STRATEGIC HOTELS & RESORTS, INC - FORM 8-K/A - EX-99.1 - EXHIBIT 99.1 - September 5, 2014

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Exhibit 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On March 31, 2014, Strategic Hotel Funding, L.L.C., the operating partnership of Strategic Hotels & Resorts, Inc. ("SHR") and certain of its direct and indirect wholly-owned subsidiaries closed on the sale of the Marriott London Grosvenor Square hotel (the "Grosvenor Disposition"). SHR sold the 237-room Marriott London Grosvenor Square hotel for £125.15 million (approximately $207.7 million). The following unaudited pro forma financial information gives effect to the Grosvenor Disposition.

The historical financial information for the years ended December 31, 2012 and 2011 has been derived from SHR's audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2013.

The unaudited pro forma statements of operations data for the years ended December 31, 2012 and 2011 are presented as if the Grosvenor Disposition had occurred on January 1, 2011.

The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what SHR's results of operations would actually have been if the transaction had in fact occurred on the earlier date discussed above. It also does not project or forecast SHR's consolidated results of operation for any future date or period.




Strategic Hotels & Resorts, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(in thousands, except per share amounts)
 
Strategic Hotels & Resorts, Inc. Historical Consolidated
 
  Grosvenor Disposition (1)
 
Strategic Hotels & Resorts, Inc. Pro Forma Consolidated
 
Revenues:
 
 
 
 
 
 
Rooms
$
429,689

 
$
(28,384
)
 
$
401,305

 
Food and beverage
264,893

 
(7,595
)
 
257,298

 
Other hotel operating revenue
75,857

 
(2,272
)
 
73,585

 
Lease revenue
4,778

 
 
 
4,778

 
Total revenues
775,217

 
(38,251
)
 
736,966

 
Operating Costs and Expenses:
 
 
 
 
 
 
Rooms
121,794

 
(5,701
)
 
116,093

 
Food and beverage
193,431

 
(3,325
)
 
190,106

 
Other departmental expenses
200,219

 
(7,065
)
 
193,154

 
Management fees
23,085

 
(2,353
)
 
20,732

 
Other hotel expenses
53,117

 
(2,322
)
 
50,795

 
Lease expense
4,580

 
 
 
4,580

 
Depreciation and amortization
99,458

 
(8,799
)
 
90,659

 
Impairment losses and other charges
18,406

 
 
 
18,406

 
Corporate expenses
31,578

 
(480
)
 
31,098

 
Total operating costs and expenses
745,668

 
(30,045
)
 
715,623

 
Operating income
29,549

 
(8,206
)
 
21,343

 
Interest expense
(75,489
)
 
5,178

 
(70,311
)
 
Interest income
213

 
(6
)
 
207

 
Equity in losses of unconsolidated affiliates
(13,485
)
 
 
 
(13,485
)
 
Foreign currency exchange loss
(1,258
)
 
11

 
(1,247
)
 
Other income, net
1,820

 
 
 
1,820

 
Loss before income taxes
(58,650
)
 
(3,023
)
 
(61,673
)
 
Income tax expense
(800
)
 
787

 
(13
)
 
Loss from continuing operations
$
(59,450
)
 
$
(2,236
)
 
$
(61,686
)
 
 
 
 
 
 
 
 
Amounts Attributable to SHR:
 
 
 
 
 
 
Loss from continuing operations
$
(56,495
)
 
$
(2,227
)
 
$
(58,722
)
 
 
 
 
 
 
 
 
Loss from continuing operations attributable to SHR common shareholders per share:
 
 
 
 
 
 
Basic:
$
(0.40
)
 
 
 
$
(0.41
)
(2)
Diluted:
$
(0.40
)
 
 
 
$
(0.41
)
(2)





Notes to Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012

1.
Grosvenor Disposition - On March 31, 2014, SHR disposed of its ownership interest in the Marriott London Grosvenor Square hotel. The consolidated accounts related to the Marriott London Grosvenor Square hotel are reflected as pro forma adjustments to eliminate accounts from continuing operations. There are no pro forma adjustments for nonrecurring items related to this transaction, including the anticipated gain on the Grosvenor Disposition, which was recognized in discontinued operations in the first quarter of 2014.

