Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2013 Results
Full Year 2013 RevPAR increased 8.8 percent in the Company's Total North American Portfolio and EBITDA margins expanded by 290 basis points
Initiates Full Year 2014 RevPAR growth guidance in the range of 5.0 percent to 7.0 percent
CHICAGO, Feb. 25, 2014 /PRNewswire/ -- Strategic Hotels & Resorts, Inc. (NYSE: BEE) today reported results for the fourth quarter and full year ended December 31, 2013.
($ in millions, except per share and operating metrics) |
Fourth Quarter |
||
Earnings Metrics |
2013 |
2012 |
% Change |
Net income (loss) attributable to common shareholders |
$3.2 |
$(36.4) |
N/A |
Net income (loss) per diluted share |
$0.02 |
$(0.18) |
N/A |
Comparable funds from operations (Comparable FFO) (a) |
$28.7 |
$12.2 |
134.9% |
Comparable FFO per diluted share (a) |
$0.14 |
$0.06 |
133.3% |
Comparable EBITDA (a) |
$58.3 |
$44.7 |
30.6% |
Total North American Portfolio Operating Metrics (b) |
|||
Average Daily Rate (ADR) |
$293.19 |
$276.26 |
6.1% |
Occupancy |
71.3% |
69.1% |
2.2 pts |
Revenue per Available Room (RevPAR) |
$209.17 |
$190.82 |
9.6% |
Total RevPAR |
$419.59 |
$365.15 |
14.9% |
EBITDA Margins |
25.9% |
21.3% |
460 bps |
North American Same Store Operating Metrics (c) |
|||
ADR |
$292.75 |
$275.64 |
6.2% |
Occupancy |
73.7% |
71.3% |
2.4 pts |
RevPAR |
$215.75 |
$196.66 |
9.7% |
Total RevPAR |
$415.35 |
$359.73 |
15.5% |
EBITDA Margins |
26.7% |
21.5% |
520 bps |
Note: Fourth quarter and full year results include payments pursuant to the JW Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in 2012 and 2013, respectively. |
($ in millions, except per share and operating metrics) |
Full Year |
||
Earnings Metrics |
2013 |
2012 |
% Change |
Net loss attributable to common shareholders |
$(13.2) |
$(79.5) |
N/A |
Net loss per diluted share |
$(0.06) |
$(0.40) |
N/A |
Comparable FFO (a) |
$89.5 |
$53.7 |
66.6% |
Comparable FFO per diluted share (a) |
$0.43 |
$0.26 |
65.4% |
Comparable EBITDA (a) |
$213.2 |
$175.4 |
21.5% |
Total North American Portfolio Operating Metrics (b) |
|||
ADR |
$289.90 |
$273.30 |
6.1% |
Occupancy |
74.2% |
72.3% |
1.9 pts |
RevPAR |
$214.98 |
$197.59 |
8.8% |
Total RevPAR |
$401.56 |
$365.43 |
9.9% |
EBITDA Margins |
24.4% |
21.5% |
290 bps |
North American Same Store Operating Metrics (c) |
|||
ADR |
$270.07 |
$254.06 |
6.3% |
Occupancy |
75.0% |
73.2% |
1.8 pts |
RevPAR |
$202.58 |
$186.05 |
8.9% |
Total RevPAR |
$373.90 |
$344.77 |
8.4% |
EBITDA Margins |
23.4% |
22.0% |
140 bps |
Note: |
Fourth quarter and full year results include payments pursuant to the JW Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in 2012 and 2013, respectively. |
(a) |
Please refer to tables provided later in this press release for a reconciliation of net (loss)/income 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 achieved outstanding operating and financial results across the board in 2013, leading the industry in RevPAR growth and margin expansion," said Raymond L. "Rip" Gellein, Jr., Chairman and Chief Executive Officer of Strategic Hotels & Resorts, Inc. "We have very positive expectations for 2014, based on our group outlook, continued strength from the transient traveler, and our ability to continue expanding margins across the portfolio. We also look forward to continuing to deleverage the Company's balance sheet and reviewing growth opportunities that meet our strategic and financial thresholds. The luxury sector is well positioned for continued strength given the dearth of competitive new supply in virtually all of our major markets," summarized Gellein.
Fourth Quarter Highlights
- Total consolidated revenues were $242.4 million in the fourth quarter of 2013, a 13.9 percent increase over the prior year period.
- Total North American portfolio RevPAR increased 9.6 percent in the fourth quarter of 2013, driven by a 6.1 percent increase in ADR and a 2.2 percentage point increase in occupancy compared to the fourth quarter of 2012. Total RevPAR increased 14.9 percent between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, Total RevPAR increased 10.6 percent in the fourth quarter of 2013 as compared to the fourth quarter of 2012.
- Comparable FFO was $0.14 per diluted share in the fourth quarter of 2013 compared with $0.06 per diluted share in the prior year period, a 133.3 percent increase over the prior year period.
- Comparable EBITDA was $58.3 million in the fourth quarter of 2013 compared with $44.7 million in the prior year period, a 30.6 percent increase.
- Net income attributable to common shareholders was $3.2 million, or $0.02 per diluted share, in the fourth quarter of 2013, compared with a net loss attributable to common shareholders of $36.4 million, or $0.18 per diluted share, in the fourth quarter of 2012. Fourth quarter 2012 results include $18.8 million of impairment losses and other related charges, a $7.8 million charge related to the termination of the management agreement at the Hotel del Coronado and a $2.5 million severance charge. These charges have been excluded from Comparable EBITDA, FFO and FFO per share.
