CHICAGO, Feb. 27, 2013 -- Strategic Hotels &
Resorts, Inc. (NYSE: BEE) today reported results for the fourth quarter
and full year ended December 31, 2012.
($
in millions, except per share and operating metrics)
|
Fourth
Quarter
|
Earnings
Metrics
|
2012
|
2011
|
%
Change
|
Net
loss attributable to common shareholders
|
$(36.4)
|
$(15.9)
|
N/A
|
Net
loss per diluted share
|
$(0.18)
|
$(0.09)
|
N/A
|
Comparable
funds from operations (Comparable FFO) (a)
|
$12.2
|
$20.1
|
(39.2)%
|
Comparable
FFO per diluted share (a)
|
$0.06
|
$0.11
|
(45.5)%
|
Comparable
EBITDA (a)
|
$44.7
|
$39.9
|
11.9%
|
|
|
|
|
Total
United States Portfolio Operating Metrics (b)
|
|
|
|
Average
Daily Rate (ADR)
|
$251.17
|
$243.88
|
3.0%
|
Occupancy
|
68.7%
|
67.5%
|
1.2
pts
|
Revenue
per Available Room (RevPAR)
|
$172.62
|
$164.53
|
4.9%
|
Total
RevPAR
|
$344.60
|
$334.72
|
3.0%
|
EBITDA
Margins
|
20.6%
|
19.7%
|
90 bps
|
|
|
|
|
North
American Same Store Operating Metrics (c)
|
|
|
|
ADR
|
$256.01
|
$248.74
|
2.9%
|
Occupancy
|
70.4%
|
68.9%
|
1.5
pts
|
RevPAR
|
$180.22
|
$171.30
|
5.2%
|
Total
RevPAR
|
$344.45
|
$333.81
|
3.2%
|
EBITDA
Margins
|
21.2%
|
20.1%
|
110
bps
|
($
in millions, except per share and operating metrics)
|
Full
Year
|
Earnings
Metrics
|
2012
|
2011
|
%
Change
|
Net
loss attributable to common shareholders
|
$(79.5)
|
$(23.7)
|
N/A
|
Net
loss per diluted share
|
$(0.40)
|
$(0.13)
|
N/A
|
Comparable
FFO (a)
|
$53.7
|
$36.4
|
47.8%
|
Comparable
FFO per diluted share (a)
|
$0.26
|
$0.20
|
30.0%
|
Comparable
EBITDA (a)
|
$175.4
|
$154.8
|
13.3%
|
|
|
|
|
Total
United States Portfolio Operating Metrics (b)
|
|
|
|
ADR
|
$258.21
|
$246.22
|
4.9%
|
Occupancy
|
72.4%
|
71.0%
|
1.4
pts
|
RevPAR
|
$186.98
|
$174.74
|
7.0%
|
Total
RevPAR
|
$355.90
|
$336.43
|
5.8%
|
EBITDA
Margins
|
22.7%
|
21.5%
|
120
bps
|
|
|
|
|
North
American Same Store Operating Metrics (c)
|
|
|
|
ADR
|
$246.42
|
$236.24
|
4.3%
|
Occupancy
|
73.5%
|
71.8%
|
1.7
pts
|
RevPAR
|
$181.18
|
$169.54
|
6.9%
|
Total
RevPAR
|
$331.68
|
$314.26
|
5.5%
|
EBITDA
Margins
|
22.4%
|
21.1%
|
130
bps
|
(a) Please refer to tables provided later in this
press release for a reconciliation of net (loss)/income to Comparable
FFO, Comparable FFO per share and Comparable EBITDA. Comparable FFO,
Comparable FFO per share and Comparable EBITDA are non-GAAP measures
and are further explained with the reconciliation tables.
(b) Operating statistics reflect results from the
Company's Total United States portfolio (see portfolio definitions
later in this press release).
(c) Operating statistics reflect results from the
Company's North American same store portfolio (see portfolio
definitions later in this press release).
"I am very pleased by our strong performance in 2012. We
continued to deliver on our stated strategy, driving steady gains in
ADR, occupancy, and RevPAR, which led to outstanding FFO and EBITDA
growth in 2012," said Raymond L. "Rip" Gellein, Jr., Chairman and Chief
Executive Officer of Strategic Hotels & Resorts, Inc. "One of the
year's highlights was the opportunistic and favorable acquisition of
the Essex House Hotel, which brought us back to the New York market and gave us greater reach
on the east coast. As we look forward to 2013, we remain focused on our
strategic imperatives: maximizing RevPAR, non-rooms revenue and profit
margins at our hotels; continuing to prudently manage our capital and
delever our balance sheet; and selectively pursuing strategic
opportunities to refine our admired portfolio and drive meaningful
value for our shareholders."
Fourth Quarter Highlights
- Net loss attributable to common shareholders was $36.4 million, or $0.18
per diluted share, in the fourth quarter of 2012, compared with a net
loss attributable to common shareholders of $15.9
million, or $0.09 per diluted
share, in the fourth quarter of 2011. Fourth quarter results include $18.8 million of impairment losses and other
related charges, a $7.8 million charge
related to the termination of the management agreement at the Hotel del
Coronado and a $2.5 million severance charge. These charges
have been excluded from Comparable EBITDA, FFO and FFO per share.
- Comparable FFO was $0.06 per
diluted share in the fourth quarter of 2012 compared with $0.11 per diluted share in the prior year
period. Fourth quarter 2011 Comparable FFO includes a $10.7 million one-time gain related to the
successful preferred equity tender offer completed on December 19, 2011. Excluding this gain,
Comparable FFO would have been $0.05 per
diluted share in the fourth quarter of 2011.
- Comparable EBITDA was $44.7 million in the fourth
quarter of 2012 compared with $39.9 million
in the prior year period, an 11.9 percent increase.
- Total United States RevPAR increased 4.9 percent in the
fourth quarter of 2012, driven by a 3.0 percent increase in ADR
and a 1.2 percentage point increase in occupancy, compared to the
fourth quarter of 2011. Total RevPAR increased 3.0 percent with
non-rooms revenue increasing by 1.1 percent between periods.
- ADR growth in the Total United States portfolio was driven
by a 3.9 percent increase in transient ADR compared to the fourth
quarter of 2011 and a 0.8 percent increase in group ADR.
- RevPAR increased 5.3 percent in the fourth quarter of 2012
in the Company's Total United States resort portfolio and 4.6 percent
in the Company's Total United States urban portfolio, compared to the
fourth quarter of 2011.
