Attached files
| file | filename |
|---|---|
| 8-K - 8-K - STRATEGIC HOTELS & RESORTS, INC | a630158kpressrelease.htm |
| EX-99.2 - EXHIBIT 99.2 - STRATEGIC HOTELS & RESORTS, INC | a63015exhibit992.htm |
| EX-99.1 - EXHIBIT 99.1 - STRATEGIC HOTELS & RESORTS, INC | a63015exhibit991a-pressrel.htm |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues: | ||||||||||||||||
Rooms | $ | 186,377 | $ | 148,874 | $ | 349,241 | $ | 251,974 | ||||||||
Food and beverage | 134,523 | 100,028 | 257,992 | 170,045 | ||||||||||||
Other hotel operating revenue | 34,989 | 25,942 | 72,896 | 46,181 | ||||||||||||
Lease revenue | 1,013 | 1,319 | 2,044 | 2,618 | ||||||||||||
Total revenues | 356,902 | 276,163 | 682,173 | 470,818 | ||||||||||||
Operating Costs and Expenses: | ||||||||||||||||
Rooms | 51,072 | 41,268 | 98,937 | 74,975 | ||||||||||||
Food and beverage | 88,245 | 67,077 | 171,319 | 121,680 | ||||||||||||
Other departmental expenses | 86,626 | 66,238 | 171,350 | 119,817 | ||||||||||||
Management fees | 12,423 | 9,241 | 23,862 | 15,019 | ||||||||||||
Other hotel expenses | 19,842 | 15,572 | 35,455 | 31,250 | ||||||||||||
Lease expense | 1,017 | 1,260 | 2,051 | 2,518 | ||||||||||||
Depreciation and amortization | 40,331 | 28,058 | 77,995 | 50,263 | ||||||||||||
Impairment losses | 10,401 | — | 10,401 | — | ||||||||||||
Corporate expenses | 6,441 | 7,198 | 14,709 | 14,391 | ||||||||||||
Total operating costs and expenses | 316,398 | 235,912 | 606,079 | 429,913 | ||||||||||||
Operating income | 40,504 | 40,251 | 76,094 | 40,905 | ||||||||||||
Interest expense | (20,709 | ) | (19,587 | ) | (43,494 | ) | (37,861 | ) | ||||||||
Interest income | 16 | 50 | 117 | 77 | ||||||||||||
Loss on early extinguishment of debt | (34,211 | ) | — | (34,211 | ) | — | ||||||||||
Equity in earnings of unconsolidated affiliates | — | 826 | — | 5,271 | ||||||||||||
Foreign currency exchange gain (loss) | 40 | (8 | ) | (76 | ) | (6 | ) | |||||||||
Gain on consolidation of affiliates | — | 65,349 | — | 143,466 | ||||||||||||
Other income, net | 40,465 | 795 | 40,308 | 1,218 | ||||||||||||
Income before income taxes and discontinued operations | 26,105 | 87,676 | 38,738 | 153,070 | ||||||||||||
Income tax expense | (2,452 | ) | (207 | ) | (2,671 | ) | (246 | ) | ||||||||
Income from continuing operations | 23,653 | 87,469 | 36,067 | 152