ALISO VIEJO, Calif.,
Aug. 2, 2012 /PRNewswire/
-- Sunstone Hotel Investors, Inc. (the "Company") (NYSE: SHO)
today announced results for the second quarter ended June 30, 2012.
Second Quarter 2012 Operational Results (as compared to
Second Quarter 2011)(1):
- Comparable Hotel RevPAR increased 7.6% to $142.82.
- Comparable Hotel EBITDA Margin increased by 110 basis points to
32.6%.
- Adjusted EBITDA increased by 11.7% to $71.1 million.
- Adjusted FFO per diluted share increased by 16.7% to
$0.35.
- Income available to common stockholders was $4.1 million (vs. $31.1
million in 2011).
- Income available to common stockholders per diluted share was
$0.03 (vs. $0.27 in 2011).
Ken Cruse, President and Chief
Executive Officer, stated, "Our team continued to execute on
our balanced business plan during the second quarter.
Proactive asset management helped to drive strong results,
including a 7.6% increase in our Comparable Hotel RevPAR, a
110-basis-point improvement in our Comparable Hotel EBITDA Margins
and a 16.7% increase in our Adjusted FFO per share.
Additionally, we took several steps toward our goal of gradually
delevering our balance sheet while improving the quality and scale
of our portfolio. During the quarter, we repaid one mortgage,
and we announced the pending sale of a highly levered hotel as well
as the equity-funded acquisitions of two high-quality, unlevered
urban hotels. We will continue to pursue high-quality
acquisitions using our shares as currency when such acquisitions
can be executed at attractive relative valuations."
Mr. Cruse continued, "Looking ahead, we continue to build a
solid base for future growth. On a same-store basis, our managers
booked more group room nights in the second quarter 2012 than in
any other second quarter over the past five years. In spite
of difficult macroeconomic conditions, lodging industry
fundamentals remain highly constructive, with capital costs and
supply trends at record lows, and demand for lodging approaching
record highs. Accordingly, we continue to believe the U.S.
lodging industry is in the first half of a prolonged growth phase
and we remain focused on delivering industry leading stockholder
returns through the continued execution of our balanced business
plan."
(1)
|
Comparable
Hotel RevPAR and Comparable Hotel EBITDA Margin information
presented reflect the Company's Comparable 31 Hotel Portfolio,
which includes all hotels in which the Company has interests as of
June 30, 2012, excluding the Marriott Del Mar, which has been
classified as held for sale and included in discontinued operations
due to its probable sale within the next year, and the Hyatt
Chicago Magnificent Mile, which is currently experiencing material
and prolonged business interruption due to rebranding and
renovation. Comparable Hotel EBITDA Margin information excludes
current and prior year real estate tax credits or assessments. The
Comparable 31 Hotel Portfolio also includes prior ownership results
as applicable in 2011 for the Doubletree Guest Suites Times Square
acquired by the Company in January 2011, the JW Marriott New
Orleans acquired by the Company in February 2011 and the Hilton San
Diego Bayfront acquired by the Company in April 2011.
|
|
SELECTED FINANCIAL DATA
|
($ in
millions, except RevPAR and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30,
|
|
Six
Months Ended June 30,
|
|
2012
|
2011
|
%
Change
|
|
2012
|
2011
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue
|
$
237.8
|
$
214.6
|
10.8%
|
|
|
$
438.9
|
$
369.9
|
18.6%
|
|
Comparable
Hotel RevPAR
|
$
142.82
|
$
132.77
|
7.6%
|
|
|
$
130.37
|
$
122.30
|
6.6%
|
|
Comparable
Hotel Occupancy
|
80.7%
|
77.9%
|
280
bps
|
|
|
77.3%
|
73.8%
|
350
bps
|
|
Comparable
Hotel ADR
|
$
176.98
|
$
170.44
|
3.8%
|
|
|
$
168.66
|
$
165.72
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Hotel EBITDA Margin
|
32.6%
|
31.5%
|
110
bps
|
|
|
28.9%
|
27.7%
|
120
bps
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
11.9
|
$
38.9
|
|
|
|
$
(1.1)
|
$
90.3
|
|
|
Income
available (loss attributable) to common stockholders
|
$
4.1
|
$
31.1
|
|
|
|
$
(16.9)
|
$
76.8
|
|
|
Income
available (loss attributable) to common stockholders per diluted
share
|
$
0.03
|
$
0.27
|
|
|
|
$
(0.14)
|
$
0.66
|
|
|
EBITDA
|
$
67.4
|
$
92.2
|
|
|
|
$
109.1
|
$
190.3
|
|
|
Adjusted
EBITDA
|
$
71.1
|
$
63.7
|
|
|
|
$
114.3
|
$
96.1
|
|
|
FFO
|
$
38.7
|
$
49.7
|
|
|
|
$
51.6
|
$
124.5
|
|
|
Adjusted
FFO
|
$
42.1
|
$
35.3
|
|
|
|
$
55.8
|
$
43.9
|
|
|
FFO per
diluted share (1)
|
$
0.32
|
$
0.42
|
|
|
|
$
0.43
|
$
1.06
|
|
|
Adjusted
FFO per diluted share (1)
|
$
0.35
|
$
0.30
|
|
|
|
$
0.47
|
$
0.37
|
|
|
(1)
|
Reflects
the Series C convertible preferred stock on a "non-converted"
basis. On an "as-converted" basis, FFO per diluted share is $0.32
and $0.42, respectively, for the three months ended June 30, 2012
and 2011, and $0.44 and $1.05, respectively, for the six months
ended June 30, 2012 and 2011. On an "as-converted" basis, Adjusted
FFO per diluted share is $0.35 and $0.30, respectively, for the
three months ended June 30, 2012 and 2011, and $0.48 and $0.39,
respectively, for the six months ended June 30, 2012 and
2011.
|
Disclosure regarding the non-GAAP financial measures in this
release is included on pages 5 and 6. Reconciliations of non-GAAP
financial measures to the most comparable GAAP measure for each of
the periods presented are included on pages 9 through 13 of this
release.
The Company's actual results for the quarter ended June 30, 2012 compare to its prior guidance as
follows:
Metric
|
Quarter
Ended June 30, 2012 Guidance
(1)
|
Impact
of Acquisition / Equity Issuances (2)
|
Adjusted Quarter Ended June 30, 2012
Guidance(3)
|
Quarter
Ended June 30, 2012 Actual
|
Performance Relative to Adjusted Guidance
Midpoint
|
Comparable
Hotel RevPAR
|
+5.5% -
7.5%
|
-
|
+5.5% -
7.5%
|
+7.6%
|
+1.1%
|
Net Income
($ millions)
|
$8 -
$11
|
$0.6
|
$9 -
$12
|
$11.9
|
+$1.4
|
Adjusted
EBITDA ($ millions)
|
$65 -
$68
|
$0.9
|
$66 -
$69
|
$71.1
|
+$3.6
|
Adjusted
FFO ($ millions)
|
$36 -
$39
|
$0.9
|
$37 -
$40
|
$42.1
|
+$3.6
|
Adjusted
FFO per diluted share
|
$0.30 -
$0.33
|
-
|
$0.30 -
$0.33
|
$0.35
|
+$0.04
|
Diluted
Weighted Average Shares Outstanding
|
117,600,000
|
2,200,000
|
119,800,000
|
120,257,000
|
+457,000
|
|
(1)
|
Reflects
guidance presented on May 2, 2012.
|
(2)
|
Reflects
supplemental financial data presented in transaction press releases
dated June 6, 2012 and June 19, 2012.
|
(3)
|
Reflects
guidance presented on May 2, 2012 adjusted for acquisition and
equity issuances.
|
Acquisitions Update
On July 19, 2012, the Company
completed the previously announced acquisition of the 357-room
Hilton Garden Inn Chicago Downtown/Magnificent Mile for a gross
purchase price of $91.75 million. The
acquisition was funded with a portion of the proceeds received from
the Company's public offering of 12.1 million shares of its common
stock (including the underwriter's exercise of its overallotment
option).