- Transient occupied room nights in the Total North American portfolio increased 5.0 percent, offsetting a 1.2 percent decline in group occupied rooms in the fourth quarter of 2013 compared to the fourth quarter of 2012. Transient ADR increased 4.7 percent compared to the fourth quarter of 2012 and group ADR increased 6.2 percent compared to the fourth quarter of 2012. Transient revenues increased 9.9 percent compared to the fourth quarter of 2012 and group revenues increased 4.9 percent, compared to the fourth quarter of 2012.
- Total United States RevPAR increased 9.7 percent in the fourth quarter of 2013, driven by a 6.4 percent increase in ADR and a 2.2 percentage point increase in occupancy, compared to the fourth quarter of 2012. Total RevPAR increased 15.1 percent between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, Total RevPAR increased 10.6 percent in the fourth quarter of 2013 as compared to the fourth quarter of 2012.
- North American same store RevPAR increased 9.7 percent in the fourth quarter of 2013, driven by a 6.2 percent increase in ADR and a 2.4 percentage point increase in occupancy, compared to the fourth quarter of 2012. Total RevPAR increased 15.5 percent between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, Total RevPAR increased 10.1 percent in the fourth quarter of 2013 as compared to the fourth quarter of 2012.
- European RevPAR increased 4.4 percent (a 2.2 percent increase in constant dollars) in the fourth quarter of 2013, driven by a 1.1 percent increase in ADR (a 1.1 percent decline in constant dollars) and a 2.7 percentage point increase in occupancy. European Total RevPAR increased 5.8 percent in the fourth quarter of 2013 over the prior year period (a 3.8 percent increase in constant dollars).
- Total North American portfolio EBITDA margins expanded 460 basis points in the fourth quarter of 2013 compared to the fourth quarter of 2012. North American same store EBITDA margins expanded 520 basis points between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, EBITDA margins expanded 180 basis points and 160 basis points in the Total North American and North American same store portfolios, respectively, between periods.
Full Year Highlights
- Total consolidated revenues were $900.0 million in 2013, a 16.1 percent increase over the prior year period.
- Total North American RevPAR increased 8.8 percent in 2013, driven by a 6.1 percent increase in ADR and a 1.9 percentage point increase in occupancy, compared to the full year 2012. Total RevPAR increased 9.9 percent between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, Total RevPAR increased 8.8 percent in 2013 compared to 2012.
- Comparable FFO was $0.43 per diluted share in 2013 compared with $0.26 per diluted share in the prior year, a 65.4 percent increase.
- Comparable EBITDA was $213.2 million in 2013 compared with $175.4 million in the prior year, a 21.5 percent increase.
- Net loss attributable to common shareholders was $13.2 million, or $0.06 per diluted share, in 2013 compared with a net loss attributable to common shareholders of $79.5 million, or $0.40 per diluted share, in the prior year. Full year 2012 results include $18.8 million of impairment losses and other related charges, a $7.8 million charge related to the termination of the management agreement at the Hotel del Coronado, and a $2.5 million severance charge. These charges have been excluded from Comparable EBITDA, FFO and FFO per share.
- Transient occupied room nights in the Total North American portfolio increased 3.1 percent and group occupied room nights increased 1.6 percent in 2013 compared to 2012. Transient ADR increased 6.1 percent in 2013 and group ADR increased 4.8 percent compared to 2012. Transient revenues increased 9.4 percent in 2013 and group revenues increased 6.5 percent, compared to 2012.
- Total United States RevPAR increased 8.6 percent in 2013, driven by a 5.9 percent increase in ADR and a 1.8 percentage point increase in occupancy, compared to the full year 2012. Total RevPAR increased 9.7 percent between periods. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, Total RevPAR increased 8.6 percent in 2013 compared to 2012.
- North American same store RevPAR increased 8.9 percent, driven by a 6.3 percent increase in ADR and a 1.8 percentage point increase in occupancy, compared to the full year 2012. Total RevPAR increased 8.4 percent between periods.
- European RevPAR decreased 1.7 percent (2.1 percent in constant dollars) in 2013, driven by a 2.4 percentage decrease in ADR (2.8 percent in constant dollars) offsetting a 0.6 percentage point increase in occupancy between years. European Total RevPAR decreased 1.2 percent in between years (1.6 percent in constant dollars).
- Total North American portfolio EBITDA margins expanded 290 basis points in 2013 compared to the full year 2012. Excluding payments received pursuant to the JW Marriott Essex House NOI guarantee, EBITDA margins expanded 210 basis points compared to the full year 2012. North American same store EBITDA margins expanded 140 basis points between periods.
Preferred Dividends
On November 27, 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 December 31, 2013 to shareholders of record as of the close of business on December 16, 2013, a quarterly dividend of $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock paid on December 31, 2013 to shareholders of record as of the close of business on December 16, 2013 and a quarterly dividend of $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock paid on December 31, 2013 to shareholders of record as of the close of business on December 16, 2013.
2013 Transaction Activity
- On December 12, 2013, the Company announced the signing of an agreement with Cascade Investment, L.L.C. to sell the Four Seasons Punta Mita Resort and adjacent La Solana land parcel for gross consideration of $200 million, subject to certain working capital adjustments. The transaction is expected to close in the first quarter of 2014.
- On October 16, 2013, the Company sold the Lakeshore Athletic Club property adjacent to the Fairmont Chicago hotel for $10.5 million to the owner of Lakeshore Sport & Fitness.
- On September 9, 2013, the Company closed on amendments to the cross-collateralized mortgage agreements secured by the Westin St. Francis and Fairmont Chicago hotels, which eliminated future principal amortization payments totaling $37.2 million in scheduled payments from the signing the amendment through the remaining term of the two agreements.
