|
CHICAGO, Nov. 2, 2011 -- Strategic Hotels &
Resorts, Inc. (NYSE: BEE) today reported results for the third quarter
ended September 30, 2011.
Third Quarter Highlights
- Net loss attributable to common shareholders was $11.9 million, or $0.06
per diluted share, in the third quarter of 2011, compared with a net
loss attributable to common shareholders of $39.4
million, or $0.26 per diluted
share, in the third quarter of 2010.
- Comparable funds from operations (Comparable FFO) was $0.06 per diluted share compared with $0.06 per diluted share in the prior year
period.
- Comparable EBITDA was $43.6 million compared with $37.4 million in the prior year period, a 16.6
percent increase between periods.
- United States same store
revenue per available room (RevPAR) increased 11.7 percent, driven by a
9.7 percent increase in average daily rate (ADR) and a 1.4 percentage
point increase in occupancy compared to the third quarter of 2010.
Total revenue per available room (Total RevPAR) increased 8.8 percent
between periods.
- North American same store RevPAR increased 11.1 percent,
driven by a 9.4 percent increase in ADR and a 1.3 percentage
point increase in occupancy compared to the third quarter of 2010.
Total RevPAR increased 7.7 percent between periods.
- Total North American RevPAR, which includes results from
the recently acquired Four Seasons Jackson Hole and Four Seasons
Silicon Valley hotels, increased by 10.8 percent, driven by an 8.9
percent increase in ADR and a 1.3 percentage point increase in
occupancy compared to the third quarter of 2010. Total RevPAR increased
7.1 percent between periods.
- United States same store
EBITDA margins expanded 200 basis points compared to the third quarter
of 2010. North American same store EBITDA margins expanded 170 basis
points and Total North American EBITDA margins expanded 160 basis
points between periods.
- European RevPAR increased 5.4 percent (0.7 percent decrease
in constant dollars), driven by a 5.1 percent increase in ADR (1.0
percent decrease in constant dollars) and a 0.3 percentage point
increase in occupancy compared to the third quarter of 2010. European
Total RevPAR increased 5.8 percent (0.1 percent decrease in constant
dollars) between periods.
"Once again, our overall performance was very strong in the
quarter," said Laurence Geller, Chief
Executive Officer of Strategic Hotels & Resorts, Inc. "As we look
ahead, we continue to see favorable group booking trends, which is one
of our best forward-looking indicators. Confirmed group nights for 2012
in our U.S. portfolio have increased over six percent compared to the
same time last year and group production has remained very healthy
since August. We remain optimistic about increasing demand in our
portfolio since our core customer base continues to spend and book
group, leisure and corporate travel, despite the lingering global and
domestic challenges and uncertainty."
The company reported financial results for the nine month
period ended September 30, 2011 as
follows:
- Net loss attributable to common shareholders was $7.8 million, or $0.04
per diluted share, compared with a net loss attributable to common
shareholders of $127.1 million, or $1.12 per diluted share, for the nine month
period ended September 30, 2010.
- Comparable FFO was $0.09 per
diluted share compared with $0.02 per
diluted share in the nine month period ended September
30, 2010.
- Comparable EBITDA was $114.8 million
compared with $97.6 million for the nine
month period ended September 30, 2010,
an increase of 17.7 percent.
Third Quarter 2011 Transaction Review
- On July 6th, the Company
closed an $85.0 million limited recourse
loan secured by the InterContinental Miami hotel. The loan bears
interest at a floating rate of LIBOR plus 350 basis points and has a
five-year initial term with two, one-year extension options, upon
satisfaction of certain financial and other conditions.
- On July 14th, the Company
closed a $110.0 million limited recourse
loan secured by the Loews Santa Monica Beach hotel. The loan bears
interest at a floating rate of LIBOR plus 385 basis points and has a
four-year initial term with three, one-year extension options, upon
satisfaction of certain financial and other conditions.
- On July 20th, the Company
closed a $130.0 million limited recourse
loan secured by the Four Seasons Washington,
D.C. hotel. The loan bears interest at a floating rate of LIBOR
plus 315 basis points and has a three-year initial term with two,
one-year extension options, upon satisfaction of certain financial and
other conditions.
- On July 28th, the Company
closed a $145.0 million limited recourse
loan secured by the InterContinental Chicago hotel. The loan bears
interest at a fixed rate of 5.61 percent and has a ten-year term.
2011 Guidance
Based on the results of the first three quarters and current
forecasts for the fourth quarter, management is narrowing its 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 $150.0 million to $156.0 million
and Comparable FFO in the range of $0.10
and $0.13 per diluted share. Management
is also raising its guidance for North American same store RevPAR
growth to be in the range between 9.0 percent and 10.0 percent, and
maintaining its guidance for Total RevPAR growth to be in the range
between 8.0 percent and 9.0 percent.
Portfolio Definitions
United States same store
hotel comparisons for the third quarter of 2011 are derived from the
Company's hotel portfolio at September 30, 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 10 properties and exclude the
Four Seasons Jackson Hole and Four Seasons Silicon Valley hotels, which
were acquired on March 11, 2011, and the
unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess
hotels.
