UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 5, 2015
 
Strategic Hotels & Resorts, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Maryland
 
001-32223
 
33-1082757
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
200 West Madison Street, Suite 1700, Chicago, Illinois
 
60606
(Address of principal executive offices)
 
(Zip Code)
(312) 658-5000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))














Item 2.02
Results of Operations and Financial Condition.
On August 5, 2015, Strategic Hotels & Resorts, Inc. issued a press release reporting the financial results for its fiscal quarter ended June 30, 2015. Copies of the press release and Supplemental Financial Information are attached to this Current Report on Form 8-K (“Current Report”) as Exhibits 99.1 and 99.2, respectively, and are incorporated herein solely for purposes of this Item 2.02 disclosure.
The information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.
 
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits.
 
 
 
Exhibit Number
  
Description
 
 
99.1

  
Press Release dated August 5, 2015
 
 
99.2

  
Supplemental Financial Information








































SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
August 6, 2015
 
 
 
 
 
 
STRATEGIC HOTELS & RESORTS, INC.
 
 
By:
 
 
/s/ Diane M. Morefield
 
Name:
 
Diane M. Morefield
 
Title:
 
Executive Vice President and Chief Financial Officer






Exhibit 99.1
COMPANY CONTACTS:
Diane Morefield
EVP & Chief Financial Officer
Strategic Hotels & Resorts
(312) 658-5740

Jonathan Stanner     
SVP, Capital Markets, Acquisitions & Treasurer
Strategic Hotels & Resorts
(312) 658-5746

FOR IMMEDIATE RELEASE
WEDNESDAY, AUGUST 5, 2015

STRATEGIC HOTELS & RESORTS REPORTS SECOND QUARTER 2015
FINANCIAL RESULTS

CHICAGO - August 5, 2015 - 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.






Exhibit 99.2
 











Strategic Hotels & Resorts, Inc.
Supplemental Financial Information
June 30, 2015




















 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
TABLE OF CONTENTS
 
 
 
  
PAGE
CORPORATE INFORMATION
 
The Company
Board of Directors
Officers
Equity Research Coverage
 
 
FINANCIAL HIGHLIGHTS
 
Supplemental Financial Data
Consolidated Statements of Operations
Consolidated Balance Sheets
Discontinued Operations
Investments in Unconsolidated Affiliates
Leasehold Information
Non-GAAP Financial Measures
Reconciliation of Net Income Attributable to SHR Common Shareholders to EBITDA and Comparable EBITDA
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
Debt Summary
 
 
PORTFOLIO DATA
 
Portfolio at June 30, 2015
Seasonality by Geographic Region
Operating Statistics by Geographic Region
Selected Financial and Operating Information by Property
Reconciliation of Property EBITDA to EBITDA
Reconciliation of Property EBITDA to Comparable EBITDA
2015 Guidance






 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
CORPORATE INFORMATION
The Company
Strategic Hotels & Resorts, Inc. is an industry-leading owner and asset manager of high-end hotels and resorts. We own interests in or lease a quality portfolio of upper upscale and luxury hotels and resorts primarily in desirable United States locations. Our portfolio is currently made up of 18 properties totaling 8,199 rooms. We own interests in or lease unique hotels with complex operations, sophisticated customers and multiple revenue streams. Our properties include large convention hotels, business hotels and resorts, which are managed by internationally recognized hotel management companies.
We believe our asset management expertise is what truly distinguishes us. Asset management is our focus, our core competency, and our competitive advantage. Our business is driven by our team’s depth of knowledge and hands-on expertise in every aspect of the lodging industry. While our focus is to drive top line revenues, we importantly focus on every component of bottom line profitability. We use our experience to make selective, value added acquisitions and recycle capital through thoughtful and planned dispositions. Simply put, we are utilizing our expert management skills in building a great hotel company which we believe will provide attractive returns for our shareholders.
Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) and is traded on the New York Stock Exchange under the symbol BEE.
Fiscal Year End:
December 31
Number of Full-Time Equivalent Employees:
38
Corporate Headquarters:
200 West Madison Street, Suite 1700
Chicago, IL 60606
(312) 658-5000
Company Contacts:
Diane M. Morefield
Executive Vice President, Chief Financial Officer
(312) 658-5000
Jonathan P. Stanner
Senior Vice President, Capital Markets, Acquisitions and Treasurer
(312) 658-5000




1



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
Board of Directors
Raymond L. Gellein, Jr.
Chairman of the Board, Chief Executive Officer and President
Sheli Z. Rosenberg
Lead Independent Director
Robert P. Bowen
Director and Chairman of the Audit Committee
James A. Jeffs
Director and Chairman of the Compensation Committee
William A. Prezant
Director and Chairman of the Corporate Governance and Nominating Committee

David W. Johnson
Director
Richard D. Kincaid
Director
Sir David M.C. Michels
Director
Eugene F. Reilly
Director




2



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
Officers
Raymond L. Gellein, Jr.
President and Chief Executive Officer
Diane M. Morefield
Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)
Richard J. Moreau
Executive Vice President, Chief Operating Officer
Paula C. Maggio
Executive Vice President, Secretary & General Counsel
John K.T. Barrett
Senior Vice President, Asset Management
Thomas G. Healy
Senior Vice President, Asset Management
David R. Hogin, Jr.
Senior Vice President, Asset Management
Robert T. McAllister
Senior Vice President, Tax
Patricia A. Needham
Senior Vice President, Legal
Eric D. Hassberger
Senior Vice President, Asset Management and Acquisitions
Jonathan P. Stanner
Senior Vice President, Capital Markets, Acquisitions and Treasurer
Gregory A. Brenner
Vice President, Controller
Carly P. Edgar
Vice President, Asset Management
James L. Porter
Vice President, Internal Audit
George T. Stowers
Vice President, Design and Construction

Bryce D. White
Vice President, Information Technology







3



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
Equity Research Coverage
 
 
 
 
 
 
Firm
 
Analyst
 
Telephone
 
 
 
Bank of America Merrill Lynch
 
Andrew Didora
 
(646) 855-2924
 
 
 
Deutsche Bank North America
 
Chris Woronka
 
(212) 250-4486
 
 
 
Green Street Advisors
 
Lukas Hartwich
 
(949) 640-8780
 
 
 