- North American same store RevPAR increased 5.2 percent in
the fourth quarter of 2012, driven by a 2.9 percent increase in
ADR and a 1.5 percentage point increase in occupancy, compared to the
fourth quarter of 2011. Total RevPAR increased 3.2 percent with
non-rooms revenue increasing by 1.1 percent between periods.
- European RevPAR increased 1.8 percent (a 1.9 percent
increase in constant dollars) in the fourth quarter of 2012, driven by
a 2.7 percent increase in ADR (a 2.7 percent increase in constant
dollars) offsetting a 0.7 percentage point decline in occupancy.
European Total RevPAR decreased 3.1 percent in the fourth quarter of
2012 over the prior year period (2.9 percent in constant dollars).
- Total United States EBITDA margins expanded 90 basis points
in the fourth quarter of 2012 compared to the fourth quarter of 2011.
North American same store EBITDA margins expanded 110 basis points
between periods.
Full Year Highlights
- Net loss attributable to common shareholders was $79.5 million, or $0.40
per diluted share, in 2012 compared with a net loss attributable to
common shareholders of $23.7 million, or
$0.13 per diluted share, in the
prior year. Full year 2012 results include $18.8
million of impairment losses and other related charges, a $7.8 million charge related to the termination
of the management agreement at the Hotel del Coronado,
and a $2.5 million severance charge.
Full year 2011 results included a $29.2 million
charge related to the loss on early termination of derivative financial
instruments and a $1.2 million charge
related to the loss on early extinguishment of debt. These charges have
been excluded from Comparable EBITDA, FFO and FFO per share.
- Comparable FFO was $0.26 per
diluted share compared with $0.20 per
diluted share in the prior year period. Full year 2011 Comparable FFO
includes a $10.7 million one-time gain
related to a successful preferred equity tender offer completed on December 19, 2011. Excluding this gain,
Comparable FFO would have been $0.14 per
diluted share.
- Comparable EBITDA was $175.4 million compared with $154.8 million in the prior year period, a
13.3 percent increase.
- Total United States RevPAR increased 7.0 percent, driven by
a 4.9 percent increase in ADR and a 1.4 percentage point
increase in occupancy, compared to the full year 2011. Total RevPAR
increased 5.8 percent with non-rooms revenue increasing by 4.7 percent
between years.
- ADR growth in the Total United States portfolio was driven
by a 5.0 percent increase in transient ADR compared to the full year
2011 and a 4.0 percent increase in group ADR.
- RevPAR increased 7.0 percent in the Company's Total United
States resort and urban portfolios, compared to the full year 2011.
- North American same store RevPAR increased 6.9 percent,
driven by a 4.3 percent increase in ADR and a 1.7 percentage
point increase in occupancy, compared to the full year 2011. Total
RevPAR increased 5.5 percent with non-rooms revenue increasing by 4.3
percent between years.
- European RevPAR increased 1.1 percent (5.0 percent in
constant dollars), driven by a 1.1 percentage point increase in
occupancy offsetting a 0.1 percent decrease in ADR (3.7 percent
increase in constant dollars) between years. European Total RevPAR
decreased 1.2 percent in between years (2.4 percent increase in
constant dollars).
- Total United States and
EBITDA margins expanded 120 basis points compared to the full year
2011. North American same store EBITDA margins expanded 130 basis
points between periods.
Preferred Dividends
On November 29, 2012, the
Company's Board of Directors declared a quarterly dividend of $0.53125 per share of 8.5 percent Series A
Cumulative Redeemable Preferred Stock paid on December
31, 2012 to shareholders of record as of December
14, 2012, a quarterly dividend of $0.51563
per share of 8.25 percent Series B Cumulative Redeemable Preferred
Stock payable on December 31, 2012 to
shareholders of record as of December 14, 2012
and a quarterly dividend of $0.51563 per
share of 8.25 percent Series C Cumulative Redeemable Preferred Stock
payable on December 31, 2012 to
shareholders of record as of December 14, 2012.
2012 Transaction Activity
- On November 1, 2012, the
Company closed a $90.0 million
non-recourse mortgage agreement with MetLife secured by the Hyatt
Regency La Jolla hotel. Under the terms of the loan agreement, the $97.5 million mortgage previously encumbering
the property was replaced with a $72.0 million
A-Note and an $18.0 million B-Note that
will each mature December 1, 2017. The
floating rate A-Note bears interest at LIBOR plus 400 basis points,
subject to a 50 basis point LIBOR floor, and the B-Note bears interest
at a fixed rate of 10.0 percent.
- On September 14, 2012, the
Company closed on the acquisition of the JW Marriott Essex House Hotel
in New York City for a gross purchase
price of approximately $362.3 million
and established a joint venture arrangement with affiliates of KSL
Capital Partners, LLC to fund the equity portion of the acquisition.
The Company owns 51.0 percent of the joint venture and serves as
managing member and asset manager.
- On June 29, 2012, the
Company paid previously accrued and unpaid dividends on the Series A, B
and C Preferred Stock through June 30, 2012
to shareholders of record as of June 15,
2012. In total, 14 quarters of preferred dividends were paid equating
to $7.4375 per share of Series A
Preferred Stock and $7.21882 per share
of Series B and Series C Preferred Stock.
- On April 23, 2012, the
Company closed on the sale of 18.4 million shares of common stock at a
public offering price of $6.50 per
share, including 2.4 million shares of common stock issued pursuant to
the exercise in full of the underwriters' over-allotment option. The
Company received approximately $114.1 million
from the offering after deducting underwriting discounts, commissions
and transaction expenses related to the offering. The Company utilized
the net proceeds from the offering to reduce borrowings under its
secured bank credit facility, fund the payment of accrued and unpaid
preferred dividends, and fund capital expenditures and working capital.
Impairment Losses and Other Charges
Fourth quarter and full year 2012 results include impairment
losses and other charges totaling $18.8 million,
including a $14.6 million impairment of
a Mexican land development site and $4.2 million
of other charges related to the elimination of certain capital projects
and entitlement pursuit activities. These one-time charges have been
excluded from Comparable EBITDA, FFO and FFO per share metrics.
2013 Guidance
For the full year 2013, the Company anticipates that
Comparable EBITDA will be in the range of $195.0
million to $210.0 million and Comparable FFO in the range of $0.33 and $0.40
per fully diluted share.