North American same store hotel comparisons for the third
quarter of 2011 are derived from the Company's hotel portfolio at September 30, 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 11 properties, including the Four Seasons Punta
Mita Resort and excluding the Four Seasons Jackson Hole and Four
Seasons Silicon Valley hotels, which were acquired on March 11, 2011, and the unconsolidated Hotel
del Coronado and Fairmont Scottsdale Princess hotels.
Total North American hotel comparisons are derived from the
Company's hotel portfolio at September 30, 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 hotels.
European hotel comparisons for the third quarter of 2011 are
derived from the Company's European owned and leased hotel properties
at September 30, 2011, consisting of the
Marriott London Grosvenor Square and the Marriott Hamburg.
Earnings Call
The Company will conduct its third quarter 2011 conference
call for investors and other interested parties on Thursday, November 3, 2011 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by telephone at
888.679.8018 (toll international: 617.213.4845) with passcode 88489803.
To participate on the web cast, log on to the Company's website at http://www.strategichotels.com
or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=176522&eventID=4203220
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 November 3, 2011 through 11:59 p.m. ET on November
10, 2011. To access the replay, dial 888.286.8010 (toll
international: 617.801.6888) with passcode 91217547. 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 http://www.strategichotels.com
within the third 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 the
Company's future financial results, stabilization in the lodging space,
positive trends in the lodging industry and the Company's 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:
ability to obtain, refinance or restructure debt or comply with
covenants contained in the Company's debt facilities; demand for hotel
rooms in the Company's 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 the Company's disposition strategy; risks related to
natural disasters; the effect of threats of terrorism, security
concerns, and increased security precautions on travel patterns and
hotel bookings; the outbreak of hostilities and international political
instability; failure to complete and close on transactions in light of
due diligence findings or the failure of closing conditions to be
satisfied; legislative or regulatory changes, including changes to laws
governing the taxation of REITs; changes in generally accepted
accounting principles, policies and guidelines applicable to REITs;
general volatility of the capital markets; and difficulties in
identifying properties to acquire and completing acquisitions.
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
|
($39.7)
|
|
($33.7)
|
|
|
Depreciation
and Amortization
|
116.3
|
|
116.3
|
|
|
Interest
Expense
|
88.4
|
|
88.4
|
|
|
Income
Taxes
|
1.8
|
|
1.8
|
|
|
Adjustments
from Consolidated Affiliates
|
(6.6)
|
|
(6.6)
|
|
|
Adjustments
from Unconsolidated Affiliates
|
21.5
|
|
21.5
|
|
|
Preferred
Shareholder Dividends
|
30.9
|
|
30.9
|
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(1.4)
|
|
(1.4)
|
|
|
Gain
on Sale of Asset
|
(103.5)
|
|
(103.5)
|
|
|
Adjustment
for Value Creation Plan
|
12.0
|
|
12.0
|
|
|
Loss
on Early Extinguishment of Debt
|
1.2
|
|
1.2
|
|
|
Loss
on Early Termination of Derivative Financial Instruments
|
29.2
|
|
29.2
|
|
|
Other
Adjustments
|
(0.1)
|
|
(0.1)
|
|
|
Comparable EBITDA
|
$150.0
|
|
$156.0
|
|
|
|
|
|
|
|
Low
Range
|
|
High
Range
|
|
|
Net
Loss Attributable to Common Shareholders
|
($39.7)
|
|
($33.7)
|
|
|
Depreciation
and Amortization
|
115.1
|
|
115.1
|
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(1.4)
|
|
(1.4)
|
|
|
Deferred
Tax on Realized Portion of Deferred Gain
|
0.4
|
|
0.4
|
|
|
Adjustments
from Consolidated Affiliates
|
(4.3)
|
|
(4.3)
|
|
|
Adjustments
from Unconsolidated Affiliates
