CHICAGO, Feb. 22, 2012 -- Strategic Hotels &
Resorts, Inc. (NYSE: BEE) today reported results for the fourth
quarter and full year ended December 31, 2011.
"Despite lingering global and domestic uncertainty, Strategic
Hotels' superior operating performance again led our competitive set,
delivering enviable fourth quarter and full year results," said Laurence Geller, Chief Executive Officer of
Strategic Hotels & Resorts, Inc. "With strong and steady demand
growth, permanent productivity enhancements, irreplaceable assets with
no competition from new supply, a pipeline of profit enhancement
opportunities and a completely restructured balance sheet, the Company
is ideally positioned for the future. With these tailwinds, I am
pleased to announce the declaration of the first quarter preferred
dividend and look forward to continued operating and financial success
in 2012."
Fourth Quarter Highlights
- Net loss attributable to common shareholders was $15.9 million, or $0.09
per diluted share, in the fourth quarter of 2011, compared with a net
loss attributable to common shareholders of $134.8
million, or $0.89 per diluted
share, in the fourth quarter of 2010.
- Comparable funds from operations (Comparable FFO) was $0.11 per diluted share in the fourth quarter
of 2011 compared with $0.03 per diluted
share in the prior year period. During the quarter, a $10.7 million one-time gain was recorded
related to the successful preferred equity tender completed on December 19, 2011. Excluding this adjustment,
Comparable FFO would have been $0.05 per
diluted share.
- Comparable EBITDA was $39.9 million in the fourth
quarter of 2011 compared with $34.5 million
in the prior year period, a 15.9 percent increase.
- United States same store
revenue per available room (RevPAR) increased 10.1 percent in the
fourth quarter of 2011, driven by a 6.5 percent increase in
average daily rate (ADR) and a 2.2 percentage point increase in
occupancy, compared to the fourth quarter 2010. Total revenue per
available room (Total RevPAR) increased 10.0 percent with non-rooms
revenue increasing by 9.9 percent between periods.
- North American same store RevPAR increased 9.8 percent in
the fourth quarter of 2011, driven by a 6.4 percent increase in
ADR and a 2.1 percentage point increase in occupancy, compared to the
fourth quarter 2010. Total RevPAR increased 9.0 percent with non-rooms
revenue increasing by 8.1 percent between periods.
- Total North American RevPAR, which includes results from
the recently acquired Four Seasons Jackson Hole and Four Seasons
Silicon Valley hotels, increased 10.2 percent in the fourth quarter of
2011, driven by a 6.7 percent increase in ADR and a 2.2
percentage point increase in occupancy, compared to the fourth quarter
2010. Total RevPAR increased 9.5 percent with non-rooms revenue
increasing by 8.8 percent between periods.
- European RevPAR decreased 0.1 percent (a 0.6 percent
increase in constant dollars) in the fourth quarter of 2011, driven by
a 0.1 percent decline in ADR (a 0.5 percent increase in constant
dollars) and no change in occupancy between periods. European Total
RevPAR increased 2.3 percent in the fourth quarter over the prior year
period (2.6 percent in constant dollars).
- United States same store
EBITDA margins contracted 50 basis points in the fourth quarter of 2011
compared to the fourth quarter of 2010. North American same store
EBITDA margins contracted 80 basis points between periods. Excluding
certain one-time property tax refunds of $4.9
million received during the fourth quarter of 2010, United States same store and North American
same store EBITDA margins expanded 290 and 240 basis points,
respectively, in the fourth quarter.
Full Year 2011 Highlights
- Net loss attributable to common shareholders was $23.7 million, or $0.13
per diluted share compared with a net loss attributable to common
shareholders of $261.9 million, or $2.13 per diluted share in the prior year.
- Comparable FFO was $0.20 per
diluted share compared with $0.05 per
diluted share in the prior year period. During the fourth quarter of
2011, a $10.7 million one-time gain was
recorded related to the successful preferred equity tender completed on
December 19, 2011. Excluding
this adjustment, Comparable FFO would have been $0.14
per diluted share.
- Comparable EBITDA was $154.8 million compared with $132.0 million in the prior year period, a
17.2 percent increase.
- United States same store
RevPAR increased 12.7 percent, driven by a 7.0 percent increase in ADR
and a 3.6 percentage point increase in occupancy, compared to
the full year 2010. Total RevPAR increased 11.3 percent with non-rooms
revenue increasing by 9.7 percent between years.
- North American same store RevPAR increased 11.0 percent,
driven by a 5.8 percent increase in ADR and a 3.4 percentage
point increase in occupancy, compared to the full year 2010. Total
RevPAR increased 9.6 percent with non-rooms revenue increasing by 8.0
percent between years.
- Total North American RevPAR increased 11.0 percent, driven
by a 5.8 percent increase in ADR and a 3.3 percentage point increase in
occupancy, compared to the full year 2010. Total RevPAR increased 9.6
percent with non-rooms revenue increasing by 8.0 percent between years.
- European RevPAR increased 8.5 percent (3.8 percent in
constant dollars), driven by a 7.0 percent increase in ADR (2.4 percent
increase in constant dollars) and a 1.1 percentage point increase in
occupancy between years. European Total RevPAR increased 8.2 percent in
between years (3.6 percent in constant dollars).
- United States same store
EBITDA margins expanded 220 basis points and North American EBITDA
margins expanded 160 basis points compared to the full year 2010.
Excluding certain one-time property tax refunds of $4.9 million received during the fourth
quarter of 2010, United States same
store and North American same store EBITDA margins expanded 320 and 240
basis points, respectively, compared to the full year 2010.
Preferred Dividends
For the first quarter 2012, the Company's board of directors
authorized, and the Company declared a quarterly dividend of $0.53125 per share of 8.5 percent Series A
Cumulative Redeemable Preferred Stock (Series A) payable on June 29, 2012 to shareholders of record as of June 15, 2012, a quarterly dividend of $0.51563 per share of 8.25 percent Series B
Cumulative Redeemable Preferred Stock (Series B) payable on June 29, 2012 to shareholders of record as of June 15, 2012 and a quarterly dividend of $0.51563 per share of 8.25 percent Series C
Cumulative Redeemable Preferred Stock (Series C) payable on June 29, 2012 to shareholders of record as of June 15, 2012, contingent upon the Company's
ability to meet, on the payment date, the requirements of the Maryland
General Corporation Law with respect to the payment of dividends (the
"Maryland Dividend Requirement"). While the Company cannot make any
guarantees, it currently expects to be able to meet the Maryland
Dividend Requirement on the June 29, 2012
payment date.
The Company had previously announced, in conjunction with the
successful purchase of approximately 3.2 million shares of preferred
equity, the declaration of accrued and unpaid dividends on the Series
A, B and C preferred stock through December 31,
2011 payable on June 29, 2012 to
shareholders of record as of June 15, 2012,
contingent upon the Company's ability to meet the Maryland Dividend
Requirement on the payment date.
