CHICAGO, May 4, 2015 /PRNewswire/ -- Strategic Hotels
& Resorts, Inc. (NYSE: BEE) today reported results for the
first quarter ended March 31,
2015.
($ in millions,
except per share and operating metrics)
|
First
Quarter
|
|
|
|
|
Earnings
Metrics
|
2015
|
2014
|
%
Change
|
Net income
attributable to common shareholders
|
$15.8
|
$217.2
|
(92.7)%
|
Net income per
diluted share
|
$0.04
|
$0.97
|
(95.9)%
|
Comparable funds from
operations (Comparable FFO) (a)
|
$56.3
|
$12.2
|
360.7%
|
Comparable FFO per
fully diluted share (a)
|
$0.20
|
$0.06
|
233.3%
|
Comparable EBITDA
(a)
|
$74.1
|
$41.2
|
80.0%
|
|
|
|
|
Same Store United
States Operating Metrics (b)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$300.26
|
$281.02
|
6.8%
|
Occupancy
|
72.1%
|
68.8%
|
3.3 pts
|
Revenue per Available
Room (RevPAR) (d)
|
$216.61
|
$193.45
|
12.0%
|
Total RevPAR
(d)
|
$429.33
|
$386.90
|
11.0%
|
EBITDA Margins
(d)
|
25.0%
|
20.0%
|
500 bps
|
|
|
|
|
Total United
States Operating Metrics (c)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$313.71
|
$292.49
|
7.3%
|
Occupancy
|
72.7%
|
69.5%
|
3.2 pts
|
Revenue per Available
Room (RevPAR) (d)
|
$227.97
|
$203.22
|
12.2%
|
Total RevPAR
(d)
|
$455.11
|
$410.47
|
10.9%
|
EBITDA Margins
(d)
|
25.0%
|
20.1%
|
490 bps
|
|
|
(a)
|
Please refer to
tables provided later in this press release for a reconciliation of
net income attributable to common shareholders 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 within the reconciliation
tables.
|
|
|
(b)
|
Operating
statistics reflect results from the Company's Same Store United
States portfolio (see portfolio definitions later in this press
release).
|
|
|
(c)
|
Operating
statistics reflect results from the Company's Total United States
portfolio (see portfolio definitions later in this press
release).
|
|
|
(d)
|
ADR, RevPAR, Total
RevPAR and EBITDA Margin statistics have been modified to take into
account certain adjustments, including those related to the
adoption of the Uniform System of Accounts for the Lodging
Industry, Eleventh Revised Edition (the "USALI Eleventh Revised
Edition").
|
"We are obviously very pleased with our first quarter
results. The combined performance of our newly-acquired
assets alongside our legacy hotels drove impressive increases in
virtually all relevant metrics compared to the same period last
year," said Raymond L. "Rip" Gellein, Chairman and Chief Executive
Officer of Strategic Hotels & Resorts. "As we head further into
the year, our team is focused on our well defined strategy of
strengthening our balance sheet, enhancing the quality of our best
in class portfolio and maximizing the performance of our
hotels. Given the strength of our first quarter performance in each
of these strategic objectives and our positive outlook for the
remainder of the year, we are increasing our full year guidance for
all key metrics."
First Quarter Highlights
- Total consolidated revenues were $325.3
million in the first quarter of 2015, a 67.1 percent
increase over the prior year period. This increase was
primarily driven by the acquisition of the Four Seasons Resort
Scottsdale at Troon North and the Montage Laguna Beach resort, as
well as the consolidation of both the Hotel del Coronado and
Fairmont Scottsdale Princess hotel.
- Net income attributable to common shareholders was $15.8 million, or $0.04 per fully diluted share, in the first
quarter of 2015, compared with $217.2
million, or $0.97 per diluted
share, in the first quarter of 2014. First quarter 2014
results include $233.9 million in
gains from the sale of the Four Seasons Punta Mita and the Marriott
London Grosvenor Square hotel, net of taxes, and the consolidation
of the Fairmont Scottsdale Princess hotel. These gains, and
other one-time items, have been excluded from Comparable EBITDA,
FFO and FFO per fully diluted share.
- Comparable FFO was $0.20 per
fully diluted share in the first quarter of 2015 compared with
$0.06 per fully diluted share in the
prior year period, a 233.3 percent increase over the prior year
period. The year-over-year increase in Comparable FFO per
fully diluted share was primarily the result of accretive
acquisitions and the redemption of preferred equity.
- Comparable EBITDA was $74.1 million in the first quarter of 2015
compared with $41.2 million in the
prior year period, an 80.0 percent increase over the prior year
period. Approximately $23.6
million of the year-over-year increase was related to
acquisition activity, net of disposition activity, with the
remainder from organic growth within the portfolio.