|
9.8
|
|
9.8
|
|
|
Gain
on Sale of Asset
|
(103.5)
|
|
(103.5)
|
|
|
Adjustment
for Value Creation Plan
|
12.0
|
|
12.0
|
|
|
Loss
on Early Extinguishment of Debt
|
1.2
|
|
1.2
|
|
|
Loss
on Early Termination of Derivative Financial Instruments
|
29.2
|
|
29.2
|
|
|
Other
Adjustments
|
(0.6)
|
|
(0.6)
|
|
|
Comparable FFO
|
$18.2
|
|
$24.2
|
|
|
Comparable FFO per Diluted Share
|
$0.10
|
|
$0.13
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
$
110,048
|
|
$
94,995
|
|
$
310,330
|
|
$
268,674
|
|
|
Food
and beverage
|
|
58,664
|
|
54,028
|
|
195,987
|
|
172,423
|
|
|
Other
hotel operating revenue
|
|
19,939
|
|
18,762
|
|
59,860
|
|
57,285
|
|
|
Lease
revenue
|
|
1,255
|
|
1,108
|
|
3,747
|
|
3,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
189,906
|
|
168,893
|
|
569,924
|
|
501,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
29,283
|
|
27,364
|
|
85,728
|
|
77,938
|
|
|
Food
and beverage
|
|
45,345
|
|
40,947
|
|
142,010
|
|
124,038
|
|
|
Other
departmental expenses
|
|
51,358
|
|
49,701
|
|
155,856
|
|
145,869
|
|
|
Management
fees
|
|
5,879
|
|
5,222
|
|
18,203
|
|
16,818
|
|
|
Other
hotel expenses
|
|
12,672
|
|
12,621
|
|
39,497
|
|
40,048
|
|
|
Lease
expense
|
|
1,249
|
|
1,106
|
|
3,702
|
|
3,396
|
|
|
Depreciation
and amortization
|
|
25,526
|
|
32,209
|
|
86,222
|
|
98,195
|
|
|
Corporate
expenses
|
|
(2,228)
|
|
8,679
|
|
24,206
|
|
22,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expenses
|
|
169,084
|
|
177,849
|
|
555,424
|
|
528,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
20,822
|
|
(8,956)
|
|
14,500
|
|
(26,635)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(21,838)
|
|
(22,118)
|
|
(67,148)
|
|
(68,488)
|
|
|
Interest
income
|
|
41
|
|
64
|
|
124
|
|
369
|
|
|
Loss
on early extinguishment of debt
|
|
(399)
|
|
(39)
|
|
(1,237)
|
|
(925)
|
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
(29,242)
|
|
(18,263)
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
(1,867)
|
|
3,001
|
|
(6,266)
|
|
2,900
|
|
|
Foreign
currency exchange (loss) gain
|
|
(209)
|
|
(132)
|
|
77
|
|
(1,394)
|
|
|
Other
income, net
|
|
355
|
|
1,605
|
|
4,716
|
|
2,299
|
|
|
Loss
before income taxes and discontinued operations
|
|
(3,095)
|
|
(26,575)
|
|
(84,476)
|
|
(110,137)
|
|
|
Income
tax expense
|
|
(867)
|
|
(68)
|
|
(279)
|
|
(296)
|
|
|
Loss
from continuing operations
|
|
(3,962)
|
|
(26,643)
|
|
(84,755)
|
|
(110,433)
|
|
|
Income
(loss) from discontinued operations, net of tax
|
|
19
|
|
(4,143)
|
|
101,215
|
|
6,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
(3,943)
|
|
(30,786)
|
|
16,460
|
|
(103,959)
|
|
|
Net
loss (income) attributable to the noncontrolling interests in SHR's
operating partnership
|
|
16
|
|
192
|
|
(70)
|
|
879
|
|
|
Net
income attributable to the noncontrolling interests in consolidated
affiliates
|
|
(254)
|
|
(1,086)
|
|
(997)
|
|
(858)
|
|
|
Net
(loss) income attributable to SHR
|
|
(4,181)
|
|
(31,680)
|
|
15,393
|
|
(103,938)
|
|
|
Preferred
shareholder dividends
|
|
(7,721)
|
|
(7,721)
|
|
(23,164)
|
|
(23,164)
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(11,902)
|
|
$
(39,401)
|
|
$
(7,771)
|
|
$
(127,102)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted (Loss) Income Per Share:
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
|
$
(0.06)
|
|
$
(0.23)
|
|
$
(0.62)
|
|
$
(1.18)
|
|
|
(Loss)
income from discontinued operations attributable to SHR common
shareholders
|
|
-
|
|
(0.03)
|
|
0.58
|
|
0.06
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(0.06)
|
|
$
(0.26)
|
$ -
|
$
(0.04)
|
|
$
(1.12)
|
|
|
Weighted
average common shares outstanding
|
|
186,146
|
|
151,635
|
|
173,349
|
|
113,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
|
(in
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
Assets
|
|
|
|
|
|
|
|
Investment
in hotel properties, net
|
$
1,707,798
|
|
$
1,835,451
|
|
|
Goodwill
|
|
40,359
|
|
40,359
|
|
|
Intangible
assets, net of accumulated amortization of $8,311 and $6,536
|
31,301
|
|
32,620
|
|
|
Assets
held for sale