2011 Transaction Review
- In December, the Company closed on the purchase of an
aggregate of 3,247,507 shares of preferred stock consisting of
1,922,273 shares of Series C stock and 984,625 shares of Series B stock
at a purchase price of $26.50 per share
and 340,609 shares of Series A stock at a purchase price of $26.70 per share. In addition, the Company
announced the payment of 12 quarters of accrued and unpaid dividends
through the end of December 31, 2011 to
shareholders of record as of June 15, 2012,
payable on June 29, 2012, contingent
upon the Company's ability to meet the Maryland Dividend Requirement on
the payment date. Total accrued dividends of approximately $72.5 million have been recorded on the
balance sheet as distributions payable.
- In July, the Company closed a $145.0
million limited recourse loan secured by the InterContinental
Chicago hotel. The loan bears interest at a fixed rate of 5.61 percent
and has a ten-year term.
- In July, the Company closed a $130.0
million limited recourse loan secured by the Four Seasons Washington, D.C. hotel. The loan bears
interest at a floating rate of LIBOR plus 315 basis points and has a
three-year initial term with two, one-year extension options, upon
satisfaction of certain financial and other conditions.
- In July, the Company closed a $110.0
million limited recourse loan secured by the Loews Santa Monica
Beach hotel. The loan bears interest at a floating rate of LIBOR plus
385 basis points and has a four-year initial term with three, one-year
extension options, upon satisfaction of certain financial and other
conditions.
- In July, the Company closed an $85.0
million limited recourse loan secured by the InterContinental
Miami hotel. The loan bears interest at a floating rate of LIBOR plus
350 basis points and has a five-year initial term with two, one-year
extension options, upon satisfaction of certain financial and other
conditions.
- In June, the Company closed a new $300.0
million secured, revolving credit facility with an accordion
feature allowing for additional borrowing capacity up to $400.0 million, subject to certain conditions.
The facility's interest rate is based upon a leverage-based pricing
grid ranging from LIBOR plus 275 basis points to LIBOR plus 375 basis
points. The facility matures in three years with a one-year extension
option available to the Company, subject to certain conditions. The
facility is secured by the Four Seasons Punta Mita Resort, the Marriott
Lincolnshire Resort, the Ritz-Carlton Half Moon Bay hotel, and the
Ritz-Carlton Laguna Niguel hotel.
- In June, the Company closed on the acquisition of the 49
percent interest in the InterContinental Chicago hotel previously held
by an affiliate of the Government of Singapore Investment Corporation
(GIC). As part of the transaction, the Company also acquired an
additional 2.5 percent ownership interest in the Hyatt Regency La Jolla
hotel, giving the Company a 53.5% controlling ownership interest in
that hotel. Total consideration was $90.2
million, which included the issuance of 10.8 million shares at a
price of $6.51 per share and $19.4 million of cash which includes working
capital and post-closing adjustments of $0.5
million.
- In June, the Company closed on an agreement to recapitalize
the Fairmont Scottsdale Princess hotel in a newly formed joint venture
with Walton Street Capital, L.L.C. (Walton Street Capital). The
recapitalization included an amendment and extension of the existing
CMBS first mortgage debt through December 31,
2013, with the option for a second extension through April 9, 2015 upon satisfaction of certain
terms and conditions. The new joint venture retired the hotel's $40.0 million mezzanine debt and total debt on
the property was reduced from $180.0 million
to $133.0 million. The Company's total
investment in the joint venture was approximately $34.9 million, which includes its pro rata
share of funding for the development of a new 23,000 square foot
ballroom and adjoining meeting space at the hotel. The Company and
Walton Street Capital are equal partners in the joint venture, with the
Company serving as the managing member and continuing to serve as the
property's asset manager.
- In April, the Company sold its leasehold interest in the
Paris Marriott Champs Elysees hotel for consideration of euro 29.2 million ($41.6
million). As part of the transaction, the Company received euro 11.9 million ($16.9
million) related to the release of the security deposit and
other closing adjustments. The Company expects to receive an additional
euro 1.6 million ($2.1 million).
- In March, the Company closed on an agreement to acquire the
Four Seasons Jackson Hole and Four Seasons Silicon Valley hotels from
The Woodbridge Company Limited (Woodbridge) in exchange for an
aggregate of 15.2 million shares of common stock at an agreed upon
issuance price of $6.08 per share, or
approximately $92.4 million. In
addition, the Company concurrently privately placed and issued an
additional 8.0 million shares of common stock at a price of $6.25 per share to an affiliate of Woodbridge
resulting in gross proceeds of $50.0 million.
- In February, the Company completed a recapitalization of
the joint venture that owns the Hotel del Coronado hotel. Under terms
of the agreement, a new joint venture was established among 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
remained as asset manager of the hotel. Blackstone is a 60 percent
owner and general partner of the joint venture. A $425 million debt financing was originated by
Deutsche Bank.
- In January, the Company sold its 50 percent interest in
BuyEfficient, an electronic purchasing platform, for $9.0 million.
2012 Guidance
For the full year 2012, the Company anticipates that
Comparable EBITDA will be in the range of $165.0
million to $180.0 million and Comparable FFO in the range of $0.22 and $0.30
per fully diluted share.
The Company's 2012 guidance includes the following assumptions:
- Same Store North American RevPAR and Total RevPAR growth in
the range of 6.0 percent to 8.0 percent and 5.0 percent to 7.0 percent,
respectively. Same Store operating metrics include North American
hotels which are included in the Company's consolidated financial
results but excludes the Four Seasons Jackson Hole and Four Seasons
Silicon Valley hotels, which were acquired in 2011;
- Same Store North American EBITDA margins between 22.1
percent and 22.9 percent or 100 basis points to 175 basis points
expansion;
- Corporate G&A expenses in the range of $22.0 to $24.0 million, excluding any expense
related to the Company's Value Creation Plan;
- Consolidated interest expense in the range of $85 million to $90 million, including
approximately $12 million of non-cash
interest expense, primarily related to swap financing amortization
costs;
- Hyatt Regency La Jolla mortgage, which matures in September 2012, successfully restructured or
refinanced and ownership of 53.5 percent is retained through year-end;
- Preferred dividend expense of $24.2
million;
- Capital expenditures totaling approximately $65 million to $75 million, including spending
of $35 million from property furniture,
fixtures and equipment (FF&E) reserves and an additional $30 million to $40 million of owner-funded
spending; and
- No additional planned acquisition, disposition or capital
raising activity.