- Same Store United States portfolio RevPAR increased 12.0
percent in the first quarter of 2015, driven by a 6.8 percent
increase in ADR and a 3.3 percentage point increase in occupancy
compared to the first quarter of 2014. Total RevPAR increased
11.0 percent between periods, with non-rooms revenue increasing
10.0 percent between periods.
- Total United States portfolio
RevPAR increased 12.2 percent in the first quarter of 2015, driven
by a 7.3 percent increase in ADR and a 3.2 percentage point
increase in occupancy compared to the first quarter of 2014.
Total RevPAR increased 10.9 percent between periods, with non-rooms
revenue increasing 9.7 percent between periods.
- Group occupied room nights in the Total United States portfolio
increased 6.2 percent and transient occupied room nights increased
3.3 percent in the first quarter of 2015 compared to the first
quarter of 2014. Group ADR increased 8.5 percent in the first
quarter of 2015 compared to the first quarter of 2014, and
transient ADR increased 6.1 percent compared to the first quarter
of 2014.
- Same Store United States and Total United States portfolio
EBITDA margins expanded 500 basis points and 490 basis points,
respectively, in the first quarter of 2015 compared to the first
quarter of 2014. Excluding one-time real estate tax credits
received in the first quarter of 2015, EBITDA margins expanded 300
basis points and 310 basis points in the Same Store and Total
United States portfolios, respectively. EBITDA margins in
both years have been adjusted to exclude the amortization of the
below market hotel management agreement related to the Hotel del
Coronado, and other adjustments related to the adoption of the
USALI Eleventh Revised Edition to improve comparability between
years.
Four Seasons Austin Hotel Acquisition
On May 1, 2015, the Company signed
an agreement to purchase the 291-room Four Seasons Austin hotel for
$197.0 million. The
acquisition, which is expected to close in May, remains subject to
closing conditions and working capital adjustments. The
Company intends to initially fund the acquisition with existing
cash balances and borrowings on its currently undrawn revolving
credit facility.
Four Seasons Hotels & Resorts will continue to manage the
AAA Four Diamond hotel, which features 291 guestrooms, including 28
suites, and sits on 2.3-acres overlooking Lady Bird Lake in the midst of the Central
Business District in Austin,
Texas. Opened in 1986, the hotel's guestrooms underwent a
significant renovation in 2014, and the hotel also features 18,000
square feet of indoor meeting space, two food and beverage outlets,
and a 5,500 square foot spa.
The purchase price represents a 12.8 times multiple on
forecasted 2015 EBITDA of $15.4
million and a 6.7 percent capitalization rate on forecasted
2015 NOI of $13.2 million. For
the Company's period of ownership in 2015, management expects the
hotel to contribute $8.5 million of
EBITDA to the Company's financial results.
"This is an exciting opportunity to acquire the only true luxury
hotel in what is arguably our nation's highest growth market," said
Gellein. "As we have long-stated, expanding our geographic
diversity is a strategic priority. This acquisition not only
achieves that, but adds yet another distinctive, high-performing
property to our portfolio. With spectacular views of Lady Bird Lake
and easy access to Austin's
central business district, convention center, and popular annual
events, the Four Seasons Austin is well-positioned under our
ownership to deliver the city's most distinctive luxury hotel
experience."
Preferred Equity Redemption
On January 5, 2015, the Company
completed the redemption of all of the outstanding 3,615,375 shares
of its 8.25 percent Series B Cumulative Redeemable Preferred Stock
(the "Series B Preferred Shares") at a redemption price of
$25.00 per share, plus accrued and
unpaid dividends in the amount of $0.028646 per share, for a total redemption cost
of $90.5 million. The
redemption of the Series B Preferred Shares eliminated
approximately $7.5 million of
dividend payments on an annual basis.
Transaction Activity
On January 29, 2015, the Company
closed on the acquisition of the Montage Laguna Beach resort for
$360.0 million. As part of the
transaction, the Company issued 7.3 million shares of common stock
to an affiliated designee of the seller, priced at $13.61 per share, or an implied valuation of
$100.0 million. In addition,
the Company assumed a $150.0 million
mortgage loan encumbering the property, priced at an annual fixed
interest rate of 3.90 percent, which matures in August 2021.
Subsequent Events
- On April 21, 2015, the Company,
along with its joint venture partner, signed an agreement to sell a
100 percent interest in the Hyatt Regency La Jolla for $118.0 million, subject to certain closing
conditions. The Company currently owns a 53.5 percent
interest in the asset. At closing, the joint venture will
retire $89.2 million of debt secured
by the hotel, which is currently consolidated on the Company's
balance sheet. The transaction is expected to close in the
second quarter of 2015.
- On April 9, 2015, the Company
retired the $117.0 million loan that
encumbered the Fairmont Scottsdale Princess hotel. The loan
had an interest rate of LIBOR plus 36 basis points. Upon
closing, $15.1 million of cash being
held by the lender was released to the Company.
