Bee Vectoring Technologies (CSE:BEE)
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CHICAGO, May 3 /PRNewswire-FirstCall/ -- Strategic Hotels & Resorts (NYSE:BEE), today reported results for the first quarter of 2006.
First Quarter Financial Highlights
-- Increase of 11.7 percent Total RevPAR and 13.4 percent RevPAR in the
Total North American portfolio for first quarter 2006. Growth was
driven by 22.2 percent RevPAR growth at properties acquired in 2005.
-- Increase of 8.9 percent Total RevPAR and 9.4 percent RevPAR in the
North American same store portfolio for first quarter 2006. RevPAR
growth was driven by 9.1 percent increase in ADR and 0.2 percent rise
in occupancy.
-- North American same store property EBITDA margin expansion of 190
basis points.
-- Quarterly Comparable EBITDA of $37.3 million.
-- Quarterly Comparable FFO of $0.34 per fully converted share.
First Quarter Activities
-- Closed on a 45 percent managing joint venture ownership interest in
the Hotel del Coronado in San Diego, California.
-- Completed a public offering for $115.0 million of 8.25% Series B
Cumulative Redeemable Preferred Stock.
-- Closed on the acquisition of the Four Seasons Washington, D.C. for
$169.7 million.
-- Completed an offering of 20.7 million shares of common stock comprised
of 8.0 million primary shares from the company and 12.7 million
secondary shares from selling shareholders. Net proceeds to the
company, after underwriting discounts and offering expenses, were
$151.9 million.
-- Reached an agreement to terminate the management contract at the
Marriott Rancho Las Palmas in Rancho Mirage, California, resulting in
a one-time charge of $10.4 million. The agreement increases the ranges
of options available to the company in respect to its future plans for
the resort, including a potential sale.
-- Closed on the acquisition of the LaSolana Hotel and Villas development
sites in Nayarit, Mexico, which is adjacent to the company's existing
Four Seasons Punta Mita Hotel.
-- Formally changed the company name to Strategic Hotels & Resorts, Inc.
and changed our New York Stock Exchange trading symbols to "BEE" for
common stock and "BEE PrB" for Series B Cumulative Redeemable
Preferred Stock.
-- Increased quarterly dividend payment by 4.5 percent to $0.23 per share
of common stock.
Subsequent Events
-- Entered into an agreement to acquire the Westin St. Francis in San
Francisco, California for $440.0 million.
-- Priced a public offering for $143.8 million of 8.25% Series C
Cumulative Redeemable Preferred Stock.
Laurence Geller, Chief Executive Officer of Strategic Hotels & Resorts, commented, "We are very pleased with the healthy results. Our continued growth and consistent improvements in performance reflect directly on clearly focused business objectives and our disciplined and prudent investment of human and financial capital. During the first quarter we further enhanced our portfolio of high-end hotels and resorts with the acquisition of the Four Seasons Washington, D.C. and a substantial joint venture interest in the Hotel del Coronado in San Diego, a National Historic Landmark. We also completed common and preferred equity offerings resulting in over $250 million in net proceeds to the company. Finally, I am pleased to report we were able to increase our quarterly dividend by 4.5 percent during the quarter, signifying strong confidence in our business fundamentals."
"Same store" hotel comparisons for first quarter 2006 are derived from the company's North American portfolio at March 31, 2006 consisting of properties held for five or more quarters, in which operations are included in the consolidated results of the company, and that have not sustained substantial property damage or business interruption or undergone large-scale capital projects during the reporting periods being compared. As a result, same store comparisons exclude the InterContinental Chicago and InterContinental Miami, both acquired on April 1, 2005, the Fairmont Chicago, acquired on September 1, 2005, the Four Seasons Washington, D.C., acquired on March 1, 2006, the unconsolidated Hotel del Coronado acquired on January 9, 2006, and the Hyatt Regency New Orleans, which was taken out of service on August 29, 2005, due to damage resulting from Hurricane Katrina.
Total North American portfolio comparisons are derived from the company's hotel portfolio at March 31, 2006, in which operations are included in the consolidated results of the company, and that have not sustained substantial property damage or business interruption or undergone large-scale capital projects during the reporting periods being compared. As a result, total North American portfolio comparisons exclude the Four Seasons Washington, D.C., which underwent a major renovation in the comparable period of 2005, the unconsolidated Hotel del Coronado, and the Hyatt Regency New Orleans, which was taken out of service on August 29, 2005, due to damage resulting from Hurricane Katrina.
Operating Results
The company reported a net loss from continuing operations available to common shareholders of $1.4 million, or $0.03 per diluted share, for the first quarter compared with net income from continuing operations available to common shareholders of $6.8 million, or $0.20 per diluted share, for the first quarter of 2005.
Adjusted EBITDA for the first quarter was $27.0 million compared to $28.1 million for the first quarter of 2005. Excluding the Marriott Rancho Las Palmas termination costs of $10.4 million, Comparable EBITDA was $37.3 million for the first quarter versus Comparable EBITDA of $28.1 million for first quarter 2005.
FFO in the first quarter was $13.7 million, or $0.24 per fully converted share, compared to $19.3 million, or $0.48 per fully converted share, in the first quarter of 2005. Excluding the Marriott Rancho Las Palmas termination costs of $10.4 million and the related deferred tax benefit of $4.0 million, Comparable FFO was $20.0 million, or $0.34 per fully converted share, for the first quarter versus Comparable FFO of $19.2 million, or $0.48 per fully converted share, for first quarter 2005. "Fully converted" per share results represent FFO before certain minority interest adjustments, divided by the weighted average total number of shares and operating partnership units convertible into shares.
