CHICAGO, May 4, 2011 -- Strategic Hotels & Resorts
(NYSE: BEE) today reported results for the first quarter ended March 31, 2011.
First Quarter Highlights
- Net loss attributable to common shareholders was $35.4 million, or $0.23
per diluted share in the first quarter of 2011, compared with net loss
attributable to common shareholders of $40.3
million, or $0.53 per diluted
share, in the first quarter of 2010.
- Comparable funds from operations (Comparable FFO) was a
loss of $0.02 per diluted share compared
with a loss of $0.14 per diluted share
in the prior year period.
- Comparable EBITDA was $28.7 million compared with $22.5 million in the prior year period, a 27.6
percent increase between periods.
- United States same store
revenue per available room (RevPAR) increased 16.6 percent, driven by a
6.1 percentage point increase in occupancy and a 6.1 percent increase
in average daily rate (ADR), compared to the first quarter 2010. Total
revenue per available room (Total RevPAR) increased 14.5 percent
between periods.
- North American same store RevPAR increased 11.9 percent,
driven by a 5.5 percentage point increase in occupancy and a
2.7 percent increase in ADR. Total RevPAR increased 10.7 percent with
non-rooms revenue increasing by 9.4 percent between periods.
- Total North American RevPAR, which includes results from
the recently acquired Four Seasons Jackson Hole and Four Seasons
Silicon Valley, increased by 11.6 percent and Total RevPAR increased
10.4 percent, driven by a 5.3 percentage point increase in occupancy
and a 2.7 percent increase in ADR. Non-rooms revenue increased 9.3
percent.
- European RevPAR increased 2.9 percent (1.5 percent in
constant dollars), driven by a 0.8 percentage point increase in
occupancy and a 1.6 percent increase in ADR (0.2 percent increase in
constant dollars) between periods. European Total RevPAR increased 2.8
percent in the first quarter over the prior year period (1.5 percent in
constant dollars). The European portfolio excludes results from the
Paris Marriott Champs Elysees which was recently sold.
- United States same store
EBITDA margins expanded 430 basis points compared to the first quarter
of 2010. North American same store and Total North American EBITDA
margins expanded 230 and 240 basis points, respectively.
"We are extremely pleased by our first quarter performance,"
said Chief Executive Officer Laurence Geller.
"We delivered terrific RevPAR growth and operating margins that far
outpaced not only the industry average but our relevant competitors.
This is the result of the productivity enhancement programs we put in
place during the downturn, our unmatched asset management capabilities
and our superior portfolio of irreplaceable hotel and resort
properties, which are in excellent physical and competitive condition."
First Quarter 2011 Transaction Review
- In March, the Company closed on an agreement to acquire the
Four Seasons Jackson Hole and Four Seasons Silicon Valley from The
Woodbridge Company Limited (Woodbridge) in exchange for an aggregate of
15.2 million shares of common stock at an agreed upon issuance price of
$6.25 per share, or an implied
valuation of $95.0 million. In addition,
the Company concurrently privately placed and issued an additional 8.0
million shares of common stock at a price of $6.25
per share to an affiliate of Woodbridge resulting in total gross
proceeds of $50.0 million.
- In February, the Company extended the maturity date of its
revolving credit facility to March 2012
and amended certain terms. The amendment included an increase of the
advance rate from 45 percent to 55 percent of the borrowing base
assets' appraised values, a reduction in the debt service coverage
ratio constant from 8 percent to 7 percent and a reduction of the debt
service coverage ratio limit from 1.3 times to 1.2 times. In exchange,
the Company agreed to reduce the total committed facility from $400 million to $350 million and reduce the
maximum total leverage covenant from 80 percent to 70 percent.
- In February, the Company completed a recapitalization of
the joint venture that owns the Hotel del Coronado. Under terms of the
agreement, a new joint venture has been established between the
Company, Blackstone Real Estate Advisors (Blackstone)
and KSL Resorts. As part of the recapitalization, which valued the
hotel at approximately $590 million, the
Company invested approximately $57 million
to retain a 34.3 percent ownership position in the joint venture and
will remain as asset manager of the hotel. Blackstone is a 60 percent
owner and general partner of the joint venture. A $425 million debt financing was originated by
Deutsche Bank.
- In February, the Company terminated $125
million of interest rate swaps for a total termination cost of $4.2 million.
- In January, the Company sold its 50 percent interest in
BuyEfficient, an electronic purchasing platform, for $9.0 million.
Subsequent Event
- On April 6th, the Company
continued its planned exit from Europe
when it closed on the sale of its leasehold interest in the Paris
Marriott Champs Elysees hotel for euro 29.2
million ($41.6 million). The
Company has also received euro 10.1 million
($14.4 million) of an additional euro 11.6 million ($16.6
million) owed related to the release of an existing leasehold
guarantee and other closing adjustments for total proceeds of euro 40.8 million ($58.2
million).
