CHICAGO, Feb. 23, 2011 -- Strategic Hotels &
Resorts (NYSE: BEE) today reported results for the fourth quarter and
full year ended December 31, 2010.
Additionally, the Company announced that it has entered into an
agreement to sell its leasehold interest in the Paris Marriott Champs
Elysees for total proceeds of euro 39.7 million
(approximately $54.4 million).
Chief Executive Officer Laurence
Geller remarked, "2010 was a pivotal and successful year for the
Company. We consistently executed upon our stated strategy,
resulting in the anticipated convergence of our key operating metrics
which turned positive last spring. Moreover, we executed a number
of well-timed, strategic initiatives that strengthened our balance
sheet, including the $350 million
secondary offering completed in May. Among the other
accomplishments we achieved in 2010 was the continuance of our planned,
methodical exit of Europe,
highlighted by the December closing of the InterContinental Prague and
the agreement to sell our interest in the Marriott Champs Elysees in Paris on attractive terms.
"In 2011, our competitive position is growing even stronger.
Our unique portfolio of high-end properties are in excellent
physical condition and are competing in markets where there is
negligible new supply. We remain focused on aggressively pursuing
the final stage of our disciplined balance sheet restructuring while
simultaneously growing rate, occupancy, market share, and margins. Our
strategy will continue to produce meaningful financial results and
support our goal of providing exceptional shareholder returns,"
concluded Geller.
Fourth Quarter Highlights
- Comparable funds from operations (Comparable FFO) was a
loss of $0.01 per diluted share compared
with a loss of $0.05 per diluted share
in the prior year period. Excluding a $5.7
million charge related to the Company's long-term incentive
compensation (Value Creation Plan or VCP), Comparable FFO was $0.03 per diluted share in the fourth quarter
of 2010.
- Comparable EBITDA was $28.7 million compared with $32.5 million in the prior year period.
Excluding the $5.7 million charge
related to the Company's VCP, Comparable EBITDA totaled $34.5 million in the fourth quarter of 2010, a
6.2 percent increase between periods.
- North American revenue per available room (RevPAR)
increased 8.1 percent, driven by a 3.3 percentage point
increase in occupancy and a 2.8 percent increase in average daily rate
(ADR), compared to the fourth quarter 2009. Total revenue per
available room (Total RevPAR) increased 8.7 percent with non-rooms
revenue increasing by 9.3 percent between periods.
- European RevPAR increased 5.0 percent (9.9 percent in
constant dollars), driven by a 2.0 percentage point increase in
occupancy and a 2.4 percent increase in ADR (7.2 percent increase in
constant dollars) between periods. European Total RevPAR increased 1.0
percent in the fourth quarter over the prior year period (5.7 percent
in constant dollars). The European portfolio excludes results
from the InterContinental Prague, which was sold in the fourth quarter,
and the Paris Marriott Champs Elysees which is currently under contract
for sale.
- North American EBITDA margins expanded 450 basis points
compared to the fourth quarter of 2009. Excluding certain
one-time property tax refunds received during the quarter and adjusting
for cancellation fees, EBITDA margins expanded 210 basis points in the
fourth quarter.
Full Year 2010 Highlights
- Comparable FFO was a loss of $0.05
per diluted share compared with a loss of $0.30
per diluted share in the prior year period. Excluding a $12.6 million charge related to the Company's
VCP, Comparable FFO was $0.05 per
diluted share for the full year 2010.
- Comparable EBITDA was $119.4 million compared with $120.0 million in the prior year period.
Excluding the $12.6 million charge
related to the Company's VCP, Comparable EBITDA was $132.0 million for the full year 2010, a 10.0
percent increase over the prior year.
- North American RevPAR increased 4.7 percent, driven by a
2.2 percentage point increase in occupancy and a 1.2
percent increase in ADR, compared to the full year 2009. Total
RevPAR increased 4.3 percent with non-rooms revenue increasing by 3.9
percent between years.
- European RevPAR increased 12.1 percent (15.3 percent in
constant dollars), driven by a 1.1 percentage point increase in
occupancy and a 10.5 percent increase in ADR (13.6 percent increase in
constant dollars) between periods. European Total RevPAR increased 7.8
percent in 2010 (10.8 percent in constant dollars). The European
portfolio excludes results from the InterContinental Prague, which was
sold in the fourth quarter, and the Paris Marriott Champs Elysees,
which is currently under contract for sale.
- North American EBITDA margins expanded 130 basis points
compared to the full year 2009. Excluding certain one-time
property tax refunds received during the fourth quarter and adjusting
for cancellation fees, EBITDA margins expanded 200 basis points in
2010.
Other Financial Results
The Company reported fourth quarter and full year 2010
earnings results as follows:
- Net loss attributable to common shareholders was $134.8 million, or $0.89
per diluted share, in the fourth quarter of 2010, compared with net
loss attributable to common shareholders of $72.2
million, or $0.96 per diluted
share, in the fourth quarter of 2009.
- For the full year, net loss attributable to common
shareholders was $261.9 million, or $2.13 per diluted share, compared with a net
loss attributable to common shareholders of $274.8
million, or $3.65 per diluted
share for the full year 2009.
2010 Dispositions and Capital Markets Review
- In December, the Company entered into an agreement to sell
its leasehold interest in the Paris Marriott Champs Elysees hotel for euro 26.5 million ($36.3
million). The Company also expects to receive an
additional euro 13.2 million ($18.1 million) related to the release of an
existing leasehold guarantee and other closing adjustments for total
proceeds of euro 39.7 million
(approximately $54.4 million). The
transaction is subject to certain closing conditions and management can
make no guarantee of closing. Net of lease expense, the property
contributed $3.3 million to Comparable
EBITDA and FFO in 2010 and was classified as held for sale in the
fourth quarter and full year financial statements. The hotel also
contributed approximately $0.4 million
in incremental corporate G&A expense in 2010.
- In December, the Company closed on the disposition of the
InterContinental Prague for total consideration of approximately euro 106.1 million ($141.4
million), which represents the assignment of the property's
third party debt and the interest rate swap liability related to the
third party indebtedness. In addition, approximately euro 2.0 million ($2.7
million) of restricted cash related to the property was released
to the Company.
- In June, the Company completed a cash tender offer to
retire 100 percent of the aggregate principal amount of the $180 million, 3.50 percent Exchangeable Senior
Notes due 2012 at par, plus accrued and unpaid interest.
- In May, the Company closed on the sale of 75.9 million
shares of common stock at a public offering price of $4.60 per share. Net proceeds to the
Company, after deducting underwriting discounts and commissions and
expenses related to the offering, were $331.8
million.
- In May, the Company closed on a seven-year, $317.8 million, non-recourse
cross-collateralized mortgage agreement secured by the Westin St.