- 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, bearing interest at LIBOR plus 365 basis points and has an initial two-year term with three, one-year extension options.
2014 Guidance
For the full year 2014, the Company is providing the following guidance ranges for its Total United States and United States same-store portfolios. Comparable EBITDA and Comparable FFO per share ranges assume the pending sale of the Four Seasons Punta Mita Resort and adjacent La Solana land parcel closes in the first quarter and proceeds are used to reduce the outstanding balance on the Company's revolving credit facility, partially redeem preferred equity, and other general corporate purposes.
Operating Metrics |
5.0% - 7.0% 4.5% - 6.5% 120 – 200 basis points |
||
RevPAR |
|||
Total RevPAR |
|||
EBITDA Margin expansion |
|||
Corporate Metrics |
|||
Comparable EBITDA |
$220M - $240M $0.53 - $0.63 |
||
Comparable FFO per diluted share |
Full year 2014 RevPAR and Total RevPAR growth guidance ranges have been reduced by 100 basis points and the EBITDA margin expansion guidance range has been reduced by 20 basis points as the result of anticipated displacement related to renovation activity.
The Company is additionally providing the following guidance for 2014:
- Corporate general and administrative expenses in the range of $22.0 million to $24.0 million, excluding costs associated with the Orange Capital activist campaign;
- Consolidated interest expense in the range of $85 million to $90 million, including approximately $8 million of non-cash interest expense;
- Preferred dividend expense of $17.6 million, which assumes the redemption of the Series A Preferred Equity at the end of the first quarter, contingent on the closing of the sale of the Four Seasons Punta Mita Resort;
- Capital expenditures totaling approximately $75 million to $80 million, including spending of $40 million from property-level furniture, fixtures and equipment (FF&E) reserves and an additional $35 million to $40 million of owner-funded spending; and
- No effect from any additional acquisition, disposition or capital raising activity that may occur during the year.
Portfolio Definitions
Total United States portfolio hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's hotel portfolio at December 31, 2013, consisting of all 15 properties located in the United States, including unconsolidated joint ventures.
North American same store hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's hotel portfolio at December 31, 2013, consisting of properties located in North America and held for five or more quarters in the case of fourth quarter results and eight or more quarters for full year results, in which operations are included in the consolidated results of the Company. As a result, same store comparisons contain 14 properties for the fourth quarter, including the Four Seasons Punta Mita Resort, but excluding the unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess hotels. Same store comparisons for the full year contain 13 properties, also excluding the JW Marriott Essex House Hotel, which was acquired on September 14, 2012.
European hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's European owned and leased hotel properties at December 31, 2013, consisting of the Marriott London Grosvenor Square and the Marriott Hamburg hotels.
Earnings Call
The Company will conduct its fourth quarter and full-year 2013 conference call for investors and other interested parties on Wednesday, February 26, 2014 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by dialing 877.415.3177 (toll international: 857.244.7320) with passcode 66838542. To participate on the webcast, log on to http://edge.media-server.com/m/p/vpa3u2wm/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 2:00 p.m. ET on February 26, 2014 through 11:59 p.m. ET on March 5, 2014. To access the replay, dial 888.286.8010 (toll international: 617.801.6888) with passcode 62181703. A replay of the call will also be available on the Internet at http://www.strategichotels.com or http://www.reuters.com/finance/markets/earnings 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.
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 8,271 rooms and 851,600 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: failure to complete or close on transactions or the failure of closing conditions to be satisfied, including the closing of the disposition of the Four Seasons Punta Mita Resort; a change in the proposed use of proceeds from the disposition of the Four Seasons Punta Mita Resort; 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, refinance or extend maturing debt; 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 2014 net income 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 Income Attributable to Common Shareholders |
$52.9 |
$72.9 |
|
Depreciation and Amortization |
112.8 |
112.8 |
|
Interest Expense |
86.0 |
86.0 |
|
Income Taxes |
2.3 |
2.3 |
|
Non-controlling Interests |
0.4 |
0.4 |
|
Adjustments from Consolidated Affiliates |
(15.5) |