On June 4, 2012, the Company
completed the previously announced acquisition of the 417-room
Wyndham Chicago, which the Company rebranded the Hyatt Chicago
Magnificent Mile. The contractual purchase price of $88.425 million consisted of a combination of
cash and 5.5 million shares of the Company's common stock initially
valued at $58.425 million
($10.71/share). Based on the
$9.38 closing price of the Company's
common stock on the NYSE on June 4,
2012, the total purchase price of the Wyndham Chicago hotel
for accounting purposes was $81.16
million, which was funded with $29.7
million of cash on hand (including $0.3 million of proration credits) and the
Company's common stock valued at $51.16
million, issued directly to the seller, the Blackstone
Group.
Disposition Update
On June 6, 2012, the Company
announced it had entered into a purchase-and-sale agreement to sell
the 284-room Marriott Del Mar for a contractual purchase price of
$66.0 million ($232,000/key). The sale of the hotel is subject
to the buyer's assumption of the existing $47.2 million mortgage. The Company and the buyer
are working to finalize the assumption with the loan's special
servicer and expect to finalize the sale and loan assumption during
the third quarter of 2012.
Balance Sheet/Liquidity Update
On April 26, 2012, the Company
used existing cash to repay its $32.2
million non-recourse mortgage secured by the Renaissance
Long Beach, which was scheduled to mature on July 1, 2012.
On June 25, 2012, the Company
completed a public offering of 12.1 million shares of its common
stock (including the underwriter's exercise of its overallotment
option) for total net proceeds of approximately $126.2 million. A portion of the proceeds from
this offering were used to acquire the Hilton Garden Inn Chicago
Downtown/Magnificent Mile. The remaining proceeds will be used for
potential future acquisitions, capital investment in the Company's
portfolio, including the renovation of the Hyatt Chicago
Magnificent Mile, and other general corporate purposes, including
working capital.
As of June 30, 2012, the Company
had approximately $277.9 million of
cash and cash equivalents, including restricted cash of
$73.3 million. As noted above, the
Company used approximately $91.75
million of its unrestricted cash to purchase the Hilton
Garden Inn Chicago Downtown/Magnificent Mile on July 19, 2012.
As of June 30, 2012, the Company
had total assets of approximately $3.2
billion, including $2.8
billion of net investments in hotel properties, total
consolidated debt related to continuing operations of $1.5 billion and stockholders' equity of
$1.4 billion.
John Arabia, Chief Financial
Officer, stated, "We continue to make meaningful progress towards
our stated goals of reducing leverage in a shareholder friendly
manner and maintaining strong liquidity, while, at the same time,
growing our portfolio's quality and scale. Since January 2011, we have improved our leverage ratio
though a combination of highly equitized acquisitions and the
repayment or elimination of approximately $221 million of debt, including debt secured by
the Marriott Del Mar which will be eliminated upon the hotel's
anticipated sale during the third quarter of 2012. Our
liquidity is strong, our near-term debt maturities are few, and we
have several avenues in which to achieve our stated goals of
reducing leverage and creating shareholder value."
Capital Improvements
The Company invested $26.7 million
in capital improvements into its portfolio during the second
quarter of 2012, and $48.5 million
during the six months ended June 30,
2012.
2012 Outlook
Achievement of the Company's anticipated results is subject to
risks and uncertainties, including those disclosed in the Company's
filings with the Securities and Exchange Commission. The
Company's guidance includes the Company's ownership period for all
2012 acquisitions and dispositions and does not take into account
the impact of any future hotel acquisitions, dispositions,
re-brandings or management change transition costs, prior-year
property tax assessments and/or credits, potential income tax
expense if the Company elects to apply net operating loss
carryforwards, debt repurchases or financings during 2012.
For the third quarter of 2012, the Company expects:
Metric
|
Quarter
Ended September 30, 2012 Guidance
|
Comparable
Hotel RevPAR
|
+3% -
5%
|
Net Income
($ millions)
|
$1 -
$4
|
Adjusted
EBITDA ($ millions)
|
$57 -
$60
|
Adjusted
FFO ($ millions)
|
$28 -
$31
|
Adjusted
FFO per diluted share
|
$0.20 -
$0.23
|
Diluted
Weighted Average Shares Outstanding
|
135,700,000
|
For the full year 2012, the Company expects:
Metric
|
Prior
2012 FY Guidance (1)
|
Impact
of Acquisitions / Dispositions / Equity Issuances
(2)
|
Adjusted Prior 2012 FY Guidance
(3)
|
Current
2012 FY Guidance
|
Change
to Adjusted Guidance Midpoint
|
Comparable
Hotel RevPAR
|
+5% -
7%
|
-
|
+5% -
7%
|
+5% -
7%
|
+0%
|
Net Income
($ millions)
|
$4 -
$13
|
$3.9
|
$8 -
$17
|
$15 -
$22
|
+$6.0
|
Adjusted
EBITDA ($ millions)
|
$229 -
$238
|
$5.5
|
$235 -
$244
|
$239 -
$245
|
+$2.5
|
Adjusted
FFO ($ millions)
|
$113 -
$122
|
$6.8
|
$120 -
$129
|
$123 -
$130
|
+$2.0
|
Adjusted
FFO per diluted share
|
$0.96 -
$1.04
|
($0.02) -
($0.03)
|
$0.94 -
$1.01
|
$0.97 -
$1.02
|
+$0.02
|
Diluted
Weighted Average Shares Outstanding
|
117,800,000
|
10,100,000
|
127,900,000
|
127,900,000
|
-
|
(1)
|
Reflects
guidance presented on May 2, 2012.
|
(2)
|
Reflects
supplemental financial data presented in transaction press releases
dated June 6, 2012 and June 19, 2012.
|
(3)
|
Reflects
guidance presented on May 2, 2012 adjusted for acquisitions,
dispositions, and equity issuances.
|
Third-quarter and full-year 2012 guidance is also based on
the following assumptions:
- Full-year capital investment of $85 to
$100 million, including the $25
million renovation of the Renaissance Washington DC.
- Hotel revenue renovation disruption of $3 to $5 million, primarily in the third and
fourth quarters.
- Third-quarter RevPAR guidance assumes that hotel revenue
renovation disruption will negatively impact third-quarter RevPAR
growth by 100 to 150 basis points.
- Full-year comparable Hotel EBITDA Margins to increase by 75 to
125 basis points.
- Full-year corporate overhead expense (excluding stock
amortization and one-time expenses related to future acquisition
closing costs) of $19 to $20
million.
- Full-year interest expense of approximately $83 to $85 million, including $4 million in amortization of deferred financing
fees.
- Full-year preferred dividends (Series A, C and D) of
approximately $30 million.
Dividend Update
On August 2, 2012, the Company's
Board of Directors declared a cash dividend of $0.50 per share payable to its Series A and
Series D cumulative redeemable preferred stockholders and a cash
dividend of $0.393 per share payable
to its Series C cumulative convertible redeemable preferred
stockholders. The dividends will be paid on or before October 15, 2012 to stockholders of record on
September 30, 2012. No dividend
was declared on the Company's common stock, as the Company intends
to deploy excess cash flow from operations toward internal
renovation investments and gradual deleveraging.
Subject to certain limitations, the Company intends to make
dividends on its stock in amounts equivalent to 100% of its annual
taxable income, which may be reduced through the application of net
operating loss carryforwards. The level of any future dividends
will be determined by the Company's Board of Directors after
considering taxable income projections, expected capital
requirements, risks affecting the Company's business and in context
of the Company's leverage-reduction initiatives. As a result,
common stock dividends may be made in the form of cash or a
combination of cash and stock consistent with Internal Revenue
Service guidelines.
Supplemental Disclosures
Contemporaneous with this release, the Company has furnished a
Form 8-K with unaudited financial information. This additional
information is being provided as a supplement to information
prepared in accordance with generally accepted accounting
principles. The Company undertakes no obligation to update any of
the information provided to conform to actual results or changes in
the Company's portfolio, capital structure or future
expectations.
Earnings Call
The Company will host a conference call to discuss second
quarter results on August 3, 2012, at
12:00 p.m. EDT (9:00 a.m. PDT). A live web cast of the call will
be available via the Investor Relations section of the Company's
website. Alternatively, investors may dial 1-800-762-8779
(for domestic callers) or 1-480-629-9645 (for international
callers). A replay of the web cast will also be archived on the
website.