Francis and Fairmont Chicago hotels with a fixed interest rate of 6.09
percent.
Impairment Losses and Other Charges
Fourth quarter and full year 2010 results include impairment
and other charges totaling $141.9 million.
These charges include an impairment to the Fairmont Scottsdale
Princess of $101.3 million and a $40.6 million impairment to the Company's
original investment in the Hotel del Coronado. These one-time,
non-cash charges have been excluded from Comparable EBITDA, FFO and FFO
per share metrics.
Subsequent Events
- The Company signed a letter agreement to acquire the Four
Seasons Jackson Hole and Four Seasons Silicon Valley from The
Woodbridge Company Limited (Woodbridge) in exchange for 15.2 million
shares of common stock at an agreed upon issuance price of $6.25 per share, or an implied valuation of $95.0 million. On a full year basis, the
hotels are forecasted to earn a combined $8.6
million of EBITDA in 2011, representing an 11.0 times EBITDA
multiple.
- In addition, the Company signed an agreement to privately
place and issue 8.0 million shares of common stock at $6.25 per share to Woodbridge resulting in
total gross proceeds of $50.0 million.
- The Company completed a recapitalization of the joint
venture that owns the Hotel del Coronado. Under terms of the
agreement, a new joint venture has been established between the
Company, Blackstone Real Estate Advisors (Blackstone)
and KSL Resorts. As part of the recapitalization, which valued
the hotel at approximately $590 million,
the Company invested approximately $57 million
to retain a 34.3 percent ownership position in the joint venture and
will remain as asset manager of the hotel. Blackstone is a 60
percent owner and general partner of the joint venture. A $425 million debt financing was originated by
Deutsche Bank.
- The Company amended its revolving credit facility to
increase total borrowing capacity. Terms of the amendment include
an increase of the advance rate from 45 percent to 55 percent of the
borrowing base assets' appraised values, a reduction in the debt
service coverage ratio constant from 8 percent to 7 percent and a
reduction of the debt service coverage ratio limit from 1.3 times to
1.2 times. In exchange, the Company agreed to reduce the total
committed facility from $400 million to $350
million and reduce the maximum total leverage covenant from 80
percent to 70 percent. Pro forma for the amendment, the Company
would have had availability on the revolving credit facility of
approximately $320 million at year-end.
The Company currently has $52 million
outstanding on the credit facility.
- The Company sold its 50 percent interest in BuyEfficient,
an electronic purchasing platform, for $9.0
million. The Company originally made a 50 percent
investment in the entity in December 2007
in partnership with Sunstone Hotel Investors, Inc.
- The Company terminated $125 million
of interest rate swaps for a total termination cost of $4.2 million.
2011 Guidance
For the full year 2011, the Company anticipates that
Comparable EBITDA will be in the range of $135.0
million to $150.0 million and Comparable FFO in the range of ($0.02) and $0.07
per fully diluted share.
The Company's 2011 guidance includes the following assumptions:
- Same Store North American RevPAR and Total RevPAR growth in
the range of 7.0 to 9.0 percent. Same Store operating metrics
include North American hotels which are included in the Company's
consolidated financial results but exclude the Fairmont Scottsdale
Princess;
- Same Store North American gross operating profit margins
between 31 percent and 32 percent and EBITDA margins between 21 percent
and 22 percent;
- Corporate G&A expenses in the range of $21.0 to $23.0 million, excluding any expense
from the Company's Value Creation Plan. The midpoint of the range
is approximately flat with 2010 corporate expenses, excluding VCP
expense, and a 27 percent reduction from the 2007 peak;
- For guidance purposes only, the Fairmont Scottsdale
Princess is assumed to contribute zero to Comparable EBITDA and FFO
beyond the maturity of the property's debt financing in September.
The property is forecasted to contribute $7.1
million to Comparable EBITDA in the first eight months of 2011;
- Disposition of the Paris Marriott Champs Elysees leasehold
position to close at the end of the first quarter;
- Acquisition of the Four Seasons Silicon Valley and Four
Seasons Jackson Hole to close at the end of the first quarter.
The two assets are expected to contribute $6.0
million to Comparable EBITDA and FFO in the last three quarters
of 2011;
- Issuance of 23.2 million shares of common equity in
exchange for the Four Seasons Silicon Valley and Four Seasons Jackson
Hole and $50 million in gross proceeds
to be used to pay down outstanding indebtedness. Weighted average
diluted shares outstanding for 2011 assumed to be approximately 170
million;
- Consolidated interest expense in the range of $95 million to $100 million, including
approximately $25 million of non-cash
interest expense, primarily related to swap financing amortization
costs;
- Capital expenditures totaling approximately $69 million, including spending of $47 million from property furniture, fixtures
and equipment (FF&E) reserves and an additional $22 million of owner-funded spending;
- No additional planned acquisition, disposition or capital
raising activity.
Portfolio Definitions
North American hotel comparisons for the fourth quarter and
full year 2010 are derived from the Company's hotel portfolio at December 31, 2010, consisting of properties in
which operations are included in the consolidated results of the
Company.
European hotel comparisons for the fourth quarter and full
year 2010 are derived from the Company's European owned and leased
hotel properties at December 31, 2010,
consisting of the Marriott London Grosvenor Square and the Marriott
Hamburg. The InterContinental Prague, which was sold in the
fourth quarter of 2010, and Paris Marriott Champs Elysees, which is
currently under contract for sale, are excluded from the European
portfolio comparisons.
Earnings Call
The Company will conduct its fourth quarter and full-year 2010
conference call for investors and other interested parties on Thursday, February 24, 2011 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by telephone at
888-713-4205 (toll international: 617-213-4862) with pass code
23050644. To participate on the web cast, log on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=176522&eventID=3689615
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 February 24, 2011, through 11:59 p.m. ET on March
3, 2011. To access the replay, dial 888-286-8010 (toll
international: 617-801-6888) and request replay pin number 40124729. 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 16 properties with an aggregate of 7,630 rooms. For a list
of current properties and for further information, please visit the
Company's website at http://www.strategichotels.com.
This press release contains forward-looking statements
about Strategic Hotels & Resorts, Inc. (the "Company"). Except for
historical information, the matters discussed in this press release are
forward-looking statements subject to certain risks and uncertainties.