Portfolio Definitions
United States same store
hotel comparisons for the fourth quarter and full year 2011 are derived
from the Company's hotel portfolio at December
31, 2011, consisting of properties located in the United States and held for five or more
quarters, in which operations are included in the consolidated results
of the Company. As a result, same store comparisons contain 10
properties and exclude the Four Seasons Jackson Hole and Four Seasons
Silicon Valley hotels, which were acquired on March
11, 2011, and the unconsolidated Hotel del Coronado and Fairmont
Scottsdale Princess hotels.
North American same store hotel comparisons for the fourth
quarter and full year 2011 are derived from the Company's hotel
portfolio at December 31, 2011,
consisting of properties located in North
America and held for five or more quarters, in which operations
are included in the consolidated results of the Company. As a result,
same store comparisons contain 11 properties, including the Four
Seasons Punta Mita Resort and excluding the Four Seasons Jackson Hole
and Four Seasons Silicon Valley hotels, which were acquired on March 11, 2011, and the unconsolidated Hotel
del Coronado and Fairmont Scottsdale Princess hotels.
Total North American hotel comparisons for the fourth quarter
and full year 2011 are derived from the Company's hotel portfolio at December 31, 2011, consisting of properties in
which operations are included in the consolidated results of the
company, including the Four Seasons Jackson Hole and Four Seasons
Silicon Valley hotels.
European hotel comparisons for the fourth quarter and full
year 2011 are derived from the Company's European owned and leased
hotel properties at December 31, 2011,
consisting of the Marriott London Grosvenor Square and the Marriott
Hamburg.
Earnings Call
The Company will conduct its fourth quarter and full-year 2011
conference call for investors and other interested parties on Thursday, February 23, 2012 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by telephone at
888.680.0892 (toll international: 617.213.4858) with passcode 19468568.
To participate on the web cast, log on to http://edge.media-server.com/m/p/y86b8c79/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 23, 2012, through 11:59 p.m. ET on March
1, 2012. To access the replay, dial 888 286.8010 (toll
international: 617 801.6888) and request replay pin number 47825728. 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 17 properties with an aggregate of 7,762 rooms. For a list
of current properties and for further information, please visit the
Company's website at http://www.strategichotels.com.
This press release contains forward-looking statements
about the Company. Except for historical information, the matters
discussed in this press release are forward-looking statements subject
to certain risks and uncertainties. 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;
the Company's ability to meet the requirements of the Maryland General
Corporation Law with respect to the payment of preferred dividends on
the June 29, 2012 payment date; 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 the Company's 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.
The following tables reconcile projected 2012 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
|
($86.7)
|
|
($71.8)
|
|
Depreciation
and Amortization
|
111.2
|
|
111.2
|
|
Interest
Expense
|
86.0
|
|
86.0
|
|
Income
Taxes
|
1.0
|
|
1.0
|
|
Non-controlling
Interests
|
(0.3)
|
|
(0.2)
|
|
Adjustments
from Consolidated Affiliates
|
(4.2)
|
|
(4.2)
|
|
Adjustments
from Unconsolidated Affiliates
|
28.8
|
|
28.8
|
|
Preferred
Shareholder Dividends
|
24.2
|
|
24.2
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
|
Adjustment
for Value Creation Plan
|
5.2
|
|
5.2
|
|
Comparable
EBITDA
|
$165.0
|
|
$180.0
|
|
|
|
|
|
|
|
|
|
|
Low
Range
|
|
High
Range
|
|
Net
Loss Attributable to Common Shareholders
|
($86.7)
|
|
($71.8)
|
|
Depreciation
and Amortization
|
109.9
|
|
109.9
|
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
|
Non-controlling
Interests
|
(0.3)
|
|
(0.2)
|
|
Adjustments
from Consolidated Affiliates
|
(1.2)
|
|
(1.2)
|
|
Adjustments
from Unconsolidated Affiliates
|
15.6
|
|
15.6
|
|
Adjustment
for Value Creation Plan
|
5.2
|
|
5.2
|
|
Comparable
FFO
|
$42.3
|
|
$57.3
|
|
Comparable
FFO per Diluted Share
|
$0.22
|
|
$0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
99,985
|
|
$
93,885
|
|
$
410,315
|
|
$
362,559
|
|
Food
and beverage
|
|
71,207
|
|
66,339
|
|
267,194
|
|
238,762
|
|
Other
hotel operating revenue
|
|
21,047
|
|
22,696
|
|
80,907
|
|
79,981
|
|
Lease
revenue
|
|
1,675
|
|
1,608
|
|
5,422
|
|
4,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
193,914
|
|
184,528
|
|
763,838
|
|
686,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
28,359
|
|
27,204
|
|
114,087
|
|
105,142
|
|
Food
and beverage
|
|
50,018
|
|
47,241
|
|
192,028
|
|
171,279
|
|
Other
departmental expenses
|
|
51,808
|
|
53,467
|
|
207,664
|
|
199,336
|
|
Management
fees
|
|
6,516
|
|
6,093
|
|
24,719
|
|
22,911
|
|
Other
hotel expenses
|
|
14,311
|
|
8,733
|
|
53,808
|
|
48,781
|
|
Lease
expense
|
|
1,163
|
|
1,170
|
|
4,865
|
|
4,566
|
|
Depreciation
and amortization
|
|
25,840
|
|
32,406
|
|
112,062
|
|
130,601
|
|
Impairment
losses and other charges
|
|
-
|
|
141,858
|
|
-
|
|
141,858
|
|
Corporate
expenses
|
|
15,650
|
|
12,594
|
|
39,856
|
|
34,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expenses
|
|
193,665
|
|
330,766
|
|
749,089
|
|
859,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
249
|
|
(146,238)
|
|
14,749
|
|
(172,873)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(19,299)