 
 
Evercore ISI
 
Rich Hightower
 
(212) 752-0886
 
 
 
JMP Securities
 
Robert LaFleur
 
(415) 835-8944
 
 
 
J.P. Morgan Securities
 
Joseph Greff
 
(212) 622-0548
 
 
 
Raymond James & Associates
 
William Crow
 
(727) 567-2594
 
 
 
Wells Fargo Securities, LLC
 
Jeffrey Donnelly
 
(617) 603-4262
 
 
 
 
 
Credit Suisse
 
Ian Weissman
 
(212) 538-6889
 
 
 
 
 
RBC Capital Markets
 
Wes Golladay
 
(440) 715-2650
 
 
 
 
 
Canaccord Genuity Inc. (US)
 
Ryan Meliker
 
(212) 389-8094
Strategic Hotels & Resorts, Inc. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Strategic Hotels & Resorts, Inc.'s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Strategic Hotels & Resorts, Inc. or its management. Strategic Hotels & Resorts, Inc. does not by its reference here imply its endorsement of, or concurrence with, such information, conclusions or recommendations.



4



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
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
%



5



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
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


6



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015 and December 31, 2014
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


7



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014

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. We received net proceeds of $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




8



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
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


9



 
 
 
 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
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.

10



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
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.

11



 
 
 
 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
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 interests 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.

12



 
 
 
 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
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
 
(40
)
 
8

 
76

 
6

Foreign currency exchange gain—discontinued operations
 

 

 

 
(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 (f)
 
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 the 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.

13




 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
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.

14



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015

Debt Summary (Continued)
(in thousands)
Future scheduled debt principal payments (including extension options) are as follows:
Years ending December 31,
 
Amounts
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.

15



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
Portfolio Data
Portfolio at June 30, 2015
(dollars in thousands)
 
Hotel
 
Location
 
Number
of
Rooms
 
% of
Total
Rooms
 
2nd QTR 2015
Property
EBITDA
 
% of 2nd
QTR 2015
Property
EBITDA
United States:
 
 
 
 
 
 
 
 
 
 
Westin St. Francis
 
San Francisco, CA
 
1,195

 
15
%
 
$
12,675

 
13
%
InterContinental Chicago
 
Chicago, IL
 
792

 
10
%
 
7,062

 
7
%
Hotel del Coronado
 
Coronado, CA
 
757

 
9
%
 
14,835

 
15
%
Fairmont Chicago
 
Chicago, IL
 
687

 
8
%
 
6,231

 
6
%
Fairmont Scottsdale Princess
 
Scottsdale, AZ
 
649

 
8
%
 
5,502

 
6
%
InterContinental Miami
 
Miami, FL
 
641

 
8
%
 
5,547

 
6
%
JW Marriott Essex House Hotel (a)
 
New York, NY
 
511

 
6
%
 
6,540

 
7
%
Ritz-Carlton Laguna Niguel
 
Dana Point, CA
 
396

 
5
%
 
8,932

 
9
%
Marriott Lincolnshire Resort
 
Lincolnshire, IL
 
389

 
5
%
 
1,205

 
1
%
Loews Santa Monica Beach Hotel
 
Santa Monica, CA
 
347

 
4
%
 
4,488

 
5
%
Four Seasons Hotel Austin (b)
 
Austin, TX
 
291

 
4
%
 
1,530

 
2
%
Ritz-Carlton Half Moon Bay
 
Half Moon Bay, CA
 
261

 
3
%
 
4,299

 
4
%
Montage Laguna Beach
 
Laguna Beach, CA
 
249

 
3
%
 
5,232

 
5
%
Four Seasons Washington, D.C.
 
Washington, D.C.
 
222

 
3
%
 
5,960

 
6
%
Four Seasons Resort Scottsdale at Troon North
 
Scottsdale, AZ
 
210

 
3
%
 
2,904

 
3
%
Four Seasons Silicon Valley
 
East Palo Alto, CA
 
200

 
2
%
 
3,392

 
4
%
Four Seasons Jackson Hole
 
Teton Village, WY
 
124

 
1
%
 
(104
)
 
%
Total United States
 
 
 
7,921

 
97
%
 
96,230

 
99
%
European:
 
 
 

 

 
 
 

Marriott Hamburg (c)
 
Hamburg, Germany
 
278

 
3
%
 
N/A

 
N/A

Assets Sold:
 
 
 
 
 
 
 
 
 
 
Hyatt Regency La Jolla Hotel (d)
 
La Jolla, CA
 
N/A

 
N/A

 
1,244

 
1
%
 
 
 
 
8,199

 
100
%
 
97,474

 
100
%
 
(a)
As of June 30, 2015, we owned a 51.0% controlling interest in the entity that owns the JW Marriott Essex House Hotel and consolidated this hotel for reporting purposes. On July 24, 2015, our joint venture partner exercised its option to sell us its equity interest in the entity that owns the JW Marriott Essex House Hotel. Subsequent to the option being exercised, we own 100% of the JW Marriott Essex House Hotel.
(b)
On May 12, 2015, we closed on the acquisition of the Four Seasons Hotel Austin. We have included the results of this hotel in the quarterly Property EBITDA and percentage of Property EBITDA calculation above only for our period of ownership.
(c)
We sublease this property and have not included it in the percentage of Property EBITDA calculation.
(d)
On May 21, 2015, we, along with our joint venture partner, sold this hotel. We have included the results of this hotel in the quarterly Property EBITDA and percentage of Property EBITDA calculation above only for our period of ownership.

16



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Four Quarters Ended June 30, 2015
Seasonality by Geographic Region
(dollars in thousands)

The Total United States portfolio is derived from our hotel portfolio at June 30, 2015, consisting of all properties located in the United States. We have three acquisition properties, the Four Seasons Resort Scottsdale at Troon North, which was acquired on December 9, 2014, the Montage Laguna Beach resort, which was acquired on January 29, 2015, and the Four Seasons Hotel Austin, which was acquired on May 12, 2015. We have not included the operating results of the Hyatt Regency La Jolla hotel because we sold the hotel on May 21, 2015. The results for the three months ended December 31, 2014 include payments pursuant to the JW Marriott Essex House Hotel NOI guarantee of $5.8 million.
 
