|
ALISO VIEJO, Calif., May 2, 2012 -- Sunstone Hotel Investors, Inc.
(the "Company") (NYSE: SHO) today announced results for the first
quarter ended March 31, 2012.
First Quarter 2012 Operational Results (as compared to
First Quarter 2011) (1) :
- Comparable Hotel RevPAR increased 5.5% to $117.45.
- Comparable Hotel EBITDA Margin increased by 120 basis
points to 24.5%.
- Adjusted EBITDA increased by 32.9% to $43.1 million.
- Adjusted FFO available to common stockholders per diluted
share increased by 71.4% to $0.12.
- Loss attributable to common stockholders was $21.0 million (vs. income available to common
stockholders of $45.7 million in 2011).
- Loss attributable to common stockholders per diluted share
was $0.18 (vs. income available to
common stockholders per diluted share of $0.39
in 2011).
Ken Cruse, President and Chief
Executive Officer, stated, "Our portfolio's solid operating performance
during the quarter and the earnings from recently acquired hotels drove
a 33% year-over-year improvement in Adjusted EBITDA, and a 71%
year-over-year improvement in Adjusted FFO per diluted share. Lodging
demand trends continue to improve and industry fundamentals are very
positive. First quarter group booking productivity for our portfolio
was at its highest level since 2006. As a result, our 2012 group
booking pace is now up over 8% and our 2013 group pace is now up over
20% as compared to the same time last year. Accordingly, we have
increased our full-year 2012 guidance."
Mr. Cruse continued, "We remain focused on improving our
portfolio quality and scale while gradually deleveraging our balance
sheet through creatively sourced, attractively valued transactions. To
this end, today we announced our acquisition of the 417-room Wyndham
Chicago for a net acquisition price of $88.4
million, or $212,000 per key. The
acquisition will be funded using a portion of our sizeable cash balance
and by issuing $58.4 million of common
shares directly to the seller, an affiliate of The Blackstone Group, at
a net price of $10.71 per share. We are
excited to have Blackstone as a
significant investor in Sunstone, and we look forward to deepening our
relationship. We are also pleased to expand our relationship with Hyatt
Hotels Corporation. We believe Hyatt is the most attractive brand for
this hotel due to Hyatt's ability to attract high-end business travel
and corporate groups, including the vast number of medical meetings
generated within walking distance of the hotel. Given the hotel's
unique upside opportunities and the mutual benefits of the transaction,
Hyatt provided us with an attractive package of franchise and economic
terms. After rebranding the hotel as the Hyatt Chicago Magnificent
Mile, and completing a comprehensive renovation and repositioning
program aimed at making the hotel one of Chicago's
top business destinations, we anticipate our all-in investment will be
approximately $250,000 per key, which we
believe will lead to attractive post-renovation returns. There will be
no debt incurred in connection with this acquisition."
|
(1)
|
Comparable
Hotel RevPAR and Comparable Hotel EBITDA Margin information presented
reflect the Company's Comparable 32 Hotel Portfolio, which includes all
hotels in which the Company has interests as of March 31, 2012.
Comparable Hotel EBITDA Margin information excludes current and prior
year real estate tax credits or assessments. The Comparable 32 Hotel
Portfolio also includes prior ownership results as applicable in 2011
for the Doubletree Guest Suites Times Square acquired by the Company in
January 2011, the JW Marriott New Orleans acquired by the Company in
February 2011, and the Hilton San Diego Bayfront acquired by the
Company in April 2011.
|
|
SELECTED
FINANCIAL DATA
|
|
($
in millions, except RevPAR and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
2012
|
2011
|
%
Change
|
|
Total
Revenue
|
$ 205.2
|
$ 159.1
|
29.0%
|
|
Comparable
Hotel RevPAR
|
$
117.45
|
$
111.31
|
5.5%
|
|
Comparable
Hotel Occupancy
|
73.8%
|
69.6%
|
420
bps
|
|
Comparable
Hotel ADR
|
$
159.14
|
$
159.93
|
(0.5)%
|
|
|
|
|
|
Comparable
Hotel EBITDA Margin
|
24.5%
|
23.3%
|
120
bps
|
|
|
|
|
|
Income
available (loss attributable) to common stockholders
|
$
(21.0 )
|
$ 45.7
|
|
|
Income
available (loss attributable) to common stockholders per diluted share
|
$
(0.18 )
|
$ 0.39
|
|
|
EBITDA
|
$ 41.7
|
$ 98.1
|
|
|
Adjusted
EBITDA
|
$ 43.1
|
$ 32.4
|
|
|
FFO
available to common stockholders
|
$ 12.9
|
$ 74.8
|
|
|
Adjusted
FFO available to common stockholders
|
$ 13.6
|
$ 8.6
|
|
|
FFO
available to common stockholders per diluted share (1)
|
$ 0.11
|
$ 0.64
|
|
|
Adjusted
FFO available to common stockholders per diluted share (1)
|
$ 0.12
|
$ 0.07
|
|
|
(1)
|
Reflects
the Series C convertible preferred stock on a "non-converted" basis. On
an "as-converted" basis, FFO available to common stockholders per
diluted share is $0.12 and $0.63, respectively, for the three months
ended March 31, 2012 and 2011. On an "as-converted" basis, Adjusted FFO
available to common stockholders per diluted share is $0.12 and $0.08,
respectively, for the three months ended March 31, 2012 and 2011.
|
Disclosure regarding the non-GAAP financial measures in this
release is included on pages 5 and 6. Reconciliations of non-GAAP
financial measures to the most comparable GAAP measure for each of the
periods presented are included on pages 9 through 12 of this release.