|
-
|
|
45,145
|
|
|
Investment
in unconsolidated affiliates
|
128,407
|
|
18,024
|
|
|
Cash
and cash equivalents
|
88,843
|
|
78,842
|
|
|
Restricted
cash and cash equivalents
|
44,543
|
|
34,618
|
|
|
Accounts
receivable, net of allowance for doubtful accounts of $1,538 and $1,922
|
47,959
|
|
35,250
|
|
|
Deferred
financing costs, net of accumulated amortization of $2,587 and $15,756
|
11,680
|
|
3,322
|
|
|
Deferred
tax assets
|
6,017
|
|
4,121
|
|
|
Other
assets
|
26,791
|
|
34,564
|
|
|
|
Total
assets
|
$
2,133,698
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Mortgages
and other debt payable
|
$
1,000,706
|
|
$
1,118,281
|
|
|
|
Bank
credit facility
|
-
|
|
28,000
|
|
|
|
Liabilities
of assets held for sale
|
-
|
|
93,206
|
|
|
|
Accounts
payable and accrued expenses
|
240,397
|
|
266,773
|
|
|
|
Deferred
tax liabilities
|
48,848
|
|
1,732
|
|
|
|
Deferred
gain on sale of hotels
|
3,781
|
|
3,930
|
|
|
|
|
|
Total
liabilities
|
1,293,732
|
|
1,511,922
|
|
|
Noncontrolling
interests in SHR's operating partnership
|
3,678
|
|
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 $138,450
and $131,296
|
|
|
|
|
|
|
|
|
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 $141,091
and $133,975
|
|
|
|
|
|
|
|
|
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 $176,363
and $167,469
|
|
|
|
|
|
|
|
|
in the
aggregate)
|
138,940
|
|
138,940
|
|
|
|
|
Common
shares ($0.01 par value; 250,000,000 common shares authorized;
185,627,199 and
|
|
|
|
|
|
|
|
|
151,305,314
common shares issued and outstanding)
|
1,856
|
|
1,513
|
|
|
|
|
Additional
paid-in capital
|
1,715,023
|
|
1,553,286
|
|
|
|
|
Accumulated
deficit
|
(1,170,022)
|
|
(1,185,294)
|
|
|
|
|
Accumulated
other comprehensive loss
|
(78,695)
|
|
(107,164)
|
|
|
|
|
|
Total
SHR's shareholders' equity
|
826,083
|
|
620,262
|
|
|
|
Noncontrolling
interests in consolidated affiliates
|
10,205
|
|
25,082
|
|
|
|
|
Total
equity
|
836,288
|
|
645,344
|
|
|
|
|
|
Total
liabilities, noncontrolling interests and equity
|
$
2,133,698
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
Supplemental
Financial Data
|
|
|
(in
thousands, except per share information)
|
|
|
|
|
September
30, 2011
|
|
|
|
|
|
|
|
|
|
Pro
Rata Share
|
|
Consolidated
|
|
|
Capitalization
|
|
|
|
Common
shares outstanding
|
185,627
|
|
185,627
|
|
|
Operating
partnership units outstanding
|
853
|
|
853
|
|
|
Restricted
stock units outstanding
|
1,039
|
|
1,039
|
|
|
Value
Creation Plan units outstanding
|
974
|
|
974
|
|
|
|
|
|
|
|
|
|
Combined
shares and units outstanding
|
188,493
|
|
188,493
|
|
|
Common
stock price at end of period
|
$ 4.31
|
|
$ 4.31
|
|
|
|
|
|
|
|
|
|
Common
equity capitalization
|
$
812,405
|
|
$
812,405
|
|
|
Preferred
equity capitalization (at $25.00 face value)
|
370,236
|
|
370,236
|
|
|
Consolidated
debt
|
1,000,706
|
|
1,000,706
|
|
|
Pro
rata share of unconsolidated debt
|
212,275
|
|
-
|
|
|
Pro
rata share of consolidated debt
|
(45,548)
|
|
-
|
|
|
Cash
and cash equivalents
|
(88,843)
|
|
(88,843)
|
|
|
|
|
|
|
|
|
|
Total
enterprise value
|
$
2,261,231
|
|
$
2,094,504
|
|
|
|
|
|
|
|
|
|
Net
Debt / Total Enterprise Value
|
47.7%
|
|
43.5%
|
|
|
Preferred
Equity / Total Enterprise Value
|
16.4%
|
|
17.7%
|
|
|
Common
Equity / Total Enterprise Value
|
35.9%
|
|
38.8%
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. The following hotels were sold during 2011
and 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
Date
Sold
|
|
Net
Sales Proceeds
|
|
|
|
|
|
|
|
|
Paris
Marriott Champs Elysees (Paris Marriott)
|
|
April
6, 2011
|
|
$
55,245
|
|
|
|
|
|
|
|
|
InterContinental
Prague
|
|
December
15, 2010
|
|
$ 3,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following is a summary of income (loss) from discontinued operations
for the three and nine months ended September 30, 2011 and 2010 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating revenues
|
|
$ -
|
|
$
19,495
|
|
$ 9,743
|
|
$
51,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses
|
|
(54)
|
|
13,984
|