These forward-looking statements include statements regarding our
future financial results, stabilization in the lodging space, positive
trends in the lodging industry and our continued focus on improving
profitability. Actual results could differ materially from the
Company's projections. Factors that may contribute to these differences
include, but are not limited to the following: failure to
reach agreement with Woodbridge on all business terms and the failure
to execute definitive agreements; failure to complete and close on
transactions in light of due diligence findings or the failure of
closing conditions to be satisfied; ability to obtain, refinance or
restructure debt or comply with covenants contained in our debt
facilities demand for hotel rooms in our current and proposed market
areas; availability of capital; ability to obtain, refinance or
restructure debt or comply with covenants contained in our debt
facilities; rising interest rates and operating costs; rising insurance
premiums; cash available for capital expenditures; competition;
economic conditions generally and in the real estate market
specifically, including deterioration of economic conditions and the
extent of its effect on business and leisure travel and the lodging
industry; ability to dispose of existing properties in a manner
consistent with our disposition strategy; risks related to natural
disasters; the effect of threats of terrorism and increased security
precautions on travel patterns and hotel bookings; the outbreak of
hostilities and international political instability; legislative or
regulatory changes, including changes to laws governing the taxation of
REITs; and changes in generally accepted accounting principles,
policies and guidelines applicable to REITs.
Additional risks are discussed in the Company's filings
with the Securities and Exchange Commission, including those appearing
under the heading "Item 1A. Risk Factors" in the Company's most recent
Form 10-K and subsequent Form 10-Qs. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations
will be attained. The forward-looking statements are made as of the
date of this press release, and we undertake no obligation to publicly
update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
COMPANY
CONTACTS:
|
|
Diane
Morefield
|
|
EVP
& Chief Financial Officer
|
|
Strategic
Hotels & Resorts
|
|
(312)
658-5740
|
|
|
|
Jonathan
Stanner
|
|
Vice
President, Capital Markets & Treasurer
|
|
Strategic
Hotels & Resorts
|
|
(312)
658-5746
|
|
|
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
|
($126.5)
|
|
($111.6)
|
|
Depreciation
and Amortization
|
125.0
|
|
125.0
|
|
Interest
Expense
|
96.3
|
|
96.3
|
|
Income
Taxes
|
3.3
|
|
3.3
|
|
Non-Controlling
Interests
|
(0.6)
|
|
(0.5)
|
|
Adjustments
from Consolidated Affiliates
|
(8.0)
|
|
(8.0)
|
|
Adjustments
from Unconsolidated Affiliates
|
16.2
|
|
16.2
|
|
Preferred
Shareholder Dividends
|
30.9
|
|
30.9
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(1.6)
|
|
(1.6)
|
|
Comparable EBITDA
|
$135.0
|
|
$150.0
|
|
|
|
|
|
|
|
|
|
|
Low
Range
|
|
High
Range
|
|
Net
Loss Attributable to Common Shareholders
|
($126.5)
|
|
($111.6)
|
|
Depreciation
and Amortization
|
123.8
|
|
123.8
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(1.6)
|
|
(1.6)
|
|
Deferred
Tax on Realized Portion of Deferred Gain
|
0.4
|
|
0.4
|
|
Non-Controlling
Interests
|
(0.6)
|
|
(0.5)
|
|
Adjustments
from Consolidated Affiliates
|
(5.2)
|
|
(5.2)
|
|
Adjustments
from Unconsolidated Affiliates
|
7.1
|
|
7.1
|
|
Comparable FFO
|
($2.6)
|
|
$12.4
|
|
Comparable FFO per Diluted Share
|
($0.02)
|
|
$0.07
|
|
|
|
|
|
Note:
No estimate for gain/loss on sale of assets related to asset
dispositions. Paris Marriott Champs Elysees results will be
classified as discontinued operations in the 2011 financial statements
which have not been separately broken out in the above reconciliations.
|
|
|
The following tables reconcile projected second quarter
through fourth quarter and full year 2011 net income attributable to
common shareholders to projected Comparable EBITDA and Comparable FFO
for the Four Seasons Jackson Hole and Four Seasons Silicon Valley (in
millions):
|
|
|
Q2 – Q4
|
|
Full
Year
|
|
Net
Income Attributable to Common Shareholders
|
$3.4
|
|
$5.2
|
|
Depreciation
and Amortization
|
2.6
|
|
3.4
|
|
Comparable EBITDA
|
$6.0
|
|
$8.6
|
|
|
|
|
|
|
|
|
|
|
Q2 – Q4
|
|
Full
Year
|
|
Net
Income Attributable to Common Shareholders
|
$3.4
|
|
$5.2
|
|
Depreciation
and Amortization
|
2.6
|
|
3.4
|
|
Comparable FFO
|
$6.0
|
|
$8.6
|
|
|
|
|
|
Note:
Depreciation and amortization has been estimated based on a
preliminary purchase price allocation. Any change in allocation
will affect the amount of depreciation and amortization expense.
|
|
|
The following tables reconcile projected 2011 net loss
attributable to common shareholders to projected Comparable EBITDA and
Comparable FFO for the Fairmont Scottsdale Princess for the period between January 1st and August 31st (in
millions):
|
|
|
Jan -
Aug
|
|
Net
Loss Attributable to Common Shareholders
|
($9.2)
|
|
Depreciation
and Amortization
|
15.0
|
|
Interest
Expense
|
1.3
|
|
Comparable EBITDA
|
$7.1
|
|
|
|
|
|
|
|
|
Jan -
Aug
|
|
Net
Loss Attributable to Common Shareholders
|
($9.2)
|
|
Depreciation
and Amortization
|
15.0
|
|
Comparable FFO
|
$5.8
|
|
|
|
Note:
Interest expense estimate based on the current forward LIBOR
curve. The property level debt financing currently has a blended
interest rate of LIBOR plus 56 basis points and is scheduled to mature
on September 9th.