The Company's 2013 guidance includes the following assumptions:
- Same Store North American RevPAR growth in the range of 5.0
percent to 7.0 percent and Total RevPAR growth of 4.0 percent to 6.0
percent, respectively. Same Store operating metrics include North
American hotels which are included in the Company's consolidated
financial results but exclude the JW Marriott Essex House Hotel, which
was acquired in 2012;
- Same Store North American EBITDA margin expansion between
75 basis points and 125 basis points;
- Corporate G&A expenses in the range of $21.0 million to $23.0 million;
- Consolidated interest expense in the range of $95 million to $100 million, including
approximately $10 million of non-cash
interest expense;
- Preferred dividend expense of $24.2
million;
- Capital expenditures totaling approximately $65 million to $70 million, including spending
of $35 million from property-level
furniture, fixtures and equipment (FF&E) reserves and an additional
$30 million to $35 million of
owner-funded spending; and
- No additional planned acquisition, disposition or capital
raising activity.
Portfolio Definitions
Total United States
portfolio hotel comparisons for the fourth quarter and full year 2012
are derived from the Company's hotel portfolio at December 31, 2012, consisting of all 14
properties located in the United States,
including unconsolidated joint ventures.
North American same store hotel comparisons for the fourth
quarter and full year 2012 are derived from the Company's hotel
portfolio at December 31, 2012,
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 13 properties for the fourth quarter,
including the Four Seasons Punta Mita Resort and excluding the JW
Marriott Essex House Hotel, which was acquired on September 14, 2012, and the unconsolidated
Hotel del Coronado and Fairmont
Scottsdale Princess hotels. Same store comparisons contain contain 11
properties for the full year, also excluding the Four Seasons Jackson
Hole and Four Seasons Silicon Valley hotels, which were acquired on March 11, 2011.
European hotel comparisons for the fourth quarter and full
year 2012 are derived from the Company's European owned and leased
hotel properties at December 31, 2012,
consisting of the Marriott London Grosvenor Square and the Marriott
Hamburg hotels.
Earnings Call
The Company will conduct its fourth quarter and full-year 2012
conference call for investors and other interested parties on Thursday, February 28, 2013 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by telephone at
800.573.4752 (toll international: 617.224.4324) with passcode 71539203.
To participate on the web cast, log on to http://edge.media-server.com/m/p/fzhfd434/lan/en
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 12:00 p.m. ET on February 28, 2013, through 11:59 p.m. ET on March
7, 2013. To access the replay, 888.286.8010 (toll international:
617.801.6888) and request replay pin number 25278256. 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 fourth 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 18 properties with an aggregate of 8,271 rooms and 851,600
square feet of meeting space. 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: the
effects of the recent global economic recession upon business and
leisure travel and the hotel markets in which the Company invests; the
Company's liquidity and refinancing demands; the Company's ability to
obtain or refinance maturing debt; the Company's ability to maintain
compliance with covenants contained in the Company's debt facilities;
stagnation or further deterioration in economic and market conditions,
particularly impacting business and leisure travel spending in the
markets where the Company's hotels operate and in which the Company
invests, including luxury and upper upscale product; general volatility
of the capital markets and the market price of the Company's shares of
common stock; availability of capital; the Company's ability to dispose
of properties in a manner consistent with the Company's investment
strategy and liquidity needs; hostilities and security concerns,
including future terrorist attacks, or the apprehension of hostilities,
in each case that affect travel within or to the
United States, Mexico, Germany, England
or other countries where the Company invests; difficulties in
identifying properties to acquire and completing acquisitions; the
Company's failure to maintain effective internal control over financial
reporting and disclosure controls and procedures; risks related to
natural disasters; increases in interest rates and operating costs,
including insurance premiums and real property taxes; contagious
disease outbreaks, such as the H1N1 virus outbreak; delays and
cost-overruns in construction and development; marketing challenges
associated with entering new lines of business or pursuing new business
strategies; the Company's failure to maintain its status as a REIT;
changes in the competitive environment in the Company's industry and
the markets where the Company invests; changes in real estate and
zoning laws or regulations; legislative or regulatory changes,
including changes to laws governing the taxation of REITS; changes in
generally accepted accounting principles, policies and guidelines; and
litigation, judgments or settlements.