|
9,456
|
|
40,394
|
|
|
Depreciation
and amortization
|
|
-
|
|
1,859
|
|
-
|
|
5,413
|
|
|
Total
operating costs and expenses
|
|
(54)
|
|
15,843
|
|
9,456
|
|
45,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
54
|
|
3,652
|
|
287
|
|
6,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
-
|
|
(2,378)
|
|
-
|
|
(7,716)
|
|
|
Interest
income
|
|
-
|
|
8
|
|
-
|
|
19
|
|
|
Foreign
currency exchange (loss) gain
|
|
-
|
|
(5,096)
|
|
51
|
|
7,490
|
|
|
Other
income, net
|
|
-
|
|
-
|
|
326
|
|
-
|
|
|
Income
tax expense
|
|
-
|
|
(329)
|
|
(379)
|
|
(736)
|
|
|
(Loss)
gain on sale
|
|
(35)
|
|
-
|
|
100,930
|
|
1,237
|
|
|
Income
(loss) from discontinued operations
|
|
$ 19
|
|
$
(4,143)
|
|
$
101,215
|
|
$ 6,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in the Hotel del Coronado and Fairmont Scottsdale Princess
|
|
|
(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%. On June 9, 2011, we completed
a recapitalization of the Fairmont Scottsdale Princess hotel. As part
of the recapitalization, our ownership interest in the Fairmont
Scottsdale Princess decreased from 100% to 50%. We account for these
investments using the equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Three
Months Ended
|
|
|
|
|
|
September
30, 2011
|
|
September
30, 2010
|
|
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
|
|
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Coronado
|
|
Princess
|
|
Total
|
|
|
Total
revenues (100%)
|
|
|
|
$
40,765
|
|
$
10,280
|
|
$
51,045
|
|
$
39,683
|
|
$ -
|
|
$
39,683
|
|
|
Property
EBITDA (100%)
|
|
|
|
$
16,995
|
|
$
(2,452)
|
|
$
14,543
|
|
$
15,593
|
|
$ -
|
|
$
15,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
|
|
Property EBITDA
|
|
|
|
$ 5,830
|
|
$
(1,226)
|
|
$ 4,604
|
|
$ 7,017
|
|
$ -
|
|
$ 7,017
|
|
|
Depreciation
and amortization
|
|
|
|
(1,665)
|
|
(1,806)
|
|
(3,471)
|
|
(2,015)
|
|
-
|
|
(2,015)
|
|
|
Interest
expense
|
|
|
|
(2,648)
|
|
(198)
|
|
(2,846)
|
|
(1,981)
|
|
-
|
|
(1,981)
|
|
|
Other
expenses, net
|
|
|
|
(83)
|
|
(96)
|
|
(179)
|
|
(15)
|
|
-
|
|
(15)
|
|
|
Income
taxes
|
|
|
|
(125)
|
|
-
|
|
(125)
|
|
(272)
|
|
-
|
|
(272)
|
|
|
Equity
in earnings (losses) of unconsolidated affiliates
|
|
$ 1,309
|
|
$
(3,326)
|
|
$
(2,017)
|
|
$ 2,734
|
|
$ -
|
|
$ 2,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of unconsolidated affiliates
|
|
$ 1,309
|
|
$
(3,326)
|
|
$
(2,017)
|
|
$ 2,734
|
|
$ -
|
|
$ 2,734
|
|
|
Depreciation
and amortization
|
|
|
|
1,665
|
|
1,806
|
|
3,471
|
|
2,015
|
|
-
|
|
2,015
|
|
|
Interest
expense
|
|
|
|
2,648
|
|
198
|
|
2,846
|
|
1,981
|
|
-
|
|
1,981
|
|
|
Income
taxes
|
|
|
|
125
|
|
-
|
|
125
|
|
272
|
|
-
|
|
272
|
|
|
EBITDA
Contribution
|
|
|
|
$ 5,747
|
|
$
(1,322)
|
|
$ 4,425
|
|
$ 7,002
|
|
$ -
|
|
$ 7,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of unconsolidated affiliates
|
|
$ 1,309
|
|
$
(3,326)
|
|
$
(2,017)
|
|
$ 2,734
|
|
$ -
|
|
$ 2,734
|
|
|
Depreciation
and amortization
|
|
|
|
1,665
|
|
1,806
|
|
3,471
|
|
2,015
|
|
-
|
|
2,015
|
|
|
FFO
Contribution
|
|
|
|
$ 2,974
|
|
$
(1,520)
|
|
$ 1,454
|
|
$ 4,749
|
|
$ -
|
|
$ 4,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended
|
|
Nine
Months Ended
|
|
|
|
|
|
September
30, 2011
|
|
September
30, 2010
|
|
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
|
|
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Coronado
|
|
Princess
|
|
Total
|
|
|
Total
revenues (100%)
|
|
|
|
$
101,255
|
|
$
12,389
|
|
$
113,644
|
|
$
94,167
|
|
$ -
|
|
$
94,167
|
|
|
Property
EBITDA (100%)
|
|
|
|
$
34,748
|
|
$
(3,196)
|
|
$
31,552
|
|
$
30,871
|
|
$ -
|
|
$
30,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
|
|
Property EBITDA
|
|
|
|
$
12,022
|
|
$
(1,598)
|
|
$
10,424
|
|
$
13,892
|
|
$ -
|
|
$
13,892
|
|
|
Depreciation
and amortization
|
|
|
|
(4,963)
|
|
(2,257)
|
|
(7,220)
|
|
(6,003)
|
|
-
|
|
(6,003)
|
|
|
Interest
expense
|
|
|
|
(7,382)
|
|
(248)
|
|
(7,630)
|
|
(5,711)
|
|
-
|
|
(5,711)
|
|
|
Other
expenses, net
|
|
|
|
(1,547)
|
|
(640)
|
|
(2,187)
|
|
(163)
|