2015 Guidance
Based on the results of the first quarter of 2015 and the
current forecast for the remainder of the year, as well as the
announced transaction activity year-to-date, management is
increasing its guidance ranges for 2015. For the full-year
ending December 31, 2015, the Company
is providing the guidance ranges shown in the table below.
RevPAR, Total RevPAR and EBITDA margin expansion reflect forecasts
for the Company's Total United States portfolio.
Guidance
Metrics
|
Previous
Range
|
|
Revised
Range
|
RevPAR
|
5.0% -
7.0%
|
|
6.0% -
8.0%
|
Total
RevPAR
|
4.0% -
6.0%
|
|
4.5% -
6.5%
|
EBITDA Margin
expansion
|
50 – 100 basis
points
|
|
125 – 175 basis
points
|
Comparable
EBITDA
|
$300M -
$320M
|
|
$320M -
$340M
|
Comparable FFO per
diluted share
|
$0.77 -
$0.85
|
|
$0.85 -
$0.93
|
The guidance
presented takes into account various accounting changes as
stipulated by the industry's USALI Eleventh Revised Edition, which
became effective in January 2015. Guidance for 2015 RevPAR, Total
RevPAR and EBITDA margin expansion has been presented to reflect
changes compared to the prior year as if these 2014 statistics
included the USALI Eleventh Revised Edition changes. Actual RevPAR,
Total RevPAR and EBITDA Margin changes from prior year may differ
slightly. The Company will present 2014 RevPAR, Total RevPAR and
EBITDA margins on an as reported basis and on a pro forma basis,
which will include the USALI Eleventh Revised Edition
changes.
|
Portfolio Definitions
Same Store United States portfolio hotel comparisons for the
first quarter of 2015 are derived from the Company's hotel
portfolio at March 31, 2015,
consisting of 15 properties located in the United States, but excluding the Four
Seasons Resort Scottsdale at Troon North and the Montage Laguna
Beach resort, which were acquired on December 9, 2014 and January 29, 2015, respectively.
Total United States portfolio
hotel comparisons for the first quarter of 2015 are derived from
the Company's current hotel portfolio, consisting of all 17
properties located in the United
States, including the Four Seasons Resort Scottsdale at
Troon North and the Montage Laguna Beach resort, which were
acquired on December 9, 2014 and
January 29, 2015,
respectively.
Total United States portfolio
hotel comparisons for the full year 2015 are derived from the
Company's current hotel portfolio, consisting of 17 properties
located in the United States,
including the Four Seasons Resort Scottsdale at Troon North and the
Montage Laguna Beach resort, which were acquired on December 9, 2014 and January 29, 2015, respectively, the Four Seasons
Austin hotel which is under contract to be acquired in the second
quarter of 2015, but excluding the Hyatt Regency La Jolla, which is
under contract to be sold in the second quarter of 2015.
Earnings Call
The Company will conduct its first quarter 2015 conference call
for investors and other interested parties on Monday, May 4, 2015 at 12:00 p.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by dialing
877-930-8296 (toll international: 253-336-8739) with passcode
27338989. To participate on the webcast, log on to
http://edge.media-server.com/m/p/5xitwhsx/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 3:00 p.m. ET on
May 4, 2015 through 11:59 p.m. ET on May 11,
2015. To access the replay, dial 855-859-2056 (toll
international: 404-537-3406) with passcode 27338989. A replay of
the call will also be available on the Internet at
www.strategichotels.com or 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 and Europe. The Company currently has ownership
interests in 18 properties with an aggregate of 8,325 rooms and
875,000 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, 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 satisfy closing conditions in transactions, the effects
of economic conditions and disruption in financial markets 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 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, Germany 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; 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 SEC, 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 2015 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