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
93,885
|
|
$
87,077
|
|
$
362,559
|
|
$
343,891
|
|
Food
and beverage
|
66,339
|
|
59,412
|
|
238,762
|
|
216,982
|
|
Other
hotel operating revenue
|
22,696
|
|
22,439
|
|
79,981
|
|
89,525
|
|
Lease
revenue
|
1,608
|
|
1,345
|
|
4,991
|
|
4,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
184,528
|
|
170,273
|
|
686,293
|
|
655,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Costs and Expenses:
|
|
|
|
|
|
|
|
|
Rooms
|
|
27,204
|
|
25,379
|
|
105,142
|
|
100,642
|
|
Food
and beverage
|
47,241
|
|
42,920
|
|
171,279
|
|
160,252
|
|
Other
departmental expenses
|
53,467
|
|
50,375
|
|
199,336
|
|
193,699
|
|
Management
fees
|
6,093
|
|
5,897
|
|
22,911
|
|
23,386
|
|
Other
hotel expenses
|
8,733
|
|
13,893
|
|
48,781
|
|
52,385
|
|
Lease
expense
|
1,170
|
|
1,255
|
|
4,566
|
|
4,752
|
|
Depreciation
and amortization
|
32,406
|
|
34,379
|
|
130,601
|
|
130,955
|
|
Impairment
losses and other charges
|
141,858
|
|
49,526
|
|
141,858
|
|
99,740
|
|
Corporate
expenses
|
12,594
|
|
4,294
|
|
34,692
|
|
23,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expenses
|
330,766
|
|
227,918
|
|
859,166
|
|
789,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
(146,238)
|
|
(57,645)
|
|
(172,873)
|
|
(134,465)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(17,797)
|
|
(23,255)
|
|
(86,285)
|
|
(93,929)
|
|
Interest
income
|
61
|
|
109
|
|
430
|
|
640
|
|
Loss
on early extinguishment of debt
|
-
|
|
-
|
|
(925)
|
|
(883)
|
|
Loss
on early termination of derivative financial instruments
|
-
|
|
-
|
|
(18,263)
|
|
-
|
|
Equity
in earnings (losses) of joint ventures
|
10,125
|
|
(426)
|
|
13,025
|
|
1,718
|
|
Foreign
currency exchange loss
|
(16)
|
|
(40)
|
|
(1,410)
|
|
(896)
|
|
Other
income (expenses), net
|
99
|
|
(305)
|
|
2,398
|
|
(137)
|
|
Loss
before income taxes and discontinued operations
|
(153,766)
|
|
(81,562)
|
|
(263,903)
|
|
(227,952)
|
|
Income
tax expense
|
(1,112)
|
|
(1,881)
|
|
(1,408)
|
|
(3,344)
|
|
Loss
from continuing operations
|
(154,878)
|
|
(83,443)
|
|
(265,311)
|
|
(231,296)
|
|
Income
(loss) from discontinued operations, net of tax
|
28,037
|
|
17,745
|
|
34,511
|
|
(15,137)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
(126,841)
|
|
(65,698)
|
|
(230,800)
|
|
(246,433)
|
|
Net
loss attributable to the noncontrolling interests in SHR's operating
partnership
|
808
|
|
832
|
|
1,687
|
|
3,129
|
|
Net
(income) loss attributable to the noncontrolling interests in
consolidated affiliates
|
(1,080)
|
|
403
|
|
(1,938)
|
|
(641)
|
|
Net
loss attributable to SHR
|
(127,113)
|
|
(64,463)
|
|
(231,051)
|
|
(243,945)
|
|
Preferred
shareholder dividends
|
(7,722)
|
|
(7,722)
|
|
(30,886)
|
|
(30,886)
|
|
Net
loss attributable to SHR common shareholders
|
$
(134,835)
|
|
$
(72,185)
|
|
$
(261,937)
|
|
$
(274,831)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Loss Per Share:
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
$
(1.07)
|
|
$
(1.19)
|
|
$
(2.41)
|
|
$
(3.45)
|
|
|
Income
(loss) from discontinued operations attributable to SHR
|
0.18
|
|
0.23
|
|
0.28
|
|
(0.20)
|
|
|
Net
loss attributable to SHR common shareholders
|
$
(0.89)
|
|
$
(0.96)
|
|
$
(2.13)
|
|
$
(3.65)
|
|
|
Weighted
average common shares outstanding
|
151,663
|
|
75,426
|
|
122,933
|
|
75,267
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
(in
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
2010
|
|
December
31,
2009
|
|
Assets
|
|
|
|
|
|
|
|
Investment
in hotel properties, net
|
$
1,835,451
|
|
$
2,162,584
|
|
|
Goodwill
|
|
40,359
|
|
75,758
|
|
|
Intangible
assets, net of accumulated amortization of $6,536 and $4,400
|
32,620
|
|
34,046
|
|
|
Assets
held for sale
|
45,145
|
|
-
|
|
|
Investment
in joint ventures
|
18,024
|
|
46,745
|
|
|
Cash
and cash equivalents
|
78,842
|
|
116,310
|
|
|
Restricted
cash and cash equivalents
|
34,618
|
|
22,829
|
|
|
Accounts
receivable, net of allowance for doubtful accounts of $1,922 and $2,657
|
35,250
|
|
54,524
|
|
|
Deferred
financing costs, net of accumulated amortization of $15,756 and $12,543
|
3,322
|
|
11,225
|
|
|
Deferred
tax assets
|
4,121
|
|
34,244
|
|
|
Other
assets
|
34,564
|
|
39,878
|
|
|
|
Total
assets
|
$
2,162,316
|
|
$
2,598,143
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Mortgages
payable
|
$
1,118,281
|
|
$
1,300,745
|
|
|
|
Exchangeable
senior notes, net of discount
|
-
|
|
169,452
|
|
|
|
Bank
credit facility
|
28,000
|
|
178,000
|
|
|
|
Liabilities
of assets held for sale
|
93,206
|
|
-
|
|
|
|
Accounts
payable and accrued expenses
|
266,773
|
|
236,269
|
|
|
|
Deferred
tax liabilities
|
1,732
|
|
16,940
|
|
|
|
Deferred
gain on sale of hotels
|
3,930
|
|
101,852
|
|
|
|
|
|
Total
liabilities
|
1,511,922
|
|
2,003,258
|
|
|
Noncontrolling
interests in SHR’s operating partnership
|
5,050
|
|
2,717
|
|
|
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 $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 $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 $167,469
in the aggregate)
|
138,940
|
|
138,940
|
|
|
|
|
Common
shares ($0.01 par value; 250,000,000 common shares authorized;
151,305,314 and
|
|
|
|
|
|
|
|
|
75,253,252
common shares issued and outstanding)
|
1,513
|
|
752
|
|
|
|
|
Additional
paid-in capital
|
1,553,286
|
|
1,233,856
|
|
|
|
|
Accumulated
deficit
|
(1,185,294)
|
|
(954,208)
|
|
|
|
|
Accumulated
other comprehensive loss
|
(107,164)
|
|
(69,341)
|
|
|
|
|
|
Total
SHR's shareholders' equity
|
620,262
|
|
568,980
|
|
|
|
Noncontrolling
interests in consolidated affiliates
|
25,082
|
|
23,188
|
|
|
|
|
Total
equity
|
645,344
|
|
592,168
|
|
|
|
|
|
Total
liabilities, noncontrolling interests and equity
|
$
2,162,316
|
|
$
2,598,143
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
Supplemental
Financial Data
|
|
(in
thousands, except per share information)
|
|
|
|
|
December
31, 2010
|
|
|
|
|
|
|
|
|
|
Pro
Rata Share
|
|
Consolidated
|
|
Capitalization
|
|
|
Common
shares outstanding
|
151,305
|
|
151,305
|
|
Operating
partnership units outstanding
|
955
|
|
955
|
|
Restricted
stock units outstanding
|
1,166
|
|
1,166
|
|
|
|
|
|
|
|
|
Combined
shares, options and units outstanding
|
153,426
|
|
153,426
|
|
Common
stock price at end of period
|
$
5.29
|
|
$
5.29
|
|
|
|
|
|
|
|
|
Common
equity capitalization
|
$
811,624
|
|
$
811,624
|
|