|
-
|
|
(163)
|
|
|
Income
taxes
|
|
|
|
554
|
|
-
|
|
554
|
|
111
|
|
-
|
|
111
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,316)
|
|
$
(4,743)
|
|
$
(6,059)
|
|
$ 2,126
|
|
$ -
|
|
$ 2,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,316)
|
|
$
(4,743)
|
|
$
(6,059)
|
|
$ 2,126
|
|
$ -
|
|
$ 2,126
|
|
|
Depreciation
and amortization
|
|
|
|
4,963
|
|
2,257
|
|
7,220
|
|
6,003
|
|
-
|
|
6,003
|
|
|
Interest
expense
|
|
|
|
7,382
|
|
248
|
|
7,630
|
|
5,711
|
|
-
|
|
5,711
|
|
|
Income
taxes
|
|
|
|
(554)
|
|
-
|
|
(554)
|
|
(111)
|
|
-
|
|
(111)
|
|
|
EBITDA
Contribution
|
|
|
|
$
10,475
|
|
$
(2,238)
|
|
$ 8,237
|
|
$
13,729
|
|
$ -
|
|
$
13,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,316)
|
|
$
(4,743)
|
|
$
(6,059)
|
|
$ 2,126
|
|
$ -
|
|
$ 2,126
|
|
|
Depreciation
and amortization
|
|
|
|
4,963
|
|
2,257
|
|
7,220
|
|
6,003
|
|
-
|
|
6,003
|
|
|
FFO
Contribution
|
|
|
|
$ 3,647
|
|
$
(2,486)
|
|
$ 1,161
|
|
$ 8,129
|
|
$ -
|
|
$ 8,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread
over
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
LIBOR
|
|
Loan
Amount
|
|
Maturity
(b)
|
|
|
|
|
|
|
|
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine
|
|
5.80%
(a)
|
|
480 bp
(a)
|
|
$
425,000
|
|
March
2016
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(22,939)
|
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
402,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage
|
|
0.60%
|
|
36 bp
|
|
$
133,000
|
|
April
2015
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(1,066)
|
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
131,934
|
|
|
|
|
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caps
|
|
Date
|
|
LIBOR
Cap Rate
|
|
Notional
Amount
|
|
Maturity
|
|
|
|
|
|
|
|
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage Loan Cap
|
|
June
2011
|
|
4.00%
|
|
$
133,000
|
|
December
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
|
|
Nine
Months Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Paris
Marriott (a):
|
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$ -
|
|
$ 6,784
|
|
$ 3,455
|
|
$
15,858
|
|
|
Revenue
(b)
|
$ -
|
|
$ 6,784
|
|
$ 3,455
|
|
$
15,858
|
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
-
|
|
(3,076)
|
|
(3,274)
|
|
(8,915)
|
|
|
Less:
Deferred gain on sale-leaseback
|
-
|
|
(1,088)
|
|
(1,214)
|
|
(3,321)
|
|
|
Adjusted
lease expense
|
-
|
|
(4,164)
|
|
(4,488)
|
|
(12,236)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
$ -
|
|
$ 2,620
|
|
$
(1,033)
|
|
$ 3,622
|
|
|
|
|
|
|
|
|
|
|
|
Marriott
Hamburg:
|
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$ 1,734
|
|
$ 1,620
|
|
$ 5,034
|
|
$ 4,369
|
|
|
Revenue
(b)
|
$ 1,255
|
|
$ 1,108
|
|
$ 3,747
|
|
$ 3,383
|
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
(1,249)
|
|
(1,106)
|
|
(3,702)
|
|
(3,396)
|
|
|
Less:
Deferred gain on sale-leaseback
|
(42)
|
|
(51)
|
|
(151)
|
|
(154)
|
|
|
Adjusted
lease expense
|
(1,291)
|
|
(1,157)
|
|
(3,853)
|
|
(3,550)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
$ (36)
|
|
$ (49)
|
|
$ (106)
|
|
$ (167)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Leaseholds:
|
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$ 1,734
|
|
$ 8,404
|
|
$ 8,489
|
|
$
20,227
|
|
|
Revenue
(b)
|
$ 1,255
|
|
$ 7,892
|
|
$ 7,202
|
|
$
19,241
|
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
(1,249)
|
|
(4,182)
|
|
(6,976)
|
|
(12,311)
|
|
|
Less:
Deferred gain on sale-leasebacks
|
(42)
|
|
(1,139)
|
|
(1,365)
|
|
(3,475)
|
|
|
Adjusted
lease expense
|
(1,291)
|
|
(5,321)
|
|
(8,341)
|
|
(15,786)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leaseholds
|
$ (36)
|
|
$ 2,571
|
|
$
(1,139)
|
|
$ 3,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
Security
Deposits (c):
|
2011
|
|
2010
|
|
|
|
|
|
|
Paris
Marriott
|
$ -
|
|
$
14,459
|
|
|
|
|
|
|
Marriott
Hamburg
|
2,544
|
|
2,540
|
|
|
|
|
|
|
Total
|
$ 2,544
|
|
$
16,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) On
April 6, 2011, we sold our leasehold interest in the Paris Marriott.
