CHICAGO, April 29, 2013 -- Strategic Hotels &
Resorts, Inc. (NYSE: BEE) today reported results for the first quarter
ended March 31, 2013.
($
in millions, except per share and operating metrics)
|
First
Quarter
|
Earnings
Metrics
|
2013
|
2012
|
%
Change
|
Net
loss attributable to common shareholders
|
$(23.4)
|
$(31.5)
|
N/A
|
Net
loss attributable to common shareholders per diluted share
|
$(0.12)
|
$(0.17)
|
N/A
|
Comparable
funds from operations (Comparable FFO) (a)
|
$2.3
|
$3.1
|
(25.2)%
|
Comparable
FFO per diluted share (a)
|
$0.01
|
$0.02
|
(50.0)%
|
Comparable
EBITDA (a)
|
$34.5
|
$33.3
|
3.5%
|
|
|
|
|
Total
North American Portfolio Operating Metrics (b)
|
|
|
|
Average
Daily Rate (ADR)
|
$280.36
|
$263.44
|
6.4%
|
Occupancy
|
67.9%
|
68.2%
|
(0.3)
pts
|
Revenue
per Available Room (RevPAR)
|
$190.35
|
$179.57
|
6.0%
|
Total
RevPAR
|
$362.93
|
$343.98
|
5.5%
|
EBITDA
Margins
|
18.9%
|
17.8%
|
110 bps
|
|
|
|
|
North
American Same Store Operating Metrics (c)
|
|
|
|
ADR
|
$265.73
|
$248.23
|
7.0%
|
Occupancy
|
66.2%
|
67.5%
|
(1.3)
pts
|
RevPAR
|
$175.99
|
$167.60
|
5.0%
|
Total
RevPAR
|
$335.95
|
$320.18
|
4.9%
|
EBITDA
Margins
|
18.0%
|
17.8%
|
20 bps
|
(a)
|
Please
refer to tables provided later in this press release for a
reconciliation of net loss to Comparable FFO, Comparable FFO per share
and Comparable EBITDA. Comparable FFO, Comparable FFO per share and
Comparable EBITDA are non-GAAP measures and are further explained with
the reconciliation tables.
|
(b)
|
Operating
statistics reflect results from the Company's Total North American
portfolio (see portfolio definitions later in this press release).
|
(c)
|
Operating
statistics reflect results from the Company's North American same store
portfolio (see portfolio definitions later in this press release).
|
"We are pleased with our first quarter results, which exceeded
our expectations. Most notable was the very strong transient demand
seen in the quarter as well as significant increases in ADR across our
portfolio and guest categories," commented Raymond
Gellein, Chairman and Chief Executive Officer of Strategic
Hotels & Resorts, Inc. "While group nights declined as compared to
the prior year period, this was expected due to non-recurring city-wide
conventions and other group meetings, as well as planned displacement
at select properties during capital renovations. As we look forward to
the remainder of the year, we expect very strong group demand and are
reaffirming our full year guidance," concluded Gellein.
First Quarter Highlights
- Net loss attributable to common shareholders was $23.4 million, or $0.12
per diluted share, in the first quarter of 2013, compared with net loss
attributable to common shareholders of $31.5
million, or $0.17 per diluted
share, in the first quarter of 2012.
- Comparable FFO was $0.01 per
diluted share in the first quarter of 2013, compared with $0.02 per diluted share in the prior year
period.
- Comparable EBITDA was $34.5 million
in the first quarter of 2013, compared with $33.3
million in the prior year period, a 3.5 percent increase between
periods.
- Total North American portfolio RevPAR increased 6.0 percent
in the first quarter of 2013, driven by a 6.4 percent increase in ADR,
offsetting a 0.3 percentage point decline in occupancy compared to the
first quarter of 2012. Total RevPAR increased 5.5 percent between
periods with non-rooms revenue increasing by 4.6 percent between
periods.
- Transient occupied room nights in the Total North American
portfolio increased 6.2 percent in the first quarter of 2013, which
partially offset an 8.3 percent decline in group occupied room nights
compared to the first quarter of 2012. Transient ADR increased 6.9
percent compared to the first quarter of 2012 and group ADR increased
4.2 percent.
- RevPAR increased 6.2 percent in the first quarter of 2013
in the Company's Total North American urban portfolio and 5.7 percent
in the Company's Total North American resort portfolio, compared to the
first quarter of 2012.
- North American same store RevPAR increased 5.0 percent in
the first quarter of 2013, driven by a 7.0 percent increase in ADR,
offsetting a 1.3 percent point decline in occupancy. Total RevPAR
increased 4.9 percent with non-rooms revenue increasing by 4.4 percent
between periods. The decline in occupancy was driven by a decrease in
group room nights due to several large, non-repeat group bookings from
the first quarter of 2012.