2.
Loss From Continuing Operations Attributable to SHR Common Shareholders Per Share Calculation - The following table calculates the pro forma weighted average basic and diluted loss from continuing operations attributable to SHR common shareholders per share:

 
 
(In thousands, except per share amounts)
 
 
Basic
 
Diluted
Historical and pro forma basic and diluted weighted average shares outstanding for the year ended December 31, 2012
 
201,109

 
201,109

Pro forma loss from continuing operations attributable to SHR for the year ended December 31, 2012
 
$
(58,722
)
 
$
(58,722
)
Historical preferred shareholder dividend
 
(24,166
)
 
(24,166
)
Pro forma loss from continuing operations attributable to SHR common shareholders for the year ended December 31, 2012
 
$
(82,888
)
 
$
(82,888
)
Pro forma loss from continuing operations attributable to SHR common shareholders per share for the year ended December 31, 2012 - basic and diluted
 
$
(0.41
)
 
$
(0.41
)


 







Strategic Hotels & Resorts, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2011
(in thousands, except per share amounts)
 
Strategic Hotels & Resorts, Inc. Historical Consolidated
 
  Grosvenor Disposition (1)
 
Strategic Hotels & Resorts, Inc. Pro Forma Consolidated
 
Revenues:
 
 
 
 
 
 
Rooms
$
392,058

 
$
(26,460
)
 
$
365,598

 
Food and beverage
257,880

 
(7,665
)
 
250,215

 
Other hotel operating revenue
74,686

 
(2,389
)
 
72,297

 
Lease revenue
5,422

 
 
 
5,422

 
Total revenues
730,046

 
(36,514
)
 
693,532

 
Operating Costs and Expenses:
 
 
 
 
 
 
Rooms
111,062

 
(5,457
)
 
105,605

 
Food and beverage
185,628

 
(3,736
)
 
181,892

 
Other departmental expenses
195,955

 
(6,824
)
 
189,131

 
Management fees
22,705

 
(2,160
)
 
20,545

 
Other hotel expenses
50,038

 
(2,525
)
 
47,513

 
Lease expense
4,865

 
 
 
4,865

 
Depreciation and amortization
106,695

 
(10,355
)
 
96,340

 
Corporate expenses
39,539

 
(496
)
 
39,043

 
Total operating costs and expenses
716,487

 
(31,553
)
 
684,934

 
Operating income
13,559

 
(4,961
)
 
8,598

 
Interest expense
(86,447
)
 
10,314

 
(76,133
)
 
Interest income
172

 
(8
)
 
164

 
Loss on early extinguishment of debt
(1,237
)
 
 
 
(1,237
)
 
Loss on early termination of derivative financial information
(29,242
)
 
 
 
(29,242
)
 
Equity in losses of unconsolidated affiliates
(9,215
)
 
 
 
(9,215
)
 
Foreign currency exchange loss
821

 
9

 
830

 
Other income, net
5,767

 
 
 
5,767

 
Loss before income taxes
(105,822
)
 
5,354

 
(100,468
)
 
Income tax expense
(656
)
 
521

 
(135
)
 
Loss from continuing operations
$
(106,478
)
 
$
5,875

 
$
(100,603
)
 
 
 
 
 
 
 
 
Amounts Attributable to SHR:
 
 
 
 
 
 
Loss from continuing operations
$
(106,365
)
 
$
5,848

 
$
(100,517
)
 
 
 
 
 
 
 
 
Loss from continuing operations attributable to SHR common shareholders per share:
 
 
 
 
 
 
Basic:
$
(0.70
)
 
 
 
$
(0.67
)
(2)
Diluted:
$
(0.70
)
 
 
 
$
(0.67
)
(2)





Notes to Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2011

1.
Grosvenor Disposition - On March 31, 2014, SHR disposed of its ownership interest in the Marriott London Grosvenor Square hotel. The consolidated accounts related to the Marriott London Grosvenor Square hotel are reflected as pro forma adjustments to eliminate accounts from continuing operations. There are no pro forma adjustments for nonrecurring items related to this transaction, including the anticipated gain on the Grosvenor Disposition, which was recognized in discontinued operations in the first quarter of 2014.

2.
Loss From Continuing Operations Attributable to SHR Common Shareholders Per Share Calculation - The following table calculates the pro forma weighted average basic and diluted loss from continuing operations attributable to SHR common shareholders per share:

 
 
(In thousands, except per share amounts)
 
 
Basic
 
Diluted
Historical and pro forma basic and diluted weighted average shares outstanding for the year ended December 31, 2011
 
176,576

 
176,576

Pro forma loss from continuing operations attributable to SHR for the year ended December 31, 2011
 
$
(100,517
)
 
$
(100,517
)
Historical preferred shareholder dividend
 
(18,482
)
 
(18,482
)
Pro forma loss from continuing operations attributable to SHR common shareholders for the year ended December 31, 2011
 
$
(118,999
)
 
$
(118,999
)
Pro forma loss from continuing operations attributable to SHR common shareholders per share for the year ended December 31, 2011 - basic and diluted
 
$
(0.67
)
 
$
(0.67
)


 




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