North American same store portfolio Total RevPAR increased 8.9 percent during the first quarter over the prior period in 2005, driven by 8.3 percent growth in non-rooms revenues and 9.4 percent growth in RevPAR. Same store ADR grew 9.1 percent and occupancy increased 0.2 percent.
Total RevPAR for the total North American portfolio grew 11.7 percent for the quarter, driven by 9.4 percent growth in non-rooms revenues and 13.4 percent growth in RevPAR. Total North American portfolio ADR grew 10.9 percent and occupancy increased 1.6 percent. Total RevPAR and RevPAR growth in properties acquired in 2005 (InterContinental Chicago, InterContinental Miami, and Fairmont Chicago) increased 18.4 percent and 22.2 percent, respectively.
For the company's European hotels, RevPAR for the first quarter increased by 0.6 percent over the first quarter of 2005, due to an 8.2 percent decrease in ADR and a 6.7 percent increase in occupancy.
North American same store EBITDA margins improved by 190 basis points in the first quarter compared with the prior period in 2005 due to increases in ADR, offset by declining margins at the Loews Santa Monica Beach Hotel which unionized in February 2005, and the Hyatt Regency Phoenix, at which operations continue to be impacted by construction of the adjacent Phoenix Civic Center.
Portfolio Update
As previously announced, the company closed on an agreement to acquire a 45 percent managing joint venture ownership interest in the Hotel del Coronado in San Diego, California. The remaining joint venture interests are held by an affiliate of Kohlberg Kravis Roberts & Co. (41 percent) and KSL Resorts (14 percent). The agreed upon market value of the new joint venture was $745 million, of which Strategic Hotel & Resorts' total equity investment was $70.2 million.
The company closed on the acquisition of the Four Seasons Washington, D.C. for a purchase price of $169.7 million including fees and costs.
The company closed on the acquisition of the LaSolana Hotel and Villas development sites in Nayarit, Mexico, which is adjacent to the company's existing Four Seasons Punta Mita Hotel.
The company entered into an agreement to terminate the management agreement on the Marriott Rancho Las Palmas Resort in Rancho Mirage, California in order to increase the range of options available to the company with respect to its future plans for the resort including a potential sale. Under the agreement, the company is required to pay Marriott Hotel Services (MHS) an initial termination fee of $5.0 million upon termination and an additional termination fee of $5.0 million in 2009, provided that the additional termination fee will not be required if the company has entered into a qualifying hotel management contract with MHS, or an affiliate, by December 31, 2008. The company also agreed to reimburse MHS for severance costs for MHS employees at the resort. The company estimates the present value of the termination fees and estimated severance costs will be $10.4 million. This one-time charge was recorded in hotel operating expenses in the first quarter 2006 financial statements. In addition, a deferred tax benefit of approximately $4.0 million related to this charge also has been recorded in the first quarter financial statements.
Balance Sheet and Capital Markets Activity
During the first quarter, the company closed a public offering of 4,600,000 shares of its 8.25% Series B Cumulative Redeemable Preferred Stock. Net proceeds totaled $110.9 million after underwriting discounts and offering expenses.
A common stock offering of 20,731,640 shares was completed during the first quarter at a price of $20.00 per share. The company sold a total of 8,000,000 primary shares of common stock and certain shareholders affiliated or associated with Prudential Financial, Inc. and Whitehall Street Real Estate Limited Partnerships VII and IX sold 12,731,640 secondary shares of common stock. The 8,000,000 shares of common stock sold by the company resulted in net proceeds of $151.9 million, after underwriting discounts and offering expenses.
Quarterly Dividend Distribution
The Board of Directors declared a quarterly dividend of $0.23 per share of common stock, which represents a 4.5 percent increase to the company's quarterly dividend payments. The dividend was payable to shareholders of record as of March 31, 2006 and was paid on April 20, 2006. Additionally, for shareholders of record as of March 15, 2006, the Board declared a quarterly dividend of $0.53125 per share of 8.50% Series A Cumulative Redeemable Preferred Stock and $0.34375 per share of 8.25% Series B Cumulative Redeemable Preferred Stock. Both of these were paid on March 31, 2006. The Series B payment represented a pro rata distribution of the scheduled quarterly dividend of $0.5156 per share due to the closing of the Series B offering on January 31, 2006.
Recent Events
Following the close of the first quarter, the company entered into an agreement to acquire the Westin St. Francis in San Francisco, California for $440.0 million.
The company priced a public offering of 5,750,000 shares, including the exercise of the over allotment option of 750,000 shares, of its 8.25% Series C Cumulative Redeemable Preferred Stock. The company expects to raise net proceeds of $138.7 million after discounts, commissions and estimated expenses.
2006 Outlook
Management reaffirms its full year 2006 guidance for Comparable FFO per fully converted share and has modified Comparable EBITDA and Comparable FFO to reflect recent acquisition and funding activity. Comparable EBITDA will be in the range of $179.0 million to $187.8 million, Comparable FFO will be in the range of $87.3 million to $96.1 million, and Comparable FFO per fully converted share will be in the range of $1.45 to $1.60.
The company expects 2006 North American same store Total RevPAR growth to be in the range of 7.5 percent to 9.5 percent and 2006 North American same store RevPAR growth to be in the range of 9.0 percent to 11.0 percent.