- European RevPAR declined 9.7 percent (9.0 percent in
constant dollars) in the first quarter of 2013, driven by a 3.4
percentage point decrease in occupancy and a 5.6 percent decrease in
ADR (4.9 percent in constant dollars) between periods. European Total
RevPAR decreased 5.6 percent in the first quarter of 2013 over the
prior year period (4.9 percent in constant dollars).
- North American same store EBITDA margins expanded 20 basis
points in the first quarter of 2013, compared to the first quarter of
2012. Total North American portfolio EBITDA margins expanded 110 basis
points.
- Group room nights currently booked for 2013 are 4.3 percent
higher compared to room nights booked for 2012 at the same time last
year, with rates 3.3 percent higher, resulting in a 7.7 percent RevPAR
increase.
- The GAAP accounting treatment related to the Marriott NOI
guarantee at the JW Marriott Essex House also impacted the Company's
first quarter results. Monthly guarantee payments, which totaled
approximately $5.6 million and for which
the Company's pro-rata share was $2.9 million,
are recorded as deferred revenue and will be recognized as Other Hotel
Operating Revenue at year-end.
Preferred Dividends
On February 21, 2013, the
Company's board of directors declared a quarterly dividend of $0.53125 per share of 8.5 percent Series A
Cumulative Redeemable Preferred Stock paid on April
1, 2013 to shareholders of record as of March
18, 2013, a quarterly dividend of $0.51563
per share of 8.25 percent Series B Cumulative Redeemable Preferred
Stock paid on April 1, 2013 to
shareholders of record as of March 18, 2013,
and a quarterly dividend of $0.51563 per
share of 8.25 percent Series C Cumulative Redeemable Preferred Stock
paid on April 1, 2013 to shareholders of
record as of March 18, 2013.
Transaction Activity
On March 12, 2013 the Company,
along with certain affiliates of Blackstone Real Estate Partners VI,
L.P., its joint venture partner, closed on a $475
million loan secured by the Hotel del Coronado. Under the terms
of the agreement, the loan bears interest at LIBOR plus 365 basis
points and has an initial two-year term with three, one-year extension
options available to the venture upon satisfaction of certain financial
and other conditions.
2013 Guidance
Based on the results of the first quarter and current
forecasts for the remainder of the year, management is reaffirming its
guidance range for full year 2013 RevPAR growth, Total RevPAR growth,
Comparable EBITDA, and Comparable FFO per fully diluted share.
For the year ending December 31, 2013,
the Company anticipates that Comparable EBITDA will be in the range of $195.0 million to $210.0 million and
Comparable FFO in the range of $0.33 and
$0.40 per fully diluted share.
Management is also reaffirming its guidance for North American same
store RevPAR growth in the range between 5.0 percent to 7.0 percent and
Total RevPAR growth in the range between 4.0 percent and 6.0 percent.
Portfolio Definitions
Total North American portfolio hotel comparisons for the first
quarter 2013 are derived from the Company's hotel portfolio at March 31, 2013, consisting of all 16
properties located in North America,
including unconsolidated joint ventures.
North American same store hotel comparisons for the first
quarter 2013 are derived from the Company's hotel portfolio at March 31, 2013, 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 include 13 properties and exclude the JW Marriott Essex
House Hotel, which was acquired on September
14, 2012, and the unconsolidated Hotel del Coronado and Fairmont
Scottsdale Princess hotels.
European hotel comparisons for the first quarter of 2013 are
derived from the Company's European owned and leased hotel properties
at March 31, 2013, consisting of the
Marriott London Grosvenor Square and the Marriott Hamburg hotels.
Earnings Call
The Company will conduct its first quarter 2013 conference
call for investors and other interested parties on Tuesday, April 30, 2013 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to access the call by dialing 866.953.6856
(toll international: 617.399.3480) with passcode 30814835. To
participate on the webcast, log on to the company's website at http://www.strategichotels.com
or http://edge.media-server.com/m/p/jrirmk6w/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 April 30,
2013 through 11:59 p.m. ET on May 7, 2013. To access the replay, dial
888.286.8010 (toll international: 617.801.6888) with passcode 35134540.
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 first quarter information section.
About the Company
Strategic Hotels & Resorts, Inc. is a real estate
investment trust (REIT) which owns and provides value-enhancing asset
management of high-end hotels and resorts in the
United States, Mexico and Europe. The Company currently has ownership
interests in 18 properties with an aggregate of 8,272 rooms and 840,000
square feet of meeting space. For a list of current properties and for
further information, please visit the Company's website at http://www.strategichotels.com.
This press release contains forward-looking statements
about Strategic Hotels & Resorts, Inc. (the "Company"). Except for
historical information, the matters discussed in this press release are
forward-looking statements subject to certain risks and uncertainties.