Preferred
equity capitalization (at $25.00 face value)
|
370,236
|
|
370,236
|
|
Consolidated
debt
|
1,146,281
|
|
1,146,281
|
|
Pro
rata share of unconsolidated debt
|
265,950
|
|
-
|
|
Pro
rata share of consolidated debt
|
(107,065)
|
|
-
|
|
Cash
and cash equivalents
|
(78,842)
|
|
(78,842)
|
|
|
|
|
|
|
|
|
|
Total
enterprise value
|
$
2,408,184
|
|
$
2,249,299
|
|
|
|
|
|
|
|
|
Net
Debt / Total Enterprise Value
|
50.9%
|
|
47.4%
|
|
Preferred
Equity / Total Enterprise Value
|
15.4%
|
|
16.5%
|
|
Common
Equity / Total Enterprise Value
|
33.7%
|
|
36.1%
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
The
results of operations of hotels sold or held for sale are classified as
discontinued operations and segregated in the consolidated statements
of operations for all periods presented. On December 23, 2010, we
entered into an agreement to sell our leasehold interest in the Paris
Marriott Champs Elysees hotel for an estimated euro 26,500,000. We also
expect to receive an additional euro 13,200,000 related to the release
of an existing leasehold guarantee and other closing adjustments for
total proceeds of euro 39,700,000. No earnest money has been deposited
by the buyer, and the sale, subject to certain closing contingencies,
is scheduled to close before April 30, 2011. The following hotels
were sold during 2010 and 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
Date
Sold
|
|
Net
Sales Proceeds
|
|
|
|
|
InterContinental
Prague
|
|
December
15, 2010
|
|
$
3,564
|
|
|
|
|
Renaissance
Paris Hotel Le Parc Trocadero
|
|
December
21, 2009
|
|
$
50,275
|
|
|
|
|
Four
Seasons Mexico City
|
|
October
29, 2009
|
|
$
52,156
|
|
|
|
|
|
|
|
|
|
The
following is a summary of income (loss) from discontinued
operations, net of tax for the three months and years ended December
31, 2010 and 2009 (in thousands):
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating revenues
|
$
16,896
|
|
$
25,213
|
|
$
68,883
|
|
$
100,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses
|
14,858
|
|
18,175
|
|
55,252
|
|
79,719
|
|
Depreciation
and amortization
|
567
|
|
2,205
|
|
5,980
|
|
13,307
|
|
Impairment
losses and other charges
|
-
|
|
269
|
|
-
|
|
31,064
|
|
|
Total
operating costs and expenses
|
15,425
|
|
20,649
|
|
61,232
|
|
124,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
1,471
|
|
4,564
|
|
7,651
|
|
(23,655)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(1,990)
|
|
(2,138)
|
|
(9,706)
|
|
(8,592)
|
|
Interest
income
|
13
|
|
(82)
|
|
32
|
|
101
|
|
Loss
on early extinguishment of debt
|
(95)
|
|
-
|
|
(95)
|
|
-
|
|
Foreign
currency exchange (loss) gain
|
(98)
|
|
(1,710)
|
|
7,392
|
|
(1,141)
|
|
Other
expenses, net
|
-
|
|
(554)
|
|
-
|
|
(554)
|
|
Income
tax benefit (expense)
|
260
|
|
(499)
|
|
(476)
|
|
540
|
|
Gain
on sale
|
28,476
|
|
18,164
|
|
29,713
|
|
18,164
|
|
|
Income
(loss) from discontinued operations, net of tax
|
$
28,037
|
|
$
17,745
|
|
$
34,511
|
|
$
(15,137)
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
Investment
in the Hotel del Coronado
|
|
(in
thousands)
|
|
|
|
On
January 9, 2006, we purchased a 45% interest in the joint venture that
owns the Hotel del Coronado(a). We account for this investment
using the equity method of accounting.
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Total
revenues (100%)
|
$
27,932
|
|
$
19,676
|
|
$
122,099
|
|
$
116,297
|
|
Property
EBITDA (100%)
|
$
5,629
|
|
$
5,767
|
|
$
36,500
|
|
$
37,988
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of joint venture (SHR 45% ownership)
|
|
|
|
|
|
|
|
|
Property EBITDA
|
$
2,533
|
|
$
2,595
|
|
$
16,425
|
|
$
17,095
|
|
Depreciation
and amortization
|
(1,891)
|
|
(1,973)
|
|
(7,894)
|
|
(7,736)
|
|
Interest
expense
|
(2,003)
|
|
(1,874)
|
|
(7,714)
|
|
(7,799)
|
|
Gain
on extinguishment of debt (b)
|
11,025
|
|
-
|
|
11,025
|
|
-
|
|
Other
expenses, net
|
(32)
|
|
(120)
|
|
(195)
|
|
(353)
|
|
Income
taxes
|
392
|
|
469
|
|
503
|
|
(82)
|
|
Equity
in earnings (losses) of joint venture
|
$
10,024
|
|
$
(903)
|
|
$
12,150
|
|
$
1,125
|
|
|
|
|
|
|
|
|
|
|
Comparable
EBITDA Contribution from investment in Hotel del Coronado
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of joint venture
|
$
10,024
|
|
$
(903)
|
|
$
12,150
|
|
$
1,125
|
|
Depreciation
and amortization
|
1,891
|
|
1,973
|
|
7,894
|
|
7,736
|
|
Interest
expense
|
2,003
|
|
1,874
|
|
7,714
|
|
7,799
|
|
Gain
on extinguishment of debt (b)
|
(11,025)
|
|
-
|
|
(11,025)
|
|
-
|
|
Income
taxes
|
(392)
|
|
(469)
|
|
(503)
|
|
82
|
|
Comparable
EBITDA Contribution from investment in Hotel del Coronado
|
$
2,501
|
|
$
2,475
|
|
$
16,230
|
|
$
16,742
|
|
|
|
|
|
|
|
|
|
|
Comparable
FFO Contribution from investment in Hotel del Coronado
|
|
|
|
|
|
|
|
|
Equity
in earnings (losses) of joint venture
|
$
10,024
|
|
$
(903)
|
|
$
12,150
|
|
$
1,125
|
|
Depreciation
and amortization
|
1,891
|
|
1,973
|
|
7,894
|
|
7,736
|
|
Gain
on extinguishment of debt (b)
|
(11,025)
|
|
-
|
|
(11,025)
|
|
-
|
|
Comparable
FFO Contribution from investment in Hotel del Coronado
|
$
890
|
|
$
1,070
|
|
$
9,019
|
|
$
8,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread
over
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
LIBOR
|
|
Loan
Amount
|
|
Maturity
|
|
CMBS
Mortgage and Mezzanine
|
|
2.34%
|
|
208 bp
|
|
$
572,500
|
|
January
2011
|
|
Revolving
Credit Facility
|
|
2.76%
|
|
250 bp
|
|
18,500
|
|
January
2011
|
|
|
|
|
|
|
|
591,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(10,720)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
580,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
|
Cap
|
|
Date
|
|
LIBOR
Cap Rate
|
|
Notional
Amount
|
|
Maturity
|
|
CMBS
Mortgage and Mezzanine Loan
|
|
January
2010
|
|
2.0%
|
|
$
630,000
|
|
January
2011
|
|
and Revolving Credit Facility Cap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) On
February 4, 2011, we completed a recapitalization of the joint venture
that owns the Hotel del Coronado. As part of the
recapitalization, a new joint venture 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 joint
venture, and our ownership interest in the Hotel del Coronado decreased
from 45% to 34.3%. In connection with the recapitalization, the
new joint venture secured $425,000,000 of five-year debt financing at a
rate of LIBOR plus 480 basis points, subject to a 1% LIBOR floor.