2011 Guidance
Based on the results of the first quarter and current
forecasts for the remainder of the year, management is raising the low
end of the full year guidance range for 2011. For the year ending December 31, 2011, the Company anticipates
that Comparable EBITDA will be in the range of $140.0
million to $150.0 million and Comparable FFO in the range of $0.01 and $0.07
per fully diluted share. Management is also raising the low end of its
guidance for North American same store RevPAR and Total RevPAR growth
to be in the range between 7.5 percent and 9.0 percent.
Portfolio Definitions
United States same store
hotel comparison for the first quarter 2011 are derived from the
Company's hotel portfolio at March 31, 2011,
consisting of properties located in the
United States and held for five or more quarters, in which
operations are included in the consolidated results of the Company. As
a result, same store comparisons contain 11 properties and exclude the
Four Seasons Jackson Hole and Four Seasons Silicon Valley, which were
acquired on March 11, 2011, and the
unconsolidated Hotel del Coronado.
North American same store hotel comparison for the first
quarter 2011 are derived from the Company's hotel portfolio at March 31, 2011, consisting of properties
located in North America and held for
five or more quarters, in which operations are included in the
consolidated results of the Company. As a result, same store
comparisons contain 12 properties and exclude the Four Seasons Jackson
Hole and Four Seasons Silicon Valley, which were acquired on March 11, 2011, and the unconsolidated Hotel
del Coronado.
Total North American hotel comparisons are derived from the
Company's hotel portfolio at March 31, 2011,
consisting of properties in which operations are included in the
consolidated results of the company, including the Four Seasons Jackson
Hole and Four Seasons Silicon Valley.
European hotel comparisons for the first quarter 2011 are
derived from the Company's European owned and leased hotel properties
at March 31, 2011, consisting of the
Marriott London Grosvenor Square and the Marriott Hamburg. The Paris
Marriott Champs Elysees, which was sold in the second quarter 2011, is
excluded from the European portfolio comparisons.
Earnings Call
The Company will conduct its first quarter 2011 conference
call for investors and other interested parties on Thursday, May 5, 2011 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by telephone at
888-680-0879 (toll international: 617-213-4856) with pass code
98214614. To participate on the web cast, log on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=176522&eventID=3945504
15 minutes before the call to download the necessary software. For
those unable to listen to the call live, a taped rebroadcast will be
available beginning at 1:00 p.m. ET on May 5, 2011, through 11:59
p.m. ET on May 12, 2011. To
access the replay, dial 888-286-8010 (toll international: 617-801-6888)
and request replay pin number 65175180. A replay of the call will also
be available on the Internet at http://www.strategichotels.com
or http://www.earnings.com for
30 days after the call.
The Company also produces supplemental financial data that
includes detailed information regarding its operating results. This
supplemental data is considered an integral part of this earnings
release. These materials are available on the Strategic Hotels &
Resorts' website at www.strategichotels.com
within the first quarter information section.
About the Company
Strategic Hotels & Resorts, Inc. is a real estate
investment trust (REIT) which owns and provides value-enhancing asset
management of high-end hotels and resorts in the
United States, Mexico and Europe. The Company currently has ownership
interests in 17 properties with an aggregate of 7,762 rooms. For a list
of current properties and for further information, please visit the
Company's website at http://www.strategichotels.com.
This press release contains forward-looking statements
about Strategic Hotels & Resorts, Inc. (the "Company"). Except for
historical information, the matters discussed in this press release are
forward-looking statements subject to certain risks and uncertainties.
These forward-looking statements include statements regarding our
future financial results, stabilization in the lodging space, positive
trends in the lodging industry and our continued focus on improving
profitability. Actual results could differ materially from the
Company's projections. Factors that may contribute to these differences
include, but are not limited to the following: failure to complete and
close on transactions in light of due diligence findings or the failure
of closing conditions to be satisfied; ability to obtain, refinance or
restructure debt or comply with covenants contained in our debt
facilities; demand for hotel rooms in our current and proposed market
areas; availability of capital; rising interest rates and operating
costs; rising insurance premiums; cash available for capital
expenditures; competition; economic conditions generally and in the
real estate market specifically, including deterioration of economic
conditions and the extent of its effect on business and leisure travel
and the lodging industry; ability to dispose of existing properties in
a manner consistent with our disposition strategy; risks related to
natural disasters; the effect of threats of terrorism and increased
security precautions on travel patterns and hotel bookings; the
outbreak of hostilities and international political instability;
legislative or regulatory changes, including changes to laws governing
the taxation of REITs; and changes in generally accepted accounting
principles, policies and guidelines applicable to REITs.