These forward-looking statements include statements regarding the
Company's future financial results, stabilization in the lodging space,
positive trends in the lodging industry and the Company's continued
focus on improving profitability. Actual results could differ
materially from the Company's projections. Factors that may contribute
to these differences include, but are not limited to the following: the
effects of the recent global economic recession upon business and
leisure travel and the hotel markets in which the Company invests; the
Company's liquidity and refinancing demands; the Company's ability to
obtain or refinance maturing debt, including the $106.5
million mortgage debt related to the Marriott London Grosvenor
Square hotel that matures on October 15, 2013;
the Company's ability to maintain compliance with covenants contained
in its debt facilities; stagnation or further deterioration in economic
and market conditions, particularly impacting business and leisure
travel spending in the markets where the Company's hotels operate and
in which the Company invests, including luxury and upper upscale
product; general volatility of the capital markets and the market price
of the Company's shares of common stock; availability of capital; the
Company's ability to dispose of properties in a manner consistent with
its investment strategy and liquidity needs; hostilities and security
concerns, including future terrorist attacks, or the apprehension of
hostilities, in each case that affect travel within or to the United States, Mexico, Germany,
England or other countries where
the Company invests; difficulties in identifying properties to acquire
and completing acquisitions; the Company's failure to maintain
effective internal control over financial reporting and disclosure
controls and procedures; risks related to natural disasters; increases
in interest rates and operating costs, including insurance premiums and
real property taxes; contagious disease outbreaks, such as the H1N1
virus outbreak; delays and cost-overruns in construction and
development; marketing challenges associated with entering new lines of
business or pursuing new business strategies; the Company's failure to
maintain its status as a REIT; changes in the competitive environment
in the Company's industry and the markets where the Company invests;
changes in real estate and zoning laws or regulations; legislative or
regulatory changes, including changes to laws governing the taxation of
REITs; changes in generally accepted accounting principles, policies
and guidelines; and litigation, judgments or settlements.
Additional risks are discussed in the Company's filings
with the Securities and Exchange Commission, including those appearing
under the heading "Item 1A. Risk Factors" in the Company's most recent
Form 10-K and subsequent Form 10-Qs. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurance that its expectations
will be attained. The forward-looking statements are made as of the
date of this press release, and the Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by law.
The following tables reconcile projected 2013 net loss
attributable to common shareholders to projected Comparable EBITDA,
Comparable FFO and Comparable FFO per diluted share (in millions,
except per share data):
|
Low
Range
|
|
High
Range
|
Net
Loss Attributable to Common Shareholders
|
$(49.8)
|
|
$(34.8)
|
Depreciation
and Amortization
|
117.3
|
|
117.3
|
Interest
Expense
|
93.8
|
|
93.8
|
Income
Taxes
|
1.1
|
|
1.1
|
Non-controlling
Interests
|
0.0
|
|
0.0
|
Adjustments
from Consolidated Affiliates
|
(15.5)
|
|
(15.5)
|
Adjustments
from Unconsolidated Affiliates
|
24.3
|
|
24.3
|
Preferred
Shareholder Dividends
|
24.2
|
|
24.2
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Other
Adjustments
|
(0.2)
|
|
(0.2)
|
Comparable
EBITDA
|
$195.0
|
|
$210.0
|
|
|
|
|
|
Low
Range
|
|
High
Range
|
Net
Loss Attributable to Common Shareholders
|
$(49.8)
|
|
$(34.8)
|
Depreciation
and Amortization
|
116.5
|
|
116.5
|
Realized
Portion of Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Non-controlling
Interests
|
(0.1)
|
|
0.0
|
Adjustments
from Consolidated Affiliates
|
(7.9)
|
|
(7.9)
|
Adjustments
from Unconsolidated Affiliates
|
14.9
|
|
14.9
|
Other
Adjustments
|
(3.3)
|
|
(3.3)
|
Comparable
FFO
|
$70.1
|
|
$85.2
|
Comparable
FFO per Diluted Share
|
$0.33
|
|
$0.40
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Consolidated
Statements of Operations