(15.5) |
|
Adjustments from Unconsolidated Affiliates |
23.5 |
23.5 |
|
Preferred Shareholder Dividends |
17.6 |
17.6 |
|
Realized Portion of Deferred Gain on Sale Leasebacks |
(0.2) |
(0.2) |
|
Gain on Sale of Assets |
(59.8) |
(59.8) |
|
Comparable EBITDA |
$220.0 |
$240.0 |
Low Range |
High Range |
||
Net Income Attributable to Common Shareholders |
$52.9 |
$72.9 |
|
Depreciation and Amortization |
112.0 |
112.0 |
|
Realized Portion of Deferred Gain on Sale Leasebacks |
(0.2) |
(0.2) |
|
Gain on Sale of Assets |
(59.8) |
(59.8) |
|
Non-controlling Interests |
0.3 |
0.3 |
|
Adjustments from Consolidated Affiliates |
(8.0) |
(8.0) |
|
Adjustments from Unconsolidated Affiliates |
14.9 |
14.9 |
|
Comparable FFO |
112.1 |
132.1 |
|
Comparable FFO per Diluted Share |
$0.53 |
$0.63 |
|
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Consolidated Statements of Operations (in thousands, except per share data)
|
||||||||||||||||
Three Months Ended |
Years Ended |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
Revenues: |
||||||||||||||||
Rooms |
$ |
126,917 |
$ |
117,255 |
$ |
506,348 |
$ |
429,689 |
||||||||
Food and beverage |
81,426 |
73,483 |
294,969 |
264,893 |
||||||||||||
Other hotel operating revenue |
32,709 |
20,799 |
93,535 |
75,857 |
||||||||||||
Lease revenue |
1,385 |
1,273 |
5,161 |
4,778 |
||||||||||||
Total revenues |
242,437 |
212,810 |
900,013 |
775,217 |
||||||||||||
Operating Costs and Expenses: |
||||||||||||||||
Rooms |
36,160 |
33,288 |
144,464 |
121,794 |
||||||||||||
Food and beverage |
59,504 |
54,794 |
225,213 |
193,431 |
||||||||||||
Other departmental expenses |
56,226 |
55,189 |
220,523 |
200,219 |
||||||||||||
Management fees |
7,829 |
6,227 |
27,126 |
23,085 |
||||||||||||
Other hotel expenses |
15,239 |
15,221 |
60,618 |
53,117 |
||||||||||||
Lease expense |
1,234 |
1,155 |
4,818 |
4,580 |
||||||||||||
Depreciation and amortization |
24,507 |
26,055 |
101,943 |
99,458 |
||||||||||||
Impairment losses and other charges |
— |
18,406 |
728 |
18,406 |
||||||||||||
Corporate expenses |
7,161 |
8,150 |
25,807 |
31,578 |
||||||||||||
Total operating costs and expenses |
207,860 |
218,485 |
811,240 |
745,668 |
||||||||||||
Operating income (loss) |
34,577 |
(5,675) |
88,773 |
29,549 |
||||||||||||
Interest expense |
(20,405) |
(16,862) |
(84,276) |
(75,489) |
||||||||||||
Interest income |
14 |
95 |
59 |
213 |
||||||||||||
Equity in (losses) earnings of unconsolidated affiliates |
(265) |
(11,431) |
2,987 |
(13,485) |
||||||||||||
Foreign currency exchange gain (loss) |
8 |
15 |
44 |
(1,258) |
||||||||||||
Other (expenses) income, net |
(359) |
455 |
(314) |
1,820 |
||||||||||||
Income (loss) before income taxes and discontinued operations |
13,570 |
(33,403) |
7,273 |
(58,650) |
||||||||||||
Income tax expense |
(153) |
(257) |
(557) |
(800) |
||||||||||||
Income (loss) from continuing operations |
13,417 |
(33,660) |
6,716 |
(59,450) |
||||||||||||
Income from discontinued operations, net of tax |
2,248 |
1,362 |
3,171 |
1,189 |
||||||||||||
Net Income (Loss) |
15,665 |
(32,298) |
9,887 |
(58,261) |
||||||||||||
Net (income) loss attributable to the noncontrolling interests in SHR's operating partnership |
(60) |
58 |
(38) |
184 |
||||||||||||
Net (income) loss attributable to the noncontrolling interests in consolidated affiliates |
(6,341) |
1,880 |
1,126 |
2,771 |
||||||||||||
Net Income (Loss) Attributable to SHR |
9,264 |
(30,360) |
10,975 |
(55,306) |
||||||||||||
Preferred shareholder dividends |
(6,041) |
(6,041) |
(24,166) |
(24,166) |
||||||||||||
Net Income (Loss) Attributable to SHR Common Shareholders |
$ |
3,223 |
$ |
(36,401) |
$ |
(13,191) |
$ |
(79,472) |
||||||||
Basic Income (Loss) Per Share: |
||||||||||||||||
Income (loss) from continuing operations attributable to SHR common shareholders |
$ |
0.01 |
$ |
(0.18) |
$ |
(0.08) |
$ |
(0.40) |
||||||||
Income from discontinued operations attributable to SHR common shareholders |
0.01 |
— |
0.02 |
— |
||||||||||||
Net income (loss) attributable to SHR common shareholders |
$ |
0.02 |
$ |
(0.18) |
$ |
(0.06) |
$ |
(0.40) |
||||||||
Weighted average common shares outstanding |
206,814 |
206,836 |
206,334 |
201,109 |
||||||||||||
Diluted Income (Loss) Per Share: |
||||||||||||||||
Income (loss) from continuing operations attributable to SHR common shareholders |
$ |
0.01 |
$ |
(0.18) |
$ |
(0.08) |
$ |
(0.40) |
||||||||
Income from discontinued operations attributable to SHR common shareholders |
0.01 |
— |
0.02 |
— |
||||||||||||
Net income (loss) attributable to SHR common shareholders |
$ |
0.02 |
$ |
(0.18) |
$ |
(0.06) |
$ |
(0.40) |
||||||||
Weighted average common shares outstanding |
208,986 |
206,836 |
206,334 |
201,109 |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Consolidated Balance Sheets (in thousands, except share data)
|
||||||||
December 31, |
||||||||
2013 |
2012 |
|||||||
Assets |
||||||||
Investment in hotel properties, net |
$ |
1,795,338 |
$ |
1,970,560 |
||||
Goodwill |
38,128 |
40,359 |
||||||
Intangible assets, net of accumulated amortization of $12,213 and $10,812 |
