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Crestline Capital Reports ProForma 
7.5% RevPAR Increase for 1998
Hotel Statistics
 
BETHESDA, MD; March 19, 1999 � Crestline Capital Corporation today reported 1998 pro forma revenues of $4.3 billion, an 8 percent increase over revenues of $4.0 billion in 1997.  Pro forma net income increased nearly 27% to $26 million, or $1.19 per share, and pro forma Earnings before Interest Expense, Taxes, Depreciation and Amortization (EBITDA) increased 12 percent to $86 million for 1998. 

Bruce D. Wardinski, Chairman of the Board and CEO, said �We are pleased with our results for 1998 as revenue and cash flow growth were strong.�  Mr. Wardinski added, �Our high quality-lodging portfolio, as well as our outstanding group of 31 senior living communities, provide a strong foundation for future growth in revenue, cash flow and shareholder value. This coming year, our first year as an independent company, will be very exciting as we execute our business plan and grow both our lodging and senior living businesses.�

Pro forma hotel revenues increased 8 percent to $4,053 million.  The increase in hotel revenues was driven primarily by a 7.5 percent increase in room revenue per available room (REVPAR) on the leased full-service hotels.  Pro forma EBITDA from the Company�s leased hotels increased 16 percent to $40 million due principally to the strong growth in full-service revenues and a one percentage point increase in the house profit margin. 

Pro forma senior living communities� revenues increased 8 percent to $241 million in 1998 due primarily to revenue per available unit (REVPAU) growth of 5 percent and the impact of expansions at the Company�s communities.  Senior living EBITDA increased 6 percent to $59 million on a pro forma basis in 1998 due principally to the strong growth in REVPAU and the impact of the expansions. 

James L. Francis, Executive Vice President and Chief Financial Officer stated �Our leased full-service hotels performed exceptionally well in 1998 with REVPAR growth  exceeding 7 percent.  We anticipate lower full-service REVPAR growth of 4 to 5 percent in 1999, but we will work closely with our hotel managers to ensure that margins, and our EBITDA, remain strong.�  Mr. Francis added, �We are looking at several growth opportunities at this time and hope to announce a deal in the near future.  We are also working on additional financing capacity to fund acquisition opportunities and to improve our financial flexibility.�

The pro forma results assume that the spin-off of Crestline Capital Corporation from Host Marriott Corporation occurred on January 1, 1997, the leases and subleases with Host Marriott were effective as of that date and that certain transactions detailed in the Company�s Securities and Exchange Commission filings occurred on January 1, 1997.  The pro forma presentation does not purport to represent what the Company�s results of operations would actually have been if the transactions had in fact occurred on such date or to project the Company�s results of operations for any future date or period.

On a historical basis, which only reflects the results of the Company�s senior living communities, revenues in 1998 were $241 million and net income was $6 million.

Crestline Capital Corporation is the largest and best capitalized independent hotel leasing company and is the owner of one of the premier portfolios of senior living communities in the country. For further information on Crestline Capital Corporation, please visit the Company�s web site at www.crestlinecapital.com.

Certain matters discussed herein are forward-looking statements within the meaning of the Private Litigation Reform Act of 1995.  Certain, but not necessarily all, of such statements can be identified by the use of forward-looking terminology, such as �believes,� �expects,� �may,� �will,� �should,� �estimates� or anticipates� or the negative thereof or comparable terminology.  All forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual transactions, results, performance or achievements of the Company to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements.  These may include: (i) national and local  economic and business conditions or governmental regulations that will affect demand, prices, wages or other costs for hotels and senior living communities; (ii) the level of rates and occupancy that can be achieved by such properties; (iii) the Company�s ability to compete effectively in areas such as access, location, quality of properties and rate structures; (iv) the ability to maintain the properties in a first-class manner (including meeting capital expenditure requirements; (v) the availability and terms of financing; (vi) governmental actions and initiatives including tax law changes that may eliminate the need for a lease structure by lodging and senior living REITs; (vii) changes to the public pay systems for medical care and the need for compliance with environmental licensure and safety requirements; and (viii) the effect on the Company of the Year 2000 issue.  Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions and business opportunities, it can give no assurance that its expectations will be attained or that any deviations will not be material.  The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