(in
thousands, except per share data)
|
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
Rooms
|
|
$
|
110,413
|
|
$
|
94,510
|
Food
and beverage
|
|
67,114
|
|
62,479
|
Other
hotel operating revenue
|
|
22,740
|
|
20,125
|
Lease
and other revenue
|
|
1,200
|
|
1,165
|
Total
revenues
|
|
201,467
|
|
178,279
|
Operating
Costs and Expenses:
|
|
|
|
|
Rooms
|
|
33,988
|
|
28,576
|
Food
and beverage
|
|
54,366
|
|
47,393
|
Other
departmental expenses
|
|
56,485
|
|
49,565
|
Management
fees
|
|
6,325
|
|
5,616
|
Other
hotel expenses
|
|
16,730
|
|
13,609
|
Lease
expense
|
|
1,176
|
|
1,168
|
Depreciation
and amortization
|
|
27,218
|
|
25,490
|
Corporate
expenses
|
|
5,984
|
|
13,810
|
Total
operating costs and expenses
|
|
202,272
|
|
185,227
|
Operating
loss
|
|
(805)
|
|
(6,948)
|
Interest
expense
|
|
(21,486)
|
|
(19,605)
|
Interest
income
|
|
12
|
|
30
|
Equity
in earnings of unconsolidated affiliates
|
|
1,345
|
|
920
|
Foreign
currency exchange gain (loss)
|
|
240
|
|
(5)
|
Other
income, net
|
|
132
|
|
452
|
Loss
before income taxes
|
|
(20,562)
|
|
(25,156)
|
Income
tax expense
|
|
(784)
|
|
(465)
|
Net
loss
|
|
(21,346)
|
|
(25,621)
|
Net
loss attributable to the noncontrolling interests in SHR's operating
partnership
|
|
87
|
|
117
|
Net
loss attributable to the noncontrolling interests in consolidated
affiliates
|
|
3,852
|
|
29
|
Net
loss attributable to SHR
|
|
(17,407)
|
|
(25,475)
|
Preferred
shareholder dividends
|
|
(6,041)
|
|
(6,041)
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(23,448)
|
|
$
|
(31,516)
|
Basic
Loss Per Share:
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(0.11)
|
|
$
|
(0.17)
|
Weighted
average common shares outstanding
|
|
206,981
|
|
186,430
|
Diluted
Loss Per Share:
|
|
|
|
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(0.12)
|
|
$
|
(0.17)
|
Weighted
average common shares outstanding
|
|
218,710
|
|
186,430
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Consolidated
Balance Sheets
(in
thousands, except share data)
|
|
|
|
|
|
|
|
|
March
31, 2013
|
|
December
31, 2012
|
Assets
|
|
|
|
|
Investment
in hotel properties, net
|
|
$
|
1,960,764
|
|
$
|
1,970,560
|
Goodwill
|
|
40,359
|
|
40,359
|
Intangible
assets, net of accumulated amortization of $10,972 and $10,812
|
|
28,296
|
|
30,631
|
Investment
in unconsolidated affiliates
|
|
91,490
|
|
112,488
|
Cash
and cash equivalents
|
|
78,527
|
|
80,074
|
Restricted
cash and cash equivalents
|
|
67,558
|
|
58,579
|
Accounts
receivable, net of allowance for doubtful accounts of $1,609 and $1,602
|
|
50,635
|
|
45,620
|
Deferred
financing costs, net of accumulated amortization of $8,214 and $7,049
|
|
10,410
|
|
11,695
|
Deferred
tax assets
|
|
2,140
|
|
2,203
|
Prepaid
expenses and other assets
|
|
53,201
|
|
54,208
|
Total
assets
|
|
$
|
2,383,380
|
|
$
|
2,406,417
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgages
and other debt payable
|
|
$
|
1,164,587
|
|
$
|
1,176,297
|
Bank
credit facility
|
|
156,000
|
|
146,000
|
Accounts
payable and accrued expenses
|
|
223,975
|
|
228,397
|
Distributions
payable
|
|
6,041
|
|
—
|
Deferred
tax liabilities
|
|
47,720
|
|
47,275
|
Total
liabilities
|
|
1,598,323
|
|
1,597,969
|
Noncontrolling
interests in SHR's operating partnership
|
|
7,123
|
|
5,463
|
Commitments
and contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
SHR's
shareholders' equity:
|
|
|
|
|
8.50%
Series A Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 4,148,141 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $105,907 and $103,704
in the aggregate)
|
|
99,995
|
|
99,995
|
8.25%
Series B Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 3,615,375 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $92,249 and $90,384 in
the aggregate)
|
|
87,064
|
|
87,064
|
8.25%
Series C Cumulative Redeemable Preferred Stock ($0.01 par value per
share; 3,827,727 shares issued and outstanding; liquidation preference
$25.00 per share plus accrued distributions and $97,667 and $95,693 in
the aggregate)
|
|
92,489
|
|
92,489
|
Common
shares ($0.01 par value per share; 350,000,000 common shares
authorized; 204,495,534 and 204,308,710 common shares issued and
outstanding)
|
|
2,045
|
|
2,043
|
Additional
paid-in capital
|
|
1,723,138
|
|
1,730,535
|
Accumulated
deficit
|
|
(1,263,334)
|
|
(1,245,927)
|
Accumulated
other comprehensive loss
|
|
(53,108)
|
|
(58,871)
|
Total
SHR's shareholders' equity
|
|
688,289
|
|
707,328
|
Noncontrolling
interests in consolidated affiliates
|
|
89,645