Additional risks are discussed in the Company's filings
with the Securities and Exchange Commission, including those appearing
under the heading "Item 1A. Risk Factors" in the Company's most recent
Form 10-K and subsequent Form 10-Qs. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations
will be attained. The forward-looking statements are made as of the
date of this press release, and we undertake no obligation to publicly
update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
The following tables reconcile projected 2011 net loss
attributable to common shareholders to projected Comparable EBITDA,
Comparable FFO and Comparable FFO per diluted share (in millions,
except per share data):
|
|
|
Low
Range
|
|
High
Range
|
|
Net
Loss Attributable to Common Shareholders
|
($135.1)
|
|
($125.2)
|
|
Depreciation
and Amortization
|
124.4
|
|
124.4
|
|
Interest
Expense
|
93.2
|
|
93.2
|
|
Income
Taxes
|
3.1
|
|
3.1
|
|
Non-controlling
Interests
|
(0.5)
|
|
(0.4)
|
|
Adjustments
from Consolidated Affiliates
|
(8.8)
|
|
(8.8)
|
|
Adjustments
from Unconsolidated Affiliates
|
16.4
|
|
16.4
|
|
Preferred
Shareholder Dividends
|
30.9
|
|
30.9
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(2.4)
|
|
(2.4)
|
|
Gain
on Sale of Asset
|
(2.6)
|
|
(2.6)
|
|
Adjustment
for Value Creation Plan
|
21.6
|
|
21.6
|
|
Other
Adjustments
|
(0.2)
|
|
(0.2)
|
|
Comparable
EBITDA
|
$140.0
|
|
$150.0
|
|
|
|
|
|
|
|
|
|
|
Low
Range
|
|
High
Range
|
|
Net
Loss Attributable to Common Shareholders
|
($135.1)
|
|
($125.2)
|
|
Depreciation
and Amortization
|
123.2
|
|
123.2
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(2.4)
|
|
(2.4)
|
|
Deferred
Tax on Realized Portion of Deferred Gain
|
0.4
|
|
0.4
|
|
Non-controlling
Interests
|
(0.5)
|
|
(0.4)
|
|
Adjustments
from Consolidated Affiliates
|
(5.5)
|
|
(5.5)
|
|
Adjustments
from Unconsolidated Affiliates
|
7.2
|
|
7.2
|
|
Gain
on Sale of Asset
|
(2.6)
|
|
(2.6)
|
|
Adjustment
for Value Creation Plan
|
21.6
|
|
21.6
|
|
Other
Adjustments
|
(4.6)
|
|
(4.6)
|
|
Comparable
FFO
|
$1.7
|
|
$11.7
|
|
Comparable
FFO per Diluted Share
|
$0.01
|
|
$0.07
|
|
|
|
|
|
|
|
Note: Beginning in the first quarter of 2011, the
definitions of Comparable EBITDA, Comparable FFO and Comparable FFO per
diluted share have been modified to exclude any expense related to the
Company's Value Creation Plan.
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
Rooms
|
|
|
$
91,470
|
|
$
80,890
|
|
Food
and beverage
|
|
62,882
|
|
54,699
|
|
Other
hotel operating revenue
|
|
19,973
|
|
19,100
|
|
Lease
revenue
|
|
1,215
|
|
1,187
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
175,540
|
|
155,876
|
|
|
|
|
|
|
|
|
|
|
Operating
Costs and Expenses:
|
|
|
|
|
|
Rooms
|
|
|
26,627
|
|
24,161
|
|
Food
and beverage
|
|
46,007
|
|
39,805
|
|
Other
departmental expenses
|
|
50,673
|
|
46,825
|
|
Management
fees
|
|
5,774
|
|
5,672
|
|
Other
hotel expenses
|
|
13,358
|
|
13,228
|
|
Lease
expense
|
|
1,196
|
|
1,195
|
|
Depreciation
and amortization
|
|
30,605
|
|
34,043
|
|
Corporate
expenses
|
|
14,477
|
|
6,060
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expenses
|
|
188,717
|
|
170,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(13,177)
|
|
(15,113)
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(19,548)
|
|
(21,506)
|
|
Interest
income
|
|
32
|
|
151
|
|
Equity
in losses of unconsolidated affiliates
|
|
(1,600)
|
|
(560)
|
|
Foreign
currency exchange gain (loss)
|
|
139
|
|
(451)
|
|
Other
income, net
|
|
3,925
|
|
232
|
|
Loss
before income taxes and discontinued operations
|
|
(30,229)
|
|
(37,247)
|
|
Income
tax benefit
|
|
1,648
|
|
837
|
|
Loss
from continuing operations
|
|
(28,581)
|
|
(36,410)
|
|
Income
from discontinued operations, net of tax
|
|
162
|
|
1,799
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(28,419)
|
|
(34,611)
|
|
Net
loss attributable to the noncontrolling interests in SHR's operating
partnership
|
|
138
|
|
442
|
|
Net
loss attributable to the noncontrolling interests in consolidated
affiliates
|
|
595
|
|
1,599
|
|
Net
loss attributable to SHR
|
|
(27,686)
|
|
(32,570)
|
|
Preferred
shareholder dividends
|
|
(7,721)
|
|
(7,721)