The following tables reconcile projected 2006 net (loss) to projected
Comparable FFO and Comparable EBITDA (in millions, except per share
data):
Low Range High Range
Net (Loss) $(11.8) $(3.2)
Deferred Tax on Realized Portion of Deferred Gain 1.3 1.3
Realized Portion of Deferred Gain on Sale Leasebacks (4.5) (4.5)
Depreciation 82.2 82.2
Depreciation from Unconsolidated Affiliates 15.2 15.2
Minority Interest 0.3 0.5
Adjustments from Consolidated Joint Ventures (1.7) (1.7)
Adjustments for Termination Costs & Deferred
Tax Benefit 6.3 6.3
Comparable Funds from Operations 87.3 96.1
Comparable FFO per Fully Converted Share $1.45 $1.60
Low Range High Range
Net (Loss) $(11.8) $(3.2)
Preferred Shareholder Dividends 24.6 24.6
Realized Portion of Deferred Gain on Sale Leasebacks (4.5) (4.5)
Depreciation 82.2 82.2
Minority Interest 0.3 0.5
Adjustments from Consolidated Joint Ventures (3.7) (3.7)
Interest Expense 43.8 43.8
Adjustments from Unconsolidated Affiliates 36.5 36.5
Income Taxes 1.2 1.2
Adjustments for Termination Costs 10.4 10.4
Comparable EBITDA $179.0 $187.8
Second Quarter 2006 Guidance
For the second quarter of 2006, the company anticipates that Comparable EBITDA will be in the range of $49.3 million to $51.6 million, Comparable FFO will be in the range of $26.3 million to $28.6 million, and Comparable FFO per fully converted share will be in the range of $0.43 to $0.47.
The company expects second quarter 2006 North American same store Total RevPAR growth to be in the range of 7.0 percent to 9.0 percent and second quarter 2006 North American same store RevPAR growth to be in the range of 9.5 percent to 11.5 percent.
The following tables reconcile projected second quarter 2006 net income to projected Comparable FFO and Comparable EBITDA.
Low Range High Range
Net Income $3.1 $5.4
Deferred Tax on Realized Portion of Deferred Gain 0.3 0.3
Realized Portion of Deferred Gain on Sale Leasebacks (1.1) (1.1)
Depreciation 19.7 19.7
Depreciation from Unconsolidated Affiliates 4.5 4.5
Minority Interest 0.2 0.2
Adjustments from Consolidated Joint Ventures (0.4) (0.4)
Comparable Funds from Operations 26.3 28.6
Comparable FFO per Fully Converted Share $0.43 $0.47
Low Range High Range
Net Income $3.1 $5.4
Preferred Shareholder Dividends 5.9 5.9
Realized Portion of Deferred Gain on Sale Leasebacks (1.1) (1.1)
Depreciation 19.7 19.7
Minority Interest 0.2 0.2
Adjustments from Consolidated Joint Ventures (0.9) (0.9)
Interest Expense 9.7 9.7
Adjustments from Unconsolidated Affiliates 10.0 10.0
Income Taxes 2.7 2.7
Comparable EBITDA $49.3 $51.6
Earnings Conference Call
The company will conduct its first quarter conference call for investors and other interested parties on Thursday, May 4th at 9:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by dialing (888) 802-2266. To participate on the webcast, log on to http://www.strategichotels.com/ or http://www.earnings.com/ approximately 15 minutes before the call.
The company also produces supplemental financial data that includes detailed information regarding its operating results. This supplemental data is considered an integral part of this earnings news release. These materials are available on the Strategic Hotels & Resorts website at http://www.strategichotels.com/ within the investor relations section.
About the Company
Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and asset manages high-end hotels and resorts. The company has ownership interests in 18 properties with an aggregate of 8,463 rooms. For further information, please visit the company's website at http://www.strategichotels.com/ .
This press release contains forward-looking statements about Strategic Hotel& 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. 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: availability of capital; ability to obtain or refinance debt; rising interest rates; rising insurance premiums; cash available for capital expenditures; competition; demand for hotel rooms in our current and proposed market areas; economic conditions generally and in the real estate market specifically; delays in construction and development; demand for hotel condominiums; marketing challenges associated with entering new lines of business; risks related to natural disasters; the pace and extent of the recovery of the New Orleans economy and tourism industry; the successful collection of insurance proceeds and rehabilitation of the New Orleans property; the effect of threats of terrorism and increased security precautions on travel patterns and hotel bookings; the outbreak of hostilities and international political instability; legislative or regulatory changes, including changes to laws governing the taxation of REITs; and changes in generally accepted accounting principles, policies and guidelines applicable to REITs.
