three Months Ended
Years Ended
December 31,
December 31,
----------------------- -----------------------
2008 2007 Change
2008 2007 Change
---- ---- ------
---- ---- ------
Average Daily
Rate
$472.50 $485.68 -2.7% $491.52
$466.85 5.3%
Average
Occupancy
64.5% 72.6% (8.1) pts 69.2%
71.5% (2.3) pts
RevPAR
$304.87 $352.55 -13.5% $339.95
$333.64 1.9%
Total RevPAR $552.27 $638.11
-13.5% $600.06 $578.20
3.8%
Property
EBITDA
Margin
34.5% 35.7% (1.2) pts 35.9%
35.5% 0.4 pts
North American Hotels (as of December
31, 2008)
13 Properties
6,395 Rooms
Three Months Ended
Years Ended
December 31,
December 31,
----------------------- -----------------------
2008 2007 Change
2008 2007 Change
---- ---- ------
---- ---- ------
Average Daily
Rate
$249.47 $257.84 -3.2% $259.59
$254.15 2.1%
Average
Occupancy
65.5% 73.2% (7.7) pts 71.6%
75.8% (4.2) pts
RevPAR
$163.52 $188.67 -13.3% $185.87
$192.59 -3.5%
Total RevPAR $326.15 $374.90
-13.0% $352.43 $365.25
-3.5%
Property
EBITDA
Margin
22.2% 26.6% (4.4) pts 24.6%
26.2% (1.6) pts
European Same Store Hotels (as of December
31, 2008)
5 Properties (three month period) 4
Properties (year end period)
1,195 Rooms (three month period) 1,079
Rooms (year end period)
Three Months Ended
Years Ended
December 31,
December 31,
----------------------- -----------------------
2008 2007 Change
2008 2007 Change
---- ---- ------
---- ---- ------
Average Daily
Rate
$289.26 $344.60 -16.1% $346.43
$327.39 5.8%
Average
Occupancy
73.2% 79.1% (5.9) pts 76.6%
81.7% (5.1) pts
RevPAR
$211.70 $272.61 -22.3% $265.37
$267.37 -0.7%
Total RevPAR $340.50 $422.71
-19.4% $379.35 $384.02
-1.2%
Property
EBITDA
Margin
39.0% 36.6% 2.4 pts
39.3% 39.4% (0.1) pts
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