Additionally, the new joint venture purchased a two-year, 2%
LIBOR cap, which was required by the loan.
|
|
|
|
(b) In
December 2010, a $37,500,000 mezzanine layer of the Hotel del
Coronado's debt structure was settled for a discounted pay-off of
$13,000,000, which resulted in a gain on the extinguishment of debt of
$24,500,000. We recorded our 45% share of the gain equal to
$11,025,000.
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
Information
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Paris
Marriott Champs Elysees (a):
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$
3,753
|
|
$
4,368
|
|
$
19,611
|
|
$
17,739
|
|
Revenue
(b)
|
$
3,753
|
|
$
4,368
|
|
$
19,611
|
|
$
17,739
|
|
|
|
|
|
|
|
|
|
|
Lease
Expense
|
(2,978)
|
|
(3,236)
|
|
(11,893)
|
|
(12,219)
|
|
Less:
Deferred Gain on Sale Leaseback
|
(1,144)
|
|
(1,237)
|
|
(4,465)
|
|
(4,685)
|
|
Adjusted
Lease Expense
|
(4,122)
|
|
(4,473)
|
|
(16,358)
|
|
(16,904)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution from Leasehold
|
$
(369)
|
|
$
(105)
|
|
$
3,253
|
|
$
835
|
|
|
|
|
|
|
|
|
|
|
Marriott
Hamburg:
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$
1,681
|
|
$
1,567
|
|
$
6,051
|
|
$
5,847
|
|
Revenue
(b)
|
$
1,608
|
|
$
1,345
|
|
$
4,991
|
|
$
4,858
|
|
|
|
|
|
|
|
|
|
|
Lease
Expense
|
(1,170)
|
|
(1,255)
|
|
(4,566)
|
|
(4,752)
|
|
Less:
Deferred Gain on Sale Leaseback
|
(53)
|
|
(58)
|
|
(207)
|
|
(217)
|
|
Adjusted
Lease Expense
|
(1,223)
|
|
(1,313)
|
|
(4,773)
|
|
(4,969)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution from Leasehold
|
$
385
|
|
$
32
|
|
$
218
|
|
$
(111)
|
|
|
|
|
|
|
|
|
|
|
Total
Leaseholds:
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
$
5,434
|
|
$
5,935
|
|
$
25,662
|
|
$
23,586
|
|
Revenue
(b)
|
$
5,361
|
|
$
5,713
|
|
$
24,602
|
|
$
22,597
|
|
|
|
|
|
|
|
|
|
|
Lease
Expense
|
(4,148)
|
|
(4,491)
|
|
(16,459)
|
|
(16,971)
|
|
Less:
Deferred Gain on Sale Leaseback
|
(1,197)
|
|
(1,295)
|
|
(4,672)
|
|
(4,902)
|
|
Adjusted
Lease Expense
|
(5,345)
|
|
(5,786)
|
|
(21,131)
|
|
(21,873)
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution from Leaseholds
|
$
16
|
|
$
(73)
|
|
$
3,471
|
|
$
724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
Security
Deposits (c):
|
2010
|
|
2009
|
|
|
|
|
|
Paris
Marriott Champs Elysees
|
$
14,459
|
|
$
10,720
|
|
|
|
|
|
Marriott
Hamburg
|
2,540
|
|
7,158
|
|
|
|
|
|
Total
|
$
16,999
|
|
$
17,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) On
December 23, 2010, we entered into an agreement to sell our leasehold
interest in the Paris Marriott Champs Elysees. No earnest money
has been deposited by the buyer, and the sale, subject to certain
closing contingencies, is scheduled to close before April 30, 2011.
The results of operations for the Paris Marriott have been
classified as discontinued operations for all periods presented.
|
|
|
|
(b)
For the three months and years ended December 31, 2010 and 2009,
Revenue for the Paris Marriott Champs Elysees represents Property
EBITDA. For the three months and years ended December 31, 2010 and
2009, 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
In addition to REIT hotel income, five other non-GAAP
financial measures are presented for the Company that we believe are
useful to management and investors as key measures of our operating
performance: Funds from Operations (FFO); FFO - Fully Diluted;
Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation
and Amortization (EBITDA); and Comparable EBITDA. A reconciliation of
these measures to net loss attributable to SHR common shareholders, the
most directly comparable GAAP measure, is set forth in the following
tables.
We compute FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts, or NAREIT, which
adopted a definition of FFO in order to promote an industry-wide
standard measure of REIT operating performance. NAREIT defines FFO as
net income (or loss) (computed in accordance with GAAP) excluding
losses or gains from sales of depreciable property plus real
estate-related depreciation and amortization, and after adjustments for
our portion of these items related to unconsolidated partnerships and
joint ventures. We also present FFO - Fully Diluted, which is FFO plus
income or loss on income attributable to convertible noncontrolling
interests. We also present Comparable FFO, which is FFO - Fully Diluted
excluding the impact of any gains or losses on early extinguishment of
debt, impairment losses, foreign currency exchange gains or losses and
other non-recurring charges. We believe that the presentation of FFO,
FFO - Fully Diluted and Comparable FFO provides useful information to
management and investors regarding our results of operations because
they are measures of our ability to fund capital expenditures and
expand our business. In addition, FFO is widely used in the real
estate industry to measure operating performance without regard to
items such as depreciation and amortization. We also present
Comparable FFO per diluted share as a non-GAAP measure of our
performance. We calculate Comparable FFO per diluted share for a
given operating period as our Comparable FFO (as defined above) divided
by the weighted average of fully diluted shares outstanding.