|
|
95,657
|
Total
equity
|
|
777,934
|
|
802,985
|
Total
liabilities, noncontrolling interests and equity
|
|
$
|
2,383,380
|
|
$
|
2,406,417
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Financial
Highlights
|
Supplemental
Financial Data
(in
thousands, except per share information)
|
|
|
|
|
March
31, 2013
|
|
|
Pro
Rata Share
|
|
|
Consolidated
|
Capitalization
|
|
|
|
|
|
|
Common
shares outstanding
|
|
204,496
|
|
|
204,496
|
|
Operating
partnership units outstanding
|
|
853
|
|
|
853
|
|
Restricted
stock units outstanding
|
|
1,620
|
|
|
1,620
|
|
Value
Creation Plan units outstanding under the deferral program
|
|
1,301
|
|
|
1,301
|
|
Combined
shares and units outstanding
|
|
208,270
|
|
|
208,270
|
|
Common
stock price at end of period
|
|
$
|
8.35
|
|
|
$
|
8.35
|
|
Common
equity capitalization
|
|
$
|
1,739,055
|
|
|
$
|
1,739,055
|
|
Preferred
equity capitalization (at $25.00 face value)
|
|
289,102
|
|
|
289,102
|
|
Consolidated
debt
|
|
1,320,587
|
|
|
1,320,587
|
|
Pro
rata share of unconsolidated debt
|
|
239,400
|
|
|
—
|
|
Pro
rata share of consolidated debt
|
|
(134,910)
|
|
|
—
|
|
Cash
and cash equivalents
|
|
(78,527)
|
|
|
(78,527)
|
|
Total
enterprise value
|
|
$
|
3,374,707
|
|
|
$
|
3,270,217
|
|
Net
Debt / Total Enterprise Value
|
|
39.9
|
%
|
|
38.0
|
%
|
Preferred
Equity / Total Enterprise Value
|
|
8.6
|
%
|
|
8.8
|
%
|
Common
Equity / Total Enterprise Value
|
|
51.5
|
%
|
|
53.2
|
%
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Investments
in Unconsolidated Affiliates
(in
thousands)
|
|
We
have a 36.4% and 50.0% ownership interest in the Hotel del Coronado
hotel and the Fairmont Scottsdale Princess hotel, respectively. We
account for these investments using the equity method of accounting.
|
|
|
|
|
|
|
|
Three
Months Ended March 31, 2013
|
|
Three
Months Ended March 31, 2012
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total
revenues (100%)
|
|
$
|
30,330
|
|
|
$
|
30,956
|
|
|
$
|
61,286
|
|
|
$
|
30,843
|
|
|
$
|
26,983
|
|
|
$
|
57,826
|
|
Property
EBITDA (100%)
|
|
$
|
7,874
|
|
|
$
|
9,569
|
|
|
$
|
17,443
|
|
|
$
|
8,219
|
|
|
$
|
8,655
|
|
|
$
|
16,874
|
|
Equity
in (losses) earnings of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
2,864
|
|
|
$
|
4,785
|
|
|
$
|
7,649
|
|
|
$
|
2,819
|
|
|
$
|
4,327
|
|
|
$
|
7,146
|
|
Depreciation
and amortization
|
|
(1,865)
|
|
|
(1,840)
|
|
|
(3,705)
|
|
|
(1,689)
|
|
|
(1,771)
|
|
|
(3,460)
|
|
Interest
expense
|
|
(2,490)
|
|
|
(194)
|
|
|
(2,684)
|
|
|
(2,518)
|
|
|
(203)
|
|
|
(2,721)
|
|
Other
expenses, net
|
|
(16)
|
|
|
(8)
|
|
|
(24)
|
|
|
(23)
|
|
|
(58)
|
|
|
(81)
|
|
Income
taxes
|
|
94
|
|
|
—
|
|
|
94
|
|
|
267
|
|
|
—
|
|
|
267
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
|
(1,413)
|
|
|
$
|
2,743
|
|
|
$
|
1,330
|
|
|
$
|
(1,144)
|
|
|
$
|
2,295
|
|
|
$
|
1,151
|
|
EBITDA
Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
|
(1,413)
|
|
|
$
|
2,743
|
|
|
$
|
1,330
|
|
|
$
|
(1,144)
|
|
|
$
|
2,295
|
|
|
$
|
1,151
|
|
Depreciation
and amortization
|
|
1,865
|
|
|
1,840
|
|
|
3,705
|
|
|
1,689
|
|
|
1,771
|
|
|
3,460
|
|
Interest
expense
|
|
2,490
|
|
|
194
|
|
|
2,684
|
|
|
2,518
|
|
|
203
|
|
|
2,721
|
|
Income
taxes
|
|
(94)
|
|
|
—
|
|
|
(94)
|
|
|
(267)
|
|
|
—
|
|
|
(267)
|
|
EBITDA
Contribution
|
|
$
|
2,848
|
|
|
$
|
4,777
|
|
|
$
|
7,625
|
|
|
$
|
2,796
|
|
|
$
|
4,269
|
|
|
$
|
7,065
|
|
FFO
Contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in (losses) earnings of unconsolidated affiliates
|
|
$
|
(1,413)
|
|
|
$
|
2,743
|
|
|
$
|
1,330
|
|
|
$
|
(1,144)
|
|
|
$
|
2,295
|
|
|
$
|
1,151
|
|
Depreciation
and amortization
|
|
1,865
|
|
|
1,840
|
|
|
3,705
|
|
|
1,689
|
|
|
1,771
|
|
|
3,460
|
|
FFO
Contribution
|
|
$
|
452
|
|
|
$
|
4,583
|
|
|
$
|
5,035
|
|
|
$
|
545
|
|
|
$
|
4,066
|
|
|
$
|
4,611
|
|
Investments
in Unconsolidated Affiliates (Continued)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
Spread
over
LIBOR
|
|
Loan
Amount
|
|
Maturity
(a)
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine
|
|
3.85
|
%
|
|
365 bp
|
|
$
|
475,000
|
|
|
March
2018
|
Cash
and cash equivalents
|
|
|
|
|
|
(5,283)
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
|
469,717
|
|
|
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
CMBS
Mortgage
|
|
0.56
|
%
|
|
36 bp
|
|
$
|
133,000
|
|
|
April
2015
|
Cash
and cash equivalents
|
|
|
|
|
|
(4,413)
|
|
|
|
Net
Debt
|
|
|
|
|
|
$
|
128,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes
extension options.