29,502 |
30,631 |
||||||
Assets held for sale |
135,901 |
— |
||||||
Investment in unconsolidated affiliates |
104,973 |
112,488 |
||||||
Cash and cash equivalents |
73,655 |
80,074 |
||||||
Restricted cash and cash equivalents |
75,916 |
58,579 |
||||||
Accounts receivable, net of allowance for doubtful accounts of $1,745 and $1,602 |
39,660 |
45,620 |
||||||
Deferred financing costs, net of accumulated amortization of $12,354 and $7,049 |
8,478 |
11,695 |
||||||
Deferred tax assets |
— |
2,203 |
||||||
Prepaid expenses and other assets |
35,600 |
54,208 |
||||||
Total assets |
$ |
2,337,151 |
$ |
2,406,417 |
||||
Liabilities, Noncontrolling Interests and Equity |
||||||||
Liabilities: |
||||||||
Mortgages and other debt payable |
$ |
1,163,696 |
$ |
1,176,297 |
||||
Bank credit facility |
110,000 |
146,000 |
||||||
Liabilities of assets held for sale |
17,027 |
— |
||||||
Accounts payable and accrued expenses |
189,889 |
228,397 |
||||||
Deferred tax liabilities |
46,137 |
47,275 |
||||||
Total liabilities |
1,526,749 |
1,597,969 |
||||||
Commitments and contingencies |
||||||||
Noncontrolling interests in SHR's operating partnership |
7,534 |
5,463 |
||||||
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 $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 $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 $95,693 in the aggregate) |
92,489 |
92,489 |
||||||
Common stock ($0.01 par value per share; 350,000,000 shares of common stock authorized; 205,582,838 and 204,308,710 shares of common stock issued and outstanding) |
2,056 |
2,043 |
||||||
Additional paid-in capital |
1,705,306 |
1,730,535 |
||||||
Accumulated deficit |
(1,234,952) |
(1,245,927) |
||||||
Accumulated other comprehensive loss |
(41,445) |
(58,871) |
||||||
Total SHR's shareholders' equity |
710,513 |
707,328 |
||||||
Noncontrolling interests in consolidated affiliates |
92,355 |
95,657 |
||||||
Total equity |
802,868 |
802,985 |
||||||
Total liabilities, noncontrolling interests and equity |
$ |
2,337,151 |
$ |
2,406,417 |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Financial Highlights Supplemental Financial Data (in thousands, except per share information)
|
||||||||
December 31, 2013 |
||||||||
Pro Rata Share |
Consolidated |
|||||||
Capitalization |
||||||||
Shares of common stock outstanding |
205,583 |
205,583 |
||||||
Operating partnership units outstanding |
797 |
797 |
||||||
Restricted stock units outstanding |
1,699 |
1,699 |
||||||
Combined shares and units outstanding |
208,079 |
208,079 |
||||||
Common stock price at end of period |
$ |
9.45 |
$ |
9.45 |
||||
Common equity capitalization |
$ |
1,966,347 |
$ |
1,966,347 |
||||
Preferred equity capitalization (at $25.00 face value) |
289,102 |
289,102 |
||||||
Consolidated debt |
1,273,696 |
1,273,696 |
||||||
Pro rata share of unconsolidated debt |
231,400 |
— |
||||||
Pro rata share of consolidated debt |
(132,794) |
— |
||||||
Cash and cash equivalents |
(73,655) |
(73,655) |
||||||
Total enterprise value |
$ |
3,554,096 |
$ |
3,455,490 |
||||
Net Debt / Total Enterprise Value |
36.6 |
% |
34.7 |
% |
||||
Preferred Equity / Total Enterprise Value |
8.1 |
% |
8.4 |
% |
||||
Common Equity / Total Enterprise Value |
55.3 |
% |
56.9 |
% |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Discontinued Operations |
||||||||||||||||
The results of operations of hotels sold or held for sale are classified as discontinued operations and segregated in the consolidated statements of operations for all periods presented. On December 12, 2013, we entered into an agreement to sell the Four Seasons Punta Mita Resort and the adjacent La Solana land parcel for $200,000,000.
The following is a summary of income from discontinued operations for the three months and years ended December 31, 2013 and 2012 (in thousands):
|
||||||||||||||||
Three Months Ended December 31, |
Years Ended December 31, |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
Hotel operating revenues |
$ |
12,300 |
$ |
11,262 |
$ |
37,964 |
$ |
33,100 |
||||||||
Operating costs and expenses |
9,061 |
8,010 |
30,203 |
26,909 |
||||||||||||
Depreciation and amortization |
1,052 |
993 |
4,075 |
4,006 |
||||||||||||
Impairment losses and other charges |
— |
437 |
— |
437 |
||||||||||||
Total operating costs and expenses |
10,113 |
9,440 |
34,278 |
31,352 |
||||||||||||
Operating income |
2,187 |
1,822 |
3,686 |
1,748 |
||||||||||||
Interest income |
— |
— |
— |
4 |
||||||||||||
Foreign currency exchange (loss) gain |
(142) |
79 |
(1) |
(352) |
||||||||||||
Other income, net |
375 |
— |
375 |
— |
||||||||||||
Income tax expense |
(172) |
(539) |
(889) |
(211) |
||||||||||||
Income from discontinued operations |
$ |
2,248 |
$ |
1,362 |
$ |
3,171 |
$ |
1,189 |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Investments in Unconsolidated Affiliates |
||||||||||||||||||||||||
We have a 36.4% and 50.0% ownership interest in the Hotel del Coronado and the Fairmont Scottsdale Princess hotel, respectively. We account for these investments using the equity method of accounting.