|
$91.6
|
|
$111.6
|
Depreciation and
Amortization
|
159.4
|
|
159.4
|
Interest
Expense
|
89.3
|
|
89.3
|
Income
Taxes
|
8.1
|
|
8.1
|
Non-controlling
Interests
|
0.3
|
|
0.3
|
Adjustments from
Consolidated Affiliates
|
5.3
|
|
5.3
|
Gain on Sale of
Asset
|
(37.0)
|
|
(37.0)
|
Amortization of Below
Market Management Agreement
|
2.1
|
|
2.1
|
Hotel acquisition
costs
|
0.7
|
|
0.7
|
Realized Portion of
Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Other
Adjustments
|
0.4
|
|
0.4
|
Comparable
EBITDA
|
$320.0
|
|
$340.0
|
|
Low
Range
|
|
High
Range
|
Net Income
Attributable to Common Shareholders
|
$91.6
|
|
$111.6
|
Depreciation and
Amortization
|
158.8
|
|
158.8
|
Non-controlling
Interests
|
0.3
|
|
0.3
|
Adjustments from
Consolidated Affiliates
|
10.3
|
|
10.3
|
Gain on Sale of
Asset
|
(37.0)
|
|
(37.0)
|
Interest Rate Swap
OCI Amortization
|
10.4
|
|
10.4
|
Amortization of Loan
Discounts
|
0.8
|
|
0.8
|
Amortization of Below
Market Management Agreement
|
2.1
|
|
2.1
|
Hotel acquisition
costs
|
0.7
|
|
0.7
|
Realized Portion of
Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Other
Adjustments
|
0.3
|
|
0.3
|
Comparable
FFO
|
238.1
|
|
258.1
|
Comparable FFO per
Diluted Share
|
$0.85
|
|
$0.93
|
|
|
|
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
Consolidated
Statements of Operations (in thousands, except per share
data)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
Rooms
|
|
$
|
162,864
|
|
|
$
|
103,100
|
|
Food and
beverage
|
|
123,469
|
|
|
70,017
|
|
Other hotel operating
revenue
|
|
37,907
|
|
|
20,239
|
|
Lease
revenue
|
|
1,031
|
|
|
1,299
|
|
Total
revenues
|
|
325,271
|
|
|
194,655
|
|
Operating Costs
and Expenses:
|
|
|
|
|
Rooms
|
|
47,865
|
|
|
33,707
|
|
Food and
beverage
|
|
83,074
|
|
|
54,603
|
|
Other departmental
expenses
|
|
84,724
|
|
|
53,579
|
|
Management
fees
|
|
11,439
|
|
|
5,778
|
|
Other hotel
expenses
|
|
15,613
|
|
|
15,678
|
|
Lease
expense
|
|
1,034
|
|
|
1,258
|
|
Depreciation and
amortization
|
|
37,664
|
|
|
22,205
|
|
Corporate
expenses
|
|
8,268
|
|
|
7,193
|
|
Total operating costs
and expenses
|
|
289,681
|
|
|
194,001
|
|
Operating
income
|
|
35,590
|
|
|
654
|
|
Interest
expense
|
|
(22,785)
|
|
|
(18,274)
|
|
Interest
income
|
|
101
|
|
|
27
|
|
Equity in earnings of
unconsolidated affiliates
|
|
—
|
|
|
4,445
|
|
Foreign currency
exchange (loss) gain
|
|
(116)
|
|
|
2
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
78,117
|
|
Other (expenses)
income, net
|
|
(157)
|
|
|
423
|
|
Income before income
taxes and discontinued operations
|
|
12,633
|
|
|
65,394
|
|
Income tax
expense
|
|
(219)
|
|
|
(39)
|
|
Income from
continuing operations
|
|
12,414
|
|
|
65,355
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
158,435
|
|
Net
Income
|
|
12,414
|
|
|
223,790
|
|
Net income
attributable to the noncontrolling interests in SHR's operating
partnership
|
|
(37)
|
|
|
(849)
|
|
Net loss attributable
to the noncontrolling interests in consolidated
affiliates
|
|
3,434
|
|
|
4,041
|
|
Net Income
Attributable to SHR
|
|
15,811
|
|
|
226,982
|
|
Preferred shareholder
dividends
|
|
—
|
|
|
(9,824)
|
|
Net Income
Attributable to SHR Common Shareholders
|
|
$
|
15,811
|
|
|
$
|
217,158
|
|
Basic Income Per
Common Share:
|
|
|
|
|
Income from
continuing operations attributable to SHR common
shareholders
|
|
$
|
0.06
|
|
|
$
|
0.29
|
|
Income from
discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
0.76
|
|
Net income
attributable to SHR common shareholders
|
|
$
|
0.06
|
|
|
$
|
1.05
|
|
Weighted average
shares of common stock outstanding
|
|
273,831
|
|
|
206,983
|
|
Diluted Income Per
Common Share:
|
|
|
|
|
Income from
continuing operations attributable to SHR common
shareholders
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
Income from
discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
0.72
|
|
Net income
attributable to SHR common shareholders
|
|
$
|
0.04
|
|
|
$
|
0.97
|
|
Weighted average
shares of common stock outstanding
|
|
282,792
|
|
|
219,368
|
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
Consolidated
Balance Sheets (in thousands, except share
data)
|
|
|
|
|
|
|
|