The Company's actual results for the quarter ended March 31, 2012 compare to its prior guidance
as follows:
|
Metric
|
Q1
2012
Guidance (1)
|
Q1
2012
Actual
|
Performance
Relative to
Midpoint
|
|
Comparable
Hotel RevPAR
|
+3% -
5%
|
+5.5%
|
+1.5%
|
|
Net
Loss ($ millions)
|
$(19)
- $(17)
|
($13)
|
+$5.0
|
|
Adjusted
EBITDA ($ millions)
|
$38 -
$40
|
$43.1
|
+$4.1
|
|
Adjusted
FFO ($ millions)
|
$9 -
$11
|
$13.6
|
+$3.6
|
|
Adjusted
FFO per diluted share
|
$0.07
- $0.09
|
$0.12
|
+$0.04
|
|
|
|
|
|
(1)
Reflects guidance presented on 02/21/2012.
|
Acquisition Update
The Company has signed a purchase and sale agreement to
acquire the 417-room Wyndham Chicago from an affiliate of The
Blackstone Group for a total purchase price of $88.4
million (approximately $212,000
per key). The hotel is well located one block east of Michigan Avenue
on the corner of North St. Claire Street in Chicago's
famed Magnificent Mile district, and is adjacent to Northwestern
Medical Hospital, Chicago's Feinberg
School of Medicine, and the new 23-story, state-of-the-art, Ann &
Robert Lurie Children's Memorial Hospital that opens in June 2012. The
hotel is subject to an 85-year building lease. Upon closing, the
Company will rebrand the hotel the Hyatt Chicago Magnificent Mile and
will immediately embark on a $25 million
renovation program (a portion of which will be funded by Hyatt).
Following the scheduled renovation and after the hotel reaches
stabilization as a Hyatt-branded hotel, the Company anticipates that
its all-in investment will be roughly $250,000
per key, which the Company estimates will equate to a below 10.0x
multiple on anticipated stabilized EBITDA. The hotel will be funded
with $30.0 million of cash on hand and $58.4 million of the Company's common stock,
which will be issued to the seller at a price equivalent to $10.71 per share. The hotel will be managed by
Davidson Hotels & Resorts under a franchise agreement with an
affiliate of Hyatt Hotels Corporation. The Company expects the purchase
of the hotel to close during the second quarter of 2012.
Jonathan D. Gray, Global Head
of Real Estate of The Blackstone Group stated, "We are excited about
this transaction with Sunstone. We believe the company and its
management are well positioned to take advantage of the continued
recovery in the lodging cycle and we look forward to building our
relationship with Sunstone."
Balance Sheet/Liquidity Update
As of March 31, 2012, the
Company had approximately $198.2 million
of cash and cash equivalents, including restricted cash of $72.0 million, total assets of $3.1 billion, including $2.8
billion of net investments in hotel properties, total
consolidated debt of $1.6 billion and
stockholders' equity of $1.2 billion.
On April 26, 2012, the Company
used existing cash to repay its $32.2 million
non-recourse mortgage secured by the Renaissance Long Beach, which was
scheduled to mature on July 1, 2012.
After this repayment, the Company's only near-term debt maturity is the
4.60% Exchangeable Senior Notes outstanding balance of $58.0 million, which is likely to be retired
with a portion of the Company's unrestricted cash balance on or before January 15, 2013, the first optional
repurchase date.
John Arabia, Chief Financial
Officer stated, "Following the repayment of the mortgage on our
Renaissance Long Beach and upon closing our acquisition of the Hyatt
Chicago Magnificent Mile, we will hold 13 unencumbered hotels. Our
remaining mortgages have well-staggered maturities and, in aggregate,
pay below-market interest rates, and we have access to multiple forms
of liquidity. While we believe Sunstone is attractively capitalized for
the current phase of the lodging cycle, we remain committed to
gradually deleveraging over the next several years while building
shareholder value. Our acquisition of the Hyatt Chicago Magnificent
Mile, which will have no debt, and our repayment of the mortgage on the
Renaissance Long Beach are highly consistent with our stated plan."
Capital Improvements
The Company invested $21.8 million
in capital improvements into its portfolio during the first quarter of
2012.
2012 Outlook
Achievement of the Company's anticipated results is subject to
risks and uncertainties, including those disclosed in the Company's
filings with the Securities and Exchange Commission. The Company's
guidance includes the existing 32 Hotel Portfolio and does not take
into account the impact of the pending Hyatt Chicago Magnificent Mile
acquisition or any future hotel acquisitions, dispositions,
re-brandings or management change transition costs, debt repurchases or
financings during 2012.
For the second quarter of 2012, the Company expects:
|
Metric
|
Quarter
Ended
June 30, 2012
Guidance
|
|
Comparable
Hotel RevPAR
|
+5.5%
- 7.5%
|
|
Net
Income ($ millions)
|
$8
- $11
|
|
Adjusted
EBITDA ($ millions)
|
$65
- $68
|
|
Adjusted
FFO ($ millions)
|
$36
- $39
|
|
Adjusted
FFO per diluted share
|
$0.30
- $0.33
|
For the full year 2012, the Company expects:
|
Metric
|
Prior
2012 FY
Guidance (1)
|
Current
2012 FY
Guidance
|
Change
to
Prior Midpoint
|
|
Comparable
Hotel RevPAR
|
+4%
- 6%
|
+5%
- 7%
|
+1%
|
|
Net
Income (Loss) ($ millions)
|
$(4)
- $8
|
$4
- $13
|
$6.5
|
|
Adjusted
EBITDA ($ millions)
|
$223
- $235
|
$229
- $238
|
$4.5
|
|
Adjusted
FFO ($ millions)
|
$105
- $117
|
$113
- $122
|
$6.5
|
|
Adjusted
FFO per diluted share
|
$0.90
- $1.00
|
$0.96
- $1.04
|
$0.05
|
|
(1)
Reflects guidance presented on 02/21/2012.
|
Full-year 2012 guidance is also based on the following
assumptions:
- Capital investment of $85 to $100
million, including the $25 million
renovation of the Renaissance Washington DC.