Additional risks are discussed 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 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 we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 31,
2006 2005
Revenues:
Rooms $76,799 $55,984
Food and beverage 46,301 34,011
Other hotel operating revenue 14,121 11,983
137,221 101,978
Lease revenue 3,801 4,071
Total revenues 141,022 106,049
Operating Costs and Expenses:
Rooms 17,993 12,026
Food and beverage 32,486 23,946
Other departmental expenses 37,320 27,582
Management fees 4,003 4,255
Other hotel expenses 18,819 5,683
Lease expense 3,224 3,573
Depreciation and amortization 14,513 9,677
Corporate expenses 5,673 4,757
Total operating costs and expenses 134,031 91,499
Operating income 6,991 14,550
Interest expense (7,850) (7,054)
Interest income 1,212 284
Equity in (losses) earnings of joint
ventures (1,619) 402
Other income, net 1,613 1,187
Income before income taxes, minority
interests and discontinued operations 347 9,369
Income tax benefit (expense) 2,236 (940)
Minority interest expense in SHR's
operating partnership (116) (1,996)
Minority interest expense in
consolidated hotel joint ventures (196) -
Income from continuing operations 2,271 6,433
Income from discontinued operations 12 666
Net income 2,283 7,099
Preferred shareholder dividends (3,706) (349)
Net (loss) income available to common
shareholders $(1,423) $6,750
Basic (Loss) Income Per Share:
(Loss) income from continuing
operations available to common
shareholders per share $(0.03) $0.20
Income from discontinued operations
per share 0.00 0.02
Net (loss) income available to
common shareholders per share $(0.03) $0.22
Weighted-average common shares
outstanding 46,763 30,247
Diluted (Loss) Income Per Share:
(Loss) income from continuing
operations available to common
shareholders per share $(0.03) $0.20
Income from discontinued operations
per share 0.00 0.02
Net (loss) income available to
common shareholders per share $(0.03) $0.22
Weighted-average common shares
outstanding 46,763 30,357
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2006 2005
Assets
Property and equipment $1,491,774 $1,300,250
Less accumulated depreciation (231,452) (217,695)
Net property and equipment 1,260,322 1,082,555
Goodwill 106,667 66,656
Intangible assets (net of
accumulated amortization of $1,529
and $1,340, respectively) 1,940 2,129
Investment in hotel joint venture 86,491 15,533
Cash and cash equivalents 77,801 65,017
Restricted cash and cash equivalents 23,741 32,115
Accounts receivable (net of
allowance for doubtful accounts of
$464 and $427, respectively) 46,864 31,286
Deferred financing costs (net of
accumulated amortization of $1,377
and $969, respectively) 7,154 7,544
Other assets 89,471 119,687
Insurance recoveries receivable 31,398 25,588
Total assets $1,731,849 $1,448,110
Liabilities and Shareholders' Equity
Liabilities:
Mortgages and other debt payable $625,710 $633,380
Bank credit facility 30,000 26,000
Accounts payable and accrued expenses 120,664 90,486
Distributions payable 14,654 11,531
Deferred gain on sale of hotels 101,605 99,970
Total liabilities 892,633 861,367
Minority interests in SHR's
operating partnership 11,504 76,030
Minority interests in consolidated
hotel joint ventures 11,085 11,616
Shareholders' equity:
8.5% Series A Cumulative
Redeemable Preferred Stock ($0.01
par value; 4,000,000 shares issued and
outstanding; liquidation preference
$25.00 per share) 97,553 97,553
8.25% Series B Cumulative
Redeemable Preferred Stock ($0.01
par value; 4,600,000 shares issued and
outstanding; liquidation preference
$25.00 per share) 110,878 -
Common shares ($0.01 par value;
150,000,000 common shares
authorized; 59,133,344 and 43,878,273
common shares issued and outstanding,
respectively) 591 439
Additional paid-in capital 908,839 688,250
Deferred compensation (5,483) (1,916)
Accumulated deficit (239,330) (241,613)
Accumulated distributions (70,607) (53,142)
Accumulated other comprehensive income 14,186 9,526
Total shareholders' equity 816,627 499,097
Total liabilities and
shareholders' equity $1,731,849 $1,448,110
Non-GAAP Financial Measures
In addition to REIT hotel income, six other non-GAAP financial measures
are presented for the Company that we believe are useful to investors as
key measures of our operating performance: Funds from Operations (FFO);
FFO - Fully Converted; and Comparable FFO; Earnings Before Interest
Expense, Taxes, Depreciation and Amortization (EBITDA); and Adjusted
EBITDA; and Comparable EBITDA. A reconciliation of these measures to net
(loss) income available to common shareholders, the most directly
comparable GAAP measure, is set forth in the following tables.
We compute FFO in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, which adopted a
definition of FFO in order to promote an industry-wide standard measure
of REIT operating performance that would not have certain drawbacks
associated with net income under GAAP. NAREIT defines FFO as net income
(or loss) (computed in accordance with GAAP) excluding (losses) or gains
from sales of property plus real estate-related depreciation and
amortization, and after adjustments for our portion of these items
related to unconsolidated partnerships and joint ventures. We also
present FFO - Fully Converted, which is FFO plus minority interest
expense on convertible minority interests. We also present Comparable
FFO, which is FFO- Fully Converted excluding the impact of any gains or
losses on early extinguishment of debt, impairment losses and other non-
recurring charges. We believe that the presentation of FFO, FFO - Fully
Converted and Comparable FFO provides useful information to 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.
EBITDA represents net (loss) income available to common shareholders
excluding: (i) interest expense, (ii) income tax expense, including
deferred income tax benefits and expenses applicable to our foreign
subsidiaries and income taxes applicable to sale of assets; and (iii)
depreciation and amortization. EBITDA also excludes interest expense,
income tax expense and depreciation and amortization of our equity method
investments. EBITDA is presented on a full participation basis, which
means we have assumed conversion of all convertible minority interests of
our operating partnership into our common stock and includes preferred
dividends. We believe this treatment of minority interest provides more
useful information for management and our investors and appropriately
considers our current capital structure. We also present Adjusted
EBITDA, which eliminates the effect of realizing deferred gains on our
sale leasebacks. We also present Comparable EBITDA, which eliminates the
effect of gains or losses on sales of assets, early extinguishment of
debt, impairment losses and other non-recurring charges. We believe
EBITDA, Adjusted 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, Adjusted EBITDA and Comparable EBITDA as measures in
determining the value of acquisitions and dispositions.