|
Caps
|
|
Effective
Date
|
|
LIBOR
Cap Rate
|
|
Notional
Amount
|
|
Maturity
|
Hotel
del Coronado
|
|
|
|
|
|
|
|
|
CMBS
Mortgage and Mezzanine Loan Caps
|
|
March
2013
|
|
3.00
|
%
|
|
$
|
475,000
|
|
|
March
2015
|
Fairmont
Scottsdale Princess
|
|
|
|
|
|
|
|
|
CMBS
Mortgage Loan Cap
|
|
June
2011
|
|
4.00
|
%
|
|
$
|
133,000
|
|
|
December
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Leasehold
Information
(in
thousands)
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
Marriott
Hamburg:
|
|
|
|
|
Property
EBITDA
|
|
$
|
1,396
|
|
$
|
1,400
|
Revenue
(a)
|
|
$
|
1,200
|
|
$
|
1,165
|
|
|
|
|
|
Lease
expense
|
|
(1,176)
|
|
(1,168)
|
Less:
Deferred gain on sale-leaseback
|
|
(51)
|
|
(51)
|
Adjusted
lease expense
|
|
(1,227)
|
|
(1,219)
|
|
|
|
|
|
EBITDA
contribution from leasehold
|
|
$
|
(27)
|
|
$
|
(54)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
Deposit (b):
|
|
March
31, 2013
|
|
December
31, 2012
|
Marriott
Hamburg
|
|
$
|
2,436
|
|
$
|
2,507
|
(a)
|
For
the three months ended March 31, 2013 and 2012, Revenue for the
Marriott Hamburg hotel represents lease revenue.
|
(b)
|
The
security deposit is recorded in prepaid expenses and other assets on
the consolidated balance sheets.
|
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Non-GAAP Financial Measures
We present five non-GAAP financial measures that we believe
are useful to management and investors as key measures of our operating
performance: Funds from Operations (FFO); FFO—Fully Diluted; Comparable
FFO; Earnings Before Interest Expense, Taxes, Depreciation and
Amortization (EBITDA); and Comparable EBITDA.
EBITDA represents net income (or loss) attributable to SHR
common shareholders excluding: (i) interest expense, (ii) income taxes,
including deferred income tax benefits and expenses applicable to our
foreign subsidiaries and income taxes applicable to sale of assets;
(iii) depreciation and amortization; and (iv) preferred stock
dividends. EBITDA also excludes interest expense, income taxes and
depreciation and amortization of our unconsolidated affiliates. EBITDA
is presented on a full participation basis, which means we have assumed
conversion of all redeemable noncontrolling interests of our operating
partnership into our common stock. We believe this treatment of
noncontrolling interests provides useful information for management and
our investors and appropriately considers our current capital
structure. We also present Comparable EBITDA, which eliminates the
effect of realizing deferred gains on our sale leasebacks, as well as
the effect of gains or losses on sales of assets, early extinguishment
of debt, impairment losses, foreign currency exchange gains or losses
and certain other charges that are highly variable from year to year.
We believe EBITDA and Comparable EBITDA are useful to management and
investors in evaluating our operating performance because they provide
management and investors with an indication of our ability to incur and
service debt, to satisfy general operating expenses, to make capital
expenditures and to fund other cash needs or reinvest cash into our
business. We also believe they help management and investors
meaningfully evaluate and compare the results of our operations from
period to period by removing the impact of our asset base (primarily
depreciation and amortization) from our operating results. Our
management also uses EBITDA and Comparable EBITDA as measures in
determining the value of acquisitions and dispositions.