- Hotel revenue renovation disruption of $3 to $5 million.
- Comparable Hotel EBITDA Margins to increase by 75 to 125
basis points.
- Corporate overhead expense (excluding stock amortization
and one-time expenses related to future acquisition closing costs) of $19 to $20 million.
- Interest expense of approximately $81
to $83 million, including $4 million
in amortization of deferred financing fees.
- Preferred dividends (Series A, C and D) of approximately $30 million.
John Arabia continued, "We have
increased our guidance based on our strong first quarter operating
results and our elevated confidence in business trends. We expect the
acceleration in group bookings and healthy transient demand, combined
with very low industry-wide supply trends to drive meaningful RevPAR
and margin growth for the next several years."
Dividend Update
On May 2, 2012, the Company's
Board of Directors declared a cash dividend of $0.50
per share payable to its Series A and Series D cumulative redeemable
preferred stockholders and a cash dividend of $0.393
per share payable to its Series C cumulative convertible redeemable
preferred stockholders. The dividends will be paid on or before July 15, 2012 to stockholders of record on June 30, 2012. No dividend was declared on the
Company's common stock, as the Company intends to deploy excess cash
flow from operations toward internal renovation investments and gradual
deleveraging.
Subject to certain limitations, the Company intends to make
dividends on its stock in amounts equivalent to 100% of its annual
taxable income, which may be reduced through the application of net
operating losses. The level of any future dividends will be determined
by the Company's Board of Directors after considering taxable income
projections, expected capital requirements, risks affecting the
Company's business and in context of the Company's leverage-reduction
initiatives. As a result, common stock dividends may be made in the
form of cash or a combination of cash and stock consistent with
Internal Revenue Service guidelines.
Supplemental Disclosures
Contemporaneous with this release, the Company has furnished a
Form 8-K with unaudited financial information. This additional
information is being provided as a supplement to information prepared
in accordance with generally accepted accounting principles. The
Company undertakes no obligation to update any of the information
provided to conform to actual results or changes in the Company's
portfolio, capital structure or future expectations.
Earnings Call
The Company will host a conference call to discuss first
quarter results on May 3, 2012, at 9:00 a.m. EDT (6:00
a.m. PDT). A live web cast of the call will be available via the
Investor Relations section of the Company's website. Alternatively,
investors may dial 1-877-941-2333 (for domestic callers) or
1-480-629-9724 (for international callers). A replay of the web cast
will also be archived on the website.
The following table includes information related to the
Wyndham Chicago, which will be rebranded the Hyatt Chicago Magnificent
Mile:
|
Wyndham
Chicago / Hyatt Chicago Magnificent Mile (1) EBITDA
Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
|
Equals:
|
|
Hotel
|
|
(In
thousands)
|
Total
|
|
|
Hotel
|
|
EBITDA
|
|
Revenues
|
Net
Income
|
Depreciation
(2)
|
EBITDA
|
|
Margins
|
|
|
|
|
|
|
|
|
FY 2012
|
$
25,600
|
$ 1,200
|
$ 3,300
|
$ 4,200
|
|
16.4%
|
|
|
|
|
|
|
|
|
Post
Renovation (3)
|
$
35,000
|
$ 5,200
|
$ 4,000
|
$ 9,200
|
|
26.3%
|
|
|
|
|
|
|
|
|
|
(1) 2012
forecast reflects anticipated prior ownership period of January - May
2012 when the hotel operated as the Wyndham Chicago, and June -
December 2012 when the hotel will be re-branded the Hyatt Chicago
Magnificent Mile.
|
|
(2) Depreciation
calculated using an estimated purchase price of $88.4 million allocated
based on the hotel's 2011 property tax assessment. Post renovation
depreciation is increased to reflect capital invested.
|
|
(3) Reflects
anticipated earnings for the subsequent twelve months following the
completion of the hotel's renovation program.
|
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. ("Sunstone") is a lodging real
estate investment trust ("REIT") that, as of March
31, 2012, has interests in 32 hotels comprised of 13,208 rooms.
Sunstone's hotels are primarily in the upper upscale segment and are
generally operated under nationally recognized brands, such as
Marriott, Hilton, Fairmont, Hyatt and Sheraton. For further
information, please visit Sunstone's website at www.sunstonehotels.com.
Sunstone's mission is to create meaningful value for our
stockholders by becoming the premier hotel owner. Our values include
transparency, trust, ethical conduct, communication and discipline. We
seek to employ a balanced, cycle-appropriate corporate strategy that
encompasses the following:
- Proactive portfolio management;
- Intensive asset management;
- Disciplined external growth; and
- Measured balance sheet improvement.
This press release contains forward-looking statements within
the meaning of federal securities laws and regulations. These
forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "predict," "project,"
"should," "will" and other similar terms and phrases, including
references to assumptions and forecasts of future results.
Forward-looking statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors that
may cause the actual results to differ materially from those
anticipated at the time the forward-looking statements are made. These
risks include, but are not limited to: volatility in the debt or equity
markets affecting our ability to acquire or sell hotel assets; national
and local economic and business conditions, including the likelihood of
a prolonged U.S. recession; the ability to maintain sufficient
liquidity and our access to capital markets; potential terrorist
attacks, which would affect occupancy rates at our hotels and the
demand for hotel products and services; operating risks associated with
the hotel business; risks associated with the level of our indebtedness
and our ability to meet covenants in our debt and equity agreements;
relationships with property managers and franchisors; our ability to
maintain our properties in a first-class manner, including meeting
capital expenditure requirements; our ability to compete effectively in
areas such as access, location, quality of accommodations and room rate
structures; changes in travel patterns, taxes and government
regulations, which influence or determine wages, prices, construction
procedures and costs; our ability to identify, successfully compete for
and complete acquisitions; the performance of hotels after they are
acquired; necessary capital expenditures and our ability to fund them
and complete them with minimum disruption; our ability to continue to
satisfy complex rules in order for us to qualify as a REIT for federal
income tax purposes; and other risks and uncertainties associated with
our business described in the Company's filings with the Securities and
Exchange Commission. Although the Company believes the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that the expectations will be
attained or that any deviation will not be material. All
forward-looking information in this release is as of May 2, 2012, and the Company undertakes no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in the Company's expectations.