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 the Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law.
The following tables reconcile projected 2013 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
|
$(55.7)
|
|
$(40.7)
|
Depreciation
and Amortization
|
119.4
|
|
119.4
|
Interest
Expense
|
97.4
|
|
97.4
|
Income
Taxes
|
1.4
|
|
1.4
|
Non-controlling
Interests
|
(0.1)
|
|
(0.1)
|
Adjustments
from Consolidated Affiliates
|
(16.0)
|
|
(16.0)
|
Adjustments
from Unconsolidated Affiliates
|
24.6
|
|
24.6
|
Preferred
Shareholder Dividends
|
24.2
|
|
24.2
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Comparable
EBITDA
|
$195.0
|
|
$210.0
|
|
Low
Range
|
|
High
Range
|
Net
Loss Attributable to Common Shareholders
|
$(55.7)
|
|
$(40.7)
|
Depreciation
and Amortization
|
118.5
|
|
118.5
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Non-controlling
Interests
|
(0.1)
|
|
(0.0)
|
Adjustments
from Consolidated Affiliates
|
(8.4)
|
|
(8.4)
|
Adjustments
from Unconsolidated Affiliates
|
14.9
|
|
14.9
|
Comparable
FFO
|
$69.0
|
|
$84.1
|
Comparable
FFO per Diluted Share
|
$0.33
|
|
$0.40
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Consolidated
Statements of Operations
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
Three
Months Ended December 31,
|
|
Years
Ended
December
31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Revenues:
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
|
123,051
|
|
|
$
|
99,985
|
|
|
$
|
446,760
|
|
|
$
|
410,315
|
|
Food
and beverage
|
|
76,164
|
|
|
71,207
|
|
|
273,857
|
|
|
267,194
|
|
Other
hotel operating revenue
|
|
23,584
|
|
|
21,047
|
|
|
82,922
|
|
|
80,907
|
|
Lease
revenue
|
|
1,273
|
|
|
1,675
|
|
|
4,778
|
|
|
5,422
|
|
Total
revenues
|
|
224,072
|
|
|
193,914
|
|
|
808,317
|
|
|
763,838
|
|
Operating
Costs and Expenses:
|
|
|
|
|
|
|
|
|
Rooms
|
|
34,268
|
|
|
28,359
|
|
|
124,896
|
|
|
114,087
|
|
Food
and beverage
|
|
56,508
|
|
|
50,018
|
|
|
199,573
|
|
|
192,028
|
|
Other
departmental expenses
|
|
58,424
|
|
|
51,808
|
|
|
211,981
|
|
|
207,664
|
|
Management
fees
|
|
6,972
|
|
|
6,516
|
|
|
24,984
|
|
|
24,719
|
|
Other
hotel expenses
|
|
16,482
|
|
|
14,311
|
|
|
56,842
|
|
|
53,808
|
|
Lease
expense
|
|
1,155
|
|
|
1,163
|
|
|
4,580
|
|
|
4,865
|
|
Depreciation
and amortization
|
|
27,048
|
|
|
25,840
|
|
|
103,464
|
|
|
112,062
|
|
Impairment
losses and other charges
|
|
18,843
|
|
|
—
|
|
|
18,843
|
|
|
—
|
|
Corporate
expenses
|
|
8,225
|
|
|
15,650
|
|
|
31,857
|
|
|
39,856
|
|
Total
operating costs and expenses
|
|
227,925
|
|
|
193,665
|
|
|
777,020
|
|
|
749,089
|
|
Operating
(loss) income
|
|
(3,853)
|
|
|
249
|
|
|
31,297
|
|
|
14,749
|
|
Interest
expense
|
|
(16,862)
|
|
|
(19,299)
|
|
|
(75,489)
|
|
|
(86,447)
|
|
Interest
income
|
|
95
|
|
|
49
|
|
|
217
|
|
|
173
|
|
Loss
on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,237)
|
|
Loss
on early termination of derivative financial instruments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,242)
|
|
Equity
in losses of unconsolidated affiliates
|
|
(11,431)
|
|
|
(2,949)
|
|
|
(13,485)
|
|
|
(9,215)
|
|
Foreign
currency exchange gain (loss)
|
|
94
|
|
|
(79)
|
|
|
(1,075)
|
|
|
(2)
|
|
Other
income, net
|
|
455
|
|
|
1,051
|
|
|
1,820
|
|
|
5,767
|
|
Loss
before income taxes and discontinued operations
|
|
(31,502)
|
|
|
(20,978)
|
|
|
(56,715)
|
|
|
(105,454)
|
|
Income
tax expense
|
|
(796)
|
|
|
(691)
|
|
|
(1,011)
|
|
|
(970)
|
|
Loss
from continuing operations
|
|
(32,298)
|
|
|
(21,669)
|
|
|
(57,726)
|
|
|
(106,424)
|
|
Income
(loss) from discontinued operations, net of tax
|
|
—
|
|
|
357
|
|
|
(535)
|
|
|
101,572
|
|
Net
loss
|
|
(32,298)
|
|
|
(21,312)
|
|
|
(58,261)
|
|
|
(4,852)
|
|
Net
loss attributable to the noncontrolling interests in SHR's operating
partnership
|
|
58
|
|
|
99
|
|
|
184
|
|
|
29
|
|
Net
loss (income) attributable to the noncontrolling interests in
consolidated affiliates
|
|
1,880
|
|
|
614
|
|
|
2,771
|
|
|
(383)
|
|
Net
loss attributable to SHR
|
|
(30,360)
|
|
|
(20,599)
|
|
|
(55,306)
|
|
|
(5,206)
|
|
Preferred
shareholder dividends
|
|
(6,041)
|
|
|
4,682
|
|
|
(24,166)
|
|
|
(18,482)
|
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(36,401)
|
|
|
$
|
(15,917)
|
|
|
$
|
(79,472)
|
|
|
$
|
(23,688)
|
|
Basic
Loss Per Share:
|
|
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
|
$
|
(0.18)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.40)
|
|
|
$
|
(0.70)
|
|
Income
(loss) from discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.57
|
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(0.18)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.40)
|
|
|
$
|
(0.13)
|
|
Weighted
average common shares outstanding
|
|
206,836
|
|
|
186,151
|
|
|
201,109
|
|
|
176,576
|
|
Diluted
Loss Per Share:
|
|
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
|
$
|
(0.18)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.40)
|
|
|
$
|
(0.70)
|
|
Income
(loss) from discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.57
|
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(0.18)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.40)
|
|
|
$
|
(0.13)
|
|
Weighted
average common shares outstanding
|
|
206,836
|
|
|
186,151
|
|
|
201,109
|
|
|
176,576
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Consolidated
Balance Sheets
|
(in
thousands, except share data)
|
|
|
|
|
|