The results of operations for the Paris Marriott have been classified
as discontinued operations for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
For the three and nine months ended September 30, 2011 and 2010,
Revenue for the Paris Marriott represents Property EBITDA. For the
three and nine months ended September 30, 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 income (or 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; (iii) depreciation and
amortization; and (iv) preferred stock dividends. 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. 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 income (or 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 income (or 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 income (or
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
|
|
Nine
Months Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(11,902)
|
|
$
(39,401)
|
|
$
(7,771)
|
|
$
(127,102)
|
|
|
Depreciation
and amortization - continuing operations
|
|
25,526
|
|
32,209
|
|
86,222
|
|
98,195
|
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
1,859
|
|
-
|
|
5,413
|
|
|
Interest
expense - continuing operations
|
|
21,838
|
|
22,118
|
|
67,148
|
|
68,488
|
|
|
Interest
expense - discontinued operations
|
|
-
|
|
2,378
|
|
-
|
|
7,716
|
|
|
Income
taxes - continuing operations
|
|
|
867
|
|
68
|
|
279
|
|
296
|
|
|
Income
taxes - discontinued operations
|
|
-
|
|
329
|
|
379
|
|
736
|
|
|
Noncontrolling
interests
|
|
|
(16)
|
|
(192)
|
|
70
|
|
(879)
|
|
|
Adjustments
from consolidated affiliates
|
|
(1,248)
|
|
(1,978)
|
|
(5,431)
|
|
(5,596)
|
|
|
Adjustments
from unconsolidated affiliates
|
|
7,162
|
|
4,332
|
|
16,293
|
|
11,890
|
|
|
Preferred
shareholder dividends
|
|
|
7,721
|
|
7,721
|
|
23,164
|
|
23,164
|
|
|
EBITDA
|
|
|
49,948
|
|
29,443
|
|
180,353
|
|
82,321
|
|
|
Realized
portion of deferred gain on sale-leaseback - continuing operations
|
|
(42)
|
|
(51)
|
|
(151)
|
|
(154)
|
|
|
Realized
portion of deferred gain on sale-leaseback - discontinued operations
|
|
-
|
|
(1,088)
|
|
(1,214)
|
|
(3,321)
|
|
|
Gain
on sale of assets - continuing operations
|
|
-
|
|
-
|
|
(2,640)
|
|
-
|
|
|
Loss
(gain) on sale of assets - discontinued operations
|
|
35
|
|
-
|
|
(100,930)
|
|
(1,237)
|
|
|
Loss
on early extinguishment of debt
|
|
|
399
|
|
39
|
|
1,237
|
|
925
|
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
29,242
|
|
18,263
|
|
|
Foreign
currency exchange loss (gain) - continuing operations (a)
|
|
209
|
|
132
|
|
(77)
|
|
1,394
|
|
|
Foreign
currency exchange loss (gain) - discontinued operations (a)
|
|
-
|
|
5,096
|
|
(51)
|
|
(7,490)
|
|
|
Adjustment
for Value Creation Plan
|
|
|
(6,921)
|
|
3,844
|
|
9,078
|
|
6,871
|
|
|
Comparable
EBITDA
|
|
|
$
43,628
|
|
$
37,415
|
|
$
114,847
|
|
$
97,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Foreign
currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Nine
Months Ended
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(11,902)
|
|
$
(39,401)
|
|
$
(7,771)
|
|
$
(127,102)
|
|
|
Depreciation
and amortization - continuing operations
|
|
25,526
|
|
32,209
|
|
86,222
|
|
98,195
|
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
1,859
|
|
-
|
|
5,413
|
|
|
Corporate
depreciation
|
|
|
(279)
|
|
(304)
|
|
(868)
|
|
(914)
|
|
|
Gain
on sale of assets - continuing operations
|
|
-
|
|
-
|
|
(2,640)
|
|
-
|
|
|
Loss
(gain) on sale of assets - discontinued operations
|
|
35
|
|
-
|
|
(100,930)
|
|
(1,237)
|
|
|
Realized
portion of deferred gain on sale-leaseback - continuing operations
|
|
(42)
|
|
(51)
|
|
(151)
|
|
(154)
|
|
|
Realized
portion of deferred gain on sale-leaseback - discontinued operations
|
|
-
|
|
(1,088)
|
|
(1,214)
|
|
(3,321)
|
|
|
Deferred
tax expense on realized portion of deferred gain on sale-leasebacks
|
|
-
|
|
340
|
|
379
|
|
1,036
|
|
|
Noncontrolling
interests adjustments
|
|
(134)
|
|
(230)
|
|
(440)
|
|
(937)
|
|
|
Adjustments
from consolidated affiliates