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(35,407)
|
|
$
(40,291)
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Loss Per Share:
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
|
$
(0.23)
|
|
$
(0.55)
|
|
|
Income
from discontinued operations attributable to SHR
|
|
-
|
|
0.02
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(0.23)
|
|
$
(0.53)
|
|
|
Weighted
average common shares outstanding
|
|
157,333
|
|
75,572
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
(in
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
Investment
in hotel properties, net
|
$
1,913,569
|
|
$
1,835,451
|
|
|
Goodwill
|
|
40,359
|
|
40,359
|
|
|
Intangible
assets, net of accumulated amortization of $7,197 and $6,536
|
33,350
|
|
32,620
|
|
|
Assets
held for sale
|
45,143
|
|
45,145
|
|
|
Investment
in unconsolidated affiliates
|
100,438
|
|
18,024
|
|
|
Cash
and cash equivalents
|
68,475
|
|
78,842
|
|
|
Restricted
cash and cash equivalents
|
41,408
|
|
34,618
|
|
|
Accounts
receivable, net of allowance for doubtful accounts of $1,738 and $1,922
|
51,096
|
|
35,250
|
|
|
Deferred
financing costs, net of accumulated amortization of $17,067 and $15,756
|
3,101
|
|
3,322
|
|
|
Deferred
tax assets
|
5,830
|
|
4,121
|
|
|
Other
assets
|
37,438
|
|
34,564
|
|
|
|
Total
assets
|
$
2,340,207
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Mortgages
and other debt payable
|
$
1,121,458
|
|
$
1,118,281
|
|
|
|
Bank
credit facility
|
7,000
|
|
28,000
|
|
|
|
Liabilities
of assets held for sale
|
95,417
|
|
93,206
|
|
|
|
Accounts
payable and accrued expenses
|
281,560
|
|
266,773
|
|
|
|
Deferred
tax liabilities
|
48,736
|
|
1,732
|
|
|
|
Deferred
gain on sale of hotels
|
4,029
|
|
3,930
|
|
|
|
|
|
Total
liabilities
|
1,558,200
|
|
1,511,922
|
|
|
Noncontrolling
interests in SHR’s operating partnership
|
5,505
|
|
5,050
|
|
|
Equity:
|
|
|
|
|
|
|
|
SHR's
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 and $133,681
in the aggregate)
|
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 and $136,347
in the aggregate)
|
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 and $170,434
in the aggregate)
|
138,940
|
|
138,940
|
|
|
|
|
Common
shares ($0.01 par value; 250,000,000 common shares authorized;
174,798,667 and
|
|
|
|
|
|
|
|
|
151,305,314
common shares issued and outstanding)
|
1,748
|
|
1,513
|
|
|
|
|
Additional
paid-in capital
|
1,694,880
|
|
1,553,286
|
|
|
|
|
Accumulated
deficit
|
(1,212,980)
|
|
(1,185,294)
|
|
|
|
|
Accumulated
other comprehensive loss
|
(100,432)
|
|
(107,164)
|
|
|
|
|
|
Total
SHR's shareholders' equity
|
741,137
|
|
620,262
|
|
|
|
Noncontrolling
interests in consolidated affiliates
|
35,365
|
|
25,082
|
|
|
|
|
Total
equity
|
776,502
|
|
645,344
|
|
|
|
|
|
Total
liabilities, noncontrolling interests and equity
|
$
2,340,207
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
Supplemental
Financial Data
|
|
(in
thousands, except per share information)
|
|
|
|
March
31, 2011
|
|
|
|
|
|
|
|
Pro
Rata Share
|
|
Consolidated
|
|
Capitalization
|
|
|
Common
shares outstanding
|
174,799
|
|
174,799
|
|
Operating
partnership units outstanding
|
853
|
|
853
|
|
Restricted
stock units outstanding
|
1,154
|
|
1,154
|
|
|
|
|
|
|
|
Combined
shares and units outstanding
|
176,806
|
|
176,806
|
|
Common
stock price at end of period
|
$ 6.45
|
|
$ 6.45
|
|
|
|
|
|
|
|
Common
equity capitalization
|
$
1,140,399
|
|
$
1,140,399
|
|
Preferred
equity capitalization (at $25.00 face value)
|
370,236
|
|
370,236
|
|
Consolidated
debt
|
1,128,458
|
|
1,128,458
|
|
Pro
rata share of unconsolidated debt
|
145,775
|
|
-
|
|
Pro
rata share of consolidated debt
|
(107,275)
|
|
-
|
|
Cash
and cash equivalents
|
(68,475)
|
|
(68,475)
|
|
|
|
|
|
|
|
|
Total
enterprise value
|
$
2,609,118
|
|
$
2,570,618
|
|
|
|
|
|
|
|
Net
Debt / Total Enterprise Value
|
42.1%
|
|
41.2%
|
|
Preferred
Equity / Total Enterprise Value
|
14.2%
|
|
14.4%
|
|
Common
Equity / Total Enterprise Value
|
43.7%
|
|
44.4%
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
The
results of operations of hotels sold or held for sale are classified as
discontinued operations and segregated in the consolidated statements
of operations for all periods presented. On April 6, 2011, we sold our