Comparable FFO per diluted share, in accordance with NAREIT, is
adjusted for the effects of dilutive securities. Dilutive
securities may include shares granted under share-based compensation
plans, operating partnership units and exchangeable debt securities.
No effect is shown for securities that are anti-dilutive.
EBITDA represents net loss attributable to SHR common
shareholders excluding: (i) interest expense, (ii) income taxes,
including deferred income tax benefits and expenses applicable to our
foreign subsidiaries and income taxes applicable to sale of assets; and
(iii) depreciation and amortization. EBITDA also excludes interest
expense, income taxes and depreciation and amortization of our equity
method investments. EBITDA is presented on a full participation basis,
which means we have assumed conversion of all convertible
noncontrolling interests of our operating partnership into our common
stock and includes preferred dividends. We believe this treatment
of noncontrolling interests provides more useful information for
management and our investors and appropriately considers our current
capital structure. We also present Comparable EBITDA, which
eliminates the effect of realizing deferred gains on our sale
leasebacks, as well as the effect of gains or losses on sales of
assets, early extinguishment of debt, impairment losses, foreign
currency exchange gains or losses and other non-recurring charges. 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 caution investors that amounts presented in accordance with
our definitions of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA,
and Comparable EBITDA may not be comparable to similar measures
disclosed by other companies, since not all companies calculate these
non-GAAP measures in the same manner. FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA should not be considered
as an alternative measure of our net loss or operating performance.
FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA
may include funds that may not be available for our discretionary use
due to functional requirements to conserve funds for capital
expenditures and property acquisitions and other commitments and
uncertainties. Although we believe that FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA can enhance your
understanding of our financial condition and results of operations,
these non-GAAP financial measures, when viewed individually, are not
necessarily a better indicator of any trend as compared to comparable
GAAP measures such as net loss attributable to SHR common shareholders.
In addition, you should be aware that adverse economic and market
conditions might negatively impact our cash flow. We have provided a
quantitative reconciliation of FFO, FFO - Fully Diluted, Comparable
FFO, EBITDA, and Comparable EBITDA to the most directly comparable GAAP
financial performance measure, which is net loss attributable to SHR
common shareholders.
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Loss Attributable to SHR Common Shareholders to EBITDA and
Comparable EBITDA
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
$
(134,835)
|
|
$
(72,185)
|
|
$
(261,937)
|
|
$
(274,831)
|
|
Depreciation
and amortization - continuing operations
|
32,406
|
|
34,379
|
|
130,601
|
|
130,955
|
|
Depreciation
and amortization - discontinued operations
|
567
|
|
2,205
|
|
5,980
|
|
13,307
|
|
Interest
expense - continuing operations
|
17,797
|
|
23,255
|
|
86,285
|
|
93,929
|
|
Interest
expense - discontinued operations
|
1,990
|
|
2,138
|
|
9,706
|
|
8,592
|
|
Income
taxes - continuing operations
|
1,112
|
|
1,881
|
|
1,408
|
|
3,344
|
|
Income
taxes - discontinued operations
|
(260)
|
|
499
|
|
476
|
|
(540)
|
|
Noncontrolling
interests
|
(808)
|
|
(832)
|
|
(1,687)
|
|
(3,129)
|
|
Adjustments
from consolidated affiliates
|
(2,013)
|
|
(2,647)
|
|
(7,609)
|
|
(9,460)
|
|
Adjustments
from unconsolidated affiliates
|
3,673
|
|
3,498
|
|
15,563
|
|
15,934
|
|
Preferred
shareholder dividends
|
7,722
|
|
7,722
|
|
30,886
|
|
30,886
|
|
EBITDA
|
(72,649)
|
|
(87)
|
|
9,672
|
|
8,987
|
|
Realized
portion of deferred gain on sale leaseback - continuing operations
|
(53)
|
|
(58)
|
|
(207)
|
|
(217)
|
|
Realized
portion of deferred gain on sale leaseback - discontinued operations
|
(1,144)
|
|
(1,237)
|
|
(4,465)
|
|
(4,685)
|
|
Loss
on sale of assets - continuing operations
|
-
|
|
472
|
|
-
|
|
477
|
|
Gain
on sale of assets - discontinued operations
|
(28,476)
|
|
(18,164)
|
|
(29,713)
|
|
(18,164)
|
|
Impairment
losses and other charges - continuing operations
|
141,858
|
|
49,526
|
|
141,858
|
|
99,740
|
|
Impairment
losses and other charges - discontinued operations
|
-
|
|
269
|
|
-
|
|
31,064
|
|
Impairment
losses and other charges - adjustments from consolidated affiliates
|
-
|
|
-
|
|
-
|
|
(169)
|
|
Loss
on early extinguishment of debt - continuing operations
|
-
|
|
-
|
|
925
|
|
883
|
|
Loss
on early extinguishment of debt - discontinued operations
|
95
|
|
-
|
|
95
|
|
-
|
|
Loss
on early termination of derivative financial instruments
|
-
|
|
-
|
|
18,263
|
|
-
|
|
Gain
on extinguishment of debt of unconsolidated affiliate
|
(11,025)
|
|
-
|
|
(11,025)
|
|
-
|
|
Foreign
currency exchange loss - continuing operations (a)
|
16
|
|
40
|
|
1,410
|
|
896
|
|
Foreign
currency exchange loss (gain) - discontinued operations (a)
|
98
|
|
1,710
|
|
(7,392)
|
|
1,141
|
|
Comparable
EBITDA
|
$
28,720
|
|
$
32,471
|
|
$
119,421
|
|
$
119,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
Years
Ended
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
$
(134,835)
|
|
$
(72,185)
|
|
$
(261,937)
|
|
$
(274,831)
|
|
Depreciation
and amortization - continuing operations
|
32,406
|
|
34,379
|
|
130,601
|
|
130,955
|
|
Depreciation
and amortization - discontinued operations