|
|
(17,797)
|
|
(86,447)
|
|
(86,285)
|
|
Interest
income
|
|
49
|
|
61
|
|
173
|
|
430
|
|
Loss
on early extinguishment of debt
|
|
-
|
|
-
|
|
(1,237)
|
|
(925)
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
(29,242)
|
|
(18,263)
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
(2,949)
|
|
10,125
|
|
(9,215)
|
|
13,025
|
|
Foreign
currency exchange loss
|
|
(79)
|
|
(16)
|
|
(2)
|
|
(1,410)
|
|
Other
income, net
|
|
1,051
|
|
99
|
|
5,767
|
|
2,398
|
|
Loss
before income taxes and discontinued operations
|
|
(20,978)
|
|
(153,766)
|
|
(105,454)
|
|
(263,903)
|
|
Income
tax expense
|
|
(691)
|
|
(1,112)
|
|
(970)
|
|
(1,408)
|
|
Loss
from continuing operations
|
|
(21,669)
|
|
(154,878)
|
|
(106,424)
|
|
(265,311)
|
|
Income
from discontinued operations, net of tax
|
|
357
|
|
28,037
|
|
101,572
|
|
34,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(21,312)
|
|
(126,841)
|
|
(4,852)
|
|
(230,800)
|
|
Net
loss attributable to the noncontrolling interests in SHR's operating
partnership
|
|
99
|
|
808
|
|
29
|
|
1,687
|
|
Net
loss (income) attributable to the noncontrolling interests in
consolidated affiliates
|
|
614
|
|
(1,080)
|
|
(383)
|
|
(1,938)
|
|
Net
loss attributable to SHR
|
|
(20,599)
|
|
(127,113)
|
|
(5,206)
|
|
(231,051)
|
|
Preferred
shareholder dividends
|
|
4,682
|
|
(7,722)
|
|
(18,482)
|
|
(30,886)
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(15,917)
|
|
$
(134,835)
|
|
$
(23,688)
|
|
$
(261,937)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted Loss Per Share:
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations attributable to SHR common shareholders
|
|
$
(0.09)
|
|
$
(1.07)
|
|
$
(0.70)
|
|
$
(2.41)
|
|
|
Income
from discontinued operations attributable to SHR common shareholders
|
|
-
|
|
0.18
|
|
0.57
|
|
0.28
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(0.09)
|
|
$
(0.89)
|
|
$
(0.13)
|
|
$
(2.13)
|
|
|
Weighted
average common shares outstanding
|
|
186,151
|
|
151,663
|
|
176,576
|
|
122,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
(in
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
Investment
in hotel properties, net
|
$
1,692,431
|
|
$
1,835,451
|
|
|
Goodwill
|
|
40,359
|
|
40,359
|
|
|
Intangible
assets, net of accumulated amortization of $8,915 and $6,536
|
30,635
|
|
32,620
|
|
|
Assets
held for sale
|
-
|
|
45,145
|
|
|
Investment
in unconsolidated affiliates
|
126,034
|
|
18,024
|
|
|
Cash
and cash equivalents
|
72,013
|
|
78,842
|
|
|
Restricted
cash and cash equivalents
|
39,498
|
|
34,618
|
|
|
Accounts
receivable, net of allowance for doubtful accounts of $1,698 and $1,922
|
43,597
|
|
35,250
|
|
|
Deferred
financing costs, net of accumulated amortization of $3,488 and $15,756
|
10,845
|
|
3,322
|
|
|
Deferred
tax assets
|
2,230
|
|
4,121
|
|
|
Prepaid
expenses and other assets
|
29,047
|
|
34,564
|
|
|
|
Total
assets
|
$
2,086,689
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Mortgages
and other debt payable
|
$
1,000,385
|
|
$
1,118,281
|
|
|
|
Bank
credit facility
|
50,000
|
|
28,000
|
|
|
|
Liabilities
of assets held for sale
|
-
|
|
93,206
|
|
|
|
Accounts
payable and accrued expenses
|
249,179
|
|
270,703
|
|
|
|
Distributions
payable
|
72,499
|
|
-
|
|
|
|
Deferred
tax liabilities
|
47,623
|
|
1,732
|
|
|
|
|
|
Total
liabilities
|
1,419,686
|
|
1,511,922
|
|
|
Noncontrolling
interests in SHR's operating partnership
|
4,583
|
|
5,050
|
|
|
Equity:
|
|
|
|
|
|
|
|
SHR's
shareholders' equity:
|
|
|
|
|
|
|
|
8.50%
Series A Cumulative Redeemable Preferred Stock ($0.01 par value;
4,148,141
|
|
|
|
|
|
|
|
|
and
4,488,750 shares issued and outstanding; liquidation preference $25.00
per
|
|
|
|
|
|
|
|
|
share
plus accrued distributions and $130,148 and $131,296 in the aggregate)
|
99,995
|
|
108,206
|
|
|
|
|
8.25%
Series B Cumulative Redeemable Preferred Stock ($0.01 par value;
3,615,375
|
|
|
|
|
|
|
|
|
and
4,600,000 shares issued and outstanding; liquidation preference $25.00
per
|
|
|
|
|
|
|
|
|
share
plus accrued distributions and $112,755 and $133,975 in the aggregate)
|
87,064
|
|
110,775
|
|
|
|
|
8.25%
Series C Cumulative Redeemable Preferred Stock ($0.01 par value;
3,827,727
|
|
|
|
|
|
|
|
|
and
5,750,000 shares issued and outstanding; liquidation preference $25.00
per
|
|
|
|
|
|
|
|
|
share
plus accrued distributions and $119,377 and $167,469 in the aggregate)
|
92,489
|
|
138,940
|
|
|
|
|
Common
shares ($0.01 par value; 250,000,000 common shares authorized;
|
|
|
|
|
|
|
|
|
185,627,199
and 151,305,314 common shares issued and outstanding)
|
1,856
|
|
1,513
|
|
|
|
|
Additional
paid-in capital
|
1,634,067
|
|
1,553,286
|
|
|
|
|
Accumulated
deficit
|
(1,190,621)
|
|
(1,185,294)
|
|
|
|
|
Accumulated
other comprehensive loss
|
(70,652)
|
|
(107,164)
|
|
|
|
|
|
Total
SHR's shareholders' equity
|
654,198
|
|
620,262
|
|
|
|
Noncontrolling
interests in consolidated affiliates
|
8,222
|
|
25,082
|
|
|
|
|
Total
equity
|
662,420
|
|
645,344
|
|
|
|
|
|
Total
liabilities, noncontrolling interests and equity
|
$
2,086,689
|
|
$
2,162,316
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
Supplemental
Financial Data
|
|
(in
thousands, except per share information)
|
|
|
|
December
31, 2011
|
|
|
|
|
|
|
|
Pro
Rata Share
|
|
Consolidated
|
|
Capitalization
|
|
|
Common
shares outstanding
|
185,627
|
|
185,627
|
|
Operating
partnership units outstanding
|
853
|
|
853
|
|
Restricted
stock units outstanding
|
1,208
|
|
1,208
|
|
Value
Creation Plan units outstanding
|
1,156
|
|
1,156
|
|
|
|
|
|
|
|
Combined
shares and units outstanding
|
188,844
|
|
188,844
|
|
Common
stock price at end of period
|
$ 5.37
|
|
$ 5.37
|
|
|
|
|
|
|
|
Common