leasehold interest in the Paris Marriott Champs Elysees for
consideration of euro 29,200,000 ($41,567,000). As part of the
transaction, we also received an additional euro 10,100,000
($14,500,000) related to the release of the security deposit and other
closing adjustments and expect to receive another euro 1,500,000
($2,130,000) within six months of the close date for total proceeds of
approximately euro 40,800,000 ($58,197,000). The following hotel was
sold during 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
Date
Sold
|
|
Net
Sales Proceeds
|
|
|
|
|
|
|
|
|
InterContinental
Prague
|
|
December
15, 2010
|
|
$
3,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following is a summary of income from discontinued operations for the
three months ended March 31, 2011 and 2010 (in thousands):
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
Hotel
operating revenues
|
|
$ 8,805
|
|
$
13,521
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses
|
|
8,682
|
|
12,577
|
|
Depreciation
and amortization
|
|
-
|
|
1,814
|
|
|
Total
operating costs and expenses
|
|
8,682
|
|
14,391
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
123
|
|
(870)
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
-
|
|
(3,186)
|
|
Interest
income
|
|
-
|
|
7
|
|
Foreign
currency exchange gain
|
|
58
|
|
6,519
|
|
Other
income, net
|
|
326
|
|
-
|
|
Income
tax expense
|
|
(359)
|
|
(59)
|
|
Gain
(loss) on sale
|
|
14
|
|
(612)
|
|
|
Income
from discontinued operations
|
|
$ 162
|
|
$ 1,799
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in the Hotel del Coronado
|
|
(in
thousands)
|
|
|
|
|
|
|
|
On
January 9, 2006, we purchased a 45% interest in the unconsolidated
affiliate that owns the Hotel del Coronado. On February 4, 2011, we
completed a recapitalization of the unconsolidated affiliate. As part
of the recapitalization, a new unconsolidated affiliate was formed to
own the Hotel del Coronado and to invest cash in the asset. Pursuant to
the terms of the recapitalization, we became a limited partner in the
new unconsolidated affiliate, and our ownership interest in the Hotel
del Coronado decreased from 45% to 34.3%. We account for this
investment using the equity method of accounting.
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2011
|
|
2010
|
|
Total
revenues (100%)
|
|
$
28,260
|
|
$
23,736
|
|
Property
EBITDA (100%)
|
|
$ 7,298
|
|
$ 5,554
|
|
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliate (SHR ownership)
|
|
|
|
|
|
Property EBITDA
|
|
$ 2,606
|
|
$ 2,499
|
|
Depreciation
and amortization
|
|
(1,635)
|
|
(1,991)
|
|
Interest
expense
|
|
(2,305)
|
|
(1,833)
|
|
Other
expenses, net
|
|
(739)
|
|
(63)
|
|
Income
taxes
|
|
577
|
|
537
|
|
Equity
in losses of unconsolidated affiliate
|
|
$
(1,496)
|
|
$ (851)
|
|
|
|
|
|
|
|
EBITDA
Contribution from investment in Hotel del Coronado
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliate
|
|
$
(1,496)
|
|
$ (851)
|
|
Depreciation
and amortization
|
|
1,635
|
|
1,991
|
|
Interest
expense
|
|
2,305
|
|
1,833
|
|
Income
taxes
|
|
(577)
|
|
(537)
|
|
EBITDA
Contribution from investment in Hotel del Coronado
|
|
$ 1,867
|
|
$ 2,436
|
|
|
|
|
|
|
|
FFO
Contribution from investment in Hotel del Coronado
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliate
|
|
$
(1,496)
|
|
$ (851)
|
|
Depreciation
and amortization
|
|
1,635
|
|
1,991
|
|
FFO
Contribution from investment in Hotel del Coronado
|
|
$ 139
|
|
$ 1,140
|
|
|
|
|
|
|
|
|
|
|
Spread
over
|
|
|
|
|
|
Debt
|
|
Interest
Rate (a)
|
|
LIBOR
(a)
|
|
Loan
Amount
|
|
Maturity
|
|
CMBS
Mortgage and Mezzanine
|
|
5.80%
|
|
480 bp
|
|
$
425,000
|
|
March
2016 (b)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(14,547)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
410,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
|
Caps
|
|
Date
|
|
LIBOR
Cap Rate
|
|
Notional
Amount
|
|
Maturity
|
|
CMBS
Mortgage and Mezzanine Loan Caps
|
|
February
2011
|
|
2.00%
|
|
$
425,000
|
|
February
2013
|
|
CMBS
Mortgage and Mezzanine Loan Caps
|
|
February
2013
|
|
2.50%
|
|
425,000
|
|
March
2013
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Subject to a 1% LIBOR floor.