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. ("Sunstone") is a lodging real
estate investment trust ("REIT") that, as of August 2, 2012, has interests in 33 hotels held
for investment comprised of 13,698 rooms. Sunstone's hotels
are primarily in the upper upscale segment and are generally
operated under nationally recognized brands, such as Marriott,
Hilton, Hyatt, Fairmont and Sheraton. For further information,
please visit Sunstone's website at www.sunstonehotels.com.
Sunstone's mission is to create meaningful value for our
stockholders by becoming the premier hotel owner. Our values
include transparency, trust, ethical conduct, communication and
discipline. We seek to employ a balanced, cycle-appropriate
corporate strategy that encompasses the following:
- Proactive portfolio management;
- Intensive asset management;
- Disciplined external growth; and
- Measured balance sheet improvement.
This press release contains forward-looking statements within
the meaning of federal securities laws and regulations. These
forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," "will" and other similar terms and phrases,
including references to assumptions and forecasts of future
results. Forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties and
other factors that may cause the actual results to differ
materially from those anticipated at the time the forward-looking
statements are made. These risks include, but are not limited to:
volatility in the debt or equity markets affecting our ability to
acquire or sell hotel assets; national and local economic and
business conditions, including the likelihood of a prolonged U.S.
recession; the ability to maintain sufficient liquidity and our
access to capital markets; potential terrorist attacks, which would
affect occupancy rates at our hotels and the demand for hotel
products and services; operating risks associated with the hotel
business; risks associated with the level of our indebtedness and
our ability to meet covenants in our debt and equity agreements;
relationships with property managers and franchisors; our ability
to maintain our properties in a first-class manner, including
meeting capital expenditure requirements; our ability to compete
effectively in areas such as access, location, quality of
accommodations and room rate structures; changes in travel
patterns, taxes and government regulations, which influence or
determine wages, prices, construction procedures and costs; our
ability to identify, successfully compete for and complete
acquisitions; the performance of hotels after they are acquired;
necessary capital expenditures and our ability to fund them and
complete them with minimum disruption; our ability to continue to
satisfy complex rules in order for us to qualify as a REIT for
federal income tax purposes; and other risks and uncertainties
associated with our business described in the Company's filings
with the Securities and Exchange Commission. Although the Company
believes the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no
assurance that the expectations will be attained or that any
deviation will not be material. All forward-looking information in
this release is as of August 2, 2012,
and the Company undertakes no obligation to update any
forward-looking statement to conform the statement to actual
results or changes in the Company's expectations.
This release should be read in conjunction with the consolidated
financial statements and notes thereto included in our most recent
reports on Form 10-K and Form 10-Q. Copies of these reports are
available on our website at www.sunstonehotels.com and through the
SEC's Electronic Data Gathering Analysis and Retrieval System
("EDGAR") at www.sec.gov.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures that we
believe are useful to investors as key measures of our operating
performance: Earnings Before Interest Expense, Taxes, Depreciation
and Amortization, or EBITDA; Adjusted EBITDA (as defined below);
Funds From Operations, or FFO; Adjusted FFO (as defined below); and
comparable and pro forma hotel EBITDA and comparable and pro forma
hotel EBITDA margin.
EBITDA represents net income (loss) excluding: non-controlling
interests; interest expense; provision for income taxes, including
income taxes applicable to sale of assets; and depreciation and
amortization. In addition, we have presented Adjusted EBITDA, which
excludes: amortization of deferred stock compensation; the impact
of any gain or loss from asset sales; impairment charges; and any
other adjustments we have identified in this release. We believe
EBITDA and Adjusted EBITDA are useful to investors in evaluating
our operating performance because these measures help investors
evaluate and compare the results of our operations from period to
period by removing the impact of our capital structure (primarily
interest expense) and our asset base (primarily depreciation and
amortization) from our operating results. We also use EBITDA and
Adjusted EBITDA as measures in determining the value of hotel
acquisitions and dispositions. A reconciliation of net income
(loss) to EBITDA and Adjusted EBITDA is set forth on page 9.
A reconciliation and the components of comparable and pro forma
hotel EBITDA and comparable and pro forma hotel EBITDA margin are
set forth on pages 12 and 13. We believe comparable and pro forma
hotel EBITDA and comparable and pro forma hotel EBITDA margin are
also useful to investors in evaluating our property-level operating
performance.
We compute FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts, or NAREIT,
an industry trade group. The Board of Governors of NAREIT in its
March 1995 White Paper (as clarified
in November 1999 and April 2002) defines FFO to mean net income (loss)
(computed in accordance with GAAP), excluding non-controlling
interests, gains and losses from sales of property, plus real
estate-related depreciation and amortization (excluding
amortization of deferred financing costs) and real estate-related
impairment losses, and after adjustment for unconsolidated
partnerships and joint ventures. We also present Adjusted FFO,
which excludes penalties, written-off deferred financing costs,
non-real estate-related impairment losses and any other adjustments
we have identified in this release. We believe that the
presentation of FFO and Adjusted FFO provide useful information to
investors regarding our operating performance because they are
measures of our operations without regard to specified non-cash
items such as real estate depreciation and amortization, gain or
loss on sale of assets and certain other items which we believe are
not indicative of the performance of our underlying hotel
properties. We believe that these items are more
representative of our asset base and our acquisition and
disposition activities than our ongoing operations. We also use FFO
as one measure in determining our results after taking into account
the impact of our capital structure. A reconciliation of net
income (loss) to FFO and Adjusted FFO is set forth on page
9.
The revenue and expense items associated with our commercial
laundry facility, BuyEfficient and other miscellaneous non-hotel
items have been excluded in presenting comparable and pro forma
hotel EBITDA margins. Management believes the calculation of
comparable and pro forma hotel EBITDA results in a more accurate
presentation of hotel EBITDA margins of the Company's 31 comparable
hotels and 33 pro forma hotels. See pages 12 and 13 for a
reconciliation of comparable and pro forma hotel EBITDA to the most
comparable GAAP measure. Our 31 comparable hotels include all
hotels in which the Company has interests as of June 30, 2012, excluding the Marriott Del Mar,
which has been classified as held for sale and included in
discontinued operations due to its probable sale within the next
year, and the Hyatt Chicago Magnificent Mile, which is currently
experiencing material and prolonged business interruption due to
rebranding and renovation, plus prior ownership results as
applicable in 2011 for the Doubletree Guest Suites Times Square
acquired by the Company in January
2011, the JW Marriott New Orleans acquired by the Company in
February 2011, and the Hilton San
Diego Bayfront acquired by the Company in April 2011. Our 33 pro forma hotels include the
31 comparable hotels, plus the Company's ownership as applicable
and prior ownership for the Hyatt Chicago Magnificent Mile acquired
by the Company in June 2012 and the
Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the
Company in July 2012.
We caution investors that amounts presented in accordance with
our definitions of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO,
comparable and pro forma hotel EBITDA and comparable and pro forma
hotel EBITDA margin may not be comparable to similar measures
disclosed by other companies, because not all companies calculate
these non-GAAP measures in the same manner. EBITDA, Adjusted
EBITDA, FFO, Adjusted FFO, comparable and pro forma hotel EBITDA
and comparable and pro forma hotel EBITDA margin should not be
considered as an alternative measure of our net income (loss),
operating performance, cash flow or liquidity. EBITDA, Adjusted
EBITDA, FFO, Adjusted FFO, comparable and pro forma hotel EBITDA
and comparable and pro forma hotel EBITDA margin 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 EBITDA, Adjusted EBITDA, FFO, Adjusted
FFO, comparable and pro forma hotel EBITDA and comparable and pro
forma hotel EBITDA margin can enhance an investor's understanding
of our results of operations, these non-GAAP financial measures,
when viewed individually, are not necessarily a better indicator of
any trend as compared to GAAP measures such as net income (loss) or
cash flow from operations. In addition, you should be aware that
adverse economic and market conditions may harm our cash flow.
For Additional Information:
Bryan Giglia
Senior Vice President – Corporate Finance
Sunstone Hotel Investors, Inc.