December
31,
|
|
|
2012
|
|
2011
|
Assets
|
|
|
|
|
Investment
in hotel properties, net
|
|
$
|
1,970,560
|
|
|
$
|
1,692,431
|
|
Goodwill
|
|
40,359
|
|
|
40,359
|
|
Intangible
assets, net of accumulated amortization of $10,812 and $8,915
|
|
30,631
|
|
|
30,635
|
|
Investment
in unconsolidated affiliates
|
|
112,488
|
|
|
126,034
|
|
Cash
and cash equivalents
|
|
80,074
|
|
|
72,013
|
|
Restricted
cash and cash equivalents
|
|
58,579
|
|
|
39,498
|
|
Accounts
receivable, net of allowance for doubtful accounts of $1,602 and $1,698
|
|
45,620
|
|
|
43,597
|
|
Deferred
financing costs, net of accumulated amortization of $7,049 and $3,488
|
|
11,695
|
|
|
10,845
|
|
Deferred
tax assets
|
|
2,203
|
|
|
2,230
|
|
Prepaid
expenses and other assets
|
|
54,208
|
|
|
29,047
|
|
Total
assets
|
|
$
|
2,406,417
|
|
|
$
|
2,086,689
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgages
and other debt payable
|
|
$
|
1,176,297
|
|
|
$
|
1,000,385
|
|
Bank
credit facility
|
|
146,000
|
|
|
50,000
|
|
Accounts
payable and accrued expenses
|
|
228,397
|
|
|
249,179
|
|
Distributions
payable
|
|
—
|
|
|
72,499
|
|
Deferred
tax liabilities
|
|
47,275
|
|
|
47,623
|
|
Total
liabilities
|
|
1,597,969
|
|
|
1,419,686
|
|
Noncontrolling
interests in SHR's operating partnership
|
|
5,463
|
|
|
4,583
|
|
Commitments
and contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
SHR's
shareholders' equity:
|
|
|
|
|
8.50%
Series A Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 4,148,141 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $103,704 and $130,148
in the aggregate)
|
|
99,995
|
|
|
99,995
|
|
8.25%
Series B Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 3,615,375 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $90,384 and $112,775 in
the aggregate)
|
|
87,064
|
|
|
87,064
|
|
8.25%
Series C Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 3,827,727 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $95,693 and $119,377 in
the aggregate)
|
|
92,489
|
|
|
92,489
|
|
Common
shares ($0.01 par value per share; 350,000,000 and 250,000,000 common
shares authorized; 204,308,710 and 185,627,199 common shares issued and
outstanding)
|
|
2,043
|
|
|
1,856
|
|
Additional
paid-in capital
|
|
1,730,535
|
|
|
1,634,067
|
|
Accumulated
deficit
|
|
(1,245,927)
|
|
|
(1,190,621)
|
|
Accumulated
other comprehensive loss
|
|
(58,871)
|
|
|
(70,652)
|
|
Total
SHR's shareholders' equity
|
|
707,328
|
|
|
654,198
|
|
Noncontrolling
interests in consolidated affiliates
|
|
95,657
|
|
|
8,222
|
|
Total
equity
|
|
802,985
|
|
|
662,420
|
|
Total
liabilities, noncontrolling interests and equity
|
|
$
|
2,406,417
|
|
|
$
|
2,086,689
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Financial
Highlights
|
|
Supplemental
Financial Data
|
(in
thousands, except per share information)
|
|
|
|
|
|
December
31, 2012
|
|
|
Pro
Rata Share
|
|
Consolidated
|
Capitalization
|
|
|
|
|
Common
shares outstanding
|
|
204,309
|
|
|
204,309
|
|
Operating
partnership units outstanding
|
|
853
|
|
|
853
|
|
Restricted
stock units outstanding
|
|
1,610
|
|
|
1,610
|
|
Value
Creation Plan units outstanding under the deferral program
|
|
1,301
|
|
|
1,301
|
|
Combined
shares and units outstanding
|
|
208,073
|
|
|
208,073
|
|
Common
stock price at end of period
|
|
$
|
6.40
|
|
|
$
|
6.40
|
|
Common
equity capitalization
|
|
$
|
1,331,667
|
|
|
$
|
1,331,667
|
|
Preferred
equity capitalization (at $25.00 face value)
|
|
289,102
|
|
|
289,102
|
|
Consolidated
debt
|
|
1,322,297
|
|
|
1,322,297
|
|
Pro
rata share of unconsolidated debt
|
|
221,200
|
|
|
—
|
|
Pro
rata share of consolidated debt
|
|
(135,160)
|
|
|
—
|
|
Cash
and cash equivalents
|
|
(80,074)
|
|
|
(80,074)
|
|
Total
enterprise value
|
|
$
|
2,949,032
|
|
|
$
|
2,862,992
|
|
Net
Debt / Total Enterprise Value
|
|
45.0
|
%
|
|
43.4
|
%
|
Preferred
Equity / Total Enterprise Value
|
|
9.8
|
%
|
|
10.1
|
%
|
Common
Equity / Total Enterprise Value
|
|
45.2
|
%
|
|
46.5
|
%
|
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 hotel was sold
during 2011 (in thousands):
|
|
|
Hotel
|
Date
Sold
|
Net
Sales Proceeds
|
Paris
Marriott Champs Elysees (Paris Marriott)
|
April
6, 2011
|
$
|
60,003
|
|
The following is a summary of income (loss) from discontinued
operations for the three months and years ended December 31, 2012 and
2011 (in thousands):
|
|
Three
Months Ended December 31,
|
|
Years
Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Hotel
operating revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,743
|
|
Operating
costs and expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,456
|
|
Operating
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
Foreign
currency exchange (loss) gain
|
|
—
|
|
|
—
|
|
|
(535)
|
|
|
51
|
|
Other
income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
326
|
|
Income
tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(379)
|
|
Gain
on sale
|
|
—
|
|
|
357
|
|
|
—
|
|
|
101,287
|
|
Income
(loss) from discontinued operations
|
|
$
|
—
|
|
|
$
|
357
|
|
|
$
|
(535)
|
|
|
$
|
101,572
|
|
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Investments in Unconsolidated Affiliates
(in thousands)
On February 4, 2011, we completed a recapitalization of the
unconsolidated affiliate that owns the Hotel del Coronado. Pursuant to the terms of the