|
||||||||||||||||||||||||
Three Months Ended December 31, 2013 |
Three Months Ended December 31, 2012 |
|||||||||||||||||||||||
Hotel del Coronado |
Fairmont Scottsdale Princess |
Total |
Hotel del Coronado |
Fairmont Scottsdale Princess |
Total |
|||||||||||||||||||
Total revenues (100%) |
$ |
33,115 |
$ |
23,634 |
$ |
56,749 |
$ |
29,888 |
$ |
20,546 |
$ |
50,434 |
||||||||||||
Property EBITDA (100%) |
$ |
8,668 |
$ |
4,111 |
$ |
12,779 |
$ |
7,201 |
$ |
3,034 |
$ |
10,235 |
||||||||||||
Equity in (losses) earnings of unconsolidated affiliates (SHR ownership) |
||||||||||||||||||||||||
Property EBITDA |
$ |
3,153 |
$ |
2,056 |
$ |
5,209 |
$ |
2,491 |
$ |
1,517 |
$ |
4,008 |
||||||||||||
Depreciation and amortization |
(1,917) |
(1,565) |
(3,482) |
(1,797) |
(1,823) |
(3,620) |
||||||||||||||||||
Interest expense |
(1,941) |
(193) |
(2,134) |
(2,549) |
(189) |
(2,738) |
||||||||||||||||||
Other expenses, net |
(14) |
(23) |
(37) |
(7,869) |
(111) |
(7,980) |
||||||||||||||||||
Income taxes |
85 |
— |
85 |
90 |
— |
90 |
||||||||||||||||||
Equity in (losses) earnings of unconsolidated affiliates |
$ |
(634) |
$ |
275 |
$ |
(359) |
$ |
(9,634) |
$ |
(606) |
$ |
(10,240) |
||||||||||||
EBITDA Contribution: |
||||||||||||||||||||||||
Equity in (losses) earnings of unconsolidated affiliates |
$ |
(634) |
$ |
275 |
$ |
(359) |
$ |
(9,634) |
$ |
(606) |
$ |
(10,240) |
||||||||||||
Depreciation and amortization |
1,917 |
1,565 |
3,482 |
1,797 |
1,823 |
3,620 |
||||||||||||||||||
Termination fee |
— |
— |
— |
7,820 |
— |
7,820 |
||||||||||||||||||
Interest expense |
1,941 |
193 |
2,134 |
2,549 |
189 |
2,738 |
||||||||||||||||||
Income taxes |
(85) |
— |
(85) |
(90) |
— |
(90) |
||||||||||||||||||
EBITDA Contribution |
$ |
3,139 |
$ |
2,033 |
$ |
5,172 |
$ |
2,442 |
$ |
1,406 |
$ |
3,848 |
||||||||||||
FFO Contribution: |
||||||||||||||||||||||||
Equity in (losses) earnings of unconsolidated affiliates |
$ |
(634) |
$ |
275 |
$ |
(359) |
$ |
(9,634) |
$ |
(606) |
$ |
(10,240) |
||||||||||||
Depreciation and amortization |
1,917 |
1,565 |
3,482 |
1,797 |
1,823 |
3,620 |
||||||||||||||||||
Termination fee |
— |
— |
— |
7,820 |
— |
7,820 |
||||||||||||||||||
FFO Contribution |
$ |
1,283 |
$ |
1,840 |
$ |
3,123 |
$ |
(17) |
$ |
1,217 |
$ |
1,200 |
Year Ended December 31, 2013 |
Year Ended December 31, 2012 |
|||||||||||||||||||||||
Hotel del Coronado |
Fairmont Scottsdale Princess |
Total |
Hotel del Coronado |
Fairmont Scottsdale Princess |
Total |
|||||||||||||||||||
Total revenues (100%) |
$ |
148,482 |
$ |
93,133 |
$ |
241,615 |
$ |
140,220 |
$ |
77,281 |
$ |
217,501 |
||||||||||||
Property EBITDA (100%) |
$ |
47,155 |
$ |
18,883 |
$ |
66,038 |
$ |
40,722 |
$ |
12,777 |
$ |
53,499 |
||||||||||||
Equity in earnings (losses) of unconsolidated affiliates (SHR ownership) |
||||||||||||||||||||||||
Property EBITDA |
$ |
17,152 |
$ |
9,442 |
$ |
26,594 |
$ |
13,989 |
$ |
6,389 |
$ |
20,378 |
||||||||||||
Depreciation and amortization |
(7,564) |
(6,570) |
(14,134) |
(6,895) |
(7,145) |
(14,040) |
||||||||||||||||||
Interest expense |
(8,325) |
(778) |
(9,103) |
(10,093) |
(778) |
(10,871) |
||||||||||||||||||
Other expenses, net |
(242) |
(58) |
(300) |
(7,931) |
(155) |
(8,086) |
||||||||||||||||||
Income taxes |
(191) |
— |
(191) |
383 |
— |
383 |
||||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates |
$ |
830 |
$ |
2,036 |
$ |
2,866 |
$ |
(10,547) |
$ |
(1,689) |
$ |
(12,236) |
||||||||||||
EBITDA Contribution |
||||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates |
$ |
830 |
$ |
2,036 |
$ |
2,866 |
$ |
(10,547) |
$ |
(1,689) |
$ |
(12,236) |
||||||||||||
Depreciation and amortization |
7,564 |
6,570 |
14,134 |
6,895 |
7,145 |
14,040 |
||||||||||||||||||
Termination fee |
— |
— |
— |
7,820 |
— |
7,820 |
||||||||||||||||||
Interest expense |
8,325 |
778 |
9,103 |
10,093 |
778 |
10,871 |
||||||||||||||||||
Income taxes |
191 |
— |
191 |
(383) |
— |
(383) |
||||||||||||||||||
EBITDA Contribution |
$ |
16,910 |
$ |
9,384 |
$ |
26,294 |
$ |
13,878 |
$ |
6,234 |
$ |
20,112 |
||||||||||||
FFO Contribution |
||||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates |
$ |
830 |
$ |
2,036 |
$ |
2,866 |
$ |
(10,547) |
$ |
(1,689) |
$ |
(12,236) |
||||||||||||
Depreciation and amortization |
7,564 |
6,570 |
14,134 |
6,895 |
7,145 |
14,040 |
||||||||||||||||||
Termination fee |
— |
— |
— |
7,820 |
— |
7,820 |
||||||||||||||||||
FFO Contribution |
$ |
8,394 |
$ |
8,606 |
$ |
17,000 |
$ |
4,168 |
$ |
5,456 |
$ |
9,624 |