equity capitalization
|
$
1,014,092
|
|
$
1,014,092
|
|
Preferred
equity capitalization (at $25.00 face value)
|
289,102
|
|
289,102
|
|
Consolidated
debt
|
1,050,385
|
|
1,050,385
|
|
Pro
rata share of unconsolidated debt
|
212,275
|
|
-
|
|
Pro
rata share of consolidated debt
|
(45,548)
|
|
-
|
|
Cash
and cash equivalents
|
(72,013)
|
|
(72,013)
|
|
|
|
|
|
|
|
|
Total
enterprise value
|
$
2,448,293
|
|
$
2,281,566
|
|
|
|
|
|
|
|
Net
Debt / Total Enterprise Value
|
46.8%
|
|
42.9%
|
|
Preferred
Equity / Total Enterprise Value
|
11.8%
|
|
12.7%
|
|
Common
Equity / Total Enterprise Value
|
41.4%
|
|
44.4%
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
The
results of operations of hotels sold are classified as discontinued
operations and segregated in the consolidated statements of operations
for all periods presented. The following hotels were sold during 2011
and 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
|
|
Date
Sold
|
|
Net
Sales Proceeds
|
|
|
|
|
|
|
|
|
Paris
Marriott Champs Elysees (Paris Marriott)
|
|
April
6, 2011
|
|
$
58,012
|
|
|
|
|
|
|
|
|
InterContinental
Prague
|
|
December
15, 2010
|
|
$ 3,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following is a summary of income from discontinued operations for the
three months and years ended December 31, 2011 and 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
operating revenues
|
|
$ -
|
|
$
16,896
|
|
$ 9,743
|
|
$
68,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses
|
|
-
|
|
14,858
|
|
9,456
|
|
55,252
|
|
Depreciation
and amortization
|
|
-
|
|
567
|
|
-
|
|
5,980
|
|
|
Total
operating costs and expenses
|
|
-
|
|
15,425
|
|
9,456
|
|
61,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
-
|
|
1,471
|
|
287
|
|
7,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
-
|
|
(1,990)
|
|
-
|
|
(9,706)
|
|
Interest
income
|
|
-
|
|
13
|
|
-
|
|
32
|
|
Loss
on early extinguishment of debt
|
|
-
|
|
(95)
|
|
-
|
|
(95)
|
|
Foreign
currency exchange (loss) gain
|
|
-
|
|
(98)
|
|
51
|
|
7,392
|
|
Other
income, net
|
|
-
|
|
-
|
|
326
|
|
-
|
|
Income
tax benefit (expense)
|
|
-
|
|
260
|
|
(379)
|
|
(476)
|
|
Gain
on sale
|
|
357
|
|
28,476
|
|
101,287
|
|
29,713
|
|
|
Income
from discontinued operations
|
|
$ 357
|
|
$
28,037
|
|
$
101,572
|
|
$
34,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in the Hotel del Coronado and Fairmont Scottsdale Princess Hotel
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
January 9, 2006, we purchased a 45% interest in the unconsolidated
affiliate that owns the Hotel del Coronado. On February 4, 2011, we
completed a recapitalization of the unconsolidated affiliate. As part
of the recapitalization, a new unconsolidated affiliate was formed to
own the Hotel del Coronado and to invest cash in the asset. Pursuant to
the terms of the recapitalization, we became a limited partner in the
new unconsolidated affiliate, and our ownership interest in the Hotel
del Coronado decreased from 45% to 34.3%. On June 9, 2011, we completed
a recapitalization of the Fairmont Scottsdale Princess hotel. As part
of the recapitalization, our ownership interest in the Fairmont
Scottsdale Princess Hotel decreased from 100% to 50%. We account for
these investments using the equity method of accounting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Three
Months Ended
|
|
|
|
|
|
December 31, 2011
|
|
December 31, 2010
|
|
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
|
|
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Total
revenues (100%)
|
|
|
|
$
30,324
|
|
$
18,322
|
|
$
48,646
|
|
$
29,021
|
|
$ -
|
|
$
29,021
|
|
Property
EBITDA (100%)
|
|
|
|
$ 7,697
|
|
$ 2,052
|
|
$ 9,749
|
|
$ 5,629
|
|
$ -
|
|
$ 5,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
|
Property EBITDA
|
|
|
|
$ 2,640
|
|
$ 1,026
|
|
$ 3,666
|
|
$ 2,533
|
|
$ -
|
|
$ 2,533
|
|
Depreciation
and amortization
|
|
|
|
(1,674)
|
|
(1,765)
|
|
(3,439)
|
|
(1,891)
|
|
-
|
|
(1,891)
|
|
Interest
expense
|
|
|
|
(2,515)
|
|
(204)
|
|
(2,719)
|
|
(2,003)
|
|
-
|
|
(2,003)
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
11,025
|
|
-
|
|
11,025
|
|
Other
expenses, net
|
|
|
|
(22)
|
|
(17)
|
|
(39)
|
|
(32)
|
|
-
|
|
(32)
|
|
Income
taxes
|
|
|
|
(49)
|
|
-
|
|
(49)
|
|
392
|
|
-
|
|
392
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,620)
|
|
$ (960)
|
|
$
(2,580)
|
|
$
10,024
|
|
$ -
|
|
$
10,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,620)
|
|
$ (960)
|
|
$
(2,580)
|
|
$
10,024
|
|
$ -
|
|
$
10,024
|
|
Depreciation
and amortization
|
|
|
|
1,674
|
|
1,765
|
|
3,439
|
|
1,891
|
|
-
|
|
1,891
|
|
Interest
expense
|
|
|
|
2,515
|
|
204
|
|
2,719
|
|
2,003
|
|
-
|
|
2,003
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
Income
taxes
|
|
|
|
49
|
|
-
|
|
49
|
|
(392)
|
|
-
|
|
(392)
|
|
EBITDA Contribution
|
|
|
|
$ 2,618
|
|
$ 1,009
|
|
$ 3,627
|
|
$ 2,501
|
|
$ -
|
|
$ 2,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(1,620)
|
|
$ (960)
|
|
$
(2,580)
|
|
$
10,024
|
|
$ -
|
|
$
10,024
|
|
Depreciation
and amortization
|
|
|
|
1,674
|
|
1,765
|
|
3,439
|
|
1,891
|
|
-
|
|
1,891
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
FFO
Contribution
|
|
|
|
$ 54
|
|
$ 805
|
|
$ 859
|
|
$ 890
|
|
$ -
|
|
$ 890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
|
|
|
|
December 31, 2011
|
|
December 31, 2010
|
|
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
Fairmont
|
|
|
|
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
Hotel
del
|
|
Scottsdale
|
|
|
|
|
|
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Coronado
|
|
Princess
|
|
Total
|
|
Total
revenues (100%)
|
|
|
|
$
136,727
|
|
$
30,711
|
|
$
167,438
|
|
$
127,960
|
|
$ -
|
