Attached files
| file | filename |
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| 8-K - FORM 8K - CNL LIFESTYLE PROPERTIES INC | d701436d8k.htm |
| EX-99.1 - PRESS RELEASE - CNL LIFESTYLE PROPERTIES INC | d701436dex991.htm |
| EX-99.3 - ANNUAL REPORT - CNL LIFESTYLE PROPERTIES INC | d701436dex993.htm |
 CNL
Lifestyle Properties, Inc. Owning America’s Lifestyle
®
Fourth Quarter 2013 Update
March 31, 2014
Exhibit 99.2 |
 2
Certain
statements
in
this
document
may
constitute
forward-looking
statements
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
as
amended
(the
“Securities
Act”)
and
of
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended
(the
“Exchange
Act”).
CNL
Lifestyle
Properties,
Inc.
(herein
also
referred
to
as
the
“Company”)
intends
that
all
such
forward-looking
statements
be
covered
by
the
safe-harbor
provisions
for
forward-looking
statements
of
Section
27A
of
the
Securities
Act
and
Section
21E
of
the
Exchange
Act,
as
applicable.
All
statements,
other
than
statements
that
relate
solely
to
historical
facts,
including,
among
others,
statements
regarding
the
Company’s
future
financial
position,
business
strategy,
projected
levels
of
growth,
projected
costs
and
projected
financing
needs,
are
forward-looking
statements.
Those
statements
include
statements
regarding
the
intent,
belief
or
current
expectations
of
the
management
team,
as
well
as
the
assumptions
on
which
such
statements
are
based,
and
generally
are
identified
by
the
use
of
words
such
as
“may,”
“will,”
“seeks,”
“anticipates,”
“believes,”
“estimates,”
“expects,”
“plans,”
“intends,”
“should,”
“continues,”
“pro
forma”
or
similar
expressions.
Forward-looking
statements
are
not
guarantees
of
future
performance
and
actual
results
may
differ
materially
from
those
contemplated
by
such
forward-looking
statements
due
to
a
variety
of
risks,
uncertainties
and
other
factors,
including
but
not
limited
to,
the
factors
detailed
in
our
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2013,
and
other
documents
filed
from
time
to
time
with
the
Securities
and
Exchange
Commission.
Many
of
these
factors
are
beyond
the
Company’s
ability
to
control
or
predict.
Such
factors
include,
but
are
not
limited
to:
changes
in
general
economic
conditions
in
the
U.S.
or
globally
(including
financial
market
fluctuations);
risks
associated
with
our
investment
strategy;
risks
associated
with
the
real
estate
markets
in
which
the
Company
invests;
risks
of
doing
business
internationally
and
global
expansion,
including
unfamiliarity
with
new
markets
and
currency
risks;
risks
associated
with
the
use
of
debt
to
finance
the
Company’s
business
activities,
including
refinancing
and
interest
rate
risk
and
the
Company’s
failure
to
comply
with
its
debt
covenants;
the
Company’s
failure
to
obtain,
renew
or
extend
necessary
financing
or
to
access
the
debt
or
equity
markets;
competition
for
properties
and/or
tenants
in
the
markets
in
which
the
Company
engages
in
business;
the
impact
of
current
and
future
environmental,
zoning
and
other
governmental
regulations
affecting
the
Company’s
properties;
the
Company’s
ability
to
make
necessary
improvements
to
properties
on
a
timely
or
cost-efficient
basis;
risks
related
to
development
projects
or
acquired
property
value-add
conversions,
if
applicable
(including
construction
delays,
cost
overruns,
the
Company’s
inability
to
obtain
necessary
permits
and/or
public
opposition
to
these
activities);
defaults
on
or
non-renewal
of
leases
by
tenants;
failure
to
lease
properties
at
all
or
on
favorable
terms;
unknown
liabilities
in
connection
with
acquired
properties
or
liabilities
caused
by
property
managers
or
operators;
the
Company’s
failure
to
successfully
manage
growth
or
integrate
acquired
properties
and
operations;
material
adverse
actions
or
omissions
by
any
joint
venture
partners;
increases
in
operating
costs
and
other
expense
items
and
costs,
uninsured
losses
or
losses
in
excess
of
the
Company’s
insurance
coverage;
the
impact
of
outstanding
or
potential
litigation;
risks
associated
with
the
Company’s
tax
structuring;
the
Company’s
failure
to
qualify
and
maintain
its
status
as
a
real
estate
investment
trust
and
the
Company’s
ability
to
protect
its
intellectual
property
and
the
value
of
its
brand.