|
|
|
|
(b)
Includes extension options.
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
Information
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Paris
Marriott Champs Elysees (a):
|
|
|
|
|
|
Property
EBITDA
|
|
$ 3,249
|
|
$ 3,405
|
|
Revenue
(b)
|
|
$ 3,249
|
|
$ 3,405
|
|
|
|
|
|
|
|
Lease
expense
|
|
(3,051)
|
|
(3,046)
|
|
Less:
Deferred gain on sale leaseback
|
|
(1,152)
|
|
(1,165)
|
|
Adjusted
lease expense
|
|
(4,203)
|
|
(4,211)
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
|
$ (954)
|
|
$ (806)
|
|
|
|
|
|
|
|
Marriott
Hamburg:
|
|
|
|
|
|
Property
EBITDA
|
|
$ 1,456
|
|
$ 1,393
|
|
Revenue
(b)
|
|
$ 1,215
|
|
$ 1,187
|
|
|
|
|
|
|
|
Lease
expense
|
|
(1,196)
|
|
(1,195)
|
|
Less:
Deferred gain on sale leaseback
|
|
(53)
|
|
(54)
|
|
Adjusted
lease expense
|
|
(1,249)
|
|
(1,249)
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
|
$ (34)
|
|
$ (62)
|
|
|
|
|
|
|
|
Total
Leaseholds:
|
|
|
|
|
|
Property
EBITDA
|
|
$ 4,705
|
|
$ 4,798
|
|
Revenue
(b)
|
|
$ 4,464
|
|
$ 4,592
|
|
|
|
|
|
|
|
Lease
expense
|
|
(4,247)
|
|
(4,241)
|
|
Less:
Deferred gain on sale leaseback
|
|
(1,205)
|
|
(1,219)
|
|
Adjusted
lease expense
|
|
(5,452)
|
|
(5,460)
|
|
|
|
|
|
|
|
EBITDA
contribution from leaseholds
|
|
$ (988)
|
|
$ (868)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
Security
Deposits (c):
|
2011
|
|
2010
|
|
|
Paris
Marriott Champs Elysees
|
$
14,055
|
|
$
14,459
|
|
|
Marriott
Hamburg
|
2,693
|
|
2,540
|
|
|
Total
|
$
16,748
|
|
$
16,999
|
|
|
|
|
|
|
|
|
(a) On
April 6, 2011, we sold our leasehold interest in the Paris Marriott
Champs Elysees. The results of operations for the Paris Marriott Champs
Elysees have been classified as discontinued operations for all periods
presented.
|
|
|
|
|
|
|
|
|
(b)
For the three months ended March 31, 2011 and 2010, Revenue for the
Paris Marriott Champs Elysees represents Property EBITDA. For the three
months ended March 31, 2011 and 2010, Revenue for the Marriott Hamburg
represents lease revenue.
|
|
|
|
|
|
|
|
|
(c)
The security deposits are recorded in other assets on the consolidated
balance sheets.