We caution investors that amounts presented in accordance with our
definitions of FFO, FFO - Fully Converted, Comparable FFO, EBITDA,
Adjusted 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, Fully Converted FFO,
Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA should not
be considered as an alternative measure of our net income or operating
performance. FFO, FFO - Fully Converted, Comparable FFO, EBITDA, Adjusted
EBITDA and Comparable EBITDA may include funds that may not be available
for our discretionary use due to functional requirements to conserve
funds for capital expenditures and property acquisitions and other
commitments and uncertainties. Although we believe that FFO, FFO - Fully
Converted, Comparable FFO, EBITDA, Adjusted 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 (loss) income available to common
shareholders. In addition, you should be aware that adverse economic and
market conditions might negatively impact our cash flow. Below, we have
provided a quantitative reconciliation of FFO, FFO - Fully Converted,
Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA to the most
directly comparable GAAP financial performance measure, which is net
(loss) income available to common shareholders, and provide an
explanatory description by footnote of the items excluded from FFO, FFO -
Fully Converted, EBITDA and Adjusted EBITDA. Prior year amounts have
been adjusted to conform to the current year presentation of a fully
converted basis.
Reconciliation of Net (Loss) Income Available to Common Shareholders to
EBITDA, Adjusted EBITDA
and Comparable EBITDA
(in thousands)
Three Months Ended
March 31,
2006 2005
Net (loss) income available to common
shareholders $(1,423) $6,750
Depreciation and amortization -
continuing operations 14,513 9,677
Depreciation and amortization -
discontinued operations - 910
Interest expense - continuing
operations 7,850 7,054
Interest expense - discontinued
operations - 428
Income taxes - continuing operations (2,236) 940
Minority interests 117 2,203
Adjustments from consolidated joint
ventures (1,081) -
Adjustments from unconsolidated
affiliates 6,558 937
Preferred shareholder dividends 3,706 349
EBITDA (a) 28,004 29,248
Realized portion of deferred gain on
sale leasebacks (1,052) (1,142)
Adjusted EBITDA (a) $26,952 $28,106
Gain on sale of assets - discontinued
operations (13) -
Gain on sale of assets - continuing
operations (30) -
Termination costs 10,384 -
Comparable EBITDA $37,293 $28,106
(a) EBITDA and Adjusted EBITDA have not been adjusted for the following
amounts included in net (loss) income available to common shareholders
because these (losses) gains have either occurred during the prior two
years or are reasonably likely to occur within two years (in
thousands):
-- Gain on sale of assets from discontinued operations amounted to $13
for the three months ended March 31, 2006.
-- Gain on sale of assets from continuing operations amounted to $30 for
the three months ended March 31, 2006.
-- Termination costs related to the termination of the management
agreement at the Marriott Rancho Las Palmas amounted to $10,384 for
the three months ended March 31, 2006.
Reconciliation of Net (Loss) Income Available to Common Shareholders to
Funds From Operations (FFO), FFO - Fully Converted and Comparable FFO
(in thousands)
Three Months Ended
March 31,
2006 2005
Net (loss) income available to common
shareholders $(1,423) $6,750
Depreciation and amortization -
continuing operations 14,513 9,677
Depreciation and amortization -
discontinued operations - 910
Gain on sale of assets - continuing
operations (30) -
Gain on sale of assets - discontinued
operations (13) -
Realized portion of deferred gain on
sale leasebacks (1,052) (1,142)
Deferred tax expense on realized
portion of deferred gain
on sale leasebacks 316 344
Minority interests adjustments (795) (2,629)
Adjustments from consolidated joint
ventures (582) -
Adjustments from unconsolidated
affiliates 1,830 510
FFO (a) 12,764 14,420
Convertible minority interests 912 4,832
FFO - Fully Converted (a) $13,676 $19,252
Termination costs 10,384 -
Deferred tax benefit on termination costs (4,045) -
Comparable FFO $20,015 $19,252
Comparable FFO per weighted-average
fully converted shares and units
outstanding $0.34 $0.48
Weighted-average fully converted
shares and units outstanding 58,149 39,967
(a) FFO and FFO - Fully Converted have not been adjusted for the following
amounts included in net (loss) income available to common shareholders
because these (losses) gains have either occurred during the prior two
years or are reasonably likely to occur within two years (in
thousands):
-- Termination costs related to the termination of the management
agreement at the Marriott Rancho Las Palmas amounted to $10,384 for
the three months ended March 31, 2006.
-- Deferred tax benefit on termination costs amounted to $4,045 for the
three months ended March 31, 2006.
Seasonality by Geographic Region
Same store revenues have been adjusted to show hotel performance on a
comparable quarter-over-quarter basis. Adjustments include (i) exclusion
of Hyatt Regency New Orleans due to a hurricane that ceased significant
operations in August 2005; (ii) exclusion of Marriott Schaumburg and
Embassy Suites Lake Buena Vista Resort as these properties were sold in
the fourth quarter of 2005 and their results of operations were
reclassified to discontinued operations; and (iii) presentation of the
hotels without regard to either ownership structure or leaseholds.