Management
believes
these
forward-looking
statements
are
reasonable;
however,
such
statements
are
necessarily
dependent
on
assumptions,
data
or
methods
that
may
be
incorrect
or
imprecise
and
the
Company
may
not
be
able
to
realize
them.
Investors
are
cautioned
not
to
place
undue
reliance
on
any
forward-looking
statements
which
are
based
on
current
expectations.
All
written
and
oral
forward-looking
statements
attributable
to
the
Company
or
persons
acting
on
its
behalf
are
qualified
in
their
entirety
by
these
cautionary
statements.
Further,
forward-looking
statements
speak
only
as
of
the
date
they
are
made
and
the
Company
undertakes
no
obligation
to
update
or
revise
forward-looking
statements
to
reflect
changed
assumptions,
the
occurrence
of
unanticipated
events
or
changes
to
future
operating
results
over
time
unless
otherwise
required
by
law.
Forward Looking Statements |
 CNL
Lifestyle Properties, Inc. Portfolio of 145 lifestyle-oriented
properties and 7 loans as of
3/14/14
Diversified by asset type,
geography and operator
Iconic assets and industry-
leading operators
Ski & Mountain
Golf
Attractions
Senior Housing
Marinas
Additional
•
24 properties
•
48 properties
•
23 properties
•
30 properties
•
17 properties
•
3 properties
Summary REIT Information
$2.7 billion
Demographically Driven / Lifestyle-Oriented
37 states and 2 Canadian provinces
Conservative Capital Structure
Leasing and Preferred Return Structures
Diversified Portfolio
The Board will consider a listing, merger, sale or
other liquidity opportunities on or before
December 31, 2015
GAAP Total Assets
Property Focus
Geographic
Diversification
Established Assets
Exit Strategy
3 |
 Recent Highlights
Completed valuation as of 12/31/2013 resulting in a NAV of $6.85
per share
Distribution unchanged with yield of 6.20% (based on NAV of $6.85 per share)
DRP shares will equal current NAV at the time of reinvestment rather than at a
discount to NAV
Engaged Jefferies LLC, a leading global investment banking and advisory firm, to
assist in the evaluation of various strategic alternatives to provide
liquidity to shareholders During
Q4
2013,
acquired
6
senior
housing
properties
and
1
water
park
for
a
total
of
$161
million;
Disposed
of
FEC
in
North
Houston
for
a
small
gain
Actively working to close remaining Pacifica senior housing portfolio properties
and other potential senior housing assets for approximately $106
million Over $41 million of owner capital invested into various portfolio
assets in 2013 Transitioned 11 marina properties to new operators in Q4 2013
and in process of transitioning 4 other marinas to new operator -
expected to be completed in the first half of
2014
An impairment provision was recorded in Q4 2013 on the golf properties due to a
decision to market and sell the golf portfolio
Completed line of credit expansion to $160M in Q4 2013
4 |
 Geographic Diversification
5 |
 The portfolio is broadly diversified across asset classes to
mitigate against seasonality and volatility
Sector Diversification
As of March 14, 2014
By Initial Purchase Price
6 |
 Sector Performance
7
Ski & Mountain
24 properties
Golf
48 properties
Attractions
23 properties
Additional Lifestyle
3 properties
Senior Housing
30 properties
Marinas
17 properties
145 properties as of March 14, 2014
Source: CNL Lifestyle Properties, Inc. 2013 Form 10-K
Past performance is not indicative of future returns.