|
$
127,960
|
|
Property
EBITDA (100%)
|
|
|
|
$
42,445
|
|
$
(1,144)
|
|
$
41,301
|
|
$
36,500
|
|
$ -
|
|
$
36,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
|
|
|
Property EBITDA
|
|
|
|
$
14,662
|
|
$ (572)
|
|
$
14,090
|
|
$
16,425
|
|
$ -
|
|
$
16,425
|
|
Depreciation
and amortization
|
|
|
|
(6,637)
|
|
(4,022)
|
|
(10,659)
|
|
(7,894)
|
|
-
|
|
(7,894)
|
|
Interest
expense
|
|
|
|
(9,897)
|
|
(452)
|
|
(10,349)
|
|
(7,714)
|
|
-
|
|
(7,714)
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
11,025
|
|
-
|
|
11,025
|
|
Other
expenses, net
|
|
|
|
(1,569)
|
|
(657)
|
|
(2,226)
|
|
(195)
|
|
-
|
|
(195)
|
|
Income
taxes
|
|
|
|
505
|
|
-
|
|
505
|
|
503
|
|
-
|
|
503
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(2,936)
|
|
$
(5,703)
|
|
$
(8,639)
|
|
$
12,150
|
|
$ -
|
|
$
12,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(2,936)
|
|
$
(5,703)
|
|
$
(8,639)
|
|
$
12,150
|
|
$ -
|
|
$
12,150
|
|
Depreciation
and amortization
|
|
|
|
6,637
|
|
4,022
|
|
10,659
|
|
7,894
|
|
-
|
|
7,894
|
|
Interest
expense
|
|
|
|
9,897
|
|
452
|
|
10,349
|
|
7,714
|
|
-
|
|
7,714
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
Income
taxes
|
|
|
|
(505)
|
|
-
|
|
(505)
|
|
(503)
|
|
-
|
|
(503)
|
|
EBITDA Contribution
|
|
|
|
$
13,093
|
|
$
(1,229)
|
|
$
11,864
|
|
$
16,230
|
|
$ -
|
|
$
16,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
Contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
(2,936)
|
|
$
(5,703)
|
|
$
(8,639)
|
|
$
12,150
|
|
$ -
|
|
$
12,150
|
|
Depreciation
and amortization
|
|
|
|
6,637
|
|
4,022
|
|
10,659
|
|
7,894
|
|
-
|
|
7,894
|
|
Gain
on extinguishment of debt
|
|
|
|
-
|
|
-
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
FFO
Contribution
|
|
|
|
$ 3,701
|
|
$
(1,681)
|
|
$ 2,020
|
|
$ 9,019
|
|
$ -
|
|
$ 9,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spread over
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest Rate
|
|
LIBOR
|
|
Loan
Amount
|
|
Maturity
(b)
|
|
|
|
|
|
|
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine
|
|
5.80%
(a)
|
|
480 bp
(a)
|
|
$
425,000
|
|
March
2016
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(23,223)
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
401,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage
|
|
0.66%
|
|
36 bp
|
|
$
133,000
|
|
April
2015
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
(2,460)
|
|
|
|
|
|
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
130,540
|
|
|
|
|
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caps
|
|
Date
|
|
LIBOR
Cap Rate
|
|
Notional
Amount
|
|
Maturity
|
|
|
|
|
|
|
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine Loan Caps
|
|
February 2011
|
|
2.00%
|
|
$
425,000
|
|
February 2013
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine Loan Caps
|
|
February 2013
|
|
2.50%
|
|
$
425,000
|
|
March
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMBS
Mortgage Loan Cap
|
|
June
2011
|
|
4.00%
|
|
$
133,000
|
|
December 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Subject to a 1% LIBOR floor.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
Includes extension options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
Information
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Paris
Marriott (a):
|
|
|
|
|
|
|
|
|
Property EBITDA
|
$ -
|
|
$ 3,753
|
|
$ 3,455
|
|
$
19,611
|
|
Revenue (b)
|
$ -
|
|
$ 3,753
|
|
$ 3,455
|
|
$
19,611
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
-
|
|
(2,978)
|
|
(3,274)
|
|
(11,893)
|
|
Less:
Deferred gain on sale-leaseback
|
-
|
|
(1,144)
|
|
(1,214)
|
|
(4,465)
|
|
Adjusted lease expense
|
-
|
|
(4,122)
|
|
(4,488)
|
|
(16,358)
|
|
|
|
|
|
|
|
|
|
|
EBITDA contribution from leasehold
|
$ -
|
|
$ (369)
|
|
$
(1,033)
|
|
$ 3,253
|
|
|
|
|
|
|
|
|
|
|
Marriott Hamburg:
|
|
|
|
|
|
|
|
|
Property EBITDA
|
$ 1,568
|
|
$ 1,681
|
|
$ 6,603
|
|
$ 6,051
|
|
Revenue (b)
|
$ 1,675
|
|
$ 1,608
|
|
$ 5,422
|
|
$ 4,991
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
(1,163)
|
|
(1,170)
|
|
(4,865)
|
|
(4,566)
|
|
Less:
Deferred gain on sale-leaseback
|
(66)
|
|
(53)
|
|
(217)
|
|
(207)
|
|
Adjusted lease expense
|
(1,229)
|
|
(1,223)
|
|
(5,082)
|
|
(4,773)
|
|
|
|
|
|
|
|
|
|
|
EBITDA contribution from leasehold
|
$ 446
|
|
$ 385
|
|
$ 340
|
|
$ 218
|
|
|
|
|
|
|
|
|
|
|
Total
Leaseholds:
|
|
|
|
|
|
|
|
|
Property EBITDA
|
$ 1,568
|
|
$ 5,434
|
|
$
10,058
|
|
$
25,662
|
|
Revenue (b)
|
$ 1,675
|
|
$ 5,361
|
|
$ 8,877
|
|
$
24,602
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
(1,163)
|
|
(4,148)
|
|
(8,139)
|
|
(16,459)
|
|
Less:
Deferred gain on sale-leasebacks
|
(66)
|
|
(1,197)
|
|
(1,431)
|
|
(4,672)
|
|
Adjusted lease expense
|
(1,229)
|
|
(5,345)
|
|
(9,570)
|
|
(21,131)
|
|
|
|
|
|
|
|
|
|
|
EBITDA contribution from leaseholds
|
$ 446
|
|
$ 16
|
|
$ (693)
|
|
$ 3,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
Security Deposits (c):
|
2011
|
|
2010
|
|
|
|
|
|
Paris
Marriott
|
$ -
|
|
$
14,459
|
|
|
|
|
|
Marriott Hamburg
|
2,462
|
|
2,540
|
|
|
|
|
|
Total
|
$ 2,462
|
|
$
16,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) On
April 6, 2011, we sold our leasehold interest in the Paris Marriott.
The results of operations for the Paris Marriott have been classified
as discontinued operations for all periods presented.
|
|
|
|
|
|
|
|
|
|
|
(b)
For the three months and years ended December 31, 2011 and 2010,
Revenue for the Paris Marriott represents Property EBITDA. For the
three months and years ended December 31, 2011 and 2010, Revenue for
the Marriott Hamburg represents lease revenue.
|
|
|
|
|
|
|
|
|
|
|
(c)
The security deposits are recorded in other assets on the consolidated
balance sheets.