We compute FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts, or NAREIT, with
the exception of impairment of depreciable real estate. NAREIT adopted
a definition of FFO in order to promote an industry-wide standard
measure of REIT operating performance. NAREIT defines FFO as net income
(or loss) (computed in accordance with GAAP) excluding losses or gains
from sales of depreciable property, impairment of depreciable real
estate, real estate-related depreciation and amortization, and our
portion of these items related to unconsolidated affiliates. We also
present FFO—Fully Diluted, which is FFO plus income or loss on income
attributable to redeemable noncontrolling interests in our operating
partnership. We also present Comparable FFO, which is FFO—Fully Diluted
excluding the impact of any gains or losses on early extinguishment of
debt, impairment losses, foreign currency exchange gains or losses and
certain other charges that are highly variable from year to year. We
believe that the presentation of FFO, FFO—Fully Diluted and Comparable
FFO provides useful information to management and investors regarding
our results of operations because they are measures of our ability to
fund capital expenditures and expand our business. In addition, FFO is
widely used in the real estate industry to measure operating
performance without regard to items such as depreciation and
amortization. We also present Comparable FFO per diluted share as a
non-GAAP measure of our performance. We calculate Comparable FFO per
diluted share for a given operating period as our Comparable FFO (as
defined above) divided by the weighted average of fully diluted shares
outstanding, excluding shares related to the JW Marriott Essex House
Hotel put option. Dilutive securities may include shares granted under
share-based compensation plans and operating partnership units. No
effect is shown for securities that are anti-dilutive.
We caution investors that amounts presented in accordance with
our definitions of FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and
Comparable EBITDA may not be comparable to similar measures disclosed
by other companies, since not all companies calculate these non-GAAP
measures in the same manner. FFO, FFO—Fully Diluted, Comparable FFO,
EBITDA, and Comparable EBITDA should not be considered as an
alternative measure of our net income (or loss) or operating
performance. FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and
Comparable EBITDA may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds for
capital expenditures and property acquisitions and other commitments
and uncertainties. Although we believe that FFO, FFO—Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA can enhance your
understanding of our financial condition and results of operations,
these non-GAAP financial measures, when viewed individually, are not
necessarily a better indicator of any trend as compared to comparable
GAAP measures such as net income (or loss) attributable to SHR common
shareholders. In addition, you should be aware that adverse economic
and market conditions might negatively impact our cash flow. We have
provided a quantitative reconciliation of FFO, FFO—Fully Diluted,
Comparable FFO, EBITDA, and Comparable EBITDA to the most directly
comparable GAAP financial performance measure, which is net income (or
loss) attributable to SHR common shareholders.
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Reconciliation
of Net Loss Attributable to SHR Common Shareholders to EBITDA and
Comparable EBITDA
(in
thousands)
|
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(23,448)
|
|
$
|
(31,516)
|
Depreciation
and amortization
|
|
27,218
|
|
25,490
|
Interest
expense
|
|
21,486
|
|
19,605
|
Income
taxes
|
|
784
|
|
465
|
Noncontrolling
interests
|
|
(87)
|
|
(117)
|
Adjustments
from consolidated affiliates
|
|
(3,554)
|
|
(1,257)
|
Adjustments
from unconsolidated affiliates
|
|
6,316
|
|
6,682
|
Preferred
shareholder dividends
|
|
6,041
|
|
6,041
|
EBITDA
|
|
34,756
|
|
25,393
|
Realized
portion of deferred gain on sale-leaseback
|
|
(51)
|
|
(51)
|
Foreign
currency exchange (gain) loss (a)
|
|
(240)
|
|
5
|
Adjustment
for Value Creation Plan
|
|
—
|
|
7,939
|
Comparable
EBITDA
|
|
$
|
34,465
|
|
$
|
33,286
|
(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 March 31,
|
|
|
2013
|
|
2012
|
Net
loss attributable to SHR common shareholders
|
|
$
|
(23,448)
|
|
$
|
(31,516)
|
Depreciation
and amortization
|
|
27,218
|
|
25,490
|
Corporate
depreciation
|
|
(131)
|
|
(265)
|
Realized
portion of deferred gain on sale-leaseback
|
|
(51)
|
|
(51)
|
Noncontrolling
interests adjustments
|
|
(127)
|
|
(133)
|
Adjustments
from consolidated affiliates
|
|
(1,641)
|
|
(667)
|
Adjustments
from unconsolidated affiliates
|
|
3,706
|
|
3,764
|
FFO
|
|
5,526
|
|
(3,378)
|
Redeemable
noncontrolling interests
|
|
40
|
|
16
|
FFO—Fully
Diluted
|
|
5,566
|
|
(3,362)
|
Non-cash
mark to market of interest rate swaps
|
|
(3,044)
|
|
(1,530)
|
Foreign
currency exchange (gain) loss (a)
|
|
(240)
|
|
5
|
Adjustment
for Value Creation Plan
|
|
—
|
|
7,939
|
Comparable
FFO
|
|
$
|
2,282
|
|
$
|
3,052
|
Comparable
FFO per fully diluted share
|
|
$
|
0.01
|
|
$
|
0.02
|
Weighted
average diluted shares (b)
|
|
209,895
|
|
188,787
|
(a)
|
Foreign
currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries.
|
(b)
|
Excludes
shares related to the JW Marriott Essex House Hotel put option.