This release should be read in conjunction with the
consolidated financial statements and notes thereto included in our
most recent reports on Form 10-K and Form 10-Q. Copies of these reports
are available on our website at www.sunstonehotels.com
and through the SEC's Electronic Data Gathering Analysis and Retrieval
System ("EDGAR") at www.sec.gov.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures that we
believe are useful to investors as key measures of our operating
performance: Earnings Before Interest Expense, Taxes, Depreciation and
Amortization, or EBITDA; Adjusted EBITDA (as defined below); Funds From
Operations, or FFO; Adjusted FFO (as defined below); and comparable
hotel EBITDA and comparable hotel EBITDA margin.
EBITDA represents net income (loss) excluding: non-controlling
interests; interest expense; provision for income taxes, including
income taxes applicable to sale of assets; and depreciation and
amortization. In addition, we have presented Adjusted EBITDA, which
excludes: amortization of deferred stock compensation; the impact of
any gain or loss from asset sales; impairment charges; and any other
adjustments we have identified in this release. We believe EBITDA and
Adjusted EBITDA are useful to investors in evaluating our operating
performance because these measures help investors evaluate and compare
the results of our operations from period to period by removing the
impact of our capital structure (primarily interest expense) and our
asset base (primarily depreciation and amortization) from our operating
results. We also use EBITDA and Adjusted EBITDA as measures in
determining the value of hotel acquisitions and dispositions. A
reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is
set forth on page 9. A reconciliation and the components of comparable
hotel EBITDA and comparable hotel EBITDA margin are set forth on page
12. We believe comparable hotel EBITDA and comparable hotel EBITDA
margin are also useful to investors in evaluating our property-level
operating performance.
We compute FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts, or NAREIT, an
industry trade group. The Board of Governors of NAREIT in its March 1995 White Paper (as clarified in November 1999 and April
2002) defines FFO to mean net income (loss) (computed in
accordance with GAAP), excluding non-controlling interests, gains and
losses from sales of property, plus real estate-related depreciation
and amortization (excluding amortization of deferred financing costs)
and real estate-related impairment losses, and after adjustment for
unconsolidated partnerships and joint ventures. We also present
Adjusted FFO, which excludes penalties, written-off deferred financing
costs, non-real estate-related impairment losses and any other
adjustments we have identified in this release. We believe that the
presentation of FFO and Adjusted FFO provide useful information to
investors regarding our operating performance because they are measures
of our operations without regard to specified non-cash items such as
real estate depreciation and amortization, gain or loss on sale of
assets and certain other items which we believe are not indicative of
the performance of our underlying hotel properties. We believe that
these items are more representative of our asset base and our
acquisition and disposition activities than our ongoing operations. We
also use FFO as one measure in determining our results after taking
into account the impact of our capital structure. A reconciliation of
net income (loss) to FFO and Adjusted FFO is set forth on page 9.
The revenue and expense items associated with our commercial
laundry facility, BuyEfficient and other miscellaneous non-hotel items
have been excluded in presenting comparable hotel EBITDA margins.
Management believes the calculation of comparable hotel EBITDA results
in a more accurate presentation of hotel EBITDA margins of the
Company's 32 comparable hotels. See page 12 for a reconciliation of
comparable hotel EBITDA to the most comparable GAAP measure. Our 32
comparable hotels include all hotels in which the Company has interests
as of March 31, 2012, plus prior
ownership results as applicable in 2011 for the Doubletree Guest Suites
Times Square acquired by the Company in January
2011, the JW Marriott New Orleans acquired by the Company in February 2011, and the Hilton San Diego
Bayfront acquired by the Company in April 2011.
We caution investors that amounts presented in accordance with
our definitions of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO,
comparable hotel EBITDA and comparable hotel EBITDA margin may not be
comparable to similar measures disclosed by other companies, because
not all companies calculate these non-GAAP measures in the same manner.
EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable hotel EBITDA and
comparable hotel EBITDA margin should not be considered as an
alternative measure of our net income (loss), operating performance,
cash flow or liquidity. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO,
comparable hotel EBITDA and comparable hotel EBITDA margin 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 EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable
hotel EBITDA and comparable hotel EBITDA margin can enhance an
investor's understanding of our results of operations, these non-GAAP
financial measures, when viewed individually, are not necessarily a
better indicator of any trend as compared to GAAP measures such as net
income (loss) or cash flow from operations. In addition, you should be
aware that adverse economic and market conditions may harm our cash
flow.
|
Sunstone
Hotel Investors, Inc.