Investments in Unconsolidated Affiliates (Continued) (in thousands)
|
|||||||||||||||
Debt |
Interest Rate |
Spread over LIBOR |
Loan Amount |
Maturity (a) |
|||||||||||
Hotel del Coronado |
|||||||||||||||
CMBS Mortgage and Mezzanine |
3.82 |
% |
365 bp |
$ |
475,000 |
March 2018 |
|||||||||
Cash and cash equivalents |
(7,462) |
||||||||||||||
Net Debt |
$ |
467,538 |
|||||||||||||
Fairmont Scottsdale Princess |
|||||||||||||||
CMBS Mortgage |
0.53 |
% |
36 bp |
$ |
117,000 |
April 2015 |
|||||||||
Cash and cash equivalents |
(6,841) |
||||||||||||||
Net Debt |
$ |
110,159 |
(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 |
December 2013 |
4.00 |
% |
$ |
117,000 |
April 2015 |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Leasehold Information (in thousands)
|
||||||||||||||||
Three Months Ended December 31, |
Years Ended December 31, |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
Marriott Hamburg: |
||||||||||||||||
Property EBITDA |
$ |
1,741 |
$ |
1,472 |
$ |
6,298 |
$ |
5,876 |
||||||||
Revenue (a) |
$ |
1,385 |
$ |
1,273 |
$ |
5,161 |
$ |
4,778 |
||||||||
Lease expense |
(1,234) |
(1,155) |
(4,818) |
(4,580) |
||||||||||||
Less: Deferred gain on sale-leaseback |
(53) |
(50) |
(207) |
(200) |
||||||||||||
Adjusted lease expense |
(1,287) |
(1,205) |
(5,025) |
(4,780) |
||||||||||||
EBITDA contribution from leasehold |
$ |
98 |
$ |
68 |
$ |
136 |
$ |
(2) |
December 31, |
||||||||
Security Deposit (b): |
2013 |
2012 |
||||||
Marriott Hamburg |
$ |
2,611 |
$ |
2,507 |
||||
(a) |
For the three months and years ended December 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 Income (Loss) Attributable to SHR Common Shareholders to EBITDA and Comparable EBITDA (in thousands)
|
||||||||||||||||
Three Months Ended |
Years Ended |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
Net income (loss) attributable to SHR common shareholders |
$ |
3,223 |
$ |
(36,401) |
$ |
(13,191) |
$ |
(79,472) |
||||||||
Depreciation and amortization—continuing operations |
24,507 |
26,055 |
101,943 |
99,458 |
||||||||||||
Depreciation and amortization—discontinued operations |
1,052 |
993 |
4,075 |
4,006 |
||||||||||||
Interest expense—continuing operations |
20,405 |
16,862 |
84,276 |
75,489 |
||||||||||||
Income taxes—continuing operations |
153 |
257 |
557 |
800 |
||||||||||||
Income taxes—discontinued operations |
172 |
539 |
889 |
211 |
||||||||||||
Noncontrolling interests |
60 |
(58) |
38 |
(184) |
||||||||||||
Adjustments from consolidated affiliates |
(3,589) |
(4,217) |
(14,604) |
(8,599) |
||||||||||||
Adjustments from unconsolidated affiliates |
5,553 |
6,956 |
23,489 |
27,562 |
||||||||||||
Preferred shareholder dividends |
6,041 |
6,041 |
24,166 |
24,166 |
||||||||||||
EBITDA |
57,577 |
17,027 |
211,638 |
143,437 |
||||||||||||
Realized portion of deferred gain on sale-leaseback |
(53) |
(50) |
(207) |
(200) |
||||||||||||
Loss on sale of assets |
430 |
— |
1,185 |
— |
||||||||||||
Loss on sale of assets—adjustments from consolidated affiliates |
(85) |
— |
(455) |
— |
||||||||||||
Impairment losses and other charges—continuing operations |
— |
18,406 |
728 |
18,406 |
||||||||||||
Impairment losses and other charges—discontinued operations |
— |
437 |
— |
437 |
||||||||||||
Foreign currency exchange (gain) loss—continuing operations (a) |
(8) |
(15) |
(44) |
1,258 |
||||||||||||
Foreign currency exchange loss (gain)—discontinued operations (a) |
142 |
(79) |
1 |
352 |
||||||||||||
Activist shareholder costs |
342 |
— |
342 |
— |
||||||||||||
Adjustment for Value Creation Plan |
— |
(1,352) |
— |
1,407 |
||||||||||||
Severance charges |
— |
2,485 |
— |
2,485 |
||||||||||||
Management agreement termination fee (b) |
— |
7,820 |
— |
7,820 |
||||||||||||
Comparable EBITDA |
$ |
58,345 |
$ |
44,679 |
$ |
213,188 |
$ |
175,402 |
(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) |
Our share of the Hotel del Coronado management agreement termination fee included in both equity in (losses) earnings of unconsolidated affiliates and net (income) loss attributable to the noncontrolling interest in consolidated affiliates. |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Reconciliation of Net Income (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 |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
Net income (loss) attributable to SHR common shareholders |
$ |
3,223 |
$ |
(36,401) |
$ |
(13,191) |
$ |
(79,472) |
||||||||
Depreciation and amortization—continuing operations |
24,507 |
26,055 |
101,943 |
99,458 |
||||||||||||
