CHICAGO, Aug. 5, 2015 /PRNewswire/ -- Strategic
Hotels & Resorts, Inc. (NYSE: BEE) today reported results for
the second quarter ended June 30,
2015.
($ in millions,
except per share and operating metrics)
|
Second
Quarter
|
Earnings
Metrics
|
2015
|
2014
|
%
|
Net income
attributable to common shareholders
|
$6.7
|
$80.8
|
(91.7)%
|
Net income per
diluted share
|
$0.02
|
$0.35
|
(94.3)%
|
Comparable funds from
operations (Comparable FFO) (a)
|
$69.0
|
$48.1
|
43.4%
|
Comparable FFO per
diluted share (a)
|
$0.25
|
$0.21
|
19.0%
|
Comparable EBITDA
(a)
|
$88.4
|
$68.9
|
28.3%
|
|
|
|
|
Same Store United
States Portfolio Operating Metrics (b)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$317.67
|
$299.97
|
5.9%
|
Occupancy
|
79.1%
|
80.0%
|
(0.9) pts
|
Revenue per Available
Room (RevPAR) (d)
|
$251.41
|
$239.95
|
4.8%
|
Total RevPAR
(d)
|
$472.27
|
$462.41
|
2.1%
|
EBITDA Margins
(d)
|
28.3%
|
28.3%
|
0 bps
|
|
|
|
|
Total United
States Portfolio Operating Metrics (c)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$328.76
|
$310.53
|
5.9%
|
Occupancy
|
78.8%
|
80.0%
|
(1.2) pts
|
Revenue per Available
Room (RevPAR) (d)
|
$259.15
|
$248.40
|
4.3%
|
Total
RevPAR(d)
|
$495.90
|
$486.55
|
1.9%
|
EBITDA
Margins(d)
|
27.7%
|
27.7%
|
0 bps
|
|
($ in millions,
except per share and operating metrics)
|
Year to
Date
|
Earnings
Metrics
|
2015
|
2014
|
%
|
Net income
attributable to common shareholders
|
$22.5
|
$298.0
|
(92.4)%
|
Net income per
diluted share
|
$0.07
|
$1.30
|
(94.6)%
|
Comparable funds from
operations (Comparable FFO) (a)
|
$125.3
|
$60.3
|
107.7%
|
Comparable FFO per
diluted share (a)
|
$0.45
|
$0.28
|
60.7%
|
Comparable EBITDA
(a)
|
$162.5
|
$110.1
|
47.6%
|
|
|
|
|
Same Store United
States Portfolio Operating Metrics (b)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$312.95
|
$293.14
|
6.8%
|
Occupancy
|
75.5%
|
75.0%
|
0.5 pts
|
Revenue per Available
Room (RevPAR) (d)
|
$236.16
|
$219.84
|
7.4%
|
Total RevPAR
(d)
|
$454.93
|
$430.34
|
5.7%
|
EBITDA Margins
(d)
|
26.8%
|
24.7%
|
210 bps
|
|
|
|
|
Total United
States Portfolio Operating Metrics (c)
|
|
|
|
Average Daily Rate
(ADR) (d)
|
$326.59
|
$305.73
|
6.8%
|
Occupancy
|
75.7%
|
75.5%
|
0.2 pts
|
Revenue per Available
Room (RevPAR) (d)
|
$247.30
|
$230.78
|
7.2%
|
Total
RevPAR(d)
|
$482.03
|
$456.46
|
5.6%
|
EBITDA
Margins(d)
|
26.5%
|
24.6%
|
190 bps
|
|
|
(a)
|
Please refer to
the tables provided later in this press release for a
reconciliation of net income attributable to common shareholders to
Comparable FFO, Comparable FFO per diluted share and Comparable
EBITDA. Comparable FFO, Comparable FFO per diluted 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").
|
"The second quarter represented another solid quarter of
operating and financial results for the company," commented Raymond
L. "Rip" Gellein, Chairman and Chief Executive Officer of Strategic
Hotels & Resorts. "We were productive on many
fronts. We acquired a world-class asset, sold a non-core
asset, substantially strengthened the balance sheet and, more
importantly, significantly grew our top line and bottom line.
The outlook for the balance of the year is very positive and we are
seeing attractive growth in group bookings looking into 2016 and
beyond," summarized Gellein.
Second Quarter Highlights
- Total consolidated revenues were $356.9
million in the second quarter of 2015, a 29.2 percent
increase over the prior year period. The increase was
primarily driven by the acquisitions of the Four Seasons Resort
Scottsdale at Troon North, the Montage Laguna Beach resort and the
Four Seasons Hotel Austin, as well as the consolidation of the
Hotel del Coronado.
- Net income attributable to common shareholders was $6.7 million, or $0.02 per diluted share, in the second quarter of
2015, compared with $80.8 million, or
$0.35 per diluted share, in the
second quarter of 2014. The year-over-year decrease in net
income was primarily the result of a one-time gain related to the
acquisition and consolidation of the Hotel del Coronado recorded in
the second quarter of 2014.
- Comparable FFO was $0.25 per
diluted share in the second quarter of 2015, compared with
$0.21 per diluted share in the prior
year period, a 19.0 percent increase over the prior year
period.
- Comparable EBITDA was $88.4 million in the second quarter of 2015,
compared with $68.9 million in the
prior year period, a 28.3 percent increase between periods as a
result of the Company's acquisition activity and same store
growth.
- Same Store United States portfolio RevPAR increased 4.8 percent
in the second quarter of 2015, driven by a 5.9 percent increase in
ADR offsetting a 0.9 percentage point decline in occupancy compared
to the second quarter of 2014. Total RevPAR increased 2.1
percent between periods, with non-rooms revenue decreasing 0.7
percent between periods.
- Total United States portfolio
RevPAR increased 4.3 percent in the second quarter of 2015, driven
by a 5.9 percent increase in ADR offsetting a 1.2 percentage point
decline in occupancy compared to the second quarter of 2014.