-
Higher ski visits and an
increase in summer-based
activities due to favorable
weather and revenue-
enhancing capital
improvements. Poor snow
conditions in the west for
2013/2014 ski season.
-
Golf rounds are down -
consistent with the 4.9%
industry decrease in overall
rounds played as reported
by Golf Datatech. EBITDA
was up slightly due to
continued operator focus.
-
The attractions portfolio
outperformed the prior year
despite our largest park
experiencing significant
weather challenges and
falling short of
expectations.
-
Occupancy and Revenue
per Occupied Unit both up
over the last year.
Average occupancy for the
entire portfolio was 91.3%
as of 12/31/13 exceeding
the industry average of
89.7%.
-
Revenue and EBITDA were
down slightly compared to
2012 due to competition in
the west and near term
impact of operator
transitions. Management
has transitioned 11 leased
marinas to new operators; 4
remaining marinas expected
to transition in Q2 2014.
-
Steady performance at
Dallas Market Center.
Multi-family property
under renovation
during 2013. |
 8
Same-Store Property Performance
Twelve Months Ended December 31, 2013 Compared to Same Period 2012
Note: Includes results for comparable leased and managed properties owned for the
entirety of 2013 and 2012. Source: CNL Lifestyle Properties, Inc. 2013
Form 10-K Past performance is not indicative of future returns.
The increases in both revenue and EBITDA are primarily due to the performance of
the ski and mountain lifestyle sector
In the 2013/2014 season, our western ski resorts have struggled with unusually
warm temperatures and severe drought conditions
Senior housing Q4 2013 occupancy was 89.7% compared to 89.0% from a year ago
Multi-family asset experienced decreases due to ongoing unit renovations
2013
lease
coverage
of
1.48x
vs.
1.40x
for
2012
-
primarily
due
to
improvements
at
our
ski
and
marina
assets
# of
Properties
Revenue
EBITDA
Ski and Mountain Lifestyle
17
8.4%
21.5%
Golf
48
-1.5%
4.8%
Attractions
21
1.7%
6.0%
Senior Housing
10
5.5%
4.7%
Marinas
17
-1.5%
-6.3%
Additional Lifestyle
1
-9.3%
-24.4%
114
4.3%
11.6% |
 Full
Year Financial Summary (in Millions) FFO
Adjusted EBITDA
9
MFFO
Source: CNL Lifestyle Properties 2012 & 2013 Form 10-K
The Company believes that its presentation of historical non-GAAP financial
measures provides useful supplementary information to and facilitates additional analysis by investors.
These historical non-GAAP financial measures are in addition to, not a
substitute for, or superior to, measures of financial performance prepared in accordance with U.S. Generally
Accepted Accounting Principles. See reconciliation to GAAP net income (loss)
contained in the Appendix. Past performance is not indicative of future
returns. Continued growth due primarily to:
Properties acquired in 2012 and 2013 offset by the impact of
selling interests in 3 joint ventures that owned 42 senior
housing communities
Same-store rent growth in ski and growth of NOI in senior
housing
2013 FFO impacted by non-cash, non-recurring impairment
provision, $58.1 million of which has not been added back in
deriving FFO |
 Credit Metrics
Interest Coverage (1)
(1) Calculated as adjusted EBITDA divided by interest
expense (2) Net debt is total debt less cash
(3) Debt includes line of credit
Net Debt / Adjusted EBITDA (2)
10
Debt / GAAP Total Assets (3)
Source: CNL Lifestyle Properties, Inc. 2012 & 2013 Form 10-K
The Company believes that its presentation of historical non-GAAP financial
measures provides useful supplementary information to and facilitates additional analysis by investors.