Total United States Hotels (as of June 30, 2015)
 
 
 
 
 
 
 
 
Acquisition property revenues - 3 Properties and 750 Rooms
 
 
 
 
 
 
Same store property revenues - 14 Properties and 7,171 Rooms
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
September 30, 2014
 
December 31, 2014
 
March 31, 2015
 
June 30, 2015
 
Total
Acquisition property revenues (a)
 
$

 
$
2,539

 
$
31,043

 
$
42,482

 
$
76,064

Acquisition property revenues (b)
 
43,137

 
44,649

 
$
11,993

 
6,780

 
106,559

Same store property revenues
 
294,231

 
300,409

 
282,739

 
307,743

 
1,185,122

Total pro forma revenues
 
$
337,368

 
$
347,597

 
$
325,775

 
$
357,005

 
$
1,367,745

Total property seasonality %
 
24.6
%
 
25.4
%
 
23.8
%
 
26.1
%
 
99.9
%

(a) Acquisition property revenues for our period of ownership
(b) Acquisition property revenues prior to our period of ownership


17



 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
Operating Statistics by Geographic Region
The Same Store United States portfolio is derived from our hotel portfolio at June 30, 2015, consisting of all properties located in the United States. The Same Store United States portfolio excludes the Four Seasons Resort Scottsdale at Troon North, the Montage Laguna Beach resort and the Four Seasons Hotel Austin for the three and six months ended June 30, 2015 and 2014.

Same Store United States Hotels (as of June 30, 2015)
14 Properties
7,171 Rooms
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
317.67

 
$
302.76

 
4.9

 
 
$
312.95

 
$
296.39

 
5.6
 
Average Occupancy
 
79.1
%
 
80.0
%
 
(0.9
)
 
pts 
 
75.5
%
 
75.0
%
 
0.5
 
pts 
RevPAR
 
$
251.41

 
$
242.18

 
3.8

 
 
$
236.16

 
$
222.28

 
6.2
 
Total RevPAR
 
$
471.59

 
$
459.33

 
2.7

 
 
$
454.93

 
$
427.87

 
6.3
 
Property EBITDA Margin
 
28.1
%
 
28.5
%
 
(0.4
)
 
pts 
 
26.6
%
 
24.9
%
 
1.7
 
pts 

Same Store United States Hotels - Adjusted (a) (as of June 30, 2015)
14 Properties
7,171 Rooms
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
317.67

 
$
299.97

 
5.9

 
 
$
312.95

 
$
293.14

 
6.8
 
Average Occupancy
 
79.1
%
 
80.0
%
 
(0.9
)
 
pts 
 
75.5
%
 
75.0
%
 
0.5
 
pts 
RevPAR
 
$
251.41

 
$
239.95

 
4.8

 
 
$
236.16

 
$
219.84

 
7.4
 
Total RevPAR
 
$
472.27

 
$
462.41

 
2.1

 
 
$
454.93

 
$
430.34

 
5.7
 
Property EBITDA Margin
 
28.3
%
 
28.3
%
 

 
pts 
 
26.8
%
 
24.7
%
 
2.1
 
pts 


(a) For the three months ended June 30, 2015 and 2014, property EBITDA margins exclude the amortization of the below market hotel management agreement related to the Hotel del Coronado of $0.5 million and $0.1 million, respectively. For the six months ended June 30, 2015 and 2014, property EBITDA margins exclude the amortization of the below market hotel management agreement related to the Hotel del Coronado of $1.0 million and $0.1 million, respectively. For the three and six months ended June 30, 2014, the statistics have been modified to take into account certain adjustments related to the subsequent adoption of the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition (the "USALI Eleventh Revised Edition").


18



 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
Operating Statistics by Geographic Region (Continued)
The Total United States portfolio is derived from our hotel portfolio at June 30, 2015, consisting of all properties located in the United States, including 100% of the operations of the Hotel del Coronado, the Fairmont Scottsdale Princess hotel, the Four Seasons Resort Scottsdale at Troon North, the Montage Laguna Beach resort and the Four Seasons Hotel Austin, including periods prior to full ownership, for the three and six months ended June 30, 2015 and 2014. We have not included the operating results of the Hyatt Regency La Jolla hotel because we sold the hotel on May 21, 2015.

Total United States Hotels (as of June 30, 2015)
17 Properties
7,921 Rooms
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
328.76

 
$
313.68

 
4.8

 
 
$
326.59

 
$
309.37

 
5.6
 
Average Occupancy
 
78.8
%
 
80.0
%
 
(1.2
)
 
pts 
 
75.7
%
 
75.5
%
 
0.2
 
pts 
RevPAR
 
$
259.15

 
$
250.92

 
3.3

 
 
$
247.30

 
$
233.52

 
5.9
 
Total RevPAR
 
$
495.30

 
$
482.97

 
2.6

 
 
$
482.03

 
$
453.65

 
6.3
 
Property EBITDA Margin
 
27.6
%
 
27.9
%
 
(0.3
)
 
pts 
 
26.4
%
 
24.7
%
 
1.7
 
pts 

Total United States Hotels - Adjusted (b) (as of June 30, 2015)
17 Properties
7,921 Rooms
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
328.76

 
$
310.53

 
5.9

 
 
$
326.59

 
$
305.73

 
6.8
 
Average Occupancy
 
78.8
%
 
80.0
%
 
(1.2
)
 
pts 
 
75.7
%
 
75.5
%
 
0.2
 
pts 
RevPAR
 
$
259.15

 
$
248.40

 
4.3

 
 
$
247.30

 
$
230.78

 
7.2
 
Total RevPAR
 
$
495.90

 
$
486.55

 
1.9

 
 
$
482.03

 
$
456.46

 
5.6
 
Property EBITDA Margin
 
27.7
%
 
27.7
%
 

 
pts 
 
26.5
%
 
24.6
%
 
1.9
 
pts 

(b) For the three months ended June 30, 2015 and 2014, property EBITDA margins exclude the amortization of the below market hotel management agreement related to the Hotel del Coronado of $0.5 million and $0.1 million, respectively. For the six months ended June 30, 2015 and 2014, property EBITDA margins exclude the amortization of the below market hotel management agreement related to the Hotel del Coronado of $1.0 million and $0.1 million, respectively. For the three and six months ended June 30, 2014, the statistics have been modified to take into account certain adjustments related to the subsequent adoption of the USALI Eleventh Revised Edition.