|
567
|
|
2,205
|
|
5,980
|
|
13,307
|
|
Corporate
depreciation
|
(303)
|
|
(304)
|
|
(1,217)
|
|
(1,217)
|
|
Loss
on sale of assets - continuing operations
|
-
|
|
472
|
|
-
|
|
477
|
|
Gain
on sale of assets - discontinued operations
|
(28,476)
|
|
(18,164)
|
|
(29,713)
|
|
(18,164)
|
|
Realized
portion of deferred gain on sale leaseback - continuing operations
|
(53)
|
|
(58)
|
|
(207)
|
|
(217)
|
|
Realized
portion of deferred gain on sale leaseback - discontinued operations
|
(1,144)
|
|
(1,237)
|
|
(4,465)
|
|
(4,685)
|
|
Deferred
tax expense on realized portion of deferred gain on sale leasebacks
|
357
|
|
386
|
|
1,393
|
|
1,462
|
|
Noncontrolling
interests adjustments
|
(222)
|
|
(488)
|
|
(1,159)
|
|
(1,928)
|
|
Adjustments
from consolidated affiliates
|
(1,335)
|
|
(1,971)
|
|
(5,979)
|
|
(7,619)
|
|
Adjustments
from unconsolidated affiliates
|
1,874
|
|
2,005
|
|
7,973
|
|
7,864
|
|
FFO
|
(131,164)
|
|
(54,960)
|
|
(158,730)
|
|
(154,596)
|
|
|
Convertible
noncontrolling interests
|
(586)
|
|
(344)
|
|
(528)
|
|
(1,201)
|
|
FFO -
Fully Diluted
|
(131,750)
|
|
(55,304)
|
|
(159,258)
|
|
(155,797)
|
|
Impairment
losses and other charges - continuing operations
|
141,858
|
|
49,526
|
|
141,858
|
|
99,740
|
|
Impairment
losses and other charges - discontinued operations
|
-
|
|
269
|
|
-
|
|
31,064
|
|
Impairment
losses and other charges - adjustments from consolidated affiliates
|
-
|
|
-
|
|
-
|
|
(169)
|
|
Non-cash
mark to market of interest rate swaps - continuing operations
|
(535)
|
|
-
|
|
9,014
|
|
-
|
|
Non-cash
mark to market of interest rate swaps - discontinued operations
|
(204)
|
|
-
|
|
25
|
|
-
|
|
Loss
on early extinguishment of debt - continuing operations
|
-
|
|
-
|
|
925
|
|
883
|
|
Loss
on early extinguishment of debt - discontinued operations
|
95
|
|
-
|
|
95
|
|
-
|
|
Loss
on early termination of derivative financial instruments
|
-
|
|
-
|
|
18,263
|
|
-
|
|
Gain
on extinguishment of debt of unconsolidated affiliate
|
(11,025)
|
|
-
|
|
(11,025)
|
|
-
|
|
Foreign
currency exchange loss - continuing operations (a)
|
16
|
|
40
|
|
1,410
|
|
896
|
|
Foreign
currency exchange loss (gain), net of tax - discontinued operations (a)
|
95
|
|
1,731
|
|
(7,421)
|
|
596
|
|
Comparable
FFO
|
$
(1,450)
|
|
$
(3,738)
|
|
$
(6,114)
|
|
$
(22,787)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
FFO per diluted share
|
$
(0.01)
|
|
$
(0.05)
|
|
$
(0.05)
|
|
$
(0.30)
|
|
Weighted
average diluted shares
|
151,663
|
|
75,426
|
|
122,933
|
|
75,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale
|
0.82%
|
|
56 bp
|
|
$
180,000
|
|
September
2011
|
|
InterContinental
Chicago
|
1.32%
|
|
106 bp
|
|
121,000
|
|
October
2011
|
|
InterContinental
Miami
|
0.99%
|
|
73 bp
|
|
90,000
|
|
October
2011
|
|
Bank
credit facility
|
4.01%
|
|
375 bp
|
|
28,000
|
|
March
2012
|
|
Loews
Santa Monica Beach Hotel
|
0.89%
|
|
63 bp
|
|
118,250
|
|
March
2012
|
|
Ritz-Carlton
Half Moon Bay
|
0.93%
|
|
67 bp
|
|
76,500
|
|
March
2012
|
|
Hyatt
Regency La Jolla
|
1.26%
|
|
100 bp
|
|
97,500
|
|
September
2012
|
|
Marriott
London Grosvenor Square (c)
|
1.86%
|
|
110 bp
(c)
|
|
117,281
|
|
October
2013
|
|
Westin
St. Francis
|
6.09%
|
|
Fixed
|
|
220,000
|
|
June
2017
|
|
Fairmont
Chicago
|
6.09%
|
|
Fixed
|
|
97,750
|
|
June
2017
|
|
|
|
|
|
|
$
1,146,281
|
|
|
|
(a)
Spread over LIBOR (0.26% at December 31, 2010).
|
|
(b)
Includes extension options, including the conditional one-year
extension option on the bank credit facility.
|
|
(c)
Principal balance of pounds Sterling 75,190,000 at December 31,
2010. Spread over three-month GBP LIBOR (0.76% at December 31,
2010).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
and European Interest Rate Swaps
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
Swap
Effective Date
|
Against
LIBOR
|
|
Amount
|
|
Maturity
|
|
March
2009 (d)
|
1.22%
|
|
$
50,000
|
|
August
2011
|
|
February
2010 (d)
|
4.59%
|
|
75,000
|
|
April
2012
|
|
February
2010
|
4.84%
|
|
100,000
|
|
July
2012
|
|
February
2010
|
5.50%
|
|
75,000
|
|
June
2013
|
|
February
2010
|
5.42%
|
|
50,000
|
|
August
2013
|
|
February
2010
|
4.90%
|
|
100,000
|
|
September
2014
|
|
February
2010
|
4.96%
|
|
100,000
|
|
December
2014
|
|
April
2010
|
5.42%
|
|
75,000
|
|
April
2015
|
|
December
2010
|
5.23%
|
|
100,000
|
|
December
2015
|
|
|
4.81%
|
|
$
725,000
|
|
|
|
|
|
|
|
|
|
|
(d)
These interest rate swaps were terminated on February 11, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
|
|
|
|
|
Against
GBP LIBOR
|
|
Notional
|
|
|
|
Swap
Effective Date
|
Current
|
|
Future
|
|
Amount
|
|
Maturity
|
|
October
2007
|
3.22%
|
|
5.72%
|
(e)
|
pounds
Sterling 75,190
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
The fixed pay rate against GBP LIBOR increases in January 2011 through
maturity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Starting
Interest Rate Swaps
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
|
|
Swap
Effective Date
|
Against
LIBOR
|
|
Amount
|
|
Maturity
|
|
|
|
February
2011
|
5.27%
|
|
$
100,000
|
|
February
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31, 2010, future scheduled debt principal payments (including
extension options) are as follows:
|
|
Years
ending December 31,
|
Amount
|
|
|
|
|
|
|
|
2011
|
$
394,213
|
|
|
|
|
|
|
|
2012
|
331,860
|
|
|
|
|
|
|
|
2013
|
119,778
|
|
|
|
|
|
|
|
2014
|
9,482
|
|
|
|
|
|
|
|
2015
|
10,075
|
|
|
|
|
|
|
|
Thereafter
|
280,873
|
|
|
|
|
|
|
|
|
$
1,146,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
~
100.0%
|
|
Weighted
average interest rate including U.S. and European swaps (f)
|
5.71%
|
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
4.27
|
|
|
|
|
(f)
Excludes the amortization of deferred financing costs and the
amortization o f the interest rate swap costs.
|
|