These historical non-GAAP financial measures are in addition to, not a
substitute for, or superior to, measures of financial performance prepared in accordance with U.S. Generally
Accepted Accounting Principles. See reconciliation to GAAP net income (loss)
contained in the Appendix. Past performance is not indicative of future
returns. Year
Coverage
2011
2.4x
2012
2.5x
2013
2.6x
Year
Coverage
2011
5.5x
2012
6.3x
2013
6.1x
Consolidated
Leverage Including Share
Year
Coverage
of Unconsolidated Entities
2011
32.0%
43.3%
2012
38.7%
45.3%
2013
44.6%
48.1% |
 Key
Credit Information 11
Weighted average interest rate is 5.73% (5.84% without JV debt)
75% fixed rate debt, 9% hedged and 16% variable rate debt
No significant near-term maturities
Note: Chart as of December 31, 2013. 2014 maturities are expected to be
refinanced or retired with proceeds from asset sales. |
 Management Initiatives
Capital Deployment / Redeployment
Retain “full investment”
status –
now focused on recycled capital
Invest in improvements and enhancements to existing assets to further
drive revenue and expense reduction
Proactive Portfolio Management and Optimization
Focused asset management to continue to drive performance and value
Continue to dispose of non-core assets
Streamline and rebalance portfolio
Liquidity Options Study
Work with Jefferies LLC to evaluate strategic alternatives to maximize
value and provide liquidity to shareholders
12 |
 Conclusion & Summary
13
Continued the positive momentum building upon successes in 2013,
despite
significant weather challenges at our largest attractions and western ski assets
in late 2013
Began the process of selling certain non-core assets and recycling capital,
which we expect will accelerate in 2014
Largely completed the restructuring activities within our key asset classes, with
the transition of properties from our largest marina tenant to four new
operators Strategically deploying excess cash into new acquisitions
and/or debt repayment
Continued to improve property performance in an effort to maximize income and
value
Now focused on the evaluation of strategic alternatives and pending liquidity to
shareholders |
 Contact Information
For more information about
CNL Lifestyle Properties, please contact
CNL Client Services at 866-650-0650.
14 |
 Appendix
15
Appendix |
 Reconciliation of FFO and MFFO to Net Loss
16
Source: CNL Lifestyle Properties 2013 Form 10-K
The Company believes that its presentation of historical non-GAAP financial
measures provides useful supplementary information to and facilitates additional analysis by investors.
These historical non-GAAP financial measures are in addition to, not a
substitute for, or superior to, measures of financial performance prepared in accordance with U.S. Generally
Accepted Accounting Principles.
Past performance is not indicative of future returns.
(1) Includes amounts related to the properties that are classified as assets
held for sale and for which the related results are classified as income
(loss) from discontinued operations in the accompanying consolidated
statements of operations. (2) This amount represents our share of the
FFO or MFFO adjustments allowable under the NAREIT or IPA definitions,
respectively, multiplied by the percentage of income or loss recognized under the HLBV
method.
(3)
In
evaluating
investments
in
real
estate,
management
differentiates
the
costs
to
acquire
the
investment
from
the
operations
derived
from
the
investment.
By
adding
back
acquisition
fees
and
expense
relating
to
business
combinations,
management
believes
MFFO
provides
useful
supplemental
information
of
its
operat
ing
performance
and
will
also
allow
comparability
between
real
estate
entities
regardless
of
their
level
of
acquisition
activities.
Acquisition
fees
and
expenses
include
payments
to
our
advisor
or
third
parties.
Acquisition
fees
and
expenses
relating
to
business
combinations
under
GAAP
are
considered
operating
expenses
and
as
expenses
included
in
the
determination
of
net
income
(loss)
and
income
(loss)
from
continuing
operations,
both
of
which
are
performance
measures
under
GAAP.
All
paid
and
accrued
acquisition
fees
and
expenses
will
have
negative
effects
on
returns
to
investors,
the
potential
for
future
distributions,
and
cash
flows
generated
by
us,
unless
earnings
from
operations
or
net
sales
proceeds
from
the
disposition
of
properties
are
generated
to
cover
the
purchase
price
of
the
property.