19



 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
Selected Financial and Operating Information by Property
(in thousands, except operating information)
The following tables present selected financial and operating information by property for the three and six months ended June 30, 2015 and 2014. Property EBITDA reflects property net operating income or loss plus depreciation and amortization. The following financial and operating information for the three and six months ended June 30, 2014 is adjusted for changes resulting from the adoption of the USALI Eleventh Revised Edition. The information in the following tables includes the amortization of the below market hotel management agreement related to the Hotel del Coronado of $0.5 million and $0.1 million for the three months ended June 30, 2015 and 2014, respectively, and $1.0 million and $0.1 million for the six months ended June 30, 2015 and 2014, respectively.
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
UNITED STATES HOTELS:
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
FAIRMONT CHICAGO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
20,492

 
$
19,246

 
6.5

 
 
$
29,922

 
$
28,123

 
6.4

 
Property EBITDA
 
$
6,231

 
$
5,812

 
7.2

 
 
$
4,514

 
$
3,673

 
22.9

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
687

 
687

 

 
  
 
687

 
687

 

 
  
Average occupancy
 
73.5
%
 
74.9
%
 
(1.4
)
 
pts 
 
60.9
%
 
60.5
%
 
0.4

 
pts 
ADR
 
$
267.20

 
$
243.03

 
9.9

 
 
$
227.42

 
$
211.90

 
7.3

 
RevPAR
 
$
196.38

 
$
182.05

 
7.9

 
 
$
138.57

 
$
128.19

 
8.1

 
Total RevPAR
 
$
327.79

 
$
307.85

 
6.5

 
 
$
240.64

 
$
226.16

 
6.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAIRMONT SCOTTSDALE PRINCESS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information (Amounts below are 100% of operations, of which SHR owns 100% as of June 30, 2014):
Total revenues
 
$
25,125

 
$
27,941

 
(10.1
)
 
 
$
67,345

 
$
64,218

 
4.9

 
Property EBITDA
 
$
5,502

 
$
7,138

 
(22.9
)
 
 
$
22,249

 
$
20,329

 
9.4

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
649

 
649

 

 
  
 
649

 
649

 

 
  
Average occupancy
 
69.2
%
 
77.5
%
 
(8.3
)
 
pts 
 
78.0
%
 
79.9
%
 
(1.9
)
 
pts 
ADR
 
$
246.09

 
$
231.91

 
6.1

 
 
$
305.52

 
$
275.67

 
10.8

 
RevPAR
 
$
170.33

 
$
179.70

 
(5.2
)
 
 
$
238.32

 
$
220.35

 
8.2

 
Total RevPAR
 
$
425.42

 
$
473.10

 
(10.1
)
 
 
$
573.30

 
$
546.68

 
4.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOUR SEASONS HOTEL AUSTIN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
No table has been provided since we did not own the property for the entire periods presented.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOUR SEASONS JACKSON HOLE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
Total revenues
 
$
5,858

 
$
5,423

 
8.0

 
 
$
23,361

 
$
21,293

 
9.7

 
Property EBITDA
 
$
(104
)
 
$
(413
)
 
74.8

 
 
$
5,030

 
$
4,095

 
22.8

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
124

 
124

 

 
  
 
124

 
124

 

 
  
Average occupancy
 
46.1
%
 
45.3
%
 
0.8

 
pts 
 
62.3
%
 
60.4
%
 
1.9

 
pts 
ADR
 
$
442.60

 
$
383.07

 
15.5

 
 
$
590.82

 
$
526.96

 
12.1

 
RevPAR
 
$
204.08

 
$
173.64

 
17.5

 
 
$
368.25

 
$
318.23

 
15.7

 
Total RevPAR
 
$
519.12

 
$
480.56

 
8.0

 
 
$
1,040.85

 
$
948.71

 
9.7

 

20




 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
FOUR SEASONS RESORT SCOTTSDALE AT TROON NORTH
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information (This table includes financial information only for our period of ownership):
 
 
Total revenues
 
$
12,272

 
N/A

 
N/A

 
 
 
$
28,154

 
N/A

 
N/A

 
 
Property EBITDA
 
$
2,904

 
N/A

 
N/A

 
 
 
$
8,287

 
N/A

 
N/A

 
 
Selected Operating Information (This table includes statistical information only for our period of ownership. For the three months ended June 30, 2014, average occupancy was 78.5%, ADR was $338.56, RevPAR was $265.73 and Total RevPAR was $630.72. For the six months ended June 30, 2014, average occupancy was 81.6%, ADR was $389.32, RevPAR was $317.76 and Total RevPAR was $692.85.):
Rooms
 
210

 
N/A

 
N/A

 
 
 
210

 
N/A

 
N/A

 
 
Average occupancy
 
76.7
%
 
N/A

 
N/A

 
 
 
81.3
%
 
N/A

 
N/A

 
 
ADR
 
$
361.57

 
N/A

 
N/A

 
 
 
$
444.11

 
N/A

 
N/A

 
 
RevPAR
 
$
277.28

 
N/A

 
N/A

 
 
 
$
361.04

 
N/A

 
N/A

 
 
Total RevPAR
 
$
642.16

 
N/A

 
N/A

 
 
 
$
740.71

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOUR SEASONS SILICON VALLEY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
Total revenues
 
$
11,017

 
$
9,737

 
13.1

 
 
$
20,872

 
$
18,323

 
13.9

 
 
Property EBITDA
 
$
3,392

 
$
2,741

 
23.8

 
 
$
5,848

 
$
4,536

 
28.9

 
 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
200

 
200

 

 
  
 
200

 
200

 

 
 
Average occupancy
 
78.4
%
 
75.0
%
 
3.4

 
pts 
 
77.8
%
 
72.8
%
 
5.0

 
 
ADR
 
$
445.93

 
$
411.21

 
8.4

 
 
$
430.78

 
$
396.17

 
8.7

 
 
RevPAR
 
$
349.42

 
$
308.22

 
13.4

 
 
$
335.26

 
$
288.37

 
16.3

 
 