|
|
Consolidated
Balance Sheets
|
|
(In
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2012
|
|
2011
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
$
126,199
|
|
$
150,533
|
|
Restricted
cash
|
71,991
|
|
67,898
|
|
Accounts
receivable, net
|
35,275
|
|
32,542
|
|
Inventories
|
2,638
|
|
2,608
|
|
Prepaid
expenses
|
10,336
|
|
10,272
|
|
Total
current assets
|
246,439
|
|
263,853
|
|
|
|
|
|
|
Investment
in hotel properties, net
|
2,761,006
|
|
2,777,826
|
|
Other
real estate, net
|
11,723
|
|
11,859
|
|
Deferred
financing fees, net
|
13,637
|
|
14,651
|
|
Goodwill
|
13,088
|
|
13,088
|
|
Other
assets, net
|
18,838
|
|
19,963
|
|
|
|
|
|
|
Total
assets
|
$
3,064,731
|
|
$
3,101,240
|
|
|
|
|
|
|
Liabilities
and Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued expenses
|
$
22,370
|
|
$
26,854
|
|
Accrued
payroll and employee benefits
|
16,423
|
|
20,863
|
|
Due to
Third-Party Managers
|
8,436
|
|
9,227
|
|
Dividends
payable
|
7,437
|
|
7,437
|
|
Other
current liabilities
|
31,164
|
|
28,465
|
|
Current
portion of notes payable
|
111,346
|
|
53,935
|
|
Total
current liabilities
|
197,176
|
|
146,781
|
|
|
|
|
|
|
Notes
payable, less current portion
|
1,449,246
|
|
1,516,542
|
|
Other
liabilities
|
13,284
|
|
12,623
|
|
Total
liabilities
|
1,659,706
|
|
1,675,946
|
|
|
|
|
|
|
Commitments
and contingencies
|
-
|
|
-
|
|
|
|
|
|
|
Preferred
stock, Series C Cumulative Convertible Redeemable Preferred
|
|
|
|
|
Stock,
$0.01 par value, 4,102,564 shares authorized, issued and
|
|
|
|
|
outstanding
at March 31, 2012 and December 31, 2011, liquidation
|
|
|
|
|
preference
of $24.375 per share
|
100,000
|
|
100,000
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred
stock, $0.01 par value, 100,000,000 shares authorized.
|
|
|
|
|
8.0%
Series A Cumulative Redeemable Preferred Stock,
|
|
|
|
|
7,050,000
shares issued and outstanding at March 31, 2012 and December
31, 2011,
|
|
|
|
|
stated
at liquidation preference of $25.00 per share
|
176,250
|
|
176,250
|
|
8.0%
Series D Cumulative Redeemable Preferred Stock,
|
|
|
|
|
4,600,000
shares issued and outstanding at March 31, 2012 and December
31, 2011,
|
|
|
|
|
stated
at liquidation preference of $25.00 per share
|
115,000
|
|
115,000
|
|
Common
stock, $0.01 par value, 500,000,000 shares authorized,
|
|
|
|
|
117,571,234
shares issued and outstanding at March 31, 2012 and
|
|
|
|
|
117,265,090
shares issued and outstanding at December 31, 2011
|
1,176
|
|
1,173
|
|
Additional
paid in capital
|
1,313,581
|
|
1,312,566
|
|
Retained
earnings
|
97,052
|
|
110,580
|
|
Cumulative
dividends
|
(452,833)
|
|
(445,396)
|
|
Accumulated
other comprehensive loss
|
(4,916)
|
|
(4,916)
|
|
Total
stockholders' equity
|
1,245,310
|
|
1,265,257
|
|
Non-controlling
interest in consolidated joint ventures
|
59,715
|
|
60,037
|
|
Total
equity
|
1,305,025
|
|
1,325,294
|
|
|
|
|
|
|
Total
liabilities and equity
|
$
3,064,731
|
|
$
3,101,240
|
|
Sunstone
Hotel Investors, Inc.
|
|
Unaudited
Consolidated Statements of Operations
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Room
|
|
|
|
|
$
136,538
|
|
$
106,480
|
|
|
Food
and beverage
|
|
|
|
|
51,837
|
|
39,285
|
|
|
Other
operating
|
|
|
|
|
16,846
|
|
13,293
|
|
|
Total
revenues
|
|
|
|
|
205,221
|
|
159,058
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Room
|
|
|
|
|
37,449
|
|
29,051
|
|
|
Food
and beverage
|
|
|
|
|
36,846
|
|
29,726
|
|
|
Other
operating
|
|
|
|
|
6,890
|
|
5,959
|
|
|
Advertising
and promotion
|
|
|
|
|
11,115
|
|
8,622
|
|
|
Repairs
and maintenance
|
|
|
|
|
8,614
|
|
7,272
|
|
|
Utilities
|
|
|
|
|
7,286
|
|
6,845
|
|
|
Franchise
costs
|
|
|
|
|
6,731
|
|
5,250
|
|
|
Property
tax, ground lease and insurance
|
|
|
|
|
16,766
|
|
13,992
|
|
|
Property
general and administrative
|
|
|
|
|
25,247
|
|
20,020
|
|
|
Corporate
overhead
|
|
|
|
|
5,300
|
|
7,657
|
|
|
Depreciation
and amortization
|
|
|
|
|
34,756
|
|
26,222
|
|
|
Total
operating expenses
|
|
|
|
|
197,000
|
|
160,616
|
|
|
Operating
income (loss)
|
|
|
|
|
8,221
|
|
(1,558)
|
|
|
Equity
in earnings of unconsolidated joint ventures
|
|
|
|
|
-
|
|
21
|
|
|
Interest
and other income
|
|
|
|
|
63
|
|
109
|
|
|
Interest
expense
|
|
|
|
|
(21,503)
|
|
(17,784)
|
|
|
Loss
on extinguishment of debt
|
|
|
|
|
(191)
|
|
-
|
|
|
Gain
on remeasurement of equity interests
|
|
|
|
|
-
|
|
69,230
|
|
|
Income
(loss) from continuing operations
|
|
|
|
|
(13,410)
|
|
50,018
|
|
|
Income
from discontinued operations
|
|
|
|
|
442
|
|
1,317
|
|
|
Net
income (loss)
|
|
|
|
|
(12,968)
|
|
51,335
|
|
|
Income
from consolidated joint venture attributable to non-controlling
interest
|
|
|
|
|
(560)
|
|
-
|
|
|
Distributions
to non-controlling interest
|
|
|
|
|
(8)
|
|
(7)
|
|
|
Preferred
stock dividends
|
|
|
|
|
(7,437)
|
|
(5,137)
|
|
|
Undistributed
income allocated to unvested restricted stock
compensation
|
|
|
|
|
-
|
|
(302)
|
|
|
Undistributed
income allocated to Series C preferred stock
|
|
|
|
|
-
|
|
(209)
|
|
|
Income
available (loss attributable) to common stockholders
|
|
|
|
|
$
(20,973)
|
|
$
45,680
|
|
|
|
|
|
|
|
|
|
|
|
Basic
per share amounts:
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations available (attributable) to
common stockholders
|
|
|
$
(0.18)
|
|
$ 0.38
|
|
|
Income
from discontinued operations
|
|
|
|
|
-
|
|
0.01
|
|
|
Basic
income available (loss attributable) to common stockholders per common
share
|
|
|
|
$
(0.18)
|
|
$ 0.39
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
per share amounts:
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations available (attributable) to
common stockholders
|
|
|
$
(0.18)
|
|
$ 0.38
|
|
|
Income
from discontinued operations
|
|
|
|
|
-
|
|
0.01
|
|
|
Diluted
income available (loss attributable) to common stockholders per common
share
|
|
|
|
$
(0.18)
|
|
$ 0.39
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
117,426
|
|
117,074
|
|
|
Diluted
|
|
|
|
|
117,426
|
|
117,074
|
|
|
Sunstone
Hotel Investors, Inc.