March 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
|
Investment in hotel
properties, net
|
|
$
|
3,175,420
|
|
|
$
|
2,828,400
|
|
Goodwill
|
|
38,128
|
|
|
38,128
|
|
Intangible assets,
net of accumulated amortization of $9,404 and $7,288
|
|
93,874
|
|
|
94,324
|
|
Investment in
unconsolidated affiliates
|
|
22,850
|
|
|
22,850
|
|
Cash and cash
equivalents
|
|
240,156
|
|
|
442,613
|
|
Restricted cash and
cash equivalents
|
|
89,985
|
|
|
81,510
|
|
Accounts receivable,
net of allowance for doubtful accounts of $832 and $492
|
|
68,141
|
|
|
51,382
|
|
Deferred financing
costs, net of accumulated amortization of $8,709 and
$7,814
|
|
10,559
|
|
|
11,440
|
|
Deferred tax
assets
|
|
1,954
|
|
|
1,729
|
|
Prepaid expenses and
other assets
|
|
49,944
|
|
|
46,781
|
|
Total
assets
|
|
$
|
3,791,011
|
|
|
$
|
3,619,157
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgages payable,
net of discount
|
|
$
|
1,855,014
|
|
|
$
|
1,705,778
|
|
Accounts payable and
accrued expenses
|
|
251,412
|
|
|
224,505
|
|
Preferred stock
redemption liability
|
|
—
|
|
|
90,384
|
|
Distributions
payable
|
|
—
|
|
|
104
|
|
Deferred tax
liabilities
|
|
46,137
|
|
|
46,137
|
|
Total
liabilities
|
|
2,152,563
|
|
|
2,066,908
|
|
Commitments and
contingencies
|
|
|
|
|
Noncontrolling
interests in SHR's operating partnership
|
|
9,865
|
|
|
10,500
|
|
Equity:
|
|
|
|
|
SHR's shareholders'
equity:
|
|
|
|
|
Common stock ($0.01
par value per share; 350,000,000 shares of common stock authorized;
275,313,504 and 267,435,799 shares of common stock issued and
outstanding)
|
|
2,753
|
|
|
2,674
|
|
Additional paid-in
capital
|
|
2,449,084
|
|
|
2,348,284
|
|
Accumulated
deficit
|
|
(874,658)
|
|
|
(890,469)
|
|
Accumulated other
comprehensive loss
|
|
(10,054)
|
|
|
(13,032)
|
|
Total SHR's
shareholders' equity
|
|
1,567,125
|
|
|
1,447,457
|
|
Noncontrolling
interests in consolidated affiliates
|
|
61,458
|
|
|
94,292
|
|
Total
equity
|
|
1,628,583
|
|
|
1,541,749
|
|
Total liabilities,
noncontrolling interests and equity
|
|
$
|
3,791,011
|
|
|
$
|
3,619,157
|
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
Financial
Highlights
|
|
Supplemental
Financial Data (in thousands, except per share
information)
|
|
|
|
|
|
March 31,
2015
|
|
|
Pro Rata Share
|
|
Consolidated
|
Capitalization
|
|
|
|
|
Shares of common
stock outstanding
|
|
275,314
|
|
|
275,314
|
|
Operating partnership
units outstanding
|
|
794
|
|
|
794
|
|
Restricted stock
units outstanding
|
|
1,418
|
|
|
1,418
|
|
Combined shares and
units outstanding
|
|
277,526
|
|
|
277,526
|
|
Common stock price at
end of period
|
|
$
|
12.43
|
|
|
$
|
12.43
|
|
Common equity
capitalization
|
|
$
|
3,449,648
|
|
|
$
|
3,449,648
|
|
Consolidated
debt
|
|
1,856,036
|
|
|
1,856,036
|
|
Pro rata share of
consolidated debt
|
|
(151,746)
|
|
|
—
|
|
Cash and cash
equivalents
|
|
(240,156)
|
|
|
(240,156)
|
|
Total enterprise
value
|
|
$
|
4,913,782
|
|
|
$
|
5,065,528
|
|
Net Debt / Total
Enterprise Value
|
|
29.8
|
%
|
|
31.9
|
%
|
Common Equity / Total
Enterprise Value
|
|
70.2
|
%
|
|
68.1
|
%
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Discontinued
Operations
|
|
The results of
operations of hotels sold prior to January 1, 2015 are classified
as discontinued operations and segregated in the consolidated
statements of operations for all periods presented. Subsequent to
January 1, 2015, only disposals that represent a strategic shift
that has a major effect on the Company's results of operations
would qualify as discontinued operations. The following hotels were
sold during the nine months ended March 31, 2014:
|
|
Hotel
|
|
Location
|
|
Date Sold
|
|
Sales Proceeds
|
|
Gain on
sale
|
Four Seasons Punta
Mita Resort and La Solana land parcel
|
|
Punta Mita,
Mexico
|
|
February 28,
2014
|
|
$
|
206,867,000
|
|
|
$
|
63,879,000
|
|
Marriott London
Grosvenor Square
|
|
London,
England
|
|
March 31,
2014
|
|
$
|
209,407,000
|
|
(a)
|
$
|
92,889,000
|
|
|
|
(a)
|
There was an
outstanding balance of £67,301,000 ($112,150,000) on the mortgage
loan secured by the Marriott London Grosvenor Square hotel, which
was repaid at the time of closing. The net proceeds we
received were $97,257,000.