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
Non-GAAP
Financial Measures
|
|
|
|
We
present five non-GAAP financial measures that we believe are useful to
management and investors as key measures of our operating performance:
Funds from Operations (FFO); FFO - Fully Diluted; Comparable FFO;
Earnings Before Interest Expense, Taxes, Depreciation and Amortization
(EBITDA); and Comparable EBITDA.
|
|
|
|
EBITDA
represents net 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 other non-cash charges, such as
the Value Creation Plan expense. We believe EBITDA and Comparable
EBITDA are useful to management and investors in evaluating our
operating performance because they provide management and investors
with an indication of our ability to incur and service debt, to satisfy
general operating expenses, to make capital expenditures and to fund
other cash needs or reinvest cash into our business. We also believe
they help management and investors meaningfully evaluate and compare
the results of our operations from period to period by removing the
impact of our asset base (primarily depreciation and amortization) from
our operating results. Our management also uses EBITDA and Comparable
EBITDA as measures in determining the value of acquisitions and
dispositions.
|
|
|
|
We
compute FFO in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, 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 other
non-cash charges, such as the Value Creation Plan expense. We believe
that the presentation of FFO, FFO - Fully Diluted and Comparable FFO
provides useful information to management and investors regarding our
results of operations because they are measures of our ability to fund
capital expenditures and expand our business. In addition, FFO is
widely used in the real estate industry to measure operating
performance without regard to items such as depreciation and
amortization. We also present Comparable FFO per diluted share as a
non-GAAP measure of our performance. We calculate Comparable FFO per
diluted share for a given operating period as our Comparable FFO (as
defined above) divided by the weighted average of fully diluted shares
outstanding. Comparable FFO per diluted share, in accordance with
NAREIT, is adjusted for the effects of dilutive securities. Dilutive
securities may include shares granted under share-based compensation
plans, operating partnership units and exchangeable debt securities. No
effect is shown for securities that are anti-dilutive.
|
|
|
|
We
caution investors that amounts presented in accordance with our
definitions of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, and
Comparable EBITDA may not be comparable to similar measures disclosed
by other companies, since not all companies calculate these non-GAAP
measures in the same manner. FFO, FFO - Fully Diluted, Comparable FFO,
EBITDA, and Comparable EBITDA should not be considered as an
alternative measure of our net income (or loss) or operating
performance. FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, and
Comparable EBITDA may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds for
capital expenditures and property acquisitions and other commitments
and uncertainties. Although we believe that FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA can enhance your
understanding of our financial condition and results of operations,
these non-GAAP financial measures, when viewed individually, are not
necessarily a better indicator of any trend as compared to comparable
GAAP measures such as net income (or loss) attributable to SHR common
shareholders. In addition, you should be aware that adverse economic
and market conditions might negatively impact our cash flow. We have
provided a quantitative reconciliation of FFO, FFO - Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA to the most directly
comparable GAAP financial performance measure, which is net income (or
loss) attributable to SHR common shareholders.
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Loss Attributable to SHR Common Shareholders to EBITDA and
Comparable EBITDA
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Years
Ended
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(15,917)
|
|
$
(134,835)
|
|
$
(23,688)
|
|
$
(261,937)
|
|
Depreciation
and amortization - continuing operations
|
|
25,840
|
|
32,406
|
|
112,062
|
|
130,601
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
567
|
|
-
|
|
5,980
|
|
Interest
expense - continuing operations
|
|
19,299
|
|
17,797
|
|
86,447
|
|
86,285
|
|
Interest
expense - discontinued operations
|
|
-
|
|
1,990
|
|
-
|
|
9,706
|
|
Income
taxes - continuing operations
|
|
691
|
|
1,112
|
|
970
|
|
1,408
|
|
Income
taxes - discontinued operations
|
|
-
|
|
(260)
|
|
379
|
|
476
|
|
Noncontrolling
interests
|
|
(99)
|
|
(808)
|
|
(29)
|
|
(1,687)
|
|
Adjustments
from consolidated affiliates
|
|
(1,302)
|
|
(2,013)
|
|
(6,733)
|
|
(7,609)
|
|
Adjustments
from unconsolidated affiliates
|
|
6,928
|
|
3,673
|
|
23,221
|
|
15,563
|
|
Preferred
shareholder dividends
|
|
(4,682)
|
|
7,722
|
|
18,482
|
|
30,886
|
|
EBITDA
|
|
30,758
|
|
(72,649)
|
|
211,111
|
|
9,672
|
|
Realized
portion of deferred gain on sale-leaseback - continuing operations
|
|
(66)
|
|
(53)
|
|
(217)
|
|
(207)
|
|
Realized
portion of deferred gain on sale-leaseback - discontinued operations
|
|
-
|
|
(1,144)
|
|
(1,214)
|
|
(4,465)
|
|
Gain
on sale of assets - continuing operations
|
|
-
|
|
-
|
|
(2,640)
|
|
-
|
|
Gain
on sale of assets - discontinued operations
|
|
(357)
|
|
(28,476)
|
|
(101,287)
|
|
(29,713)
|
|
Impairment
losses and other charges
|
|
-
|
|
141,858
|
|
-
|
|
141,858
|
|
Loss
on early extinguishment of debt - continuing operations
|
|
-
|
|
-
|
|
1,237
|
|
925
|
|
Loss
on early extinguishment of debt - discontinued operations
|
|
-
|
|
95
|
|
-
|
|
95
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
29,242
|
|
18,263
|
|
Gain
on extinguishment of debt of unconsolidated affiliate