recapitalization, our ownership interest in the Hotel del Coronado decreased from 45% to 34.3%. On December 17, 2012, we acquired an additional
interest in the entity increasing our ownership to 36.4%. 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 hotel decreased from 100% to 50%.
We account for these investments using the equity method of accounting.
|
|
Three
Months Ended December 31, 2012
|
|
Three
Months Ended December 31, 2011
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total
revenues (100%)
|
|
$
|
29,888
|
|
|
$
|
20,546
|
|
|
$
|
50,434
|
|
|
$
|
30,324
|
|
|
$
|
18,322
|
|
|
$
|
48,646
|
|
Property
EBITDA (100%)
|
|
$
|
7,201
|
|
|
$
|
3,034
|
|
|
$
|
10,235
|
|
|
$
|
7,697
|
|
|
$
|
2,052
|
|
|
$
|
9,749
|
|
Equity
in losses of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
2,491
|
|
|
$
|
1,517
|
|
|
$
|
4,008
|
|
|
$
|
2,640
|
|
|
$
|
1,026
|
|
|
$
|
3,666
|
|
Depreciation
and amortization
|
|
(1,797)
|
|
|
(1,823)
|
|
|
(3,620)
|
|
|
(1,674)
|
|
|
(1,765)
|
|
|
(3,439)
|
|
Interest
expense
|
|
(2,549)
|
|
|
(189)
|
|
|
(2,738)
|
|
|
(2,515)
|
|
|
(204)
|
|
|
(2,719)
|
|
Other
expenses, net
|
|
(7,869)
|
|
|
(111)
|
|
|
(7,980)
|
|
|
(22)
|
|
|
(17)
|
|
|
(39)
|
|
Income
taxes
|
|
90
|
|
|
—
|
|
|
90
|
|
|
(49)
|
|
|
—
|
|
|
(49)
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(9,634)
|
|
|
$
|
(606)
|
|
|
$
|
(10,240)
|
|
|
$
|
(1,620)
|
|
|
$
|
(960)
|
|
|
$
|
(2,580)
|
|
EBITDA
Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(9,634)
|
|
|
$
|
(606)
|
|
|
$
|
(10,240)
|
|
|
$
|
(1,620)
|
|
|
$
|
(960)
|
|
|
$
|
(2,580)
|
|
Depreciation
and amortization
|
|
1,797
|
|
|
1,823
|
|
|
3,620
|
|
|
1,674
|
|
|
1,765
|
|
|
3,439
|
|
Termination
fee
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest
expense
|
|
2,549
|
|
|
189
|
|
|
2,738
|
|
|
2,515
|
|
|
204
|
|
|
2,719
|
|
Income
taxes
|
|
(90)
|
|
|
—
|
|
|
(90)
|
|
|
49
|
|
|
—
|
|
|
49
|
|
EBITDA
Contribution
|
|
$
|
2,442
|
|
|
$
|
1,406
|
|
|
$
|
3,848
|
|
|
$
|
2,618
|
|
|
$
|
1,009
|
|
|
$
|
3,627
|
|
FFO
Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(9,634)
|
|
|
$
|
(606)
|
|
|
$
|
(10,240)
|
|
|
$
|
(1,620)
|
|
|
$
|
(960)
|
|
|
$
|
(2,580)
|
|
Depreciation
and amortization
|
|
1,797
|
|
|
1,823
|
|
|
3,620
|
|
|
1,674
|
|
|
1,765
|
|
|
3,439
|
|
Termination
fee
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
FFO
Contribution
|
|
$
|
(17)
|
|
|
$
|
1,217
|
|
|
$
|
1,200
|
|
|
$
|
54
|
|
|
$
|
805
|
|
|
$
|
859
|
|
|
|
Year
Ended December 31, 2012
|
|
Year
Ended December 31, 2011
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total
revenues (100%)
|
|
$
|
140,220
|
|
|
$
|
77,281
|
|
|
$
|
217,501
|
|
|
$
|
136,727
|
|
|
$
|
30,711
|
|
|
$
|
167,438
|
|
Property
EBITDA (100%)
|
|
$
|
40,722
|
|
|
$
|
12,777
|
|
|
$
|
53,499
|
|
|
$
|
42,445
|
|
|
$
|
(1,144)
|
|
|
$
|
41,301
|
|
Equity
in losses of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
13,989
|
|
|
$
|
6,389
|
|
|
$
|
20,378
|
|
|
$
|
14,662
|
|
|
$
|
(572)
|
|
|
$
|
14,090
|
|
Depreciation
and amortization
|
|
(6,895)
|
|
|
(7,145)
|
|
|
(14,040)
|
|
|
(6,637)
|
|
|
(4,022)
|
|
|
(10,659)
|
|
Interest
expense
|
|
(10,093)
|
|
|
(778)
|
|
|
(10,871)
|
|
|
(9,897)
|
|
|
(452)
|
|
|
(10,349)
|
|
Other
expenses, net
|
|
(7,931)
|
|
|
(155)
|
|
|
(8,086)
|
|
|
(1,569)
|
|
|
(657)
|
|
|
(2,226)
|
|
Income
taxes
|
|
383
|
|
|
—
|
|
|
383
|
|
|
505
|
|
|
—
|
|
|
505
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(10,547)
|
|
|
$
|
(1,689)
|
|
|
$
|
(12,236)
|
|
|
$
|
(2,936)
|
|
|
$
|
(5,703)
|
|
|
$
|
(8,639)
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(10,547)
|
|
|
$
|
(1,689)
|
|
|
$
|
(12,236)
|
|
|
$
|
(2,936)
|
|
|
$
|
(5,703)
|
|
|
$
|
(8,639)
|
|
Depreciation
and amortization
|
|
6,895
|
|
|
7,145
|
|
|
14,040
|
|
|
6,637
|
|
|
4,022
|
|
|
10,659
|
|
Termination
fee
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest
expense
|
|
10,093
|
|
|
778
|
|
|
10,871
|
|
|
9,897
|
|
|
452
|
|
|
10,349
|
|
Income
taxes
|
|
(383)
|
|
|
—
|
|
|
(383)
|
|
|
(505)
|
|
|
—
|
|
|
(505)
|
|
EBITDA
Contribution
|
|
$
|
13,878
|
|
|
$
|
6,234
|
|
|
$
|
20,112
|
|
|
$
|
13,093
|
|
|
$
|
(1,229)
|
|
|
$
|
11,864
|
|
FFO
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in losses of unconsolidated affiliates
|
|
$
|
(10,547)
|
|
|
$
|
(1,689)
|
|
|
$
|
(12,236)
|
|
|
$
|
(2,936)
|
|
|
$
|
(5,703)
|
|
|
$
|
(8,639)
|
|
Depreciation
and amortization
|
|
6,895
|
|
|
7,145
|
|
|
14,040
|
|
|
6,637
|
|
|
4,022
|
|
|
10,659
|
|
Termination
fee
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
FFO
Contribution
|
|
$
|
4,168
|
|
|
$
|
5,456
|
|
|
$
|
9,624
|
|
|
$
|
3,701
|
|
|
$
|
(1,681)
|
|
|
$
|
2,020
|
|
Investments
in Unconsolidated Affiliates (Continued)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
|
|
Spread
over
LIBOR
|
|
|
|
Loan
Amount
|
|
Maturity
(a)
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine
|
|
5.80
|
%
|
|
(b)
|
|
480 bp
|
|
(b)
|
|
$
|
425,000
|
|
|
March
2016
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
(7,929)
|
|
|
|
Net
Debt
|
|
|
|
|
|
|
|
|
|
$
|
417,071
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage
|
|
0.57
|
%
|
|
|
|
36 bp
|
|
|
|
$
|
133,000
|
|
|
April
2015
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
(4,626)
|
|
|
|
Net
Debt
|
|
|
|
|
|
|
|
|
|
$
|
128,374
|
|
|
|
(a) Includes extension options.
(b) Subject to a 1% LIBOR floor.