|
|
Reconciliation
of Net Income (Loss) to Non-GAAP Financial Measures
|
|
(Unaudited
and in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to EBITDA and Adjusted EBITDA
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
March
31,
|
|
2012
|
2011
|
|
|
|
|
Net
income (loss)
|
$
(12,968)
|
$
51,335
|
|
Operations
held for investment:
|
|
|
|
Depreciation
and amortization
|
34,756
|
26,222
|
|
Amortization
of lease intangibles
|
1,035
|
937
|
|
Interest
expense
|
20,194
|
16,866
|
|
Amortization
of deferred financing fees
|
967
|
613
|
|
Non-cash
interest related to discount on Senior Notes
|
266
|
261
|
|
Non-cash
interest related to loss on derivatives, net
|
76
|
44
|
|
Non-controlling
interests:
|
|
|
|
Income
from consolidated joint venture attributable to non-controlling
interest
|
(560)
|
-
|
|
Depreciation
and amortization
|
(1,419)
|
-
|
|
Interest
expense
|
(570)
|
-
|
|
Amortization
of deferred financing fees
|
(56)
|
-
|
|
Non-cash
interest related to loss on derivative
|
(1)
|
-
|
|
Unconsolidated
joint ventures:
|
|
|
|
Depreciation
and amortization
|
-
|
3
|
|
Discontinued
operations:
|
|
|
|
Depreciation
and amortization
|
-
|
1,693
|
|
Interest
expense
|
-
|
157
|
|
Amortization
of deferred financing fees
|
-
|
3
|
|
EBITDA
|
41,720
|
98,134
|
|
|
|
|
Operations
held for investment:
|
|
|
|
Amortization
of deferred stock compensation
|
946
|
544
|
|
Non-cash
straightline lease expense
|
696
|
240
|
|
Gain
on sale of assets
|
(11)
|
-
|
|
Loss
on extinguishment of debt
|
191
|
-
|
|
Gain
on remeasurement of equity interests
|
-
|
(69,230)
|
|
Lawsuit
settlement reversal of costs
|
(145)
|
-
|
|
Closing
costs - completed acquisitions
|
-
|
2,739
|
|
Non-controlling
interests:
|
|
|
|
Non-cash
straightline lease expense
|
(113)
|
-
|
|
Unconsolidated
joint ventures:
|
|
|
|
Amortization
of deferred stock compensation
|
-
|
2
|
|
Discontinued
operations:
|
|
|
|
Gain
on sale of assets
|
(177)
|
-
|
|
1,387
|
(65,705)
|
|
|
|
|
Adjusted
EBITDA
|
$
43,107
|
$
32,429
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to FFO and Adjusted FFO
|
|
|
|
|
|
|
|
Net
income (loss)
|
$
(12,968)
|
$
51,335
|
|
Preferred
stock dividends
|
(7,437)
|
(5,137)
|
|
Operations
held for investment:
|
|
|
|
Real
estate depreciation and amortization
|
34,449
|
25,945
|
|
Amortization
of lease intangibles
|
1,035
|
937
|
|
Gain
on sale of assets
|
(11)
|
-
|
|
Non-controlling
interests:
|
|
|
|
Income
from consolidated joint venture attributable to non-controlling
interest
|
(560)
|
-
|
|
Real
estate depreciation and amortization
|
(1,419)
|
-
|
|
Discontinued
operations:
|
|
|
|
Real
estate depreciation and amortization
|
-
|
1,693
|
|
Gain
on sale of assets
|
(177)
|
-
|
|
FFO
available to common stockholders
|
12,912
|
74,773
|
|
|
|
|
Operations
held for investment:
|
|
|
|
Non-cash
straightline lease expense
|
696
|
240
|
|
Non-cash
interest related to loss on derivatives, net
|
76
|
44
|
|
Loss
on extinguishment of debt
|
191
|
-
|
|
Gain
on remeasurement of equity interests
|
-
|
(69,230)
|
|
Lawsuit
settlement reversal of costs
|
(145)
|
-
|
|
Closing
costs - completed acquisitions
|
-
|
2,739
|
|
Non-controlling
interests:
|
|
|
|
Non-cash
straightline lease expense
|
(113)
|
-
|
|
Non-cash
interest related to loss on derivative
|
(1)
|
-
|
|
704
|
(66,207)
|
|
|
|
|
Adjusted
FFO available to common stockholders
|
$
13,616
|
$ 8,566
|
|
|
|
|
FFO
available to common stockholders per diluted share
|
$ 0.11
|
$ 0.64
|
|
|
|
|
Adjusted
FFO available to common stockholders per diluted share
|
$ 0.12
|
$ 0.07
|
|
|
|
|
Basic
weighted average shares outstanding
|
117,426
|
117,074
|
|
Shares
associated with unvested restricted stock awards
|
155
|
137
|
|
Diluted
weighted average shares outstanding (1)
|
117,581
|
117,211
|
|
(1)
Diluted weighted average shares outstanding includes the Series C
convertible preferred stock on a "non-converted" basis. On an
"as-converted" basis,
|
|
FFO
available to common stockholders per diluted share is $0.12 and $0.63,
respectively, for the three months ended March 31, 2012 and 2011. On an
|
|
"as-converted"
basis, Adjusted FFO available to common stockholders per
diluted share is $0.12 and $0.08, respectively, for the three months
ended
|
|
March
31, 2012 and 2011.