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries (SHR)
|
|
Debt
Summary
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Debt
|
|
Interest
Rate
|
|
Spread
(a)
|
|
Loan
Amount
|
|
Maturity
(b)
|
Marriott
London Grosvenor Square (c)
|
|
1.61
|
%
|
|
110 bp
(c)
|
|
$
|
106,475
|
|
|
October
2013
|
North
Beach Venture
|
|
5.00
|
%
|
|
Fixed
|
|
1,476
|
|
|
January
2014
|
Bank
credit facility
|
|
3.20
|
%
|
|
300 bp
|
|
156,000
|
|
|
June
2015
|
Four
Seasons Washington, D.C.
|
|
3.35
|
%
|
|
315 bp
|
|
130,000
|
|
|
July
2016
|
Westin
St. Francis
|
|
6.09
|
%
|
|
Fixed
|
|
212,677
|
|
|
June
2017
|
Fairmont
Chicago
|
|
6.09
|
%
|
|
Fixed
|
|
94,496
|
|
|
June
2017
|
JW
Marriott Essex House Hotel
|
|
4.75
|
%
|
|
400 bp
|
|
190,000
|
|
|
September
2017
|
Hyatt
Regency La Jolla (d)
|
|
4.50%
/ 10.00
|
%
|
|
400 bp
/ Fixed
|
|
89,463
|
|
|
December
2017
|
InterContinental
Miami
|
|
3.70
|
%
|
|
350 bp
|
|
85,000
|
|
|
July
2018
|
Loews
Santa Monica Beach Hotel
|
|
4.05
|
%
|
|
385 bp
|
|
110,000
|
|
|
July
2018
|
InterContinental
Chicago
|
|
5.61
|
%
|
|
Fixed
|
|
145,000
|
|
|
August
2021
|
|
|
|
|
|
|
$
|
1,320,587
|
|
|
|
(a)
|
Spread
over LIBOR (0.20% at March 31, 2013). Interest on the JW Marriott Essex
House Hotel loan is subject to a 0.75% LIBOR floor. Interest on the
Hyatt Regency La Jolla loan is subject to a 0.50% LIBOR floor.
|
(b)
|
Includes
extension options.
|
(c)
|
Principal
balance of £70,040,000 at March 31, 2013. Spread over three-month
GBP LIBOR (0.51% at March 31, 2013).
|
(d)
|
Interest
on $72,000,000 is payable at LIBOR plus 4.00%, subject to a 0.50% LIBOR
floor, and interest on $17,463,000 is payable at a fixed rate of 10.00%.
|
Domestic
and European Interest Rate Swaps
|
|
|
|
|
|
|
|
Swap
Effective Date
|
|
Fixed
Pay Rate
Against
LIBOR
|
|
Notional
Amount
|
|
Maturity
|
February
2010
|
|
4.90
|
%
|
|
$
|
100,000
|
|
|
September
2014
|
February
2010
|
|
4.96
|
%
|
|
100,000
|
|
|
December
2014
|
December
2010
|
|
5.23
|
%
|
|
100,000
|
|
|
December
2015
|
February
2011
|
|
5.27
|
%
|
|
100,000
|
|
|
February
2016
|
|
|
5.09
|
%
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap
Effective Date
|
|
Fixed
Pay Rate
Against
GBP LIBOR
|
|
Notional
Amount
|
|
|
Maturity
|
October
2007
|
|
5.72
|
%
|
|
|
|
£
|
70,040
|
|
|
October
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
scheduled debt principal payments (including extension options) are as
follows:
|
|
|
|
Years
ending December 31,
|
|
Amount
|
2013
|
|
$
|
115,161
|
|
2014
|
|
15,348
|
|
2015
|
|
172,246
|
|
2016
|
|
150,661
|
|
2017
|
|
548,979
|
|
Thereafter
|
|
318,192
|
|
|
|
$
|
1,320,587
|
|
|
|
|
Percent
of fixed rate debt including U.S. and European swaps
|
|
74.0
|
%
|
Weighted
average interest rate including U.S. and European swaps (e)
|
|
6.41
|
%
|
Weighted
average maturity of fixed rate debt (debt with maturity of greater than
one year)
|
|
3.96
|
|
(e)
|
Excludes
the amortization of deferred financing costs and the amortization of
the interest rate swap costs.
|
|