Caps
|
|
Effective
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
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Leasehold
Information
|
(in
thousands)
|
|
|
|
|
|
|
|
Three
Months Ended December 31,
|
|
Years
Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Paris
Marriott (a):
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,455
|
|
Revenue
(b)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,455
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,274)
|
|
Less:
Deferred gain on sale-leaseback
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,214)
|
|
Adjusted
lease expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,488)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,033)
|
|
|
|
|
|
|
|
|
|
|
Marriott
Hamburg:
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
1,472
|
|
|
$
|
1,568
|
|
|
$
|
5,876
|
|
|
$
|
6,603
|
|
Revenue
(b)
|
|
$
|
1,273
|
|
|
$
|
1,675
|
|
|
$
|
4,778
|
|
|
$
|
5,422
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
|
(1,155)
|
|
|
(1,163)
|
|
|
(4,580)
|
|
|
(4,865)
|
|
Less:
Deferred gain on sale-leaseback
|
|
(50)
|
|
|
(66)
|
|
|
(200)
|
|
|
(217)
|
|
Adjusted
lease expense
|
|
(1,205)
|
|
|
(1,229)
|
|
|
(4,780)
|
|
|
(5,082)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
|
$
|
68
|
|
|
$
|
446
|
|
|
$
|
(2)
|
|
|
$
|
340
|
|
|
|
|
|
|
|
|
|
|
Total
Leaseholds:
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
1,472
|
|
|
$
|
1,568
|
|
|
$
|
5,876
|
|
|
$
|
10,058
|
|
Revenue
(b)
|
|
$
|
1,273
|
|
|
$
|
1,675
|
|
|
$
|
4,778
|
|
|
$
|
8,877
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
|
(1,155)
|
|
|
(1,163)
|
|
|
(4,580)
|
|
|
(8,139)
|
|
Less:
Deferred gain on sale-leasebacks
|
|
(50)
|
|
|
(66)
|
|
|
(200)
|
|
|
(1,431)
|
|
Adjusted
lease expense
|
|
(1,205)
|
|
|
(1,229)
|
|
|
(4,780)
|
|
|
(9,570)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
contribution from leaseholds
|
|
$
|
68
|
|
|
$
|
446
|
|
|
$
|
(2)
|
|
|
$
|
(693)
|
|
|
|
December
31,
|
Security
Deposit (c):
|
|
2012
|
|
2011
|
Marriott
Hamburg
|
|
$
|
2,507
|
|
|
$
|
2,462
|
|
(a) On April 6, 2011, we sold our leasehold interest in the
Paris Marriott hotel. The results of operations for the Paris Marriott
hotel have been classified as discontinued operations for all periods
presented.
(b) For the year ended December 31, 2011, Revenue for the
Paris Marriott hotel represents Property EBITDA. For the three months
and years ended December 31, 2012 and 2011, Revenue for the Marriott
Hamburg hotel represents lease revenue.
(c) The security deposit is recorded in prepaid expenses and
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 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 certain other charges that are highly variable from year to year.
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, with
the exception of impairment of depreciable real estate. NAREIT 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, impairment of depreciable real
estate, real estate-related depreciation and amortization, and 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
certain other charges that are highly variable from year to year. 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, excluding shares related to the JW Marriott Essex House
Hotel put option. Dilutive securities may include shares granted under
share-based compensation plans and operating partnership units. 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 December 31,
|
|
Years
Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(36,401)
|
|
|
$
|
(15,917)
|
|
|
$
|
(79,472)
|
|
|
$
|
(23,688)
|
|
Depreciation
and amortization
|
|
27,048
|
|
|
25,840
|
|
|
103,464
|
|
|
112,062
|
|
Interest
expense
|
|
16,862
|
|
|
19,299
|
|
|
75,489
|
|
|
86,447
|
|
Income
taxes—continuing operations
|
|
796
|
|
|
691
|
|
|
1,011
|
|
|
970
|
|
Income
taxes—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
379
|
|
Noncontrolling
interests
|
|
(58)
|
|
|
(99)
|
|
|
(184)
|
|
|
(29)
|
|
Adjustments
from consolidated affiliates
|
|
(4,217)
|
|
|
(1,302)
|
|
|
(8,599)
|
|
|
(6,733)
|
|
Adjustments
from unconsolidated affiliates
|
|
6,956
|
|
|
6,928
|
|
|
27,562
|
|
|
23,221
|
|
Preferred
shareholder dividends
|
|
6,041
|
|
|
(4,682)
|
|
|
24,166
|
|
|
18,482
|
|
EBITDA
|
|
17,027
|
|
|
30,758
|
|
|
143,437
|
|
|
211,111
|
|
Realized
portion of deferred gain on sale-leaseback—continuing operations
|
|
(50)
|
|
|
(66)
|
|
|
(200)
|
|
|
(217)
|
|
Realized
portion of deferred gain on sale-leaseback—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,214)
|
|
Gain
on sale of assets—continuing operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,640)
|
|
Gain
on sale of assets—discontinued operations
|
|
—
|
|
|
(357)
|
|
|
—
|
|
|
(101,287)
|
|
Impairment
losses and other charges
|
|
18,843
|
|
|
—
|
|
|
18,843
|
|
|
—
|
|
Loss
on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,237
|
|
Loss
on early termination of derivative financial instruments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,242
|
|
Foreign
currency exchange (gain) loss—continuing operations (a)
|
|
(94)
|
|
|
79
|
|
|
1,075
|
|
|
2
|
|
Foreign
currency exchange loss (gain)—discontinued operations (a)
|
|
—
|
|
|
—
|
|
|
535
|
|
|
(51)
|
|
Adjustment
for Value Creation Plan
|
|
(1,352)
|
|
|
9,529
|
|
|
1,407
|
|
|
18,607
|
|
Severance
charges
|
|
2,485
|
|
|
—
|
|
|
2,485
|
|
|
—
|
|
Management
agreement termination fee (b)
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
Comparable
EBITDA
|
|
$
|
44,679
|
|
|
$
|
39,943
|
|
|
$
|
175,402
|
|
|
$
|
154,790
|
|
(a) Foreign currency exchange gains or losses applicable to
third-party and inter-company debt and certain balance sheet items held
by foreign subsidiaries.
(b) Our share of the Hotel del Coronado
management agreement termination fee included in both equity in losses
of unconsolidated affiliates and net loss attributable to the
noncontrolling interests in consolidated affiliates.