|
The following is a summary of income from discontinued
operations for the three months ended March 31, 2014 (in
thousands):
|
|
Three Months
Ended
March 31,
2014
|
Hotel operating
revenues
|
|
$
|
17,767
|
Operating costs and
expenses
|
|
11,485
|
Depreciation and
amortization
|
|
1,275
|
Total operating costs
and expenses
|
|
12,760
|
Operating
income
|
|
5,007
|
Interest
expense
|
|
(1,326)
|
Interest
income
|
|
2
|
Loss on early
extinguishment of debt
|
|
(272)
|
Foreign currency
exchange gain
|
|
32
|
Income tax
expense
|
|
(833)
|
Gain on sale, net of
tax
|
|
155,825
|
Income from
discontinued operations
|
|
$
|
158,435
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
Investments in
Unconsolidated Affiliates (in thousands)
|
|
We had a 36.4% equity
ownership interest in the Hotel del Coronado that we accounted for
using the equity method of accounting until we acquired the
remaining 63.6% equity ownership interest not previously owned by
us on June 11, 2014. We had a 50.0% equity ownership interest in
the Fairmont Scottsdale Princess hotel that we accounted for using
the equity method of accounting until we acquired the remaining
50.0% equity ownership interest not previously owned by us on March
31, 2014. For purposes of this analysis, the operating results
reflect the 36.4% equity ownership interest we held in the Hotel
del Coronado prior to June 11, 2014 and the 50.0% equity ownership
interest we held in the Fairmont Scottsdale Princess hotel prior to
March 31, 2014.
|
|
|
|
|
|
Three Months Ended
March 31, 2014
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total revenues
(100%)
|
|
$
|
34,042
|
|
|
$
|
35,006
|
|
|
$
|
69,048
|
|
Property EBITDA
(100%)
|
|
$
|
9,559
|
|
|
$
|
13,191
|
|
|
$
|
22,750
|
|
Equity in (losses)
earnings of unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
3,351
|
|
|
$
|
6,595
|
|
|
$
|
9,946
|
|
Depreciation and
amortization
|
|
(1,955)
|
|
|
(1,551)
|
|
|
(3,506)
|
|
Interest
expense
|
|
(1,900)
|
|
|
(168)
|
|
|
(2,068)
|
|
Other expenses,
net
|
|
(4)
|
|
|
(30)
|
|
|
(34)
|
|
Income
taxes
|
|
230
|
|
|
—
|
|
|
230
|
|
Equity in (losses)
earnings of unconsolidated affiliates
|
|
$
|
(278)
|
|
|
$
|
4,846
|
|
|
$
|
4,568
|
|
EBITDA
Contribution:
|
|
|
|
|
|
|
Equity in (losses)
earnings of unconsolidated affiliates
|
|
$
|
(278)
|
|
|
$
|
4,846
|
|
|
$
|
4,568
|
|
Depreciation and
amortization
|
|
1,955
|
|
|
1,551
|
|
|
3,506
|
|
Interest
expense
|
|
1,900
|
|
|
168
|
|
|
2,068
|
|
Income
taxes
|
|
(230)
|
|
|
—
|
|
|
(230)
|
|
EBITDA
Contribution
|
|
$
|
3,347
|
|
|
$
|
6,565
|
|
|
$
|
9,912
|
|
FFO
Contribution:
|
|
|
|
|
|
|
Equity in (losses)
earnings of unconsolidated affiliates
|
|
$
|
(278)
|
|
|
$
|
4,846
|
|
|
$
|
4,568
|
|
Depreciation and
amortization
|
|
1,955
|
|
|
1,551
|
|
|
3,506
|
|
FFO
Contribution
|
|
$
|
1,677
|
|
|
$
|
6,397
|
|
|
$
|
8,074
|
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
Leasehold
Information (in thousands)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Marriott
Hamburg:
|
|
|
|
|
Property
EBITDA
|
|
$
|
1,239
|
|
|
$
|
1,512
|
|
Revenue
(a)
|
|
$
|
1,031
|
|
|
$
|
1,299
|
|
|
|
|
|
|
Lease
expense
|
|
(1,034)
|
|
|
(1,258)
|
|
Less: Deferred gain
on sale-leaseback
|
|
(44)
|
|
|
(53)
|
|
Adjusted lease
expense
|
|
(1,078)
|
|
|
(1,311)
|
|
|
|
|
|
|
Comparable EBITDA
contribution from leasehold
|
|
$
|
(47)
|
|
|
$
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
Security Deposit
(b):
|
|
March 31,
2015
|
|
December 31,
2014
|
Marriott
Hamburg
|
|
$
|
2,039
|
|
|
$
|
2,299
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For the three months
ended March 31, 2015 and 2014, 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.