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
Non-GAAP
Financial Measures
|
|
|
|
We
present five non-GAAP financial measures 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); and Comparable EBITDA.
|
|
|
|
EBITDA
represents net loss attributable to SHR common shareholders excluding:
(i) interest expense, (ii) income taxes, 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 taxes and
depreciation and amortization of our unconsolidated affiliates. EBITDA
is presented on a full participation basis, which means we have assumed
conversion of all redeemable noncontrolling interests of our operating
partnership into our common stock and includes preferred dividends. We
believe this treatment of noncontrolling interests provides more useful
information for management and our investors and appropriately
considers our current capital structure. We also present Comparable
EBITDA, which eliminates the effect of realizing deferred gains on our
sale leasebacks, as well as 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-cash charges, such as
the Value Creation Plan expense. We believe 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 and Comparable
EBITDA as measures in determining the value of acquisitions and
dispositions.
|
|
|
|
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 affiliates. We also present FFO -
Fully Diluted, which is FFO plus income or loss on income attributable
to redeemable noncontrolling interests in our operating partnership. 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-cash charges, such as the Value Creation Plan expense. 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.
|
|
|
|
We
caution investors that amounts presented in accordance with our
definitions of FFO, FFO - Fully Diluted, Comparable FFO, 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, and Comparable EBITDA should not be considered as an
alternative measure of our net loss or operating performance. FFO, FFO
- Fully Diluted, Comparable FFO, 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, 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 loss attributable to SHR common shareholders. In addition, you
should be aware that adverse economic and market conditions might
negatively impact our cash flow. We have provided a quantitative
reconciliation of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, and
Comparable EBITDA to the most directly comparable GAAP financial
performance measure, which is net loss attributable to SHR common
shareholders.
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Loss Attributable to SHR Common Shareholders to EBITDA and
Comparable EBITDA
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(35,407)
|
|
$
(40,291)
|
|
Depreciation
and amortization - continuing operations
|
|
30,605
|
|
34,043
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
1,814
|
|
Interest
expense - continuing operations
|
|
19,548
|
|
21,506
|
|
Interest
expense - discontinued operations
|
|
-
|
|
3,186
|
|
Income
taxes - continuing operations
|
|
(1,648)
|
|
(837)
|
|
Income
taxes - discontinued operations
|
|
359
|
|
59
|
|
Noncontrolling
interests
|
|
(138)
|
|
(442)
|
|
Adjustments
from consolidated affiliates
|
|
(1,329)
|
|
(1,482)
|
|
Adjustments
from unconsolidated affiliates
|
|
3,890
|
|
3,402
|
|
Preferred
shareholder dividends
|
|
7,721
|
|
7,721
|
|
EBITDA
|
|
23,601
|
|
28,679
|
|
Realized
portion of deferred gain on sale leaseback - continuing operations
|
|
(53)
|
|
(54)
|
|
Realized
portion of deferred gain on sale leaseback - discontinued operations
|
|
(1,152)
|
|
(1,165)
|
|
Gain
on sale of assets - continuing operations
|
|
(2,640)
|
|
-
|
|
(Gain)
loss on sale of assets - discontinued operations
|
|
(14)
|
|
612
|
|
Foreign
currency exchange (gain) loss - continuing operations (a)
|
|
(139)
|
|
451
|
|
Foreign
currency exchange gain - discontinued operations (a)
|
|
(58)
|
|
(6,519)
|
|
Adjustment
for Value Creation Plan
|
|
9,181
|
|
506
|
|
Comparable
EBITDA
|
|
$
28,726
|
|
$
22,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Fore ign currency exchange gains or losses applicable
to third-party and inter-company debt and certain balance sheet items
held by foreign subsidiaries.
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Loss Attributable to SHR Common Shareholders to
|
|
Funds
From Operations (FFO), FFO - Fully Diluted and Comparable FFO
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(35,407)
|
|
$
(40,291)
|
|
Depreciation
and amortization - continuing operations
|
|
30,605
|
|
34,043