|
|
Sunstone
Hotel Investors, Inc.
|
|
Reconciliation
of Net Income to Non-GAAP Financial Measures
|
|
Guidance
for Second Quarter 2012
|
|
(Unaudited
and in thousands except per share amounts)
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
June
30, 2012
|
|
Low
|
High
|
|
|
|
|
Net
income
|
$ 8,350
|
$
11,350
|
|
Depreciation
and amortization
|
35,000
|
35,000
|
|
Amortization
of lease intangibles
|
1,000
|
1,000
|
|
Interest
expense
|
20,250
|
20,250
|
|
Amortization
of deferred financing fees
|
1,000
|
1,000
|
|
Non-controlling
interests
|
(2,500)
|
(2,500)
|
|
Non-cash
interest related to discount on Senior Notes
|
275
|
275
|
|
Amortization
of deferred stock compensation
|
875
|
875
|
|
Non-cash
straightline lease expense
|
750
|
750
|
|
Adjusted
EBITDA
|
$
65,000
|
$
68,000
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Adjusted FFO
|
|
|
|
|
|
|
|
Net
income
|
$ 8,350
|
$
11,350
|
|
Preferred
stock dividends
|
(7,500)
|
(7,500)
|
|
Real
estate depreciation and amortization
|
34,750
|
34,750
|
|
Non-controlling
interests
|
(1,750)
|
(1,750)
|
|
Amortization
of lease intangibles
|
1,000
|
1,000
|
|
Non-cash
straightline lease expense
|
750
|
750
|
|
Adjusted
FFO available to common stockholders
|
$
35,600
|
$
38,600
|
|
|
|
|
|
|
|
Adjusted
FFO available to common stockholders per diluted share
|
$ 0.30
|
$ 0.33
|
|
|
|
|
Diluted
weighted average shares outstanding
|
117,600
|
117,600
|
|
Sunstone
Hotel Investors, Inc.
|
|
Reconciliation
of Net Income to Non-GAAP Financial Measures
|
|
Guidance
for Full Year 2012
|
|
(Unaudited
and in thousands except per share amounts)
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
Year
Ended
|
|
December
31, 2012
|
|
Low
|
High
|
|
|
|
|
Net
income
|
$ 4,400
|
$
13,400
|
|
Depreciation
and amortization
|
140,000
|
140,000
|
|
Amortization
of lease intangibles
|
4,000
|
4,000
|
|
Interest
expense
|
79,000
|
79,000
|
|
Amortization
of deferred financing fees
|
4,000
|
4,000
|
|
Non-controlling
interests
|
(10,000)
|
(10,000)
|
|
Non-cash
interest related to discount on Senior Notes
|
1,100
|
1,100
|
|
Amortization
of deferred stock compensation
|
3,500
|
3,500
|
|
Non-cash
straightline lease expense
|
3,000
|
3,000
|
|
Adjusted
EBITDA
|
$
229,000
|
$
238,000
|
|
|
|
|
|
|
|
Reconciliation
of Net Income to Adjusted FFO
|
|
|
|
|
|
|
|
Net
income
|
$ 4,400
|
$
13,400
|
|
Preferred
stock dividends
|
(30,000)
|
(30,000)
|
|
Real
estate depreciation and amortization
|
138,800
|
138,800
|
|
Non-controlling
interests
|
(7,000)
|
(7,000)
|
|
Amortization
of lease intangibles
|
4,000
|
4,000
|
|
Non-cash
straightline lease expense
|
3,000
|
3,000
|
|
Adjusted
FFO available to common stockholders
|
$
113,200
|
$
122,200
|
|
|
|
|
|
|
|
Adjusted
FFO available to common stockholders per diluted share
|
$ 0.96
|
$ 1.04
|
|
|
|
|
Diluted
weighted average shares outstanding
|
117,800
|
117,800
|
|
Sunstone
Hotel Investors, Inc.