Total RevPAR
 
$
605.32

 
$
534.98

 
13.1

 
 
$
576.59

 
$
506.17

 
13.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOUR SEASONS WASHINGTON, D.C.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
20,802

 
$
20,052

 
3.7

 
 
$
35,590

 
$
34,444

 
3.3

 
Property EBITDA
 
$
5,960

 
$
5,802

 
2.7

 
 
$
7,952

 
$
7,705

 
3.2

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
222

 
222

 

 
  
 
222

 
222

 

 
  
Average occupancy
 
78.2
%
 
81.8
%
 
(3.6
)
 
pts 
 
70.3
%
 
72.8
%
 
(2.5
)
 
pts 
ADR
 
$
669.77

 
$
607.92

 
10.2

 
 
$
608.06

 
$
563.13

 
8.0

 
RevPAR
 
$
523.57

 
$
497.00

 
5.3

 
 
$
427.62

 
$
410.21

 
4.2

 
Total RevPAR
 
$
1,029.72

 
$
992.55

 
3.7

 
 
$
885.72

 
$
857.19

 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HOTEL DEL CORONADO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information (Amounts below are 100% of operations, of which SHR owns 100% as of June 30, 2014.):
Total revenues
 
$
44,689

 
$
44,285

 
0.9

 
 
$
81,899

 
$
77,479

 
5.7

 
Property EBITDA
 
$
14,835

 
$
14,962

 
(0.8
)
 
 
$
28,882

 
$
24,521

 
17.8

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
757

 
757

 

 
  
 
757

 
757

 

 
  
Average occupancy
 
76.5
%
 
68.6
%
 
7.9

 
pts 
 
74.0
%
 
65.6
%
 
8.4

 
pts 
ADR
 
$
382.80

 
$
386.46

 
(0.9
)
 
 
$
368.16

 
$
364.39

 
1.0

 
RevPAR
 
$
292.75

 
$
265.07

 
10.4

 
 
$
272.45

 
$
239.07

 
14.0

 
Total RevPAR
 
$
648.73

 
$
642.86

 
0.9

 
 
$
597.73

 
$
565.47

 
5.7

 

21



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
INTERCONTINENTAL CHICAGO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
22,649

 
$
22,120

 
2.4

 
 
$
33,357

 
$
34,214

 
(2.5
)
 
Property EBITDA
 
$
7,062

 
$
7,097

 
(0.5
)
 
 
$
5,224

 
$
6,409

 
(18.5
)
 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
792

 
792

 

 
  
 
792

 
792

 

 
  
Average occupancy
 
85.5
%
 
88.1
%
 
(2.6
)
 
pts 
 
70.7
%
 
75.7
%
 
(5.0
)
 
pts 
ADR
 
$
229.72

 
$
215.89

 
6.4

 
 
$
197.09

 
$
184.70

 
6.7

 
RevPAR
 
$
196.34

 
$
190.14

 
3.3

 
 
$
139.31

 
$
139.75

 
(0.3
)
 
Total RevPAR
 
$
314.26

 
$
306.92

 
2.4

 
 
$
232.69

 
$
238.67

 
(2.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERCONTINENTAL MIAMI
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
19,394

 
$
17,769

 
9.1

 
 
$
44,985

 
$
41,010

 
9.7

 
Property EBITDA
 
$
5,547

 
$
5,047

 
9.9

 
 
$
16,270

 
$
14,397

 
13.0

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
641

 
641

 

 
  
 
641

 
641

 

 
  
Average occupancy
 
87.0
%
 
86.1
%
 
0.9

 
pts 
 
88.3
%
 
89.1
%
 
(0.8
)
 
pts 
ADR
 
$
188.59

 
$
182.58

 
3.3

 
 
$
232.13

 
$
221.14

 
5.0

 
RevPAR
 
$
163.97

 
$
157.11

 
4.4

 
 
$
205.01

 
$
197.07

 
4.0

 
Total RevPAR
 
$
332.48

 
$
304.63

 
9.1

 
 
$
387.73

 
$
353.47

 
9.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JW MARRIOTT ESSEX HOUSE HOTEL
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
Total revenues
 
$
27,503

 
$
26,461

 
3.9

 
 
$
45,194

 
$
43,779

 
3.2

 
Property EBITDA
 
$
6,540

 
$
6,452

 
1.4

 
 
$
5,487

 
$
5,973

 
(8.1
)
 
Selected Operating Information:
Rooms
 
511

 
511

 

 
  
 
511

 
511

 

 
 
Average occupancy
 
85.1
%
 
87.8
%
 
(2.7
)
 
pts 
 
80.2
%
 
81.6
%
 
(1.4
)
 
pts 
ADR
 
$
481.01

 
$
463.33

 
3.8

 
 
$
418.77

 
$
413.07

 
1.4

 
RevPAR
 
$
409.32

 
$
406.84

 
0.6

 
 
$
335.76

 
$
337.06

 
(0.4
)
 
Total RevPAR
 
$
591.45

 
$
569.04

 
3.9

 
 
$
488.63

 
$
473.34

 
3.2

 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
LOEWS SANTA MONICA BEACH HOTEL
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
14,663

 
$
14,705

 
(0.3
)
 
 
$
27,264

 
$
28,327

 
(3.8
)
 
Property EBITDA
 
$
4,488

 
$
4,755

 
(5.6
)
 
 
$
7,329

 
$
8,415

 
(12.9
)
 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
347

 
347

 

 
  
 
347

 
347

 

 
  
Average occupancy
 
82.7
%
 
86.3
%
 
(3.6
)
 
pts 
 
80.8
%
 
87.4
%
 
(6.6
)
 
pts 
ADR
 
$
378.00

 
$
364.63

 
3.7

 
 
$
362.92

 
$
352.83

 
2.9

 
RevPAR
 
$
312.71

 
$
314.82

 
(0.7
)
 
 
$
293.22

 
$
308.22

 
(4.9
)
 
Total RevPAR
 
$
464.37

 
$
471.98

 
(1.6
)
 
 
$
434.08

 
$
457.35

 
(5.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

22



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
MARRIOTT LINCOLNSHIRE RESORT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information (Property EBITDA excludes a $10.4 million impairment loss related to this hotel for the three and six months ended June 30, 2015):
Total revenues
 