(949) 382-3036
Sunstone Hotel Investors, Inc.
|
Consolidated Balance Sheets
|
(In
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
$
204,549
|
|
$
150,533
|
|
Restricted
cash
|
73,306
|
|
66,230
|
|
Accounts
receivable, net
|
36,259
|
|
32,127
|
|
Inventories
|
2,666
|
|
2,608
|
|
Prepaid
expenses
|
9,382
|
|
10,189
|
|
Investment
in hotel property of discontinued operations, net
|
39,122
|
|
38,958
|
|
Other
current assets of discontinued operations, net
|
2,861
|
|
2,223
|
Total
current assets
|
368,145
|
|
302,868
|
|
|
|
|
|
Investment
in hotel properties, net
|
2,810,409
|
|
2,738,868
|
Other real
estate, net
|
12,057
|
|
11,859
|
Deferred
financing fees, net
|
12,622
|
|
14,594
|
Goodwill
|
13,088
|
|
13,088
|
Other
assets, net
|
20,083
|
|
19,963
|
|
|
|
|
|
Total
assets
|
$
3,236,404
|
|
$
3,101,240
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued expenses
|
$
25,509
|
|
$
26,800
|
|
Accrued
payroll and employee benefits
|
18,662
|
|
20,863
|
|
Due to
Third-Party Managers
|
9,252
|
|
9,227
|
|
Dividends
payable
|
7,437
|
|
7,437
|
|
Other
current liabilities
|
37,474
|
|
28,177
|
|
Current
portion of notes payable
|
78,912
|
|
53,325
|
|
Note
payable of discontinued operations
|
47,159
|
|
47,460
|
|
Other
current liabilities of discontinued operations
|
224
|
|
342
|
Total
current liabilities
|
224,629
|
|
193,631
|
|
|
|
|
|
Notes
payable, less current portion
|
1,396,980
|
|
1,469,692
|
Capital
lease obligations, less current portion
|
15,636
|
|
-
|
Other
liabilities
|
13,810
|
|
12,623
|
Total
liabilities
|
1,651,055
|
|
1,675,946
|
|
|
|
|
|
Commitments and contingencies
|
-
|
|
-
|
|
|
|
|
|
Preferred
stock, Series C Cumulative Convertible Redeemable
Preferred
|
|
|
|
|
Stock,
$0.01 par value, 4,102,564 shares authorized, issued and
|
|
|
|
|
outstanding at June 30, 2012 and December 31, 2011,
liquidation
|
|
|
|
|
preference
of $24.375 per share
|
100,000
|
|
100,000
|
|
|
|
|
|
Equity:
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred
stock, $0.01 par value, 100,000,000 shares authorized.
|
|
|
|
|
8.0% Series A Cumulative
Redeemable Preferred Stock,
|
|
|
|
|
7,050,000 shares issued and outstanding at June 30, 2012 and
December 31, 2011,
|
|
|
|
|
stated at liquidation preference of $25.00 per share
|
176,250
|
|
176,250
|
|
8.0% Series D Cumulative
Redeemable Preferred Stock,
|
|
|
|
|
4,600,000 shares issued and outstanding at June 30, 2012 and
December 31, 2011,
|
|
|
|
|
stated at liquidation preference of $25.00 per share
|
115,000
|
|
115,000
|
|
Common
stock, $0.01 par value, 500,000,000 shares authorized,
|
|
|
|
|
135,229,303 shares
issued and outstanding at June 30, 2012 and
|
|
|
|
|
117,265,090 shares
issued and outstanding at December 31, 2011
|
1,352
|
|
1,173
|
|
Additional
paid in capital
|
1,491,639
|
|
1,312,566
|
|
Retained
earnings
|
108,600
|
|
110,580
|
|
Cumulative
dividends
|
(460,270)
|
|
(445,396)
|
|
Accumulated other comprehensive loss
|
(4,799)
|
|
(4,916)
|
Total
stockholders' equity
|
1,427,772
|
|
1,265,257
|
Non-controlling interest in consolidated joint
ventures
|
57,577
|
|
60,037
|
Total
equity
|
1,485,349
|
|
1,325,294
|
|
|
|
|
|
Total
liabilities and equity
|
$
3,236,404
|
|
$
3,101,240
|
|
|
|
|
|
Sunstone Hotel Investors, Inc.
|
Unaudited Consolidated Statements of
Operations
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30,
|
|
Six Months Ended June
30,
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Room
|
|
|
|
|
$
164,398
|
|
$
148,140
|
|
$
298,536
|
|
$
252,451
|
Food
and beverage
|
|
|
|
|
56,202
|
|
49,786
|
|
106,534
|
|
87,820
|
Other operating
|
|
|
|
|
17,240
|
|
16,648
|
|
33,803
|
|
29,654
|
Total revenues
|
|
|
|
|
237,840
|
|
214,574
|
|
438,873
|
|
369,925
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Room
|
|
|
|
|
38,958
|
|
35,296
|
|
75,806
|
|
63,809
|
Food
and beverage
|
|
|
|
|
37,169
|
|
35,136
|
|
72,908
|
|
63,855
|
Other operating
|
|
|
|
|
6,618
|
|
6,101
|
|
13,412
|
|
11,943
|
Advertising and promotion
|
|
|
|
|
11,135
|
|
10,190
|
|
22,043
|
|
18,589
|
Repairs and maintenance
|
|
|
|
|
8,642
|
|
8,080
|
|
17,090
|
|
15,171
|
Utilities
|
|
|
|
|
6,845
|
|
7,089
|
|
13,998
|
|
13,797
|
Franchise costs
|
|
|
|
|
8,320
|
|
7,396
|
|
14,967
|
|
12,558
|
Property tax, ground lease and
insurance
|
|
|
|
|
18,338
|
|
14,316
|
|
34,851
|
|
28,092
|
Property general and
administrative
|
|
|
|
|
26,565
|
|
24,515
|
|
51,256
|
|
44,031
|
Corporate overhead
|
|
|
|
|
7,686
|
|
6,305
|
|
12,983
|
|
13,958
|
Depreciation and amortization
|
|
|
|
|
34,793
|
|
32,287
|
|
69,079
|
|
58,155
|
Total operating
expenses
|
|
|
|
|
205,069
|
|
186,711
|
|
398,393
|
|
343,958
|
Operating income
|
|
|
|
|
32,771
|
|
27,863
|
|
40,480
|
|
25,967
|
Equity in earnings of unconsolidated joint
ventures
|
|
|
|
|
-
|
|
-
|
|
-
|
|
21
|
Interest and other income
|
|
|
|
|
74
|
|
1,319
|
|
137
|
|
1,427
|
Interest expense
|
|
|
|
|
(20,873)
|
|
(20,462)
|
|
(41,691)
|
|
(37,560)
|
Loss
on extinguishment of debt
|
|
|
|
|
-
|
|
-
|
|
(191)
|
|
-
|
Gain
on remeasurement of equity interests
|
|
|
|
|
-
|
|
-
|
|
-
|
|
69,230
|
Income (loss) from continuing
operations
|
|
|
|
|
11,972
|
|
8,720
|
|
(1,265)
|
|
59,085
|
Income (loss) from discontinued
operations
|
|
|
|
|
(117)
|
|
30,209
|
|
152
|
|
31,179
|
Net income (loss)
|
|
|
|
|
11,855
|
|
38,929
|
|
(1,113)
|
|
90,264
|
Income from consolidated joint venture
attributable to non-controlling interest
|
|
|
|
|
(307)
|
|
(244)
|
|
(867)
|
|
(244)
|
Distributions to non-controlling
interest
|
|
|
|
|
(8)
|
|
(7)
|
|
(16)
|
|
(14)
|
Preferred stock dividends
|
|
|
|
|
(7,437)
|
|
(7,310)
|
|
(14,874)
|
|
(12,447)
|
Undistributed income allocated to unvested
restricted stock compensation
|
|
|
|
|
(47)
|
|
(291)
|
|
-
|
|
(717)
|
Income available (loss attributable) to
common stockholders
|
|
|
|
|
$
4,056
|
|
$
31,077
|
|
$
(16,870)
|
|
$
76,842
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
per share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations available (attributable) to
common stockholders
|
|
|
$
0.03
|
|
$
0.01
|
|
$
(0.14)
|
|
$
0.39
|
Income
from discontinued operations
|
|
|
|
|
-
|
|
0.26
|
|
-
|
|
0.27
|
Basic
income available (loss attributable) to common stockholders per
common share
|
|
|
|
$
0.03
|
|
$
0.27
|
|
$
(0.14)
|
|
$
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
per share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations available (attributable) to
common stockholders
|
|
|
$
0.03
|
|
$
0.01
|
|
$
(0.14)
|
|
$
0.39
|
Income
from discontinued operations
|
|
|
|
|
-
|
|
0.26
|
|
0.00
|
|
0.27
|
Diluted
income available (loss attributable) to common stockholders per
common share
|
|
|
|
$
0.03
|
|
$
0.27
|
|
$
(0.14)
|
|
$
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
120,029
|
|
117,227
|
|
118,728
|
|
117,151
|
Diluted
|
|
|
|
|
120,029
|
|
117,227
|
|
118,728
|
|
117,151
|
Sunstone Hotel Investors, Inc.