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 December 31,
|
|
Years
Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(36,401)
|
|
|
$
|
(15,917)
|
|
|
$
|
(79,472)
|
|
|
$
|
(23,688)
|
|
Depreciation
and amortization
|
|
27,048
|
|
|
25,840
|
|
|
103,464
|
|
|
112,062
|
|
Corporate
depreciation
|
|
(190)
|
|
|
(273)
|
|
|
(979)
|
|
|
(1,141)
|
|
Gain
on sale of assets—continuing operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,640)
|
|
Gain
on sale of assets—discontinued operations
|
|
—
|
|
|
(357)
|
|
|
—
|
|
|
(101,287)
|
|
Realized
portion of deferred gain on sale-leaseback—continuing operations
|
|
(50)
|
|
|
(66)
|
|
|
(200)
|
|
|
(217)
|
|
Realized
portion of deferred gain on sale-leaseback—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,214)
|
|
Deferred
tax expense on realized portion of deferred gain on sale-leasebacks
|
|
—
|
|
|
—
|
|
|
—
|
|
|
379
|
|
Noncontrolling
interests adjustments
|
|
(127)
|
|
|
(135)
|
|
|
(501)
|
|
|
(575)
|
|
Adjustments
from consolidated affiliates
|
|
(1,906)
|
|
|
(664)
|
|
|
(4,091)
|
|
|
(4,486)
|
|
Adjustments
from unconsolidated affiliates
|
|
3,923
|
|
|
3,740
|
|
|
15,258
|
|
|
11,763
|
|
FFO
|
|
(7,703)
|
|
|
12,168
|
|
|
33,479
|
|
|
(11,044)
|
|
Redeemable
noncontrolling interests
|
|
69
|
|
|
36
|
|
|
317
|
|
|
546
|
|
FFO—Fully
Diluted
|
|
(7,634)
|
|
|
12,204
|
|
|
33,796
|
|
|
(10,498)
|
|
Impairment
losses and other charges
|
|
18,843
|
|
|
—
|
|
|
18,843
|
|
|
—
|
|
Non-cash
mark to market of interest rate swaps
|
|
(7,833)
|
|
|
(1,696)
|
|
|
(12,238)
|
|
|
(2,183)
|
|
Loss
on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,237
|
|
Loss
on early termination of derivative financial instruments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,242
|
|
Foreign
currency exchange (gain) loss—continuing operations (a)
|
|
(94)
|
|
|
79
|
|
|
1,075
|
|
|
2
|
|
Foreign
currency exchange loss (gain)—discontinued operations (a)
|
|
—
|
|
|
—
|
|
|
535
|
|
|
(51)
|
|
Adjustment
for Value Creation Plan
|
|
(1,352)
|
|
|
9,529
|
|
|
1,407
|
|
|
18,607
|
|
Severance
charges
|
|
2,485
|
|
|
—
|
|
|
2,485
|
|
|
—
|
|
Management
agreement termination fee (b)
|
|
7,820
|
|
|
—
|
|
|
7,820
|
|
|
—
|
|
Comparable
FFO
|
|
$
|
12,235
|
|
|
$
|
20,116
|
|
|
$
|
53,723
|
|
|
$
|
36,356
|
|
Comparable
FFO per fully diluted share
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
|
$
|
0.26
|
|
|
$
|
0.20
|
|
Weighted
average diluted shares (c)
|
|
209,307
|
|
|
188,340
|
|
|
203,605
|
|
|
179,319
|
|
(a) Foreign currency exchange gains or losses applicable to
third-party and inter-company debt and certain balance sheet items held
by foreign subsidiaries.
(b) Our share of the Hotel del Coronado
management agreement termination fee included in both equity in losses
of unconsolidated affiliates and net loss attributable to the
noncontrolling interests in consolidated affiliates.
(c) Excludes shares related to the JW Marriott Essex House
Hotel put option.
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Debt
Summary
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
Spread
(a)
|
|
Loan
Amount
|
|
Maturity
(b)
|
Marriott
London Grosvenor Square (c)
|
|
1.62
|
%
|
|
110 bp
(c)
|
|
$
|
115,468
|
|
|
October
2013
|
North
Beach Venture
|
|
5.00
|
%
|
|
Fixed
|
|
1,476
|
|
|
January
2014
|
Bank
credit facility
|
|
3.21
|
%
|
|
300 bp
|
|
146,000
|
|
|
June
2015
|
Four
Seasons Washington, D.C.
|
|
3.36
|
%
|
|
315 bp
|
|
130,000
|
|
|
July
2016
|
Westin
St. Francis
|
|
6.09
|
%
|
|
Fixed
|
|
214,186
|
|
|
June
2017
|
Fairmont
Chicago
|
|
6.09
|
%
|
|
Fixed
|
|
95,167
|
|
|
June
2017
|
JW
Marriott Essex House Hotel
|
|
4.75
|
%
|
|
400 bp
|
|
190,000
|
|
|
September
2017
|
Hyatt
Regency La Jolla (d)
|
|
4.50%
/ 10.00%
|
|
400 bp
/ Fixed
|
|
90,000
|
|
|
December
2017
|
InterContinental
Miami
|
|
3.71
|
%
|
|
350 bp
|
|
85,000
|
|
|
July
2018
|
Loews
Santa Monica Beach Hotel
|
|
4.06
|
%
|
|
385 bp
|
|
110,000
|
|
|
July
2018
|
InterContinental
Chicago
|
|
5.61
|
%
|
|
Fixed
|
|
145,000
|
|
|
August
2021
|
|
|
|
|
|
|
$
|
1,322,297
|
|
|
|
(a) Spread over LIBOR (0.21% at December 31, 2012). Interest
on the JW Marriott Essex House Hotel loan is subject to a 0.75% LIBOR
floor. Interest on the Hyatt Regency La Jolla loan is subject to a
0.50% LIBOR floor.
(b) Includes extension options.
(c) Principal balance of £71,070,000 at December 31,
2012. Spread over three-month GBP LIBOR (0.52% at December 31, 2012).
(d) Interest on $72,000,000 is
payable at LIBOR plus 4.00%, subject to a 0.50% LIBOR floor, and
interest on $18,000,000 is payable at a
fixed rate of 10.00%.
Domestic and European Interest Rate Swaps
Swap
Effective Date
|
|
Fixed
Pay Rate
Against
LIBOR
|
|
Notional
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
|
|
|
|
Swap
Effective Date
|
|
Fixed
Pay Rate
Against
GBP LIBOR
|
|
Notional
Amount
|
|
|
Maturity
|
October
2007
|
|
5.72
|
%
|
|
|
|
£
|
71,070
|
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Future scheduled debt principal payments (including extension
options) are as follows:
Years
ending December 31,
|
|
Amount
|
2013
|
|
$
|
126,334
|
|
2014
|
|
15,348
|
|
2015
|
|
162,246
|
|
2016
|
|
150,661
|
|
2017
|
|
549,516
|
|
Thereafter
|
|
318,192
|
|
|
|
$
|
1,322,297
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
|
74.8
|
%
|
Weighted
average interest rate including U.S. and European swaps (e)
|
|
6.45
|
%
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
|
4.21
|
|
(e) Excludes the amortization of deferred financing costs and
the amortization of the interest rate swap costs.
|