$
9,515

 
$
9,187

 
3.6

 
 
$
16,161

 
$
15,650

 
3.3

 
Property EBITDA
 
$
1,205

 
$
1,021

 
18.0

 
 
$
905

 
$
383

 
136.3

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
389

 
389

 

 
  
 
389

 
389

 

 
  
Average occupancy
 
63.3
%
 
60.8
%
 
2.5

 
pts 
 
58.9
%
 
55.6
%
 
3.3

 
pts 
ADR
 
$
144.56

 
$
137.82

 
4.9

 
 
$
142.63

 
$
135.54

 
5.2

 
RevPAR
 
$
91.44

 
$
83.85

 
9.1

 
 
$
83.95

 
$
75.30

 
11.5

 
Total RevPAR
 
$
268.79

 
$
259.58

 
3.5

 
 
$
229.54

 
$
222.28

 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MONTAGE LAGUNA BEACH
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information (This table includes financial information only for our period of ownership):
 
 
 
 
Total revenues
 
$
23,445

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
Property EBITDA
 
$
5,232

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
Selected Operating Information (This table includes statistical information only for our period of ownership. For the six months ended June 30, 2015, average occupancy was 75.8%, ADR was $555.32, RevPAR was $420.94 and Total RevPAR was $975.93. For the three and six months ended June 30, 2014, average occupancy was 83.3% and 79.4%, respectively, ADR was $544.67 and $510.91, respectively, RevPAR was $453.59 and $407.38, respectively, and Total RevPAR was $1,050.45 and $945.39, respectively):
Rooms
 
249

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
Average occupancy
 
74.0
%
 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
ADR
 
$
609.48

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
RevPAR
 
$
451.05

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
Total RevPAR
 
$
1,035.55

 
N/A

 
N/A

 
 
 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RITZ-CARLTON HALF MOON BAY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
18,444

 
$
17,834

 
3.4

 
 
$
32,196

 
$
30,655

 
5.0

 
Property EBITDA
 
$
4,299

 
$
4,029

 
6.7

 
 
$
5,896

 
$
5,221

 
12.9

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
261

 
261

 

 
  
 
261

 
261

 

 
  
Average occupancy
 
67.4
%
 
74.9
%
 
(7.5
)
 
pts 
 
61.4
%
 
67.9
%
 
(6.5
)
 
pts 
ADR
 
$
488.60

 
$
412.83

 
18.4

 
 
$
453.99

 
$
391.44

 
16.0

 
RevPAR
 
$
329.52

 
$
309.13

 
6.6

 
 
$
278.93

 
$
265.62

 
5.0

 
Total RevPAR
 
$
776.57

 
$
750.89

 
3.4

 
 
$
681.53

 
$
648.91

 
5.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RITZ-CARLTON LAGUNA NIGUEL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
26,034

 
$
25,977

 
0.2

 
 
$
50,284

 
$
46,131

 
9.0

 
Property EBITDA
 
$
8,932

 
$
8,735

 
2.3

 
 
$
16,872

 
$
14,256

 
18.4

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
396

 
396

 

 
  
 
396

 
396

 

 
  
Average occupancy
 
69.6
%
 
71.2
%
 
(1.6
)
 
pts 
 
72.0
%
 
69.3
%
 
2.7

 
pts 
ADR
 
$
428.58

 
$
414.62

 
3.4

 
 
$
410.83

 
$
388.51

 
5.7

 
RevPAR
 
$
298.42

 
$
295.07

 
1.1

 
 
$
295.89

 
$
269.12

 
9.9

 
Total RevPAR
 
$
722.44

 
$
720.87

 
0.2

 
 
$
701.54

 
$
643.60

 
9.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


23




 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
Three and Six Months Ended June 30, 2015 and 2014
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
WESTIN ST. FRANCIS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
41,557

 
$
40,818

 
1.8

 
 
$
82,053

 
$
74,543

 
10.1

 
Property EBITDA
 
$
12,675

 
$
12,046

 
5.2

 
 
$
24,595

 
$
18,043

 
36.3

 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
1,195

 
1,195

 

 
  
 
1,195

 
1,195

 

 
  
Average occupancy
 
92.1
%
 
92.1
%
 

 
pts 
 
87.6
%
 
84.3
%
 
3.3

 
pts 
ADR
 
$
278.28

 
$
260.36

 
6.9

 
 
$
278.97

 
$
253.44

 
10.1

 
RevPAR
 
$
256.34

 
$
239.82

 
6.9

 
 
$
244.37

 
$
213.61

 
14.4

 
Total RevPAR
 
$
386.19

 
$
375.36

 
2.9

 
 
$
379.36

 
$
344.64

 
10.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN HOTEL:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MARRIOTT HAMBURG
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Financial Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
5,120

 
$
6,281

 
(18.5
)
 
 
$
9,273

 
$
11,430

 
(18.9
)
 
Property EBITDA
 
$
1,321

 
$
1,687

 
(21.7
)
 
 
$
2,560

 
$
3,199

 
(20.0
)
 
Selected Operating Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rooms
 
278

 
278

 

 
  
 
278

 
278

 

 
  
Average occupancy
 
84.4
%
 
85.8
%
 
(1.4
)
 
pts 
 
81.7
%
 
84.7
%
 
(3.0
)
 
pts 
ADR
 
$
186.26

 
$
218.76

 
(14.9
)
 
 
$
171.49

 
$
198.14

 
(13.5
)
 
RevPAR
 
$
157.15

 
$
187.61

 
(16.2
)
 
 
$
140.06

 
$
167.91

 
(16.6
)
 
Total RevPAR
 
$
202.39

 
$
248.27

 
(18.5
)
 
 
$
184.29

 
$
227.16

 
(18.9
)
 





24



 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
Reconciliation of Property EBITDA to EBITDA
(in thousands)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Hotel
 
Property
EBITDA
 
EBITDA
 
Property
EBITDA
 
EBITDA
 
Property
EBITDA
 
EBITDA
 
Property
EBITDA
 
EBITDA
Fairmont Chicago
 
$
6,231

 
$
6,231

 
$
5,812

 
$
5,812

 
$
4,514

 
$
4,514

 
$
3,672

 
$
3,672

Fairmont Scottsdale Princess (a)
 
5,502

 
5,502

 
7,138

 
7,138

 
22,249

 
22,249

 
20,329

 
7,138

Four Seasons Hotel Austin (b)
 

 
1,530

 

 

 

 
1,530

 

 

Four Seasons Jackson Hole
 
(104
)
 
(104
)
 
(413
)
 
(413
)
 
5,030

 
5,030

 
4,095

 
4,095

Four Seasons Resort Scottsdale at Troon North (c)
 
2,904

 
2,904

 

 

 
8,287

 
8,287

 

 

Four Seasons Silicon Valley
 
3,392

 
3,392

 
2,741

 
2,741

 
5,848

 
5,848

 
4,536

 
4,536

Four Seasons Washington, D.C.
 