Depreciation and amortization—discontinued operations |
1,052 |
993 |
4,075 |
4,006 |
||||||||||||
Corporate depreciation |
(125) |
(190) |
(508) |
(979) |
||||||||||||
Loss on sale of assets |
430 |
— |
1,185 |
— |
||||||||||||
Realized portion of deferred gain on sale-leaseback |
(53) |
(50) |
(207) |
(200) |
||||||||||||
Noncontrolling interests adjustments |
(123) |
(127) |
(400) |
(501) |
||||||||||||
Adjustments from consolidated affiliates |
(1,813) |
(1,906) |
(7,378) |
(4,091) |
||||||||||||
Adjustments from unconsolidated affiliates |
3,482 |
3,923 |
14,135 |
15,258 |
||||||||||||
FFO |
30,580 |
(7,703) |
99,654 |
33,479 |
||||||||||||
Redeemable noncontrolling interests |
183 |
69 |
438 |
317 |
||||||||||||
FFO—Fully Diluted |
30,763 |
(7,634) |
100,092 |
33,796 |
||||||||||||
Impairment losses and other charges—continuing operations |
— |
18,406 |
728 |
18,406 |
||||||||||||
Impairment losses and other charges—discontinued operations |
— |
437 |
— |
437 |
||||||||||||
Non-cash mark to market of interest rate swaps |
(2,496) |
(7,833) |
(11,617) |
(12,238) |
||||||||||||
Foreign currency exchange (gain) loss—continuing operations (a) |
(8) |
(15) |
(44) |
1,258 |
||||||||||||
Foreign currency exchange loss (gain)—discontinued operations (a) |
142 |
(79) |
1 |
352 |
||||||||||||
Activist shareholder costs |
342 |
— |
342 |
— |
||||||||||||
Adjustment for Value Creation Plan |
— |
(1,352) |
— |
1,407 |
||||||||||||
Severance charges |
— |
2,485 |
— |
2,485 |
||||||||||||
Management agreement termination fee (b) |
— |
7,820 |
— |
7,820 |
||||||||||||
Comparable FFO |
$ |
28,743 |
$ |
12,235 |
$ |
89,502 |
$ |
53,723 |
||||||||
Comparable FFO per fully diluted share |
$ |
0.14 |
$ |
0.06 |
$ |
0.43 |
$ |
0.26 |
||||||||
Weighted average diluted shares (c) |
209,800 |
209,307 |
209,328 |
203,605 |
(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) |
Our share of the Hotel del Coronado management agreement termination fee included in both equity in (losses) earnings of unconsolidated affiliates and net (income) loss attributable to the noncontrolling interests in consolidated affiliates. |
(c) |
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) |
4.28 |
% |
375 bp (c) |
$ |
115,958 |
October 2014 |
|||||
North Beach Venture |
5.00 |
% |
Fixed |
1,469 |
January 2015 |
||||||
Bank credit facility |
3.17 |
% |
300 bp |
110,000 |
June 2015 |
||||||
Four Seasons Washington, D.C. |
3.32 |
% |
315 bp |
130,000 |
July 2016 |
||||||
Westin St. Francis |
6.09 |
% |
Fixed |
209,588 |
June 2017 |
||||||
Fairmont Chicago |
6.09 |
% |
Fixed |
93,124 |
June 2017 |
||||||
JW Marriott Essex House Hotel |
4.75 |
% |
400 bp |
185,826 |
September 2017 |
||||||
Hyatt Regency La Jolla (d) |
4.50% / 10.00 |
% |
400 bp / Fixed |
89,312 |
December 2017 |
||||||
InterContinental Miami |
3.67 |
% |
350 bp |
85,000 |
July 2018 |
||||||
Loews Santa Monica Beach Hotel |
4.02 |
% |
385 bp |
109,000 |
July 2018 |
||||||
InterContinental Chicago |
5.61 |
% |
Fixed |
144,419 |
August 2021 |
||||||
$ |
1,273,696 |
(a) |
Spread over LIBOR (0.17% at December 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 December 31, 2013. On August 7, 2013, the Company entered into an amendment to the mortgage loan. The amendment extended the maturity of the loan to October 2014 and waived the July 2013 and subsequent principal payments through the extended term. Pursuant to the amendment, the spread over GBP LIBOR increases in steps during the extension period from GBP LIBOR plus 2.10% in August 2013 to GBP LIBOR plus 4.25% in April 2014. The spread in the table is the spread over three-month GBP LIBOR (0.53% at December 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 $17,312,000 is payable at a fixed rate of 10.00%. |
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 |
Future scheduled debt principal payments (including extension options) are as follows:
Years ending December 31, |
Amount |
|||
2014 |
$ |
120,213 |
||
2015 |
117,498 |
|||
2016 |
139,783 |
|||
2017 |
577,043 |
|||
2018 |
185,015 |
|||
Thereafter |
134,144 |
|||
$ |
1,273,696 |
|||
Percent of fixed rate debt including swaps |
68.0 |
% |
||
Weighted average interest rate including swaps (e) |
6.21 |
% |
||
Weighted average maturity of fixed rate debt (debt with maturity of greater than one year) |
3.92 |
(e) |
Excludes the amortization of deferred financing costs and the amortization of the interest rate swap costs. |
SOURCE Strategic Hotels & Resorts, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article