(4)
Under
GAAP,
rental
receipts
are
allocated
to
periods
using
various
methodologies.
This
may
result
in
income
recognition
that
is
significantly
different
than
underlying
contract
terms.
By
adjusting
for
these
items
(to
reflect
such
payments
from
a
GAAP
accrual
basis
to
a
cash
basis
of
disclosing
the
rent
and
lease
payments),
MFFO
provides
useful
supplemental
information
on
the
realized
economic
impact
of
lease
terms
and
debt
investments,
providing
insight
on
the
contractual
cash
flows
of
such
lease
terms
and
debt
investments,
and
aligns
results
with
management’s
analysis
of
operating
performance.
(5) (Gain) loss of extinguishment of debt includes legal fees incurred with the
transaction, prepayment penalty fees and write-off of unamortized loan
costs, as applicable. (6) Management believes that adjusting for gains or
write-offs of, lease related assets is appropriate because they are
non-recurring non-cash adjustments that may not be reflective of our ongoing operating
performance. In 2013, we recorded an impairment provisions totaling $58.1 million
for deferred rent from prior GAAP straight-lining adjustments and lease
incentives which resulted from a change in our expected holding periods for
those properties. (7) In July 2013, we completed the sale of our
interests in 42 senior housing properties held through three unconsolidated
joint ventures. (8) The add back for impairment of real estate assets to
arrive at FFO does not include approximately $58.1 million in impairments of
deferred rent from prior GAAP straight-lining adjustments and lease
incentives described in Footnote (6) above. While impairment charges are excluded
from the calculation of FFO, investors are cautioned that due to the fact
that impairments are based on estimated future undiscounted cash flows and
the relatively limited term of our operations, it could be difficult to recover any
impairment charges. |
 Reconciliation of Adjusted EBITDA to Net
Income (Loss)
17
Source: CNL Lifestyle Properties 2013 Form 10-K
The Company believes that its presentation of historical non-GAAP financial
measures provides useful supplementary information to and facilitates additional analysis by investors.
These historical non-GAAP financial measures are in addition to, not a
substitute for, or superior to, measures of financial performance prepared in accordance with U.S. Generally
Accepted Accounting Principles.
Past performance is not indicative of future returns.
(1)
Investments
in
our
unconsolidated
joint
ventures
are
accounted
for
under
the
HLBV
method
of
accounting.
Under
this
method,
we
recognize
income
or
loss
based
on
the
change
in
liquidating
proceeds
we
would
receive
from
a
hypothetical
liquidation
of
our
investments
based
on
depreciated
book
value.
We
adjust
EBITDA
for
equity
in
earnings
(loss)
of
our
unconsolidated
entities
because
we
believe
this
is
not
reflective
of
the
joint
ventures’
operating
performance
or
cash
flows
available
for
distributions
to
us.
We
believe
cash
distributions
from
our
unconsolidated
entities,
exclusive
of
any
financing
transactions,
are
reflective
of
their
operating
performance
and
its
impact
to
us
and
have
been
added
back
to
adjusted
EBITDA
above.
For
the
year
ended
December
31,
2013,
cash
distributions
from
unconsolidated
entities
excludes
approximately
$5.3
million
in
return
of
capital.
For
the
year
ended
December
31,
2012,
cash
distributions
from
unconsolidated
entities
excludes
approximately
$3.4
million
in
return
of
capital.
(2) We believe that adjusting for straight-line adjustments for leased
properties and mortgages and other notes receivable is appropriate because they are non-cash adjustments and reflect the actual cash
receipts received by us from our tenants and borrowers.
(3) In July 2013, we completed the sale of our interests in 42 senior housing
properties held through three unconsolidated joint ventures. (4)
In
connection
with
an
acquisition
of
an
attraction
property,
we
recorded
a
bargain
purchase
gain
as
a
result
of
the
fair
value
of
the
net
assets
acquired
exceeding
the
consideration
transferred. |