5,960

 
5,960

 
5,802

 
5,802

 
7,952

 
7,952

 
7,706

 
7,706

Hotel del Coronado (a)
 
14,835

 
14,835

 
14,962

 
3,759

 
28,882

 
28,882

 
24,521

 
3,759

InterContinental Chicago
 
7,062

 
7,062

 
7,097

 
7,097

 
5,224

 
5,224

 
6,409

 
6,409

InterContinental Miami
 
5,547

 
5,547

 
5,047

 
5,047

 
16,270

 
16,270

 
14,397

 
14,397

JW Marriott Essex House Hotel
 
6,540

 
6,540

 
6,452

 
6,452

 
5,487

 
5,487

 
5,973

 
5,973

Loews Santa Monica Beach Hotel
 
4,488

 
4,488

 
4,755

 
4,755

 
7,329

 
7,329

 
8,415

 
8,415

Marriott Lincolnshire Resort
 
1,205

 
1,205

 
1,021

 
1,021

 
905

 
905

 
383

 
383

Montage Laguna Beach (d)
 
5,232

 
5,232

 

 

 

 
8,539

 

 

Ritz-Carlton Half Moon Bay
 
4,299

 
4,299

 
4,029

 
4,029

 
5,896

 
5,896

 
5,221

 
5,221

Ritz-Carlton Laguna Niguel
 
8,932

 
8,932

 
8,735

 
8,735

 
16,872

 
16,872

 
14,255

 
14,255

Westin St. Francis
 
12,675

 
12,675

 
12,046

 
12,046

 
24,595

 
24,595

 
18,043

 
18,043

Marriott Hamburg (e)
 
1,321

 
(4
)
 
1,687

 
59

 
2,560

 
(7
)
 
3,199

 
100

 
 
96,021

 
96,226

 
86,911

 
74,080

 
167,900

 
175,402

 
141,154

 
104,102

Assets Sold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hyatt Regency La Jolla (f)
 
1,244

 
1,244

 
1,396

 
1,396

 
3,597

 
3,597

 
1,587

 
1,587

 
 
$
97,265

 
$
97,470

 
$
88,307

 
$
75,476

 
$
171,497

 
$
178,999

 
$
142,741

 
$
105,689

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses
 
 
 
(10,401
)
 
 
 

 
 
 
(10,401
)
 
 
 

Corporate expenses
 
 
 
(6,441
)
 
 
 
(7,198
)
 
 
 
(14,709
)
 
 
 
(14,391
)
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 affiliate
 
 
 

 
 
 
65,349

 
 
 

 
 
 
143,466

Other income, net
 
 
 
40,465

 
 
 
795

 
 
 
40,308

 
 
 
1,218

Income from discontinued operations
 
 
 

 
 
 
604

 
 
 

 
 
 
159,039

Depreciation expense—discontinued operations
 

 
 
 

 
 
 

 
 
 
1,275

Interest expense—discontinued operations
 

 
 
 

 
 
 

 
 
 
1,326

Income taxes—discontinued operations
 

 
 
 

 
 
 

 
 
 
833

Income taxes—sale of assets
 
 
 

 
 
 

 
 
 

 
 
 
20,451

Noncontrolling interest in consolidated affiliates
 
(16,888
)
 
 
 
217

 
 
 
(13,454
)
 
 
 
4,258

Adjustments from consolidated affiliates
 
(3,209
)
 
 
 
(3,939
)
 
 
 
(7,046
)
 
 
 
(7,614
)
Adjustments from unconsolidated affiliates
 

 
 
 
3,153

 
 
 

 
 
 
8,443

Other adjustments
 
 
 
207

 
 
 
31

 
 
 
200

 
 
 
(130
)
EBITDA
 
 
 
$
67,048

 
 
 
$
135,356

 
 
 
$
139,727

 
 
 
$
429,205


(a)
On March 31, 2014, we acquired the remaining ownership interest in the Fairmont Scottsdale Princess hotel and consolidated the property. On June 11, 2014, we acquired the remaining ownership interest in the Hotel del Coronado and consolidated the property. EBITDA represents revenue and expenses generated by these properties subsequent to the consolidation of these properties. Prior to the acquisitions on March 31, 2014 and June 11, 2014, we accounted for these properties under the equity method of accounting. EBITDA related to our interest in these properties while they were accounted for under the equity method

25



of accounting is reflected in adjustments from unconsolidated affiliates. Property EBITDA represents 100% of revenue and expenses generated by these properties.
(b)
On May 12, 2015, we purchased the Four Seasons Hotel Austin. We have not included the results of this hotel in Property EBITDA for the three and six months ended June 30, 2015 and 2014 above since we did not own the property for the entire periods.
(c)
On December 9, 2014 we purchased the Four Seasons Resort Scottsdale at Troon North. We have not included the results of this hotel in Property EBITDA for the three and six months ended June 30, 2014 above since we did not own the property during those periods.
(d)
On January 29, 2015, we purchased the Montage Laguna Beach resort. We have not included the results of this hotel in Property EBITDA for the six months ended June 30, 2015 and for the three and six months ended June 30, 2014 above since we did not own the property for the entire periods.
(e)
We have a leasehold interest in and sublease this property. Therefore, EBITDA represents the lease revenue less the lease expense recorded in our statements. Property EBITDA represents the revenue less expenses generated by the property.
(f)
On May 21, 2015, we sold the Hyatt Regency La Jolla hotel. We have included the results of this hotel in Property EBITDA for our period of ownership.