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CRESTLINE CAPITAL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited, in thousands, except per share amounts)
 

                                                    Year Ended 
                                      January 1,                 January 2,
                                               1999                              1998 
 

Revenues
   Full-service hotels ������������������..  $3,756,589 $3,461,732
   Limited service hotels ����������������....       296,502      281,609
      Total hotel revenue �����������������.   4,053,091    3,743,341
   Senior living communities ���������������.       241,445       222,789
   Other �����������������������..              4,500           4,500
      Total revenues ������������������.�   4,299,036   3,970,630

Operating Costs and Expenses
   Hotels �����������������������    4,008,227   3,703,877
   Senior living communities���������������       204,191      189,467
   Other�����������������������.             4,500           4,500
      Total operating costs and expenses����������...   4,216,918   3 ,897,844

Operating Profit �������������������.         82,118         72,786
Corporate expenses ������������������..  (17,376)        (16,500)
Interest expense ��������������������  (22,937)        (22,696)
Interest income��������������������.           2,601            1,501
Income before income taxes���������������         44,406          35,091
Provision for income taxes ���������������...  (18,206)        (14,387)

Net Income  ���������������������..     $     26,200 $        20,704

Basic Earnings Per Common Share�����������... $        1.19 $             .95

Diluted Earnings Per Common Share ���������..  $        1.19 $             .95

Historical Balance Sheet Data as of January 1, 1999 (audited)

   Cash and cash equivalents ��������������.. $ 66,779
   Total assets ��������������������.   858,753
   Debt, excluding working capital notes due to Host Marriott�      213,076
   Shareholders' equity ����������������...      459,254
 CRESTLINE CAPITAL CORPORATION 
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited, in thousands, except per share amounts and statistics)
 

 
                                                                                                                              Year   Ended 
                                                                                                                           January 1,     January 2, 
                                                                                                                               1999               1998 

EBITDA
Hotel leases �������������������������. $ 40,000 $  34,600 
Senior living communities �������������������.  59,396   56,009 
Corporate and other, net of interest income ������������..                  (13,025)             (13,249) 

   EBITDA �������������������������.. $ 86,371 $  77,360 

EBITDA �������������������.������... $ 86,371     $         77,360
Interest expense�����������������������.                  (22,937)       (22,696)
Hotel working capital interest expense��������������.    4,864       4,864
Depreciation and amortization�����������������..                  (22,892)   (23,437)
Income taxes������������������������.                   (18,206)     (14,387) 
Other non-cash charges, net������������������..   (1,000)    (1,000)
   Net income������������������������. $ 26,200      $         20,704 

Full-Service Hotel Statistics (120 Properties)
Room rate �������������������������. $ 143.59 $   133.39
Room rate increase ���������������.������..  7.6%
Occupancy������������������������...  77.5%      77.6%
REVPAR �������������������������.          $        111.29 $   103.52
REVPAR increase���������������������...  7.5%
 
 

Limited Service Hotel Statistics
                                                                                                                         1998      1997
Courtyard (53 Properties)
Room rate������������������������� $ 90.71       $ 84.30 
Room rate increase ���������������������..  7.6% 
Occupancy������������������������..  80.5%       81.1% 
REVPAR�������������������������. $ 73.04 $      68.38 
REVPAR increase ���������������������...  6.8%

Residence Inn (18 Properties)
Room rate ������������������������� $ 102.15 $        99.96
Room rate increase ���������������������..  2.2% 
Occupancy ������������������������...  84.1%            83.3%
REVPAR�������������������������. $ 85.86 $           83.27
REVPAR increase ���������������������...   3.1% 
 

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Contact:
       Scanlon, Heather
[email protected]
   
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Also See: Host Marriott To Acquire Eight Public Limited Partnerships that Own 24 Full-service Marriott / Dec 1998 

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