|
|
Comparable
Hotel EBITDA Margins
|
|
(Unaudited
and in thousands except hotels and rooms)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31, 2012
|
|
Three
Months Ended March 31, 2011
|
|
Actual
(1)
|
|
|
Actual
(2)
|
|
Prior
Ownership Adjustments (3)
|
|
Acquired
Hotel (4)
|
|
Comparable
(5)
|
|
Number
of Hotels
|
32
|
|
|
31
|
|
|
|
1
|
|
32
|
|
Number
of Rooms
|
13,208
|
|
|
12,018
|
|
|
|
1,190
|
|
13,208
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA Margin (6)
|
24.7%
|
|
|
21.0%
|
|
16.7%
|
|
35.1%
|
|
23.1%
|
|
Hotel
EBITDA Margin adjusted for prior year property tax credits and
assessment (7)
|
24.5%
|
|
|
21.2%
|
|
|
|
|
|
23.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
136,538
|
|
|
$
106,480
|
|
$ 3,771
|
|
$
17,867
|
|
$
128,118
|
|
Food
and beverage revenue
|
51,837
|
|
|
39,285
|
|
738
|
|
9,744
|
|
49,767
|
|
Other
operating revenue
|
12,139
|
|
|
9,173
|
|
328
|
|
2,264
|
|
11,765
|
|
Total
Hotel Revenues
|
200,514
|
|
|
154,938
|
|
4,837
|
|
29,875
|
|
189,650
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Room
expense
|
37,605
|
|
|
29,285
|
|
979
|
|
4,366
|
|
34,630
|
|
Food
and beverage expense
|
36,877
|
|
|
29,776
|
|
842
|
|
5,872
|
|
36,490
|
|
Other
hotel expense
|
53,126
|
|
|
44,341
|
|
1,590
|
|
6,496
|
|
52,427
|
|
General
and administrative expense
|
23,473
|
|
|
18,958
|
|
616
|
|
2,653
|
|
22,227
|
|
Total
Hotel Expenses
|
151,081
|
|
|
122,360
|
|
4,027
|
|
19,387
|
|
145,774
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA
|
49,433
|
|
|
32,578
|
|
810
|
|
10,488
|
|
43,876
|
|
Prior
year property tax credits and assessment
|
(339)
|
|
|
315
|
|
-
|
|
-
|
|
315
|
|
Hotel
EBITDA adjusted for prior year property tax credits and assessment
|
49,094
|
|
|
32,893
|
|
810
|
|
10,488
|
|
44,191
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hotel
operating income
|
969
|
|
|
1,002
|
|
-
|
|
-
|
|
1,002
|
|
Amortization
of lease intangibles
|
(1,035)
|
|
|
(937)
|
|
(140)
|
|
-
|
|
(1,077)
|
|
Non-cash
straightline lease expense
|
(696)
|
|
|
(240)
|
|
(6)
|
|
(450)
|
|
(696)
|
|
Management
company transition costs
|
(394)
|
|
|
(82)
|
|
-
|
|
-
|
|
(82)
|
|
Prior
year property tax assessment
|
339
|
|
|
(315)
|
|
-
|
|
-
|
|
(315)
|
|
Corporate
overhead
|
(5,300)
|
|
|
(7,657)
|
|
-
|
|
-
|
|
(7,657)
|
|
Depreciation
and amortization
|
(34,756)
|
|
|
(26,222)
|
|
(523)
|
|
(4,868)
|
|
(31,613)
|
|
Operating
Income (Loss)
|
8,221
|
|
|
(1,558)
|
|
141
|
|
5,170
|
|
3,753
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings of unconsolidated joint ventures
|
-
|
|
|
21
|
|
-
|
|
-
|
|
21
|
|
Interest
and other income
|
63
|
|
|
109
|
|
-
|
|
-
|
|
109
|
|
Interest
expense
|
(21,503)
|
|
|
(17,784)
|
|
(425)
|
|
(2,271)
|
|
(20,480)
|
|
Loss
on extinguishment of debt
|
(191)
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Gain
on remeasurement of equity interests
|
-
|
|
|
69,230
|
|
-
|
|
-
|
|
69,230
|
|
Income
from discontinued operations
|
442
|
|
|
1,317
|
|
-
|
|
-
|
|
1,317
|
|
Net
Income (Loss)
|
$
(12,968)
|
|
|
$
51,335
|
|
$ (284)
|
|
$ 2,899
|
|
$
53,950
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Actual represents the Company's ownership results for the 32 hotels
held for investment as of March 31, 2012.
|
|
(2)
Actual represents the Company's ownership results for the 31 hotels
held for investment as of March 31, 2011. Excludes the Royal Palm Miami
Beach which was sold in April 2011, and the Valley River Inn which was
sold in October 2011. Room count as of March 31, 2011 has been adjusted
by six additional rooms which were added to the Courtyard by Marriott
Los Angeles Airport during the second quarter of 2011, and by two
additional rooms which were added to the JW Marriott New Orleans during
the fourth quarter of 2011.
|
|
|
(3)
Prior Ownership Adjustments represent prior ownership results for the
Doubletree Guest Suites Times Square acquired by the Company on January
14, 2011 and the JW Marriott New Orleans acquired by the Company on
February 15, 2011, along with the Company's pro forma amortization of
lease intangibles, non-cash straightline lease expense, depreciation
expense and interest expense.
|
|
|
(4)
Acquired Hotel represents prior ownership results for the Hilton San
Diego Bayfront acquired by the Company on April 15, 2011, along with
the Company's pro forma non-cash straightline lease expense,
depreciation expense and interest expense.
|
|
(5)
Comparable represents the Company's ownership results for the 31 hotels
held for investment as of March 31, 2011, plus prior ownership results
and the Company's pro forma adjustments for the Doubletree Guest Suites
Times Square acquired by the Company on January 14, 2011, the JW
Marriott New Orleans acquired by the Company on February 15, 2011, and
the Hilton San Diego Bayfront acquired by the Company on April 15, 2011.
|
|
|
(6)
Hotel EBITDA Margin is calculated as Hotel EBITDA divided by total
hotel revenues.
|
|
(7)
Hotel EBITDA Margin for the three months ended March 31, 2012 includes
the benefit of $0.3 million due to prior year property tax credits.
Hotel EBITDA Margin for the three months ended March 31, 2011 includes
additional expense of $0.3 million due to a prior year property tax
assessment. Without this benefit and expense, Comparable Hotel EBITDA
Margin for the three months ended March 31, 2012 and 2011 would have
been 24.5% and 23.3%, respectively.
|
|