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
Foreign
currency exchange loss - continuing operations (a)
|
|
79
|
|
16
|
|
2
|
|
1,410
|
|
Foreign
currency exchange loss (gain) - discontinued operations (a)
|
|
-
|
|
98
|
|
(51)
|
|
(7,392)
|
|
Adjustment
for Value Creation Plan
|
|
9,529
|
|
5,743
|
|
18,607
|
|
12,614
|
|
Comparable
EBITDA
|
|
$
39,943
|
|
$
34,463
|
|
$
154,790
|
|
$
132,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
(15,917)
|
|
$
(134,835)
|
|
$
(23,688)
|
|
$
(261,937)
|
|
Depreciation
and amortization - continuing operations
|
|
25,840
|
|
32,406
|
|
112,062
|
|
130,601
|
|
Depreciation
and amortization - discontinued operations
|
|
-
|
|
567
|
|
-
|
|
5,980
|
|
Corporate
depreciation
|
|
(273)
|
|
(303)
|
|
(1,141)
|
|
(1,217)
|
|
Gain
on sale of assets - continuing operations
|
|
-
|
|
-
|
|
(2,640)
|
|
-
|
|
Gain
on sale of assets - discontinued operations
|
|
(357)
|
|
(28,476)
|
|
(101,287)
|
|
(29,713)
|
|
Realized
portion of deferred gain on sale-leaseback - continuing operations
|
|
(66)
|
|
(53)
|
|
(217)
|
|
(207)
|
|
Realized
portion of deferred gain on sale-leaseback - discontinued operations
|
|
-
|
|
(1,144)
|
|
(1,214)
|
|
(4,465)
|
|
Deferred
tax expense on realized portion of deferred gain on sale-leasebacks
|
|
-
|
|
357
|
|
379
|
|
1,393
|
|
Noncontrolling
interests adjustments
|
|
(135)
|
|
(222)
|
|
(575)
|
|
(1,159)
|
|
Adjustments
from consolidated affiliates
|
|
(664)
|
|
(1,335)
|
|
(4,486)
|
|
(5,979)
|
|
Adjustments
from unconsolidated affiliates
|
|
3,740
|
|
1,874
|
|
11,763
|
|
7,973
|
|
FFO
|
|
12,168
|
|
(131,164)
|
|
(11,044)
|
|
(158,730)
|
|
|
Redeemable
noncontrolling interests
|
|
36
|
|
(586)
|
|
546
|
|
(528)
|
|
FFO -
Fully Diluted
|
|
12,204
|
|
(131,750)
|
|
(10,498)
|
|
(159,258)
|
|
Impairment
losses and other charges
|
|
-
|
|
141,858
|
|
-
|
|
141,858
|
|
Non-cash
mark to market of interest rate swaps - continuing operations
|
|
(1,696)
|
|
(535)
|
|
(2,183)
|
|
9,014
|
|
Non-cash
mark to market of interest rate swaps - discontinued operations
|
|
-
|
|
(204)
|
|
-
|
|
25
|
|
Loss
on early extinguishment of debt - continuing operations
|
|
-
|
|
-
|
|
1,237
|
|
925
|
|
Loss
on early extinguishment of debt - discontinued operations
|
|
-
|
|
95
|
|
-
|
|
95
|
|
Loss
on early termination of derivative financial instruments
|
|
-
|
|
-
|
|
29,242
|
|
18,263
|
|
Gain
on extinguishment of debt of unconsolidated affiliate
|
|
-
|
|
(11,025)
|
|
-
|
|
(11,025)
|
|
Foreign
currency exchange loss - continuing operations (a)
|
|
79
|
|
16
|
|
2
|
|
1,410
|
|
Foreign
currency exchange loss (gain), net of tax - discontinued operations (a)
|
|
-
|
|
95
|
|
(51)
|
|
(7,421)
|
|
Adjustment
for Value Creation Plan
|
|
9,529
|
|
5,743
|
|
18,607
|
|
12,614
|
|
Comparable
FFO
|
|
$
20,116
|
|
$ 4,293
|
|
$
36,356
|
|
$ 6,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
FFO per diluted share
|
|
$ 0.11
|
|
$ 0.03
|
|
$ 0.20
|
|
$ 0.05
|
|
Weighted
average diluted shares
|
|
188,340
|
|
151,663
|
|
179,319
|
|
122,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Foreign
currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Summary
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
|
|
|
|
Debt
|
|
|
Interest
Rate
|
|
Spread
(a)
|
|
Amount
|
|
Maturity
(b)
|
|
Hyatt
Regency La Jolla
|
|
|
1.30%
|
|
100 bp
|
|
$
97,500
|
|
September
2012
|
|
North
Beach Venture
|
|
|
5.00%
|
|
Fixed
|
|
1,476
|
|
January
2013
|
|
Marriott
London Grosvenor Square (c)
|
|
|
2.18%
|
|
110 bp
(c)
|
|
113,659
|
|
October
2013
|
|
Bank
credit facility
|
|
|
3.30%
|
|
300 bp
|
|
50,000
|
|
June
2015
|
|
Four
Seasons Washington, D.C.
|
|
|
3.45%
|
|
315 bp
|
|
130,000
|
|
July
2016
|
|
Westin
St. Francis
|
|
|
6.09%
|
|
Fixed
|
|
220,000
|
|
June
2017
|
|
Fairmont
Chicago
|
|
|
6.09%
|
|
Fixed
|
|
97,750
|
|
June
2017
|
|
InterContinental
Miami
|
|
|
3.80%
|
|
350 bp
|
|
85,000
|
|
July
2018
|
|
Loews
Santa Monica Beach Hotel
|
|
|
4.15%
|
|
385 bp
|
|
110,000
|
|
July
2018
|
|
InterContinental
Chicago
|
|
|
5.61%
|
|
Fixed
|
|
145,000
|
|
August
2021
|
|
|
|
|
|
|
|
|
$
1,050,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Spread over LIBOR (0.30% at December 31, 2011).
|
|
|
|
|
|
|
|
|
(b)
Includes extension options.
|
|
|
|
|
|
|
|
|
|
|
(c)
Principal balance of GBP 73,130,000 at December 31, 2011. Spread over
three-month GBP LIBOR (1.08% at December 31, 2011).
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
and European Interest Rate Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
|
|
Swap
Effective Date
|
|
|
Against
LIBOR
|
|
Amount
|
|
Maturity
|
|
|
|
February
2010
|
|
|
4.90%
|
|
$
100,000
|
|
September
2014
|
|
|
|
February
2010
|
|
|
4.96%
|
|
100,000
|
|
December
2014
|
|
|
|
December
2010
|
|
|
5.23%
|
|
100,000
|
|
December
2015
|
|
|
|
February
2011
|
|
|
5.27%
|
|
100,000
|
|
February
2016
|
|
|
|
|
|
|
5.09%
|
|
$
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Pay Rate
|
|
Notional
|
|
|
|
|
|
Swap
Effective Date
|
|
|
Against
GBP LIBOR
|
|
Amount
|
|
Maturity
|
|
|
|
October
2007
|
|
|
5.72%
|
|
GBP
73,130
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
December 31, 2011, future scheduled debt principal payments (including
extension options) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
ending December 31,
|
|
|
Amount
|
|
|
|
|
|
|
|
2012
|
|
|
$
109,099
|
|
|
|
|
|
|
|
2013
|
|
|
122,799
|
|
|
|
|
|
|
|
2014
|
|
|
13,872
|
|
|
|
|
|
|
|
2015
|
|
|
65,046
|
|
|
|
|
|
|
|
2016
|
|
|
145,861
|
|
|
|
|
|
|
|
Thereafter
|
|
|
593,708
|
|
|
|
|
|
|
|
|
|
|
$
1,050,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
|
|
|
93.1%
|
|
|
|
Weighted
average interest rate including U.S. and European swaps (d)
|
|
|
|
6.63%
|
|
|
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
|
4.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
Excludes the amortization of deferred financing costs and the
amortization of the interest rate swap costs.
|
|
|
|