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 on non-depreciable
assets, 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 Attributable to SHR Common Shareholders to EBITDA and
Comparable EBITDA (in thousands)
|
|
|
Three Months Ended
March 31,
|
|
|
2015
|
|
2014
|
Net income
attributable to SHR common shareholders
|
|
$
|
15,811
|
|
|
$
|
217,158
|
|
Depreciation and
amortization—continuing operations
|
|
37,664
|
|
|
22,205
|
|
Depreciation and
amortization—discontinued operations
|
|
—
|
|
|
1,275
|
|
Interest
expense—continuing operations
|
|
22,785
|
|
|
18,274
|
|
Interest
expense—discontinued operations
|
|
—
|
|
|
1,326
|
|
Income
taxes—continuing operations
|
|
219
|
|
|
39
|
|
Income
taxes—discontinued operations
|
|
—
|
|
|
833
|
|
Income taxes—sale of
assets
|
|
—
|
|
|
20,451
|
|
Noncontrolling
interests
|
|
37
|
|
|
849
|
|
Adjustments from
consolidated affiliates
|
|
(3,837)
|
|
|
(3,675)
|
|
Adjustments from
unconsolidated affiliates
|
|
—
|
|
|
5,290
|
|
Preferred shareholder
dividends
|
|
—
|
|
|
9,824
|
|
EBITDA
|
|
72,679
|
|
|
293,849
|
|
Realized portion of
deferred gain on sale-leaseback
|
|
(44)
|
|
|
(53)
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
(78,117)
|
|
Gain on sale of
assets—discontinued operations
|
|
—
|
|
|
(176,276)
|
|
Loss on early
extinguishment of debt—discontinued operations
|
|
—
|
|
|
272
|
|
Foreign currency
exchange loss (gain)—continuing operations (a)
|
|
116
|
|
|
(2)
|
|
Foreign currency
exchange gain—discontinued operations (a)
|
|
—
|
|
|
(32)
|
|
Hotel acquisition
costs
|
|
720
|
|
|
—
|
|
Non-cash interest
rate derivative activity
|
|
116
|
|
|
—
|
|
Amortization of below
market hotel management agreement
|
|
513
|
|
|
—
|
|
Activist shareholder
costs
|
|
—
|
|
|
1,533
|
|
Comparable
EBITDA
|
|
$
|
74,100
|
|
|
$
|
41,174
|
|
|
|
(a)
|
Foreign currency
exchange gains or losses applicable to certain balance sheet items
held by foreign subsidiaries.
|
Strategic Hotels
& Resorts, Inc. and Subsidiaries (SHR)
|
|
|
|
Reconciliation of
Net Income 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,
|
|
|
2015
|
|
2014
|
Net income
attributable to SHR common shareholders
|
|
$
|
15,811
|
|
|
$
|
217,158
|
|
Depreciation and
amortization—continuing operations
|
|
37,664
|
|
|
22,205
|
|
Depreciation and
amortization—discontinued operations
|
|
—
|
|
|
1,275
|
|
Corporate
depreciation
|
|
(128)
|
|
|
(123)
|
|
Gain on sale of
assets, net of tax—discontinued operations
|
|
—
|
|
|
(155,825)
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
(78,117)
|
|
Realized portion of
deferred gain on sale-leaseback
|
|
(44)
|
|
|
(53)
|
|
Noncontrolling
interests adjustments
|
|
(110)
|
|
|
(98)
|
|
Adjustments from
consolidated affiliates
|
|
(2,243)
|
|
|
(1,835)
|
|
Adjustments from
unconsolidated affiliates
|
|
—
|
|
|
3,506
|
|
FFO
|
|
50,950
|
|
|
8,093
|
|
Redeemable
noncontrolling interests
|
|
147
|
|
|
947
|
|
FFO—Fully
Diluted
|
|
51,097
|
|
|
9,040
|
|
Non-cash interest
rate derivative activity—continuing operations
|
|
3,229
|
|
|
(2,294)
|
|
Loss on early
extinguishment of debt—discontinued operations
|
|
—
|
|
|
272
|
|
Foreign currency
exchange loss (gain)—continuing operations (a)
|
|
116
|
|
|
(2)
|
|
Foreign currency
exchange gain—discontinued operations (a)
|
|
—
|
|
|
(32)
|
|
Amortization of debt
discount
|
|
650
|
|
|
—
|
|
Amortization of below
market hotel management agreement
|
|
513
|
|
|
—
|
|
Hotel acquisition
costs
|
|
720
|
|
|
—
|
|
Activist shareholder
costs
|
|
—
|
|
|
1,533
|
|
Excess of redemption
liability over carrying amount of redeemed preferred
stock
|
|
—
|
|
|
3,709
|
|
Comparable
FFO
|
|
$
|
56,325
|
|
|
$
|
12,226
|
|
Comparable FFO per
fully diluted share
|
|
$
|
0.20
|
|
|
$
|
0.06
|
|
Weighted average
diluted shares (b)
|
|
276,930
|
|
|
209,583
|
|
|
|
(a)
|
Foreign currency
exchange gains or losses applicable to 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)
|
Fairmont Scottsdale
Princess (c)
|
|
0.54
|
%
|
|
36 bp
|
|
$
|
117,000
|
|
|
April 2015
|
Westin St.