|
Reconciliation of Net Income (Loss) to Non-GAAP
Financial Measures
|
(Unaudited and in thousands, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to EBITDA and
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Six
Months Ended
|
|
June
30,
|
|
June
30,
|
|
2012
|
2011
|
|
2012
|
2011
|
|
|
|
|
|
|
Net
income (loss)
|
$
11,855
|
$
38,929
|
|
$
(1,113)
|
$
90,264
|
Operations held for investment:
|
|
|
|
|
|
Depreciation and amortization
|
34,793
|
32,287
|
|
69,079
|
58,155
|
Amortization of lease
intangibles
|
1,028
|
992
|
|
2,056
|
1,922
|
Interest expense
|
19,230
|
18,432
|
|
38,743
|
34,616
|
Amortization of deferred financing
fees
|
959
|
809
|
|
1,922
|
1,418
|
Write-off of deferred financing
fees
|
3
|
-
|
|
3
|
-
|
Non-cash interest related to discount on
Senior Notes
|
258
|
261
|
|
524
|
522
|
Non-cash interest related to loss on
derivatives
|
423
|
960
|
|
499
|
1,004
|
Non-controlling interests:
|
|
|
|
|
|
Income from consolidated joint venture
attributable
to non-controlling interest
|
(307)
|
(244)
|
|
(867)
|
(244)
|
Depreciation and amortization
|
(1,420)
|
(1,184)
|
|
(2,839)
|
(1,184)
|
Interest expense
|
(567)
|
(456)
|
|
(1,137)
|
(456)
|
Amortization of deferred financing
fees
|
(56)
|
(47)
|
|
(112)
|
(47)
|
Non-cash interest related to loss on
derivative
|
-
|
(28)
|
|
(1)
|
(28)
|
Unconsolidated joint ventures:
|
|
|
|
|
|
Depreciation and amortization
|
-
|
-
|
|
-
|
3
|
Discontinued operations:
|
|
|
|
|
|
Depreciation and amortization
|
495
|
630
|
|
965
|
2,677
|
Amortization of lease
intangibles
|
7
|
7
|
|
14
|
14
|
Interest expense
|
680
|
845
|
|
1,361
|
1,684
|
Amortization of deferred financing
fees
|
3
|
6
|
|
7
|
13
|
EBITDA
|
67,384
|
92,199
|
|
109,104
|
190,333
|
|
|
|
|
|
|
Operations held for investment:
|
|
|
|
|
|
Amortization of deferred stock
compensation
|
896
|
929
|
|
1,842
|
1,473
|
Non-cash straightline lease
expense
|
693
|
766
|
|
1,389
|
1,006
|
Capital lease obligation interest - cash
ground rent
|
(117)
|
-
|
|
(117)
|
-
|
Gain on sale of assets
|
-
|
(56)
|
|
(11)
|
(56)
|
Loss on extinguishment of
debt
|
-
|
-
|
|
191
|
-
|
Gain on remeasurement of equity
interests
|
-
|
-
|
|
-
|
(69,230)
|
Lawsuit settlement costs
|
255
|
-
|
|
110
|
-
|
Closing costs - completed
acquisitions
|
1,339
|
633
|
|
1,375
|
3,372
|
Prior year property tax
assessments
|
1,061
|
-
|
|
1,061
|
-
|
Non-controlling interests:
|
|
|
|
|
|
Non-cash straightline lease
expense
|
(113)
|
(129)
|
|
(226)
|
(129)
|
Prior year property tax
assessments
|
(265)
|
-
|
|
(265)
|
-
|
Unconsolidated joint ventures:
|
|
|
|
|
|
Amortization of deferred stock
compensation
|
-
|
-
|
|
-
|
2
|
Discontinued operations:
|
|
|
|
|
|
Gain on sale of assets
|
-
|
(14,018)
|
|
(177)
|
(14,018)
|
Impairment loss
|
-
|
1,495
|
|
-
|
1,495
|
Gain on extinguishment of
debt
|
-
|
(18,145)
|
|
-
|
(18,145)
|
|
3,749
|
(28,525)
|
|
5,172
|
(94,230)
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
71,133
|
$
63,674
|
|
$
114,276
|
$
96,103
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to FFO and
Adjusted FFO
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
$
11,855
|
$
38,929
|
|
$
(1,113)
|
$
90,264
|
Preferred
stock dividends
|
(7,437)
|
(7,310)
|
|
(14,874)
|
(12,447)
|
Operations held for investment:
|
|
|
|
|
|
Real estate depreciation and
amortization
|
34,494
|
31,987
|
|
68,473
|
57,578
|
Amortization of lease
intangibles
|
1,028
|
992
|
|
2,056
|
1,922
|
Gain on sale of assets
|
-
|
(56)
|
|
(11)
|
(56)
|
Non-controlling interests:
|
|
|
|
|
|
Income from consolidated joint venture
attributable to non-controlling interest
|
(307)
|
(244)
|
|
(867)
|
(244)
|
Real estate depreciation and
amortization
|
(1,420)
|
(1,184)
|
|
(2,839)
|
(1,184)
|
Discontinued operations:
|
|
|
|
|
|
Real estate depreciation and
amortization
|
495
|
630
|
|
965
|
2,677
|
Amortization of lease
intangibles
|
7
|
7
|
|
14
|
14
|
Gain on sale of assets
|
-
|
(14,018)
|
|
(177)
|
(14,018)
|
FFO
|
38,715
|
49,733
|
|
51,627
|
124,506
|
|
|
|
|
|
|
Operations held for investment:
|
|
|
|
|
|
Non-cash straightline lease
expense
|
693
|
766
|
|
1,389
|
1,006
|
Write-off of deferred financing
fees
|
3
|
-
|
|
3
|
-
|
Non-cash interest related to loss on
derivatives
|
423
|
960
|
|
499
|
1,004
|
Loss on extinguishment of
debt
|
-
|
-
|
|
191
|
-
|
Gain on remeasurement of equity
interests
|
-
|
-
|
|
-
|
(69,230)
|
Lawsuit settlement costs
|
255
|
-
|
|
110
|
-
|
Closing costs - completed
acquisitions
|
1,339
|
633
|
|
1,375
|
3,372
|
Prior year property tax
assessments
|
1,061
|
-
|
|
1,061
|
-
|
Non-controlling interests:
|
|
|
|
|
|
Non-cash straightline lease
expense
|
(113)
|
(129)
|
|
(226)
|
(129)
|
Non-cash interest related to loss on
derivative
|
-
|
(28)
|
|
(1)
|
(28)
|
Prior year property tax
assessments
|
(265)
|
-
|
|
(265)
|
-
|
Discontinued operations:
|
|
|
|
|
|
Impairment loss
|
-
|
1,495
|
|
-
|
1,495
|
Gain on extinguishment of
debt
|
-
|
(18,145)
|
|
-
|
(18,145)
|
|
3,396
|
(14,448)
|
|
4,136
|
(80,655)
|
|
|
|
|
|
|
Adjusted FFO
|
$
42,111
|
$
35,285
|
|
$
55,763
|
$
43,851
|
|
|
|
|
|
|
FFO per
diluted share
|
$
0.32
|
$
0.42
|
|
$
0.43
|
$
1.06
|
|
|
|
|
|
|
Adjusted FFO per diluted share
|
$
0.35
|
$
0.30
|
|
$
0.47
|
$
0.37
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
120,029
|
117,227
|
|
118,728
|
117,151
|
Shares
associated with unvested restricted stock awards
|
228
|
87
|
|
191
|
116
|
Diluted
weighted average shares outstanding (1)
|
120,257
|
117,314
|
|
118,919
|
117,267
|
|
|
|
|
|
|
(1)
|
Diluted
weighted average shares outstanding includes the Series C
convertible preferred stock on a "non-converted" basis. On an
"as-converted" basis, FFO per diluted share is $0.32 and $0.42,
respectively, for the three months ended June 30, 2012 and 2011,
and $0.44 and $1.05, respectively, for the six months ended June
30, 2012 and 2011. On an "as-converted" basis, Adjusted FFO per
diluted share is $0.35 and $0.30, respectively, for the three
months ended June 30, 2012 and 2011, and $0.48 and $0.39,
respectively, for the six months ended June 30, 2012 and
2011.
|
Sunstone Hotel Investors, Inc.
|
Reconciliation of Net Income to Non-GAAP Financial
Measures
|
Guidance for Third Quarter 2012
|
(Unaudited and in thousands except per share
amounts)
|
|
|
Reconciliation of Net Income to Adjusted
EBITDA
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
September 30, 2012
|
|
Low
|
High
|
|
|
|
Net
income
|
$
850
|
$
4,050
|
Depreciation and amortization
|
35,000
|
35,000
|
Amortization of lease
intangibles
|
1,000
|
1,000
|
Interest expense
|
20,000
|
20,000
|
Amortization of deferred financing
fees
|
1,000
|
1,000
|
Non-controlling interests
|
(2,500)
|
(2,700)
|
Non-cash interest related to discount on
Senior Notes
|
300
|
300
|
Amortization of deferred stock
compensation
|
900
|
900
|
Capital lease obligation interest - cash
ground rent
|
(300)
|
(300)
|
Non-cash straightline lease
expense
|
750
|
750
|
Adjusted EBITDA
|
$
57,000
|
$
60,000
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted
FFO
|
|
|
|
|
|
|
Net
income
|
$
850
|
$
4,050
|
Preferred stock dividends
|
(7,500)
|
(7,500)
|
Real estate depreciation and
amortization
|
34,500
|
34,500
|
Non-controlling interests
|
(2,000)
|
(2,200)
|
Amortization of lease
intangibles
|
1,000
|
1,000
|
Non-cash straightline lease
expense
|
750
|
750
|
Adjusted FFO
|
$
27,600
|
$
30,600
|
|
|
|
|
|
|
Adjusted FFO per diluted share
|
$
0.20
|
$
0.23
|
|
|
|
Diluted
weighted average shares outstanding
|
135,700
|
135,700
|
|
|
|
Sunstone Hotel Investors, Inc.
|
Reconciliation of Net Income to Non-GAAP Financial
Measures
|
Guidance for Full Year 2012
|
(Unaudited and in thousands except per share
amounts)
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted
EBITDA
|
|
|
|
|
|
|
|
Year
Ended
|
|
December 31, 2012
|
|
Low
|
High
|
|
|
|
Net
income
|
$
14,850
|
$
21,650
|
Depreciation and amortization
|
140,000
|
140,000
|
Amortization of lease
intangibles
|
4,000
|
4,000
|
Interest expense
|
79,000
|
79,000
|
Amortization of deferred financing
fees
|
4,000
|
4,000
|
Non-controlling interests
|
(9,500)
|
(10,300)
|
Non-cash interest related to discount on
Senior Notes
|
1,100
|
1,100
|
Amortization of deferred stock
compensation
|
3,500
|
3,500
|
Capital lease obligation interest - cash
ground rent
|
(950)
|
(950)
|
Non-cash straightline lease
expense
|
3,000
|
3,000
|
Adjusted EBITDA
|
$
239,000
|
$
245,000
|
|
|
|
|
|
|
Reconciliation of Net Income to Adjusted
FFO
|
|
|
|
|
|
|
Net
income
|
$
14,850
|
$
21,650
|
Preferred stock dividends
|
(30,000)
|
(30,000)
|
Real estate depreciation and
amortization
|
138,800
|
138,800
|
Non-controlling interests
|
(7,200)
|
(7,600)
|
Amortization of lease
intangibles
|
4,000
|
4,000
|
Non-cash straightline lease
expense
|
3,000
|
3,000
|
Adjusted FFO
|
$
123,450
|
$
129,850
|
|
|
|
|
|
|
Adjusted FFO per diluted share
|
$
0.97
|
$
1.02
|
|
|
|
Diluted
weighted average shares outstanding
|
127,900
|
127,900
|
Sunstone Hotel Investors, Inc.
|
Comparable and Pro Forma Hotel EBITDA and
Margins
|
(Unaudited and in thousands except hotels and
rooms)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30, 2012
|
|
Three
Months Ended June 30, 2011
|
|
|
Actual
(1)
|
|
Non-Comparable Hotel (2)
|
|
Comparable (3)
|
|
2012
Acquisitions (4)
|
|
Pro
Forma (5)
|
|
Actual
(6)
|
|
Prior
Ownership Adjustments (7)
|
|
Comparable(3)
|
|
2012
Acquisitions (4)
|
|
Pro
Forma (5)
|
Number of
Hotels
|
32
|
|
(1)
|
|
31
|
|
2
|
|
33
|
|
31
|
|
|
|
31
|
|
2
|
|
33
|
Number of
Rooms
|
13,341
|
|
(417)
|
|
12,924
|
|
774
|
|
13,698
|
|
12,924
|
|
|
|
12,924
|
|
774
|
|
13,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA Margin (8)
|
32.6%
|
|
39.3%
|
|
32.5%
|
|
36.2%
|
|
32.7%
|
|
32.0%
|
|
30.7%
|
|
31.9%
|
|
35.2%
|
|
32.1%
|
Hotel
EBITDA Margin adjusted for prior year property tax credits and
assessment (9)
|
32.6%
|
|
|
|
32.6%
|
|
|
|
32.8%
|
|
31.5%
|
|
|
|
31.5%
|
|
|
|
31.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue
|
$
164,398
|
|
$
(2,009)
|
|
$
162,389
|
|
$
10,911
|
|
$
173,300
|
|
$
148,140
|
|
$
2,510
|
|
$
150,650
|
|
$
10,318
|
|
$
160,968
|
Food and beverage
revenue
|
56,202
|
|
(511)
|
|
55,691
|
|
1,675
|
|
57,366
|
|
49,786
|
|
1,272
|
|
51,058
|
|
2,019
|
|
53,077
|
Other operating
revenue
|
12,293
|
|
(137)
|
|
12,156
|
|
603
|
|
12,759
|
|
11,956
|
|
282
|
|
12,238
|
|
630
|
|
12,868
|
Total
Hotel Revenues
|
232,893
|
|
(2,657)
|
|
230,236
|
|
13,189
|
|
243,425
|
|
209,882
|
|
4,064
|
|
213,946
|
|
12,967
|
|
226,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room expense
|
39,142
|
|
(363)
|
|
38,779
|
|
2,316
|
|
41,095
|
|
35,503
|
|
582
|
|
36,085
|
|
2,164
|
|
38,249
|
Food and beverage
expense
|
37,204
|
|
(237)
|
|
36,967
|
|
925
|
|
37,892
|
|
35,185
|
|
873
|
|
36,058
|
|
954
|
|
37,012
|
Other hotel
expense
|
55,695
|
|
(845)
|
|
54,850
|
|
4,055
|
|
58,905
|
|
48,852
|
|
1,034
|
|
49,886
|
|
4,209
|
|
54,095
|
General and administrative
expense
|
24,931
|
|
(168)
|
|
24,763
|
|
1,117
|
|
25,880
|
|
23,269
|
|
329
|
|
23,598
|
|
1,080
|
|
24,678
|
Total
Hotel Expenses
|
156,972
|
|
(1,613)
|
|
155,359
|
|
8,413
|
|
163,772
|
|
142,809
|
|
2,818
|
|
145,627
|
|
8,407
|
|
154,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA
|
75,921
|
|
(1,044)
|
|
74,877
|
|
4,776
|
|
79,653
|
|
67,073
|
|
1,246
|
|
68,319
|
|
4,560
|
|
72,879
|
Prior year
property tax assessments and (credits), net
|
89
|
|
-
|
|
89
|
|
-
|
|
89
|
|
(915)
|
|
-
|
|
(915)
|
|
-
|
|
(915)
|
Hotel
EBITDA adjusted for prior year property tax assessments and
(credits), net
|
76,010
|
|
(1,044)
|
|
74,966
|
|
4,776
|
|
79,742
|
|
66,158
|
|
1,246
|
|
67,404
|
|
4,560
|
|
71,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hotel
operating income
|
1,148
|
|
-
|
|
1,148
|
|
-
|
|
1,148
|
|
1,140
|
|
-
|
|
1,140
|
|
-
|
|
1,140
|
Amortization of lease intangibles
|
(1,028)
|
|
-
|
|
(1,028)
|
|
-
|
|
(1,028)
|
|
(992)
|
|
-
|
|
(992)
|
|
-
|
|
(992)
|
Non-cash
straightline lease expense
|
(693)
|
|
-
|
|
(693)
|
|
-
|
|
(693)
|
|
(766)
|
|
70
|
|
(696)
|
|
-
|
|
(696)
|
Capital
lease obligation interest - cash ground rent
|
117
|
|
(117)
|
|
-
|
|
351
|
|
351
|
|
-
|
|
-
|
|
-
|
|
351
|
|
351
|
Management
company transition costs
|
(215)
|
|
143
|
|
(72)
|
|
(143)
|
|
(215)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Prior year
property tax (assessments) and credits, net
|
(89)
|
|
-
|
|
(89)
|
|
-
|
|
(89)
|
|
915
|
|
-
|
|
915
|
|
-
|
|
915
|
Corporate
overhead
|
(7,686)
|
|
-
|
|
(7,686)
|
|
-
|
|
(7,686)
|
|
(6,305)
|
|
-
|
|
(6,305)
|
|
-
|
|
(6,305)
|
Depreciation and amortization
|
(34,793)
|
|
587
|
|
(34,206)
|
|
(3,059)
|
|
(37,265)
|
|
(32,287)
|
|
(917)
|
|
(33,204)
|
|
(3,059)
|
|
(36,263)
|
Operating Income
|
32,771
|
|
(431)
|
|
32,340
|
|
1,925
|
|
34,265
|
|
27,863
|
|
399
|
|
28,262
|
|
1,852
|
|
30,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and other income
|
74
|
|
-
|
|
74
|
|
-
|
|
74
|
|
1,319
|
|
-
|
|
1,319
|
|
-
|
|
1,319
|
Interest
expense
|
(20,873)
|
|
117
|
|
(20,756)
|
|
(351)
|
|
(21,107)
|
|
(20,462)
|
|
(312)
|
|
(20,774)
|
|
(351)
|
|
(21,125)
|
Income
(loss) from discontinued operations
|
(117)
|
|
-
|
|
(117)
|
|
-
|
|
(117)
|
|
30,209
|
|
-
|
|
30,209
|
|
-
|
|
30,209
|
Net
Income
|
$
11,855
|
|
$
(314)
|
|
$
11,541
|
|
$
1,574
|
|
$
13,115
|
|
$
38,929
|
|
$
87
|
|
$
39,016
|
|
$
1,501
|
|
$
40,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Actual represents the
Company's ownership results for the 32 hotels held for investment
as of June 30, 2012. Excludes the Marriott Del Mar which has been
classified as held for sale as of June 30, 2012 due to its probable
sale within the next year.
|
(2)
|
Non-Comparable Hotel
represents the Company's ownership results for the Hyatt Chicago
Magnificent Mile, which is currently experiencing material and
prolonged business interruption due to rebranding and
renovation.
|
(3)
|
Comparable represents the
Company's ownership results and prior ownership results as
applicable for the 31 hotels held for investment as of June 30,
2012, excluding the Hyatt Chicago Magnificent Mile, which is
currently experiencing material and prolonged business interruption
due to rebranding and renovation.
|
(4)
|
2012 Acquisitions
represents the Company's ownership results as applicable and prior
ownership results for Hyatt Chicago Magnificent Mile acquired by
the Company on June 4, 2012, and the Hilton Garden Inn Chicago
Downtown/Magnificent Mile acquired by the Company on July 19, 2012,
along with the Company's pro forma adjustments for depreciation
expense.
|
(5)
|
Pro Forma represents the
Company's ownership results, prior ownership results and pro forma
adjustments as applicable for the 32 hotels held for investment as
of June 30, 2012, plus the Hilton Garden Inn Chicago
Downtown/Magnificent Mile acquired by the Company on July 19,
2012.
|
(6)
|
Actual represents the
Company's ownership results for the 31 hotels held for investment
as of June 30, 2011. Excludes the Royal Palm Miami Beach which was
sold in April 2011, the Valley River Inn which was sold in October
2011, and the Marriott Del Mar which has been classified as held
for sale as of June 30, 2012 due to its probable sale within the
next year.
|
(7)
|
Prior Ownership Adjustments
represent prior ownership results for the Hilton San Diego Bayfront
acquired on April 15, 2011, along with the Company's pro forma
non-cash straightline lease expense, depreciation expense and
interest expense. Excludes prior ownership adjustments for the
Hyatt Chicago Magnificent Mile acquired on June 4, 2012, which has
been classified as non-comparable
as the hotel is currently experiencing material and prolonged
business interruption due to rebranding and
renovation.
|
(8)
|
Hotel EBITDA Margin is
calculated as Hotel EBITDA divided by total hotel
revenues.
|
(9)
|
Hotel EBITDA Margin for the
three months ended June 30, 2012 includes additional expense of
$0.1 million due to a prior year property tax assessment net of
credits received. Hotel EBITDA Margin for the three months ended
June 30, 2011 includes the additional benefit of $0.9 million due
to prior year property tax credits. Without this expense and
benefit, Comparable Hotel
EBITDA margin for the three months ended June 30, 2012 and 2011
would have been 32.6% and 31.5%, respectively, and Pro Forma Hotel
EBITDA margin for the three months ended June 30, 2012 and 2011
would have been 32.8% and 31.7%, respectively.
|
Sunstone Hotel Investors, Inc.
|
Comparable and Pro Forma Hotel EBITDA and
Margins
|
(Unaudited and in thousands except hotels and
rooms)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2012
|
|
Six
Months Ended June 30, 2011
|
|
|
Actual
(1)
|
|
Non-comparable Hotel (2)
|
|
Comparable (3)
|
|
2012
Acquisitions (4)
|
|
Pro
Forma (5)
|
|
Actual(6)
|
|
Prior
Ownership Adjustments (7)
|
|
Comparable (3)
|
|
2012
Acquisitions (4)
|
|
Pro
Forma (5)
|
Number of
Hotels
|
32
|
|
(1)
|
|
31
|
|
2
|
|
33
|
|
31
|
|
|
|
31
|
|
2
|
|
33
|
Number of
Rooms
|
13,341
|
|
(417)
|
|
12,924
|
|
774
|
|
13,698
|
|
12,924
|
|
|
|
12,924
|
|
774
|
|
13,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA Margin(8)
|
29.0%
|
|
39.3%
|
|
28.9%
|
|
22.6%
|
|
28.6%
|
|
27.4%
|
|
32.3%
|
|
27.9%
|
|
21.1%
|
|
27.6%
|
Hotel
EBITDA Margin adjusted for prior year property tax credits,
net(9)
|
28.9%
|
|
|
|
28.9%
|
|
|
|
28.6%
|
|
27.2%
|
|
|
|
27.7%
|
|
|
|
27.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue
|
$
298,536
|
|
$
(2,009)
|
|
$
296,527
|
|
$
16,408
|
|
$
312,935
|
|
$
252,451
|
|
$
24,150
|
|
$
276,601
|
|
$
14,936
|
|
$
291,537
|
Food and beverage
revenue
|
106,534
|
|
(511)
|
|
106,023
|
|
2,601
|
|
108,624
|
|
87,820
|
|
11,753
|
|
99,573
|
|
2,949
|
|
102,522
|
Other operating
revenue
|
24,150
|
|
(137)
|
|
24,013
|
|
1,134
|
|
25,147
|
|
20,842
|
|
2,873
|
|
23,715
|
|
1,114
|
|
24,829
|
Total
Hotel Revenues
|
429,220
|
|
(2,657)
|
|
426,563
|
|
20,143
|
|
446,706
|
|
361,113
|
|
38,776
|
|
399,889
|
|
18,999
|
|
418,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room expense
|
76,146
|
|
(363)
|
|
75,783
|
|
4,184
|
|
79,967
|
|
64,250
|
|
5,926
|
|
70,176
|
|
3,722
|
|
73,898
|
Food and beverage
expense
|
72,974
|
|
(237)
|
|
72,737
|
|
1,598
|
|
74,335
|
|
63,954
|
|
7,589
|
|
71,543
|
|
1,638
|
|
73,181
|
Other hotel
expense
|
107,889
|
|
(845)
|
|
107,044
|
|
7,843
|
|
114,887
|
|
92,238
|
|
9,120
|
|
101,358
|
|
7,826
|
|
109,184
|
General and administrative
expense
|
47,850
|
|
(168)
|
|
47,682
|
|
1,970
|
|
49,652
|
|
41,723
|
|
3,597
|
|
45,320
|
|
1,800
|
|
47,120
|
Total
Hotel Expenses
|
304,859
|
|
(1,613)
|
|
303,246
|
|
15,595
|
|
318,841
|
|
262,165
|
|
26,232
|
|
288,397
|
|
14,986
|
|
303,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA
|
124,361
|
|
(1,044)
|
|
123,317
|
|
4,548
|
|
127,865
|
|
98,948
|
|
12,544
|
|
111,492
|
|
4,013
|
|
115,505
|
Prior year
property tax credits, net
|
(250)
|
|
-
|
|
(250)
|
|
-
|
|
(250)
|
|
(600)
|
|
-
|
|
(600)
|
|
-
|
|
(600)
|
Hotel
EBITDA adjusted for prior year property tax credits,
net
|
124,111
|
|
(1,044)
|
|
123,067
|
|
4,548
|
|
127,615
|
|
98,348
|
|
12,544
|
|
110,892
|
|
4,013
|
|
114,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hotel
operating income
|
2,118
|
|
-
|
|
2,118
|
|
-
|
|
2,118
|
|
2,142
|
|
-
|
|
2,142
|
|
-
|
|
2,142
|
Amortization of lease intangibles
|
(2,056)
|
|
-
|
|
(2,056)
|
|
-
|
|
(2,056)
|
|
(1,922)
|
|
(140)
|
|
(2,062)
|
|
-
|
|
(2,062)
|
Non-cash
straightline lease expense
|
(1,389)
|
|
-
|
|
(1,389)
|
|
-
|
|
(1,389)
|
|
(1,006)
|
|
(386)
|
|
(1,392)
|
|
-
|
|
(1,392)
|
Capital
lease obligation interest - cash ground rent
|
117
|
|
(117)
|
|
-
|
|
702
|
|
702
|
|
-
|
|
-
|
|
-
|
|
702
|
|
702
|
Management
company transition costs
|
(609)
|
|
143
|
|
(466)
|
|
(143)
|
|
(609)
|
|
(82)
|
|
-
|
|
(82)
|
|
-
|
|
(82)
|
Prior year
property tax credits, net
|
250
|
|
-
|
|
250
|
|
-
|
|
250
|
|
600
|
|
-
|
|
600
|
|
-
|
|
600
|
Corporate
overhead
|
(12,983)
|
|
-
|
|
(12,983)
|
|
-
|
|
(12,983)
|
|
(13,958)
|
|
-
|
|
(13,958)
|
|
-
|
|
(13,958)
|
Depreciation and amortization
|
(69,079)
|
|
587
|
|
(68,492)
|
|
(6,118)
|
|
(74,610)
|
|
(58,155)
|
|
(6,308)
|
|
(64,463)
|
|
(6,118)
|
|
(70,581)
|
Operating Income
|
40,480
|
|
(431)
|
|
40,049
|
|
(1,011)
|
|
39,038
|
|
25,967
|
|
5,710
|
|
31,677
|
|
(1,403)
|
|
30,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in
earnings of unconsolidated joint ventures
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
21
|
|
-
|
|
21
|
|
-
|
|
21
|
Interest
and other income
|
137
|
|
-
|
|
137
|
|
-
|
|
137
|
|
1,427
|
|
-
|
|
1,427
|
|
-
|
|
1,427
|
Interest
expense
|
(41,691)
|
|
117
|
|
(41,574)
|
|
(702)
|
|
(42,276)
|
|
(37,560)
|
|
(3,008)
|
|
(40,568)
|
|
(702)
|
|
(41,270)
|
Loss on
extinguishment of debt
|
(191)
|
|
-
|
|
(191)
|
|
-
|
|
(191)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain on
remeasurement of equity interests
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
69,230
|
|
-
|
|
69,230
|
|
-
|
|
69,230
|
Income
from discontinued operations
|
152
|
|
-
|
|
152
|
|
-
|
|
152
|
|
31,179
|
|
-
|
|
31,179
|
|
-
|
|
31,179
|
Net
Income (Loss)
|
$
(1,113)
|
|
$
(314)
|
|
$
(1,427)
|
|
$
(1,713)
|
|
$
(3,140)
|
|
$
90,264
|
|
$
2,702
|
|
$
92,966
|
|
$
(2,105)
|
|
$
90,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Actual represents the
Company's ownership results for the 32 hotels held for investment
as of June 30, 2012. Excludes the Marriott Del Mar which has been
classified as held for sale as of June 30, 2012 due to its probable
sale within the next year.
|
(2)
|
Non-Comparable Hotel
represents the Company's ownership results for the Hyatt Chicago
Magnificent Mile, which is currently experiencing material and
prolonged business interruption due to rebranding and
renovation.
|
(3)
|
Comparable represents the
Company's ownership results and prior ownership results as
applicable for the 31 hotels held for investment as of June 30,
2012, excluding the Hyatt Chicago Magnificent Mile, which is
currently experiencing material and prolonged business interruption
due to rebranding and renovation.
|
(4)
|
2012 Acquisitions
represents the Company's ownership results as applicable and prior
ownership results for Hyatt Chicago Magnificent Mile acquired by
the Company on June 4, 2012, and the Hilton Garden Inn Chicago
Downtown/Magnificent Mile acquired by the Company on July 19, 2012,
along with the Company's pro forma adjustments for depreciation
expense.
|
(5)
|
Pro Forma represents the
Company's ownership results, prior ownership results and pro forma
adjustments as applicable for the 32 hotels held for investment as
of June 30, 2012, plus the Hilton Garden Inn Chicago
Downtown/Magnificent Mile acquired by the Company on July 19,
2012.
|
(6)
|
Actual represents the
Company's ownership results for the 31 hotels held for investment
as of June 30, 2011. Excludes the Royal Palm Miami Beach which was
sold in April 2011, the Valley River Inn which was sold in October
2011, and the Marriott Del Mar which has been classified as held
for sale as of June 30, 2012 due to its probable sale within the
next year.
|
(7)
|
Prior Ownership Adjustments
represent prior ownership results for the Doubletree Guest Suites
Times Square acquired by the Company on January 14, 2011, the JW
Marriott New Orleans acquired by the Company on February 15, 2011,
and the Hilton San Diego Bayfront acquired by the Company on April
15, 2011, along with the Company's pro forma non-cash
amortization of lease intangibles,
non-cash straightline lease expense, depreciation expense and
interest expense. Excludes prior ownership adjustments for the
Hyatt Chicago Magnificent Mile acquired on June 4, 2012, which has
been classified as non-comparable as the hotel is currently
experiencing material and prolonged business interruption due
to rebranding and
renovation.
|
(8)
|
Hotel EBITDA Margin is
calculated as Hotel EBITDA divided by total hotel
revenues.
|
(9)
|
Hotel EBITDA Margin for the
six months ended June 30, 2012 includes additional net benefit of
$0.3 million due to prior year property tax credits net of
assessments received. Hotel EBITDA Margin for the six months ended
June 30, 2011 includes the additional net benefit of $0.6 million
due to prior year property tax credits net of assessments received.
Without this additional net
benefit, Comparable Hotel EBITDA margin for the six months ended
June 30, 2012 and 2011 would have been 28.9% and 27.7%,
respectively, and Pro Forma Hotel EBITDA margin for the six months
ended June 30, 2012 and 2011 would have been 28.6% and 27.4%,
respectively.
|
SOURCE Sunstone Hotel Investors, Inc.