Acquisition properties and the related dates of purchase are as follows:
InterContinental Chicago and InterContinental Miami (April 1, 2005),
Fairmont Chicago (September 1, 2005), Hotel Del Coronado (January 9,
2006) and Four Seasons Washington, D.C. (March 1, 2006).
United States Hotels (as of March 31, 2006)
Acquisition property revenues - 5 Properties and 3,014 Rooms
Same store property revenues - 7 Properties and 3,039 Rooms
Three Months Ended
June September December March
30, 30, 31, 31,
2005 2005 2005 2006 Total
Acquisition property
revenues $28,664 $31,964 $44,027 $72,388 $177,043
Same store property
revenues 67,093 63,468 71,883 71,768 274,212
Total revenues $95,757 $95,432 $115,910 $144,156 $451,255
Same store seasonality % 24.5% 23.1% 26.2% 26.2% 100.0%
Mexican Hotels (as of March 31, 2006)
Same store property revenues - 2 Properties and 385 Rooms
Three Months Ended
June September December March
30, 30, 31, 31,
2005 2005 2005 2006 Total
Same store property
revenues $15,990 $12,646 $15,891 $20,119 $64,646
Same store seasonality % 24.7% 19.6% 24.6% 31.1% 100.0%
Total North American Hotels (as of March 31, 2006)
Acquisition property revenues - 5 Properties and 3,014 Rooms
Same store property revenues - 9 Properties and 3,424 Rooms
Three Months Ended
June September December March
30, 30, 31, 31,
2005 2005 2005 2006 Total
Acquisition property
revenue $28,664 $31,964 $44,027 $72,388 $177,043
Same store property
revenue 76,114 87,774 84,322 91,887 338,858
Total revenues $104,778 $119,738 $128,349 $164,275 $517,140
Same store seasonality % 22.5% 25.9% 24.9% 27.0% 100.0%
European Hotels (as of March 31, 2006)
Same store property revenues - 3 Properties and 841 Rooms
Three Months Ended
June September December March
30, 30, 31, 31,
2005 2005 2005 2006 Total
Same store property
revenues $23,179 $23,582 $18,923 $17,303 $82,987
Same store seasonality % 27.9% 28.4% 22.8% 20.9% 100.0%
Operating Statistics by Geographic Region
Operating results have been adjusted to show hotel performance on a
comparable period basis. Adjustments include (i) exclusion of
InterContinental Chicago, InterContinental Miami, Fairmont Chicago, Hotel
del Coronado and Four Seasons Washington, D.C.'s partial year results;
(ii) exclusion of Hyatt Regency New Orleans due to a hurricane that ceased
significant operations in August 2005; (iii) exclusion of Marriott
Schaumburg and Embassy Suites Lake Buena Vista Resort as these properties
were sold in the fourth quarter of 2005 and their results of operations
were reclassified to discontinued operations; and (iv) presentation of the
European hotels without regard to either ownership structure or
leaseholds.
United States Hotels (as of March 31, 2006)
7 Properties
3,039 Rooms
Three Months Ended
March 31,
2006 2005 Change
Average Daily Rate $184.63 $172.82 6.8%
Average Occupancy 74.5% 74.5% - pts
RevPAR $137.54 $128.80 6.8%
Total RevPAR $267.28 $250.33 6.8%
Property EBITDA Margin (excludes
termination costs - see note (d)
on page 17) 26.3% 24.6% 1.7 pts
Mexican Hotels (as of March 31, 2006)
2 Properties
385 Rooms
Three Months Ended
March 31,
2006 2005 Change
Average Daily Rate $503.56 $442.55 13.8%
Average Occupancy 74.3% 72.3% 2.0 pts
RevPAR $374.34 $319.75 17.1%
Total RevPAR $581.90 $499.56 16.5%
Property EBITDA Margin 39.0% 37.5% 1.5 pts
Total North American Hotels (as of March 31, 2006)
9 Properties
3,424 Rooms
Three Months Ended
March 31,
2006 2005 Change
Average Daily Rate $220.95 $202.46 9.1%
Average Occupancy 74.5% 74.3% 0.2 pts
RevPAR $164.56 $150.36 9.4%
Total RevPAR $303.17 $278.48 8.9%
Property EBITDA Margin (excludes
termination costs - see note (d)
on page 17) 29.1% 27.2% 1.9 pts
European Hotels (as of March 31, 2006)
3 Properties
841 Rooms
Three Months Ended
March 31,
2006 2005 Change
Average Daily Rate $197.72 $215.27 (8.2)%
Average Occupancy 76.5% 69.8% 6.7 pts
RevPAR $151.18 $150.21 0.6 %
Total RevPAR $228.59 $220.71 3.6 %
Property EBITDA Margin 29.7% 30.7% (1.0)pts
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 months ended March 31, 2006 and 2005. Property
EBITDA reflects property net operating income plus depreciation and
amortization.