Francis
|
|
6.09
|
%
|
|
Fixed
|
|
209,588
|
|
|
June 2017
|
Fairmont
Chicago
|
|
6.09
|
%
|
|
Fixed
|
|
93,124
|
|
|
June 2017
|
Hyatt Regency La
Jolla (d)
|
|
4.50% /
10.00%
|
|
400 bp /
Fixed
|
|
89,239
|
|
|
December
2017
|
Hotel del Coronado
(e)
|
|
3.83
|
%
|
|
365 bp
|
|
475,000
|
|
|
March 2018
|
Bank credit
facility
|
|
2.18
|
%
|
|
200 bp
|
|
—
|
|
|
April 2019
|
Four Seasons
Washington, D.C.
|
|
2.43
|
%
|
|
225 bp
|
|
120,000
|
|
|
June 2019
|
JW Marriott Essex
House Hotel
|
|
3.13
|
%
|
|
295 bp
|
|
225,000
|
|
|
January
2020
|
Loews Santa Monica
Beach Hotel
|
|
2.73
|
%
|
|
255 bp
|
|
120,000
|
|
|
May 2021
|
InterContinental
Chicago
|
|
5.61
|
%
|
|
Fixed
|
|
142,085
|
|
|
August 2021
|
Montage Laguna Beach
(f)
|
|
3.90
|
%
|
|
Fixed
|
|
150,000
|
|
|
August 2021
|
InterContinental
Miami
|
|
3.99
|
%
|
|
Fixed
|
|
115,000
|
|
|
September
2024
|
|
|
|
|
|
|
1,856,036
|
|
|
|
Unamortized discount
(f)
|
|
|
|
|
|
(1,022)
|
|
|
|
|
|
|
|
|
|
$
|
1,855,014
|
|
|
|
|
|
(a)
|
Spread over LIBOR
(0.18% at March 31, 2015). See (d) below for interest on the
Hyatt Regency La Jolla loan.
|
(b)
|
Includes extension
options.
|
(c)
|
On March 31, 2014, we
acquired the remaining 50.0% equity interest in the Fairmont
Scottsdale Princess hotel, resulting in the Fairmont Scottsdale
Princess hotel becoming wholly-owned by us. In connection with the
acquisition, we consolidated the Fairmont Scottsdale Princess hotel
and became fully obligated under the entire mortgage loan secured
by the Fairmont Scottsdale Princess hotel. We recorded the mortgage
loan at its fair value, which included a debt discount, which is
being amortized as additional interest expense over the maturity
period of the loan. In April 2015, we repaid the outstanding
balance of this loan.
|
(d)
|
Interest on
$72,000,000 is payable at an annual rate of LIBOR plus 4.00%,
subject to a 0.50% LIBOR floor, and interest on $17,239,000 is
payable at a fixed rate of 10.00%.
|
(e)
|
On June 11, 2014, we
acquired the remaining 63.6% equity interest in the Hotel del
Coronado, resulting in the Hotel del Coronado becoming wholly-owned
by us. In connection with the acquisition, we consolidated the
Hotel del Coronado and became fully obligated under the entire
outstanding balance of the mortgage and mezzanine loans secured by
the Hotel del Coronado.
|
(f)
|
On January 29, 2015,
we closed on the acquisition of the Montage Laguna Beach resort. In
connection with the acquisition, we assumed the outstanding balance
of the mortgage loan secured by the Montage Laguna Beach resort. We
recorded the mortgage loan at its fair value, which included a debt
discount, which is being amortized as additional interest expense
over the maturity period of the loan.
|
Debt Summary
(Continued) (dollars in thousands)
|
|
|
|
Future scheduled debt
principal payments (including extension options) are as
follows:
|
|
|
|
Years ending
December 31,
|
|
Amount
|
2015
(remainder)
|
|
$
|
118,439
|
|
2016
|
|
2,031
|
|
2017
|
|
394,123
|
|
2018
|
|
477,299
|
|
2019
|
|
122,433
|
|
Thereafter
|
|
741,711
|
|
|
|
1,856,036
|
|
Unamortized
discount
|
|
(1,022)
|
|
|
|
$
|
1,855,014
|
|
|
|
|
Percent of fixed rate
debt
|
|
39.1
|
%
|
Weighted average
interest rate (g)
|
|
3.98
|
%
|
Weighted average
maturity of fixed rate debt (debt with maturity of greater than one
year)
|
|
4.66
|
|
|
|
(g)
|
Excludes the
amortization of deferred financing costs.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/strategic-hotels--resorts-reports-first-quarter-2015-results-300076606.html
SOURCE Strategic Hotels & Resorts, Inc.