|
|
(663)
|
|
(1,342)
|
|
(3,822)
|
|
(4,644)
|
|
|
Adjustments
from unconsolidated affiliates
|
|
3,770
|
|
2,047
|
|
8,023
|
|
6,099
|
|
|
FFO
|
|
|
|
16,311
|
|
(5,961)
|
|
(23,212)
|
|
(27,566)
|
|
|
Redeemable
noncontrolling interests
|
|
118
|
|
38
|
|
510
|
|
58
|
|
|
FFO -
Fully Diluted
|
|
|
16,429
|
|
(5,923)
|
|
(22,702)
|
|
(27,508)
|
|
|
Non-cash
mark to market of interest rate swaps
|
|
1,146
|
|
5,597
|
|
(487)
|
|
9,778
|
|
|
Loss
on early extinguishment of debt
|
|
399
|
|
39
|
|
1,237
|
|
925
|
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
29,242
|
|
18,263
|
|
|
Foreign
currency exchange loss (gain) - continuing operations (a)
|
|
209
|
|
132
|
|
(77)
|
|
1,394
|
|
|
Foreign
currency exchange loss (gain), net of tax - discontinued operations (a)
|
|
-
|
|
5,085
|
|
(51)
|
|
(7,515)
|
|
|
Adjustment
for Value Creation Plan
|
|
(6,921)
|
|
3,844
|
|
9,078
|
|
6,871
|
|
|
Comparable
FFO
|
|
|
$
11,262
|
|
$ 8,774
|
|
$
16,240
|
|
$ 2,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
FFO per diluted share
|
|
$ 0.06
|
|
$ 0.06
|
|
$ 0.09
|
|
$ 0.02
|
|
|
Weighted
average diluted shares
|
|
188,097
|
|
153,093
|
|
175,974
|
|
114,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Foreign
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Summary
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
|
|
|
|
|
Debt
|
|
|
Interest
Rate
|
|
Spread
(a)
|
|
Amount
|
|
Maturity
(b)
|
|
|
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 (c)
|
|
|
2.05%
|
|
110 bp
(c)
|
|
113,980
|
|
October
2013
|
|
|
Bank
credit facility
|
|
|
3.24%
|
|
300 bp
|
|
-
|
|
June
2015
|
|
|
Four
Seasons Washington, D.C.
|
|
|
3.39%
|
|
315 bp
|
|
130,000
|
|
July
2016
|
|
|
Westin
St. Francis
|
|
|
6.09%
|
|
Fixed
|
|
220,000
|
|
June
2017
|
|
|
Fairmont
Chicago
|
|
|
6.09%
|
|
Fixed
|
|
97,750
|
|
June
2017
|
|
|
InterContinental
Miami
|
|
|
3.74%
|
|
350 bp
|
|
85,000
|
|
July
2018
|
|
|
Loews
Santa Monica Beach Hotel
|
|
|
4.09%
|
|
385 bp
|
|
110,000
|
|
July
2018
|
|
|
InterContinental
Chicago
|
|
|
5.61%
|
|
Fixed
|
|
145,000
|
|
August
2021
|
|
|
|
|
|
|
|
|
$
1,000,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Spread over LIBOR (0.24% at September 30, 2011).
|
|
|
|
|
|
|
|
|
|
(b)
Includes extension options.
|
|
|
|
|
|
|
|
|
|
|
|
(c)
Principal balance of £73,130,000 at September 30, 2011. Spread
over three-month GBP LIBOR (0.95% at September 30, 2011).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
and European Interest Rate Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
|
|
|
Swap
Effective Date
|
|
|
Against
LIBOR
|
|
Amount
|
|
Maturity
|
|
|
|
|
February
2010
|
|
|
4.90%
|
|
$
100,000
|
|
September
2014
|
|
|
|
|
February
2010
|
|
|
4.96%
|
|
100,000
|
|
December
2014
|
|
|
|
|
December
2010
|
|
|
5.23%
|
|
100,000
|
|
December
2015
|
|
|
|
|
February
2011
|
|
|
5.27%
|
|
100,000
|
|
February
2016
|
|
|
|
|
|
|
5.09%
|
|
$
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
|
|
|
Swap
Effective Date
|
|
|
Against
GBP LIBOR
|
|
Amount
|
|
Maturity
|
|
|
|
|
October
2007
|
|
|
5.72%
|
|
£
73,130
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
September 30, 2011, future scheduled debt principal payments (including
extension options) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
ending December 31,
|
|
|
Amount
|
|
|
|
|
|
|
|
|
2011
(remainder)
|
|
|
$ -
|
|
|
|
|
|
|
|
|
2012
|
|
|
109,107
|
|
|
|
|
|
|
|
|
2013
|
|
|
123,112
|
|
|
|
|
|
|
|
|
2014
|
|
|
13,872
|
|
|
|
|
|
|
|
|
2015
|
|
|
15,046
|
|
|
|
|
|
|
|
|
Thereafter
|
|
|
739,569
|
|
|
|
|
|
|
|
|
|
|
$
1,000,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
|
|
|
97.8%
|
|
|
|
|
Weighted
average interest rate including U.S. and European swaps (d)
|
|
|
|
6.80%
|
|
|
|
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
|
5.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
Excludes the amortization of deferred financing costs and the
amortization of the interest rate swap costs.
|
|