26



 
 
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
 
Three and Six Months Ended June 30, 2015 and 2014
 
Reconciliation of Property EBITDA to Comparable EBITDA
(in thousands)
 
 
Three Months Ended June 30, 2015
 
Six Months Ended June 30, 2015
 
 
Property
EBITDA
 
Adjustments
 
Comparable
EBITDA
 
Property
EBITDA
 
Adjustments
 
Comparable EBITDA
Urban Hotels:
 
 
 
 
 
 
 
 
 
 
 
 
Fairmont Chicago
 
$
6,231

 
 
 
$
6,231

 
$
4,514

 
 
 
$
4,514

Four Seasons Hotel Austin
 

 
1,530

 
1,530

 

 
1,530

 
1,530

Four Seasons Silicon Valley
 
3,392

 
 
 
3,392

 
5,848

 
 
 
5,848

Four Seasons Washington, D.C.
 
5,960

 
 
 
5,960

 
7,952

 
 
 
7,952

InterContinental Chicago
 
7,062

 
 
 
7,062

 
5,224

 
 
 
5,224

InterContinental Miami
 
5,547

 
 
 
5,547

 
16,270

 
 
 
16,270

JW Marriott Essex House Hotel
 
6,540

 
(2,990
)
 
3,550

 
5,487

 
(2,356
)
 
3,131

Westin St. Francis
 
12,675

 
 
 
12,675

 
24,595

 
 
 
24,595

Total Urban Hotels
 
47,407

 
(1,460
)
 
45,947

 
69,890

 
(826
)
 
69,064

Resorts:
 
 
 
 
 
 
 
 
 
 
 
 
Fairmont Scottsdale Princess
 
5,502

 
 
 
5,502

 
22,249

 
 
 
22,249

Four Seasons Jackson Hole
 
(104
)
 
 
 
(104
)
 
5,030

 
 
 
5,030

Four Seasons Resort Scottsdale at Troon North
 
2,904

 
 
 
2,904

 
8,287

 
 
 
8,287

Hotel del Coronado
 
14,835

 
513

 
15,348

 
28,882

 
1,026

 
29,908

Loews Santa Monica Beach Hotel
 
4,488

 
 
 
4,488

 
7,329

 
 
 
7,329

Marriott Lincolnshire Resort
 
1,205

 
 
 
1,205

 
905

 
 
 
905

Montage Laguna Beach
 
5,232

 
 
 
5,232

 

 
8,539

 
8,539

Ritz-Carlton Half Moon Bay
 
4,299

 
 
 
4,299

 
5,896

 
 
 
5,896

Ritz-Carlton Laguna Niguel
 
8,932

 
 
 
8,932

 
16,872

 
 
 
16,872

Total Resorts
 
47,293

 
513

 
47,806

 
95,450

 
9,565

 
105,015

European Hotel:
 
 
 
 
 
 
 
 
 
 
 
 
Marriott Hamburg
 
1,321

 
(1,368
)
 
(47
)
 
2,560

 
(2,654
)
 
(94
)
Assets Sold:
 
 
 
 
 
 
 
 
 
 
 
 
Hyatt Regency La Jolla
 
1,244

 
(548
)
 
696

 
3,597

 
(1,586
)
 
2,011

 
 
$
97,265

 
$
(2,863
)
 
$
94,402

 
$
171,497

 
$
4,499

 
$
175,996

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of QTR Comparable EBITDA
 
 
 
% of YTD Comparable EBITDA
 
 
Urban Hotels
 
49
%
 

 
39
%
 

Resorts
 
51
%
 

 
60
%
 

Total
 
100
%
 
 
 
99
%
 
 
Total United States Urban Hotels (as of June 30, 2015) (a)
 
 
 
 
 
 
 
  
8 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,539 Rooms
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
307.31

 
$
289.97

 
6.0

 
 
$
295.86

 
$
277.93

 
6.5

 
Average Occupancy
 
84.3
%
 
85.3
%
 
(1.0
)
 
pts 
 
78.0
%
 
78.2
%
 
(0.2
)
 
pts 
RevPAR
 
$
259.21

 
$
247.40

 
4.8

 
 
$
230.72

 
$
217.29

 
6.2

 
Total RevPAR
 
$
428.42

 
$
408.64

 
4.8

 
 
$
390.05

 
$
366.30

 
6.5

 
Property EBITDA Margin
 
28.9
%
 
28.7
%
 
0.2

 
pts 
 
24.4
%
 
22.7
%
 
1.7

 
pts 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Includes the Four Seasons Hotel Austin, including periods prior to ownership.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total United States Resorts (as of June 30, 2015) (b)
 
 
 
 
 
 
 
  
9 Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,382 Rooms
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
 
Six Months Ended June 30,
 
 
 
 
2015
 
2014
 
Change
 
 
 
2015
 
2014
 
Change
 
 
ADR
 
$
362.75

 
$
351.01

 
3.3

 
 
$
370.85

 
$
355.36

 
4.4

 
Average Occupancy
 
71.4
%
 
72.8
%
 
(1.4
)
 
pts 
 
72.7
%
 
71.9
%
 
0.8

 
pts 
RevPAR
 
$
259.08

 
$
255.66

 
1.3

 
 
$
269.54

 
$
255.34

 
5.6

 
Total RevPAR
 
$
585.05

 
$
582.90

 
0.4

 
 
$
605.48

 
$
571.08

 
6.0

 
Property EBITDA Margin
 
26.3
%
 
27.1
%
 
(0.8
)
 
pts 
 
28.1
%
 
26.4
%
 
1.7

 
pts 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(b) Includes the Four Seasons Resort Scottsdale at Troon North and Montage Laguna Beach resort, including periods prior to ownership.

27



 
  
Supplemental Financial Information
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
  
June 30, 2015
 
2015 Guidance
(in millions, except per share data)
 
 
 
Year Ended
December 31, 2015
Operational Guidance
 
Low Range
 
High Range
Total RevPAR growth
 
4.0
%
 
5.0
%
RevPAR growth
 
5.5
%
 
6.5
%
 

 
 
Year Ended
December 31, 2015
Comparable EBITDA Guidance
 
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

 
 
 
Year Ended
December 31, 2015
Comparable FFO Guidance
 
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




28