Total RevPAR increased 1.9 percent between periods, with non-rooms
revenue decreasing 0.5 percent between periods.
- Group occupied room nights in the Total United States portfolio
decreased 0.9 percent in the second quarter 2015 and transient
occupied room nights decreased 1.8 percent compared to the second
quarter of 2014. Transient ADR increased 6.8 percent compared
to the second quarter of 2014 and group ADR increased 4.7
percent.
- Same Store United States and Total United States portfolio
EBITDA margins were flat in the second quarter of 2015, compared to
the second quarter of 2014. Excluding a one-time real estate
tax credit received in the second quarter of 2014 and one-time
charges related to real estate and personal property taxes
recognized in the second quarter of 2015, EBITDA margins expanded
40 basis points in the Same Store and Total United States
portfolios. 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.
Year to Date Highlights
- Total consolidated revenues were $682.2
million for the six month period ended June 30, 2015, a 44.9 percent increase over the
prior year period. This increase was primarily driven by the
acquisitions of the Four Seasons Resort Scottsdale at Troon North,
the Montage Laguna Beach resort and the Four Seasons Hotel Austin,
as well as the consolidation of the Hotel del Coronado and the
Fairmont Scottsdale Princess resort.
- Net income attributable to common shareholders was $22.5 million, or $0.07 per diluted share, compared with
$298.0 million, or $1.30 per diluted share, for the six month period
ended June 30, 2014. The
year-over-year decrease in net income was primarily the result of
the one-time gains related to the consolidation of the Fairmont
Scottsdale Princess resort and the Hotel del Coronado recorded in
the first half of 2014.
- Comparable FFO was $0.45 per
diluted share compared with $0.28 per
diluted share in the six month period ended June 30, 2014, a 60.7 percent increase over the
prior year period as a result of the Company's acquisition and
financing activities.
- Comparable EBITDA was $162.5 million compared with $110.1 million for the six month period ended
June 30, 2014, a 47.6 percent
increase between periods as a result of the Company's acquisition
activity and same store growth.
Transaction Activity
On April 9, 2015, the Company
retired the $117.0 million loan that
encumbered the Fairmont Scottsdale Princess resort. 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.
On May 12, 2015, the Company
closed on the acquisition of the Four Seasons Hotel Austin for
$197.0 million.
On May 21, 2015, the Company,
along with its joint venture partner, closed on the sale of the
Hyatt Regency La Jolla hotel for $118
million. The Company previously owned a 53.5% interest
in the asset. At closing, the joint venture retired
$89.2 million of debt secured by the
hotel.
On May 27, 2015, the Company
closed a new $750.0 million senior
unsecured credit facility with an accordion feature allowing
additional borrowing capacity up to $1.0
billion. The facility is comprised of a $450.0 million unsecured revolving credit
facility and a $300.0 million
unsecured term loan. The revolving credit facility interest
rate is based upon a leverage-based pricing grid ranging from LIBOR
plus 165 basis points to LIBOR plus 240 basis points. The
term loan interest rate is also based on a leverage based pricing
grid ranging from LIBOR plus 160 basis points to LIBOR plus 235
basis points. The combined unsecured facility has a five-year
term.
On May 27, 2015, the Company also
closed a $115.0 million mortgage loan
secured by the Ritz-Carlton Half Moon Bay hotel. The loan
bears interest at a floating rate of LIBOR plus 240 basis points
and has a five-year initial term with two, one-year extension
options.
On May 27, 2015, the Company
simultaneously repaid the previously outstanding $209.6 million loan secured by the Westin St.
Francis hotel and the $93.1 million
loan secured by the Fairmont Chicago hotel that were
cross-collateralized and priced at a fixed interest rate of 6.09
percent and set to mature in June 2017. In connection with
the repayment, the Company paid a prepayment penalty totaling
approximately $32.9 million.
Subsequent Event
- On July 24, 2015, the Company
acquired the remaining 49 percent ownership interest in the JW
Marriott Essex House hotel. Pursuant to the terms of the
joint venture agreements, the Company's partner, affiliates of KSL
Capital Partners, LLC ("KSL"), exercised a contractual put option
of their equity interests in the asset and the Company will issue
KSL an aggregate of 6,595,449 shares of common stock priced at
$12.82 per share, or an implied
valuation of $84.6
million.
2015 Guidance
Based on the results of the first six months of 2015 and current
forecasts for the remainder of the year, management is adjusting
its guidance ranges for full year 2015 RevPAR growth, Total RevPAR
growth, Comparable EBITDA and Comparable FFO per fully diluted
share.
For the full-year ending December 31,
2015, the Company is providing the following guidance
ranges:
Guidance
Metrics
|
Previous
Range
|
|
Revised
Range
|
RevPAR
|
6.0% -
8.0%
|
|
5.5% -
6.5%
|
Total
RevPAR
|
4.5% -
6.5%
|
|
4.0% -
5.0%
|
EBITDA Margin
expansion
|
125 – 175 basis
points
|
|
125 – 175 basis
points
|
Comparable
EBITDA
|
$320M -
$340M
|
|
$325M -
$340M
|
Comparable FFO per
diluted share
|
$0.85 -
$0.93
|
|
$0.88 -
$0.94
|
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
second quarter of 2015 are derived from the Company's hotel
portfolio at June 30, 2015,
consisting of 14 properties located in the United States, but excluding the Four
Seasons Resort Scottsdale at Troon North, the Montage Laguna Beach
resort, and the Four Seasons Hotel Austin which were acquired on
December 9, 2014, January 29, 2015, and May
12, 2015, respectively as well as the Hyatt Regency La
Jolla, which was sold on May, 21, 2015.
Total United States portfolio
hotel comparisons for the second quarter of 2015 are derived from
the Company's hotel portfolio as of June 30,
2015, consisting of all 17 properties located in
the United States, including the
Four Seasons Resort Scottsdale at Troon North, the Montage Laguna
Beach resort, and the Four Seasons Hotel Austin, which were
acquired on December 9, 2014,
January 29, 2015, and May 12, 2015, respectively, but excluding the
Hyatt Regency La Jolla, which was sold on May, 21, 2015.
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, the
Montage Laguna Beach resort, and the Four Seasons Hotel Austin
which were acquired on December 9,
2014, January 29, 2015, and
May 12, 2015 respectively, but
excluding the Hyatt Regency La Jolla, which was sold on May, 21,
2015.
Earnings Call
The Company will conduct its second quarter 2015 conference call
for investors and other interested parties on Thursday, August 6, 2015 at 10:00 a.m. Eastern Time (ET). Interested
individuals are invited to access the call by dialing 877.930.8296
(toll international: 253.336.8739) with passcode 80609573. To
participate on the webcast, log on to the company's website at
http://www.strategichotels.com or
http://edge.media-server.com/m/p/3x8gtzod/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 1:00 p.m.
ET on August 6, 2015 through
11:59 p.m. ET on August 13, 2015. To access the replay, dial
855.859.2056 (toll international: 404.537.3406) with passcode
80609573. A replay of the call will also be available in the
Investor Relations section of the company's website at
http://www.strategichotels.com.
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 8,199 rooms and
851,000 square feet of multi-purpose meeting and banqueting space.
For a list of current properties and for further information,
please visit the Company's website at www.strategichotels.com.
This press release contains forward-looking statements about
Strategic Hotels & Resorts, Inc. (the "Company"). Except for
historical information, the matters discussed in this press release
are forward-looking statements subject to certain risks and
uncertainties. These forward-looking statements include statements
regarding the Company's future financial results, stabilization in
the lodging space, positive trends in the lodging industry and the
Company's continued focus on improving profitability. Actual
results could differ materially from the Company's projections.
Factors that may contribute to these differences include, but are
not limited to the following: the effects of economic conditions
and disruptions 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 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 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
|
$58.9
|
|
$73.9
|
Depreciation and
Amortization
|
160.6
|
|
160.6
|
Interest
Expense
|
81.4
|
|
81.4
|
Income
Taxes
|
8.1
|
|
8.1
|
Non-controlling
Interests
|
0.2
|
|
0.2
|
Adjustments from
Consolidated Affiliates
|
8.6
|
|
8.6
|
Realized Portion of
Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Gain on Sale of
Asset
|
(40.6)
|
|
(40.6)
|
Impairment
Losses
|
10.4
|
|
10.4
|
Loss on Early
Extinguishment of Debt
|
34.2
|
|
34.2
|
Hotel Acquisition
Costs
|
1.1
|
|
1.1
|
Amortization of Below
Market Management Agreement
|
2.1
|
|
2.1
|
Other
Adjustments
|
0.2
|
|
0.2
|
Comparable
EBITDA
|
$325.0
|
|
$340.0
|
|
Low
Range
|
|
High
Range
|
Net Income
Attributable to Common Shareholders
|
$58.9
|
|
$73.9
|
Depreciation and
Amortization
|
159.9
|
|
159.9
|
Realized Portion of
Deferred Gain on Sale Leasebacks
|
(0.2)
|
|
(0.2)
|
Gain on Sale of
Asset
|
(40.6)
|
|
(40.6)
|
Non-controlling
Interests
|
0.2
|
|
0.2
|
Adjustments from
Consolidated Affiliates
|
12.0
|
|
12.0
|
Impairment
Losses
|
10.4
|
|
10.4
|
Interest Rate Swap
OCI Amortization
|
10.4
|
|
10.4
|
Loss on Early
Extinguishment of Debt
|
34.2
|
|
34.2
|
Amortization of Debt
Discount
|
0.8
|
|
0.8
|
Amortization of Below
Market Management Agreement
|
2.1
|
|
2.1
|
Hotel Acquisition
Costs
|
1.1
|
|
1.1
|
Comparable
FFO
|
249.2
|
|
264.2
|
Comparable FFO per
Diluted Share
|
$0.88
|
|
$0.94
|
|
|
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Consolidated
Statements of Operations
|
(in thousands,
except per share data)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
|
186,377
|
|
|
$
|
148,874
|
|
|
$
|
349,241
|
|
|
$
|
251,974
|
|
Food and
beverage
|
|
134,523
|
|
|
100,028
|
|
|
257,992
|
|
|
170,045
|
|
Other hotel operating
revenue
|
|
34,989
|
|
|
25,942
|
|
|
72,896
|
|
|
46,181
|
|
Lease
revenue
|
|
1,013
|
|
|
1,319
|
|
|
2,044
|
|
|
2,618
|
|
Total
revenues
|
|
356,902
|
|
|
276,163
|
|
|
682,173
|
|
|
470,818
|
|
Operating Costs
and Expenses:
|
|
|
|
|
|
|
|
|
Rooms
|
|
51,072
|
|
|
41,268
|
|
|
98,937
|
|
|
74,975
|
|
Food and
beverage
|
|
88,245
|
|
|
67,077
|
|
|
171,319
|
|
|
121,680
|
|
Other departmental
expenses
|
|
86,626
|
|
|
66,238
|
|
|
171,350
|
|
|
119,817
|
|
Management
fees
|
|
12,423
|
|
|
9,241
|
|
|
23,862
|
|
|
15,019
|
|
Other hotel
expenses
|
|
19,842
|
|
|
15,572
|
|
|
35,455
|
|
|
31,250
|
|
Lease
expense
|
|
1,017
|
|
|
1,260
|
|
|
2,051
|
|
|
2,518
|
|
Depreciation and
amortization
|
|
40,331
|
|
|
28,058
|
|
|
77,995
|
|
|
50,263
|
|
Impairment
losses
|
|
10,401
|
|
|
—
|
|
|
10,401
|
|
|
—
|
|
Corporate
expenses
|
|
6,441
|
|
|
7,198
|
|
|
14,709
|
|
|
14,391
|
|
Total operating costs
and expenses
|
|
316,398
|
|
|
235,912
|
|
|
606,079
|
|
|
429,913
|
|
Operating
income
|
|
40,504
|
|
|
40,251
|
|
|
76,094
|
|
|
40,905
|
|
Interest
expense
|
|
(20,709)
|
|
|
(19,587)
|
|
|
(43,494)
|
|
|
(37,861)
|
|
Interest
income
|
|
16
|
|
|
50
|
|
|
117
|
|
|
77
|
|
Loss on early
extinguishment of debt
|
|
(34,211)
|
|
|
—
|
|
|
(34,211)
|
|
|
—
|
|
Equity in earnings of
unconsolidated affiliates
|
|
—
|
|
|
826
|
|
|
—
|
|
|
5,271
|
|
Foreign currency
exchange gain (loss)
|
|
40
|
|
|
(8)
|
|
|
(76)
|
|
|
(6)
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
65,349
|
|
|
—
|
|
|
143,466
|
|
Other income,
net
|
|
40,465
|
|
|
795
|
|
|
40,308
|
|
|
1,218
|
|
Income before income
taxes and discontinued operations
|
|
26,105
|
|
|
87,676
|
|
|
38,738
|
|
|
153,070
|
|
Income tax
expense
|
|
(2,452)
|
|
|
(207)
|
|
|
(2,671)
|
|
|
(246)
|
|
Income from
continuing operations
|
|
23,653
|
|
|
87,469
|
|
|
36,067
|
|
|
152,824
|
|
Income from
discontinued operations, net of tax
|
|
—
|
|
|
604
|
|
|
—
|
|
|
159,039
|
|
Net
Income
|
|
23,653
|
|
|
88,073
|
|
|
36,067
|
|
|
311,863
|
|
Net income
attributable to the noncontrolling interests in SHR's operating
partnership
|
|
(67)
|
|
|
(281)
|
|
|
(104)
|
|
|
(1,130)
|
|
Net (income) loss
attributable to the noncontrolling interests in consolidated
affiliates
|
|
(16,888)
|
|
|
217
|
|
|
(13,454)
|
|
|
4,258
|
|
Net Income
Attributable to SHR
|
|
6,698
|
|
|
88,009
|
|
|
22,509
|
|
|
314,991
|
|
Preferred shareholder
dividends
|
|
—
|
|
|
(7,169)
|
|
|
—
|
|
|
(16,993)
|
|
Net Income
Attributable to SHR Common Shareholders
|
|
$
|
6,698
|
|
|
$
|
80,840
|
|
|
$
|
22,509
|
|
|
$
|
297,998
|
|
Basic Income Per
Common Share:
|
|
|
|
|
|
|
|
|
Income from
continuing operations attributable to SHR common
shareholders
|
|
$
|
0.02
|
|
|
$
|
0.36
|
|
|
$
|
0.08
|
|
|
$
|
0.65
|
|
Income from
discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.74
|
|
Net income
attributable to SHR common shareholders
|
|
$
|
0.02
|
|
|
$
|
0.36
|
|
|
$
|
0.08
|
|
|
$
|
1.39
|
|
Weighted average
shares of common stock outstanding
|
|
276,380
|
|
|
222,013
|
|
|
257,056
|
|
|
214,450
|
|
Diluted Income Per
Common Share:
|
|
|
|
|
|
|
|
|
Income from
continuing operations attributable to SHR common
shareholders
|
|
$
|
0.02
|
|
|
$
|
0.35
|
|
|
$
|
0.07
|
|
|
$
|
0.60
|
|
Income from
discontinued operations attributable to SHR common
shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.70
|
|
Net income
attributable to SHR common shareholders
|
|
$
|
0.02
|
|
|
$
|
0.35
|
|
|
$
|
0.07
|
|
|
$
|
1.30
|
|
Weighted average
shares of common stock outstanding
|
|
278,383
|
|
|
233,463
|
|
|
284,208
|
|
|
225,900
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Consolidated
Balance Sheets
|
(in thousands,
except share data)
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
|
Investment in hotel
properties, net
|
|
$
|
3,276,411
|
|
|
$
|
2,828,400
|
|
Goodwill
|
|
21,629
|
|
|
38,128
|
|
Intangible assets,
net of accumulated amortization of $11,783 and $7,288
|
|
93,936
|
|
|
94,324
|
|
Investment in
unconsolidated affiliates
|
|
22,850
|
|
|
22,850
|
|
Cash and cash
equivalents
|
|
98,586
|
|
|
442,613
|
|
Restricted cash and
cash equivalents
|
|
77,790
|
|
|
81,510
|
|
Accounts receivable,
net of allowance for doubtful accounts of $688 and $492
|
|
71,486
|
|
|
51,382
|
|
Deferred financing
costs, net of accumulated amortization of $8,203 and
$7,814
|
|
14,580
|
|
|
11,440
|
|
Deferred tax
assets
|
|
1,419
|
|
|
1,729
|
|
Prepaid expenses and
other assets
|
|
56,727
|
|
|
46,781
|
|
Total
assets
|
|
$
|
3,735,414
|
|
|
$
|
3,619,157
|
|
Liabilities,
Noncontrolling Interests and Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Mortgages payable,
net of discount
|
|
$
|
1,460,637
|
|
|
$
|
1,705,778
|
|
Credit facility,
including an unsecured term loan of $300,000 and $0
|
|
344,000
|
|
|
—
|
|
Accounts payable and
accrued expenses
|
|
234,306
|
|
|
224,505
|
|
Preferred stock
redemption liability
|
|
—
|
|
|
90,384
|
|
Distributions
payable
|
|
—
|
|
|
104
|
|
Deferred tax
liabilities
|
|
46,117
|
|
|
46,137
|
|
Total
liabilities
|
|
2,085,060
|
|
|
2,066,908
|
|
Commitments and
contingencies
|
|
|
|
|
Noncontrolling
interests in SHR's operating partnership
|
|
9,619
|
|
|
10,500
|
|
Equity:
|
|
|
|
|
SHR's shareholders'
equity:
|
|
|
|
|
Common stock ($0.01
par value per share; 350,000,000 shares of common stock authorized;
275,494,707 and 267,435,799 shares of common stock issued and
outstanding)
|
|
2,755
|
|
|
2,674
|
|
Additional paid-in
capital
|
|
2,451,209
|
|
|
2,348,284
|
|
Accumulated
deficit
|
|
(867,960)
|
|
|
(890,469)
|
|
Accumulated other
comprehensive loss
|
|
(7,586)
|
|
|
(13,032)
|
|
Total SHR's
shareholders' equity
|
|
1,578,418
|
|
|
1,447,457
|
|
Noncontrolling
interests in consolidated affiliates
|
|
62,317
|
|
|
94,292
|
|
Total
equity
|
|
1,640,735
|
|
|
1,541,749
|
|
Total liabilities,
noncontrolling interests and equity
|
|
$
|
3,735,414
|
|
|
$
|
3,619,157
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Financial
Highlights
|
|
Supplemental
Financial Data
|
(in thousands,
except per share information)
|
|
|
|
June 30,
2015
|
|
|
Pro Rata Share
|
|
Consolidated
|
Capitalization
|
|
|
|
|
Shares of common
stock outstanding
|
|
275,495
|
|
|
275,495
|
|
Operating partnership
units outstanding
|
|
794
|
|
|
794
|
|
Restricted stock
units outstanding
|
|
1,205
|
|
|
1,205
|
|
Combined shares and
units outstanding
|
|
277,494
|
|
|
277,494
|
|
Common stock price at
end of period
|
|
$
|
12.12
|
|
|
$
|
12.12
|
|
Common equity
capitalization
|
|
$
|
3,363,227
|
|
|
$
|
3,363,227
|
|
Consolidated
debt
|
|
1,805,618
|
|
|
1,805,618
|
|
Pro rata share of
consolidated debt
|
|
(110,250)
|
|
|
—
|
|
Cash and cash
equivalents
|
|
(98,586)
|
|
|
(98,586)
|
|
Total enterprise
value
|
|
$
|
4,960,009
|
|
|
$
|
5,070,259
|
|
Net Debt / Total
Enterprise Value
|
|
32.2
|
%
|
|
33.7
|
%
|
Common Equity / Total
Enterprise Value
|
|
67.8
|
%
|
|
66.3
|
%
|
Strategic Hotels & Resorts, Inc. and
Subsidiaries (SHR)
Disposition of Hotel Properties
2015 Dispositions
Effective January 1, 2015, the
Company adopted new accounting guidance which amends the
requirements for reporting discontinued operations. Under the
guidance, only disposals that represent a strategic shift that has
(or will have) a major effect on the Company's results of
operations would qualify as discontinued operations.
On May 21, 2015, the Company,
along with its joint venture partner, sold the Hyatt Regency La
Jolla hotel for sales proceeds of approximately $118,293,000. The $89,228,000 mortgage loan secured by the hotel
was repaid at the time of closing. A $40,613,000 gain on the sale was recorded in
other income, net in the condensed consolidated statements of
operations for the three and six months ended June 30, 2015. The portion of the gain
attributable to the joint venture partner was $16,649,000, which is reflected in net income
attributable to the noncontrolling interests in consolidated
affiliates in the condensed consolidated statements of operations
for the three and six months ended June
30, 2015. The disposition of the Hyatt Regency La
Jolla hotel does not represent a strategic shift that has had a
major effect on the Company's results of operations; therefore, the
hotel's results of operations are included in continuing operations
for all periods presented.
2014 Dispositions
During the six months ended June 30,
2014, the Company sold the following hotels:
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 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. The following is a summary of
income from discontinued operations, net of tax, for the three and
six months ended June 30, 2014 (in thousands):
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2014
|
|
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
|
|
604
|
|
|
156,429
|
|
Income from
discontinued operations, net of tax
|
|
$
|
604
|
|
|
$
|
159,039
|
|
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
June 30, 2014
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total revenues
(100%)
|
|
$
|
33,821
|
|
|
$
|
—
|
|
|
$
|
33,821
|
|
Property EBITDA
(100%)
|
|
$
|
11,202
|
|
|
$
|
—
|
|
|
$
|
11,202
|
|
Equity in earnings of
unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
4,075
|
|
|
$
|
—
|
|
|
$
|
4,075
|
|
Depreciation and
amortization
|
|
(1,572)
|
|
|
—
|
|
|
(1,572)
|
|
Interest
expense
|
|
(1,518)
|
|
|
—
|
|
|
(1,518)
|
|
Other expenses,
net
|
|
(18)
|
|
|
—
|
|
|
(18)
|
|
Income
taxes
|
|
(87)
|
|
|
—
|
|
|
(87)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
880
|
|
|
$
|
—
|
|
|
$
|
880
|
|
EBITDA
Contribution:
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
880
|
|
|
$
|
—
|
|
|
$
|
880
|
|
Depreciation and
amortization
|
|
1,572
|
|
|
—
|
|
|
1,572
|
|
Interest
expense
|
|
1,518
|
|
|
—
|
|
|
1,518
|
|
Income
taxes
|
|
87
|
|
|
—
|
|
|
87
|
|
EBITDA
Contribution
|
|
$
|
4,057
|
|
|
$
|
—
|
|
|
$
|
4,057
|
|
FFO
Contribution:
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
880
|
|
|
$
|
—
|
|
|
$
|
880
|
|
Depreciation and
amortization
|
|
1,572
|
|
|
—
|
|
|
1,572
|
|
FFO
Contribution
|
|
$
|
2,452
|
|
|
$
|
—
|
|
|
$
|
2,452
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
Hotel
del
Coronado
|
|
Fairmont
Scottsdale
Princess
|
|
Total
|
Total revenues
(100%)
|
|
$
|
67,863
|
|
|
$
|
35,006
|
|
|
$
|
102,869
|
|
Property EBITDA
(100%)
|
|
$
|
20,761
|
|
|
$
|
13,191
|
|
|
$
|
33,952
|
|
Equity in earnings of
unconsolidated affiliates (SHR ownership)
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
7,426
|
|
|
$
|
6,595
|
|
|
$
|
14,021
|
|
Depreciation and
amortization
|
|
(3,526)
|
|
|
(1,551)
|
|
|
(5,077)
|
|
Interest
expense
|
|
(3,418)
|
|
|
(168)
|
|
|
(3,586)
|
|
Other expenses,
net
|
|
(25)
|
|
|
(30)
|
|
|
(55)
|
|
Income
taxes
|
|
143
|
|
|
—
|
|
|
143
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
600
|
|
|
$
|
4,846
|
|
|
$
|
5,446
|
|
EBITDA
Contribution
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
600
|
|
|
$
|
4,846
|
|
|
$
|
5,446
|
|
Depreciation and
amortization
|
|
3,526
|
|
|
1,551
|
|
|
5,077
|
|
Interest
expense
|
|
3,418
|
|
|
168
|
|
|
3,586
|
|
Income
taxes
|
|
(143)
|
|
|
—
|
|
|
(143)
|
|
EBITDA
Contribution
|
|
$
|
7,401
|
|
|
$
|
6,565
|
|
|
$
|
13,966
|
|
FFO
Contribution
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
600
|
|
|
$
|
4,846
|
|
|
$
|
5,446
|
|
Depreciation and
amortization
|
|
3,526
|
|
|
1,551
|
|
|
5,077
|
|
FFO
Contribution
|
|
$
|
4,126
|
|
|
$
|
6,397
|
|
|
$
|
10,523
|
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Leasehold
Information
|
(in
thousands)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Marriott
Hamburg:
|
|
|
|
|
|
|
|
|
Property
EBITDA
|
|
$
|
1,321
|
|
|
$
|
1,687
|
|
|
$
|
2,560
|
|
|
$
|
3,199
|
|
Revenue
(a)
|
|
$
|
1,013
|
|
|
$
|
1,319
|
|
|
$
|
2,044
|
|
|
$
|
2,618
|
|
|
|
|
|
|
|
|
|
|
Lease
expense
|
|
(1,017)
|
|
|
(1,260)
|
|
|
(2,051)
|
|
|
(2,518)
|
|
Less: Deferred gain
on sale-leaseback
|
|
(43)
|
|
|
(54)
|
|
|
(87)
|
|
|
(107)
|
|
Adjusted lease
expense
|
|
(1,060)
|
|
|
(1,314)
|
|
|
(2,138)
|
|
|
(2,625)
|
|
|
|
|
|
|
|
|
|
|
Comparable EBITDA
contribution from leasehold
|
|
$
|
(47)
|
|
|
$
|
5
|
|
|
$
|
(94)
|
|
|
$
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security Deposit
(b):
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
Marriott
Hamburg
|
|
|
|
|
|
|
|
|
|
$
|
2,117
|
|
|
$
|
2,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For the three and six
months ended June 30, 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) attributable to SHR common
shareholders; 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 attributable to SHR common shareholders 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 attributable to SHR common shareholders 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 attributable to SHR common shareholders,
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 attributable to SHR common shareholders,
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 attributable to SHR common
shareholders, 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
attributable to SHR common shareholders, 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 attributable to SHR common
shareholders, 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 attributable to SHR common
shareholders, 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
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
attributable to SHR common shareholders
|
|
$
|
6,698
|
|
|
$
|
80,840
|
|
|
$
|
22,509
|
|
|
$
|
297,998
|
|
Depreciation and
amortization—continuing operations
|
|
40,331
|
|
|
28,058
|
|
|
77,995
|
|
|
50,263
|
|
Depreciation and
amortization—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,275
|
|
Interest
expense—continuing operations
|
|
20,709
|
|
|
19,587
|
|
|
43,494
|
|
|
37,861
|
|
Interest
expense—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,326
|
|
Income
taxes—continuing operations
|
|
2,452
|
|
|
207
|
|
|
2,671
|
|
|
246
|
|
Income
taxes—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
833
|
|
Income taxes—sale of
assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,451
|
|
Net income
attributable to noncontrolling interests in SHR's operating
partnership (a)
|
|
67
|
|
|
281
|
|
|
104
|
|
|
1,130
|
|
Adjustments
attributable to noncontrolling interests in consolidated affiliates
(b)
|
|
(3,209)
|
|
|
(3,939)
|
|
|
(7,046)
|
|
|
(7,614)
|
|
Adjustments
attributable to unconsolidated affiliates (c)
|
|
—
|
|
|
3,153
|
|
|
—
|
|
|
8,443
|
|
Preferred shareholder
dividends
|
|
—
|
|
|
7,169
|
|
|
—
|
|
|
16,993
|
|
EBITDA
|
|
67,048
|
|
|
135,356
|
|
|
139,727
|
|
|
429,205
|
|
Realized portion of
deferred gain on sale-leaseback
|
|
(43)
|
|
|
(54)
|
|
|
(87)
|
|
|
(107)
|
|
Gain on sale of
assets—continuing operations
|
|
(40,613)
|
|
|
(767)
|
|
|
(40,613)
|
|
|
(767)
|
|
Gain on sale of
assets—discontinued operations
|
|
—
|
|
|
(604)
|
|
|
—
|
|
|
(176,880)
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
(65,349)
|
|
|
—
|
|
|
(143,466)
|
|
Impairment
losses
|
|
10,401
|
|
|
—
|
|
|
10,401
|
|
|
—
|
|
Loss on early
extinguishment of debt—continuing operations
|
|
34,211
|
|
|
—
|
|
|
34,211
|
|
|
—
|
|
Loss on early
extinguishment of debt—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272
|
|
Foreign currency
exchange (gain) loss—continuing operations
|
|
(40)
|
|
|
8
|
|
|
76
|
|
|
6
|
|
Foreign currency
exchange gain—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
Hotel acquisition
costs
|
|
346
|
|
|
—
|
|
|
1,066
|
|
|
—
|
|
Non-cash interest
rate derivative activity
|
|
30
|
|
|
—
|
|
|
146
|
|
|
—
|
|
Amortization of below
market hotel management agreement
|
|
513
|
|
|
108
|
|
|
1,026
|
|
|
108
|
|
Activist shareholder
costs
|
|
—
|
|
|
104
|
|
|
—
|
|
|
1,637
|
|
Adjustments
attributable to noncontrolling interests in consolidated affiliates
(d)
|
|
16,559
|
|
|
109
|
|
|
16,559
|
|
|
109
|
|
Comparable
EBITDA
|
|
$
|
88,412
|
|
|
$
|
68,911
|
|
|
$
|
162,512
|
|
|
$
|
110,085
|
|
|
|
(a)
|
EBITDA is presented
on a full participation basis, which means we have assumed
conversion of all redeemable noncontrolling interests in SHR's
operating partnership into shares of SHR's common stock. This
adjustment reverses the net income that was allocated to the
noncontrolling interests in SHR's operating partnership.
|
|
|
(b)
|
This adjustment
represents the portion of interest expense, income taxes and
depreciation and amortization attributable to the noncontrolling
interest in affiliates that are consolidated but not wholly owned
by us.
|
|
|
(c)
|
This adjustment
represents our portion of interest expense, income taxes and
depreciation and amortization related to affiliates that are not
consolidated.
|
|
|
(d)
|
This adjustment
represents the portion of gains or losses from sales of depreciable
property and the portion of loss on early extinguishment of debt
attributable to the noncontrolling interests in affiliates that are
consolidated but not wholly owned by us.
|
Strategic
Hotels & Resorts, Inc. and Subsidiaries
(SHR)
|
|
Reconciliation of
Net Income Attributable to SHR Common Shareholders
to
|
Funds From
Operations (FFO) Attributable to SHR Common Shareholders, FFO—Fully
Diluted and Comparable FFO
|
(in thousands,
except per share data)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
attributable to SHR common shareholders
|
|
$
|
6,698
|
|
|
$
|
80,840
|
|
|
$
|
22,509
|
|
|
$
|
297,998
|
|
Depreciation and
amortization—continuing operations
|
|
40,331
|
|
|
28,058
|
|
|
77,995
|
|
|
50,263
|
|
Depreciation and
amortization—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,275
|
|
Corporate
depreciation
|
|
(127)
|
|
|
(123)
|
|
|
(255)
|
|
|
(246)
|
|
Gain on sale of
assets—continuing operations
|
|
(40,613)
|
|
|
(767)
|
|
|
(40,613)
|
|
|
(767)
|
|
Gain on sale of
assets, net of tax—discontinued operations
|
|
—
|
|
|
(604)
|
|
|
—
|
|
|
(156,429)
|
|
Gain on consolidation
of affiliates
|
|
—
|
|
|
(65,349)
|
|
|
—
|
|
|
(143,466)
|
|
Realized portion of
deferred gain on sale-leaseback
|
|
(43)
|
|
|
(54)
|
|
|
(87)
|
|
|
(107)
|
|
Adjustments
attributable to noncontrolling interests in SHR's operating
partnership (a)
|
|
(116)
|
|
|
(95)
|
|
|
(226)
|
|
|
(193)
|
|
Adjustments
attributable to noncontrolling interests in consolidated affiliates
(b)
|
|
14,801
|
|
|
(1,971)
|
|
|
12,558
|
|
|
(3,806)
|
|
Adjustments
attributable to unconsolidated affiliates (c)
|
|
—
|
|
|
1,571
|
|
|
—
|
|
|
5,077
|
|
FFO attributable to
SHR common shareholders
|
|
20,931
|
|
|
41,506
|
|
|
71,881
|
|
|
49,599
|
|
Adjustments
attributable to noncontrolling interests in SHR's operating
partnership - other (d)
|
|
183
|
|
|
376
|
|
|
330
|
|
|
1,323
|
|
FFO—Fully
Diluted
|
|
21,114
|
|
|
41,882
|
|
|
72,211
|
|
|
50,922
|
|
Impairment
losses
|
|
10,401
|
|
|
—
|
|
|
10,401
|
|
|
—
|
|
Non-cash interest
rate derivative activity
|
|
2,489
|
|
|
2,184
|
|
|
5,718
|
|
|
(110)
|
|
Loss on early
extinguishment of debt—continuing operations
|
|
34,211
|
|
|
—
|
|
|
34,211
|
|
|
—
|
|
Loss on early
extinguishment of debt—discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272
|
|
Foreign currency
exchange (gain) loss—continuing operations (a)
|
|
(40)
|
|
|
8
|
|
|
76
|
|
|
6
|
|
Foreign currency
exchange gain—discontinued operations (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
Amortization of debt
discount
|
|
40
|
|
|
623
|
|
|
690
|
|
|
623
|
|
Amortization of below
market hotel management agreement
|
|
513
|
|
|
108
|
|
|
1,026
|
|
|
108
|
|
Hotel acquisition
costs
|
|
346
|
|
|
—
|
|
|
1,066
|
|
|
—
|
|
Activist shareholder
costs
|
|
—
|
|
|
104
|
|
|
—
|
|
|
1,637
|
|
Excess of redemption
liability over carrying amount of redeemed preferred
stock
|
|
—
|
|
|
3,203
|
|
|
—
|
|
|
6,912
|
|
Adjustments
attributable to noncontrolling interests in consolidated affiliates
(e)
|
|
(90)
|
|
|
—
|
|
|
(90)
|
|
|
—
|
|
Comparable
FFO
|
|
$
|
68,984
|
|
|
$
|
48,112
|
|
|
$
|
125,309
|
|
|
$
|
60,338
|
|
Comparable FFO per
fully diluted share
|
|
$
|
0.25
|
|
|
$
|
0.21
|
|
|
$
|
0.45
|
|
|
$
|
0.28
|
|
Weighted average
diluted shares (b)
|
|
279,380
|
|
|
225,348
|
|
|
278,145
|
|
|
217,875
|
|
|
|
(a)
|
This adjustment
represents the portion of depreciation and amortization
attributable to the redeemable noncontrolling interests in our
operating partnership.
|
|
|
(b)
|
This adjustment
represents the portion of depreciation and amortization and gains
or losses from sales of depreciable property that are attributable
to the noncontrolling interests in affiliates that are consolidated
but not wholly owned by us.
|
|
|
(c)
|
This adjustment
represents our portion of depreciation and amortization related to
affiliates that are not consolidated.
|
|
|
(d)
|
This adjustment
represents amounts other than depreciation and amortization that
are attributable to the redeemable noncontrolling interests in our
operating partnership.
|
|
|
(e)
|
This adjustment
represents the portion of loss on early extinguishment of debt that
is attributable to the noncontrolling interests in affiliates that
are consolidated but not wholly owned by us.
|
|
|
(f)
|
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)
|
Hotel del
Coronado
|
|
3.84
|
%
|
|
365 bp
|
|
$
|
475,000
|
|
|
March 2018
|
Four Seasons
Washington, D.C.
|
|
2.44
|
%
|
|
225 bp
|
|
120,000
|
|
|
June 2019
|
JW Marriott Essex
House Hotel
|
|
3.14
|
%
|
|
295 bp
|
|
225,000
|
|
|
January
2020
|
Unsecured revolving
credit facility (c)
|
|
1.84
|
%
|
|
165 bp
|
|
44,000
|
|
|
May 2020
|
Unsecured term loan
(c)
|
|
1.79
|
%
|
|
160 bp
|
|
300,000
|
|
|
May 2020
|
Loews Santa Monica
Beach Hotel
|
|
2.74
|
%
|
|
255 bp
|
|
120,000
|
|
|
May 2021
|
InterContinental
Chicago
|
|
5.61
|
%
|
|
Fixed
|
|
141,618
|
|
|
August 2021
|
Montage Laguna Beach
(d)
|
|
3.90
|
%
|
|
Fixed
|
|
150,000
|
|
|
August 2021
|
Ritz-Carlton Half
Moon Bay (e)
|
|
2.59
|
%
|
|
240 bp
|
|
115,000
|
|
|
May 2022
|
InterContinental
Miami
|
|
3.99
|
%
|
|
Fixed
|
|
115,000
|
|
|
September
2024
|
|
|
|
|
|
|
1,805,618
|
|
|
|
Unamortized discount
(d)
|
|
|
|
|
|
(981)
|
|
|
|
|
|
|
|
|
|
$
|
1,804,637
|
|
|
|
|
|
(a)
|
Spread over LIBOR
(0.19% at June 30, 2015).
|
(b)
|
Includes extension
options.
|
(c)
|
On May 27, 2015, we
entered into a new $750,000,000 senior unsecured credit facility
that is comprised of a $450,000,000 unsecured revolving credit
facility and a $300,000,000 unsecured term loan. Interest on
the unsecured revolving credit facility is payable monthly based
upon a leverage-based grid with annual rates ranging from LIBOR
plus 1.65% to LIBOR plus 2.40%. Interest on the unsecured
term loan is also payable monthly based upon a leverage-based
pricing grid with annual rates ranging from LIBOR plus 1.60% to
LIBOR plus 2.35%.
|
(d)
|
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.
|
(e)
|
On May 27, 2015, we
closed on a new $115,000,000 mortgage loan secured by the
Ritz-Carlton Half Moon Bay hotel. The mortgage loan has two,
one-year extension options, subject to certain
conditions.
|
Second Quarter 2015 Debt Repayments
On April 9, 2015, we repaid the
$117,000,000 mortgage loan secured by
the Fairmont Scottsdale Princess hotel.
On May 21, 2015, we sold the Hyatt
Regency La Jolla hotel and repaid the $89,288,000 mortgage loan secured by the hotel at
the time of closing. We recorded a $193,000 loss on early extinguishment of debt,
which included the write off of unamortized deferred financing
costs.
On May 27, 2015, we repaid the
$209,558,000 mortgage loan secured by
the Westin St. Francis hotel and the $93,124,000 mortgage loan secured by the Fairmont
Chicago hotel using proceeds from the new mortgage loan secured by
the Ritz-Carlton Half Moon Bay hotel and proceeds from the
$300,000,000 unsecured term loan. We
recorded a $34,014,000 loss on early
extinguishment of debt, which included prepayment penalties of
$32,917,000 and the write off of
unamortized deferred financing costs.
Debt Summary
(Continued)
|
(dollars in
thousands)
|
|
Future scheduled debt
principal payments (including extension options) are as
follows:
|
|
Years ending
December 31,
|
|
Amount
|
2015
(remainder)
|
|
$
|
1,126
|
|
2016
|
|
2,040
|
|
2017
|
|
3,066
|
|
2018
|
|
480,033
|
|
2019
|
|
125,276
|
|
Thereafter
|
|
1,194,077
|
|
|
|
1,805,618
|
|
Unamortized
discount
|
|
(981)
|
|
|
|
$
|
1,804,637
|
|
|
|
|
|
Percent of fixed rate
debt
|
|
22.5
|
%
|
Weighted average
interest rate (f)
|
|
3.29
|
%
|
Weighted average
maturity of fixed rate debt (debt with maturity of greater than one
year)
|
|
6.97
|
|
|
|
(f)
|
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-second-quarter-2015-financial-results-300124403.html
SOURCE Strategic Hotels & Resorts, Inc.