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
1,814
|
|
Corporate
depreciation
|
|
(299)
|
|
(304)
|
|
Gain
on sale of assets - continuing operations
|
|
(2,640)
|
|
-
|
|
(Gain)
loss on sale of assets - discontinued operations
|
|
(14)
|
|
612
|
|
Realized
portion of deferred gain on sale leaseback - continuing operations
|
|
(53)
|
|
(54)
|
|
Realized
portion of deferred gain on sale leaseback - discontinued operations
|
|
(1,152)
|
|
(1,165)
|
|
Deferred
tax expense on realized portion of deferred gain on sale leasebacks
|
|
359
|
|
363
|
|
Noncontrolling
interests adjustments
|
|
(157)
|
|
(480)
|
|
Adjustments
from consolidated affiliates
|
|
(1,561)
|
|
(1,966)
|
|
Adjustments
from unconsolidated affiliates
|
|
1,839
|
|
2,004
|
|
FFO
|
|
(8,480)
|
|
(5,424)
|
|
|
Redeemable
noncontrolling interests
|
|
19
|
|
38
|
|
FFO -
Fully Diluted
|
|
(8,461)
|
|
(5,386)
|
|
Non-cash
mark to market of interest rate swaps
|
|
(4,366)
|
|
-
|
|
Foreign
currency exchange (gain) loss - continuing operations (a)
|
|
(139)
|
|
451
|
|
Foreign
currency exchange gain, net of tax - discontinued operations (a)
|
|
(58)
|
|
(6,526)
|
|
Adjustment
for Value Creation Plan
|
|
9,181
|
|
506
|
|
Comparable
FFO
|
|
$
(3,843)
|
|
$
(10,955)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
FFO per diluted share
|
|
$
(0.02)
|
|
$
(0.14)
|
|
Weighted
average diluted shares
|
|
157,333
|
|
75,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Foreign currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries. Foreign currency exchange gains or losses applicable to
third-party and inter-company debt and certain balance sheet items held
by foreign
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Summary
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
|
|
|
|
Debt
|
|
|
Interest
Rate
|
|
|
Spread
(a)
|
|
Amount
|
|
Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale
|
|
|
0.80%
|
|
|
56 bp
|
|
$
180,000
|
|
September
2011
|
|
InterContinental
Chicago
|
|
|
1.30%
|
|
|
106 bp
|
|
121,000
|
|
October
2011
|
|
InterContinental
Miami
|
|
|
0.97%
|
|
|
73 bp
|
|
90,000
|
|
October
2011
|
|
Bank
credit facility
|
|
|
3.99%
|
|
|
375 bp
|
|
7,000
|
|
March
2012
|
|
Loews
Santa Monica Beach Hotel
|
|
|
0.87%
|
|
|
63 bp
|
|
118,250
|
|
March
2012
|
|
Ritz-Carlton
Half Moon Bay
|
|
|
0.91%
|
|
|
67 bp
|
|
76,500
|
|
March
2012
|
|
Hyatt
Regency La Jolla
|
|
|
1.24%
|
|
|
100 bp
|
|
97,500
|
|
September
2012
|
|
North
Beach Venture
|
|
|
5.00%
|
|
|
Fixed
|
|
1,476
|
|
January
2013
|
|
Marriott
London Grosvenor Square (b)
|
|
|
1.92%
|
|
|
110 bp
(b)
|
|
118,982
|
|
October
2013
|
|
Westin
St. Francis
|
|
|
6.09%
|
|
|
Fixed
|
|
220,000
|
|
June
2017
|
|
Fairmont
Chicago
|
|
|
6.09%
|
|
|
Fixed
|
|
97,750
|
|
June
2017
|
|
|
|
|
|
|
|
|
|
$
1,128,458
|
|
|
|
(a)
Spread over LIBOR (0.24% at March 31, 2011).
|
|
(b)
Principal balance of 74,160,000 British pounds Sterling at March 31,
2011. Spread over three-month GBP LIBOR (0.82% at March 31, 2011).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
and European Interest Rate Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
|
Notional
|
|
|
|
Swap
Effective Date
|
|
|
Against
LIBOR
|
|
|
Amount
|
|
Maturity
|
|
February
2010
|
|
|
4.84%
|
|
|
$
100,000
|
|
July
2012
|
|
February
2010
|
|
|
5.50%
|
|
|
75,000
|
|
June
2013
|
|
February
2010
|
|
|
5.42%
|
|
|
50,000
|
|
August
2013
|
|
February
2010
|
|
|
4.90%
|
|
|
100,000
|
|
September
2014
|
|
February
2010
|
|
|
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
|
|
|
|
|
5.16%
|
|
|
$
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
|
Notional
|
|
|
|
|
Swap
Effective Date
|
|
|
Against
GBP LIBOR
|
|
|
Amount
|
|
Maturity
|
|
|
October
2007
|
|
|
5.72%
|
|
|
74,160
pounds
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
March 31, 2011, future scheduled debt principal payments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
ending December 31,
|
|
|
Amount
|
|
|
|
|
|
|
|
2011
(remainder)
|
|
|
$
392,653
|
|
|
|
|
|
|
|
2012
|
|
|
310,952
|
|
|
|
|
|
|
|
2013
|
|
|
124,423
|
|
|
|
|
|
|
|
2014
|
|
|
9,481
|
|
|
|
|
|
|
|
2015
|
|
|
10,075
|
|
|
|
|
|
|
|
Thereafter
|
|
|
280,874
|
|
|
|
|
|
|
|
|
|
|
$
1,128,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
|
|
|
|
~100.0%
|
|
|
Weighted
average interest rate including U.S. and European swaps (c)
|
|
|
|
|
6.12%
|
|
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
|
4.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
Excludes the amortization of deferred financing costs and the
amortization of the interest rate swap costs.
|
|