Three Months Ended March 31,
2006 2005
INTERCONTINENTAL CHICAGO
Selected Financial Information
(This table includes financial
information only for our period
of ownership):
Total revenues $11,906 N/A
Property EBITDA $1,743 N/A
Selected Operating Information
(This table includes statistical
information only for our period
of ownership. For the three months
ended March 31, 2005, average
occupancy was 52.7%, ADR was $145.78,
RevPAR was $76.80 and Total RevPAR
was $124.63):
Rooms 792 N/A
Average occupancy 62.3% N/A
ADR $168.38 N/A
RevPAR $104.83 N/A
Total RevPAR $167.03 N/A
HYATT REGENCY PHOENIX
Selected Financial Information:
Total revenues $12,158 $12,824
Property EBITDA $4,775 $5,106
Selected Operating Information:
Rooms 696 696
Average occupancy 81.8% 81.6%
ADR $151.33 $155.29
RevPAR $123.85 $126.68
Total RevPAR $194.09 $204.73
FAIRMONT CHICAGO
Selected Financial Information
(This table includes financial
information only for our period
of ownership):
Total revenues $12,189 N/A
Property EBITDA $842 N/A
Selected Operating Information
(This table includes statistical
information only for our period of
ownership. For the three months
ended March 31, 2005, average
occupancy was 61.1%, ADR was
$151.01, RevPAR was $92.20 and
Total RevPAR was $173.15):
Rooms 691 N/A
Average occupancy 62.4% N/A
ADR $178.41 N/A
RevPAR $111.37 N/A
Total RevPAR $196.00 N/A
HOTEL DEL CORONADO
Selected Financial and Operating Information (No table has been
provided since we did not own the property for the entire periods
presented. For the three months ended March 31, 2006, average
occupancy was 79.0%, ADR was $303.97, RevPAR was $240.12 and Total
RevPAR was $484.72. For the three months ended March 31, 2005, average
occupancy was 76.7%, ADR was $283.33, RevPAR was $217.46 and Total
RevPAR was $434.90)
Three Months Ended March 31,
2006 2005
INTERCONTINENTAL MIAMI
Selected Financial Information (This
table includes financial information
only for our period of ownership):
Total revenues $16,626 N/A
Property EBITDA $6,814 N/A
Selected Operating Information (This table
includes statistical information only for
our period of ownership. For the three
months ended March 31, 2005, average
occupancy was 85.3%, ADR was $179.68,
RevPAR was $153.27 and Total RevPAR
was $256.71):
Rooms 641 N/A
Average occupancy 84.3% N/A
ADR $207.05 N/A
RevPAR $174.48 N/A
Total RevPAR $288.20 N/A
HILTON BURBANK AIRPORT AND CONVENTION CENTER
Selected Financial Information:
Total revenues $7,993 $6,920
Property EBITDA $2,729 $2,230
Selected Operating Information:
Rooms 488 488
Average occupancy 79.1% 75.1%
ADR $138.15 $121.02
RevPAR $109.31 $90.83
Total RevPAR $181.99 $157.56
MARRIOTT RANCHO LAS PALMAS RESORT
Selected Financial Information:
Total revenues $10,249 $10,800
Property EBITDA (excludes termination
costs - see note (d) on page 17) $2,346 $2,479
Selected Operating Information:
Rooms 444 444
Average occupancy 69.0% 75.4%
ADR $197.47 $188.02
RevPAR $136.21 $141.70
Total RevPAR $274.80 $289.58
HYATT REGENCY LA JOLLA AT AVENTINE
Selected Financial Information:
Total revenues $10,873 $9,230
Property EBITDA $3,149 $2,101
Selected Operating Information:
Rooms 419 419
Average occupancy 78.4% 76.7%
ADR $185.20 $162.32
RevPAR $145.22 $124.47
Total RevPAR $288.33 $244.76
Three Months Ended March 31,
2006 2005
MARRIOTT LINCOLNSHIRE RESORT
Selected Financial Information:
Total revenues $7,969 $7,441
Property EBITDA $990 $795
Selected Operating Information:
Rooms 389 390
Average occupancy 52.7% 57.1%
ADR $130.90 $116.39
RevPAR $69.04 $66.47
Total RevPAR $243.88 $227.14
LOEWS SANTA MONICA BEACH HOTEL
Selected Financial Information:
Total revenues $11,133 $10,374
Property EBITDA $3,473 $3,321
Selected Operating Information:
Rooms 342 342
Average occupancy 85.0% 86.7%
ADR $268.61 $251.47
RevPAR $228.22 $217.90
Total RevPAR $361.70 $337.04
RITZ-CARLTON HALF MOON BAY
Selected Financial Information:
Total revenues $11,393 $9,648
Property EBITDA $1,413 $489
Selected Operating Information:
Rooms 261 261
Average occupancy 65.3% 58.4%
ADR $295.83 $277.65
RevPAR $193.15 $162.04
Total RevPAR $485.01 $410.73
FOUR SEASONS WASHINGTON, D.C.
Selected Financial and Operating Information (No table has been provided
since we did not own the property for the entire periods presented. For
the three months ended March 31, 2006, average occupancy was 65.0%, ADR
was $462.14, RevPAR was $300.48 and Total RevPAR was $545.85. For the
three months ended March 31, 2005, average occupancy was 23.2%, ADR was
$565.58, RevPAR was $131.16 and Total RevPAR was $293.41):
HYATT REGENCY NEW ORLEANS
Selected Financial Information:
Total revenues N/A $17,657
Property EBITDA N/A $5,783
Selected Operating Information (For 2006,
no statistics are provided as the hotel
is under redevelopment):
Rooms 1,184
Average occupancy N/A 64.1%
ADR N/A $153.09
RevPAR N/A $98.11
Total RevPAR N/A $165.70
Three Months Ended March 31,
2006 2005
FOUR SEASONS MEXICO CITY
Selected Financial Information:
Total revenues $6,069 $5,422
Property EBITDA $1,467 $1,208
Selected Operating Information:
Rooms 240 240
Average occupancy 66.2% 63.9%
ADR $242.16 $225.10
RevPAR $160.39 $143.93
Total RevPAR $280.97 $251.02
FOUR SEASONS PUNTA MITA RESORT
Selected Financial Information:
Total revenues $14,050 $11,663
Property EBITDA $6,383 $5,199
Selected Operating Information:
Rooms 145 140
Average occupancy 87.8% 86.5%
ADR $831.67 $718.11
RevPAR $730.52 $621.16
Total RevPAR $1,082.88 $925.63
Three Months Ended March 31,
2006 2005
INTERCONTINENTAL PRAGUE
Selected Financial Information (Amounts below
are 100% of operations, of which SHCI
owns 35%):
Total revenues $6,293 $6,650
Property EBITDA $1,794 $2,192
Selected Operating Information:
Rooms 372 372
Average Occupancy 73.2% 68.7%
ADR $147.98 $173.55
RevPAR $108.39 $119.29
Total RevPAR $187.96 $198.63
MARRIOTT HAMBURG
Selected Financial Information:
Total revenues $4,681 $3,750
Property EBITDA $1,236 $1,279
Selected Operating Information:
Rooms 277 277
Average occupancy 81.0% 67.3%
ADR $148.00 $150.85
RevPAR $119.91 $101.47
Total RevPAR $187.77 $150.42
PARIS MARRIOTT CHAMPS ELYSEES
Selected Financial Information:
Total revenues $6,329 $6,306
Property EBITDA $2,104 $1,661
Selected Operating Information:
Rooms 192 192
Average occupancy 76.1% 75.4%
ADR $366.82 $371.88
RevPAR $279.17 $280.44
Total RevPAR $366.26 $364.93
Reconciliation of Property EBITDA to EBITDA
(in thousands)
Three Months Ended March 31,
2006 2005
Property Property
Hotel EBITDA EBITDA EBITDA EBITDA
Hyatt Regency New Orleans $- $(369) $5,783 $5,783
InterContinental
Chicago (a) 1,743 1,743 - -
Hyatt Regency Phoenix 4,775 4,775 5,106 5,106
Fairmont Chicago (b) 842 842 - -
Hotel del Coronado (c) 9,793 - - -
InterContinental Miami (a) 6,814 6,814 - -
Hilton Burbank Airport
and Convention Center 2,729 2,729 2,230 2,230
Marriott Rancho Las
Palmas Resort 2,346 (8,038) 2,479 2,479
Hyatt Regency La Jolla
at Aventine 3,149 3,149 2,101 2,101
Marriott Lincolnshire
Resort 990 990 795 795
Loews Santa Monica
Beach Hotel 3,473 3,473 3,321 3,321
Ritz-Carlton Half
Moon Bay 1,413 1,413 489 489
Four Seasons
Washington, D.C. 1,313 1,313 - -
Four Seasons Mexico City 1,467 1,467 1,208 1,208
Four Seasons Punta
Mita Resort 6,383 6,383 5,199 5,199
InterContinental
Prague (d) 1,794 - 2,192 -
Marriott Hamburg (e) 1,236 26 1,279 37
Paris Marriott Champs
Elysees (e) 2,104 467 1,661 237
$52,364 $27,177 $33,843 $28,985
Adjustments:
Corporate expenses $(5,673) $(4,757)
Interest income 1,212 284
Equity in (losses)
earnings of joint
ventures (1,619) 402
Other income, net 1,613 1,187
Income from discontinued
operations (excluding
minority interest) 13 873
Depreciation and
amortization -
discontinued
operations - 910
Interest expense -
discontinued
operations - 428
Minority interest
expense in
consolidated hotel
joint ventures (196) -
Adjustments from
consolidated joint
ventures (1,081) -
Adjustments from
unconsolidated
affiliates 6,558 937
Other adjustments - (1)
EBITDA $28,004 $29,248
(a) On April 1, 2005, we purchased an 85% controlling interest in the
joint ventures that own the InterContinental Chicago and Miami
hotels. We consolidate these hotels for reporting purposes. We have
included the results of this hotel in Property EBITDA above for our
period of ownership.
(b) On September 1, 2005, we purchased the Fairmont Chicago. We have
included the results of this hotel in Property EBITDA above for our
period of ownership.
(c) On January 9, 2006 we closed the acquisition of a 45% joint venture
ownership interest in SHC KSL Partners, LP, the existing owner of the
Hotel del Coronado in San Diego, California. We account for our
investment under the equity method of accounting. Our equity in
earnings of the hotel joint venture is included in equity in (losses)
earnings of joint ventures in our consolidated statements of
operations.
(d) We have a 35% interest in the joint venture that owns the
InterContinental Prague and account for our investment under the
equity method of accounting. Our equity in earnings of the hotel
joint venture is included in equity in (losses) earnings of joint
ventures in our consolidated statements of operations.
(e) We have leasehold interests in these properties. 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 that is recorded by our sub-lessee.
DATASOURCE: Strategic Hotels & Resorts, Inc.
CONTACT: James Mead, Chief Financial Officer of Strategic Hotels &
Resorts, Inc., +1-312-658-5740; or Vicki Baker, General Inquiries,
+1-703-796-1798, or Leslie Loyet, Analyst Inquiries, +1-312-640-6672, or
Tim Grace, Media Inquiries, +1-312-640-6667, all of Financial Relations Board
Web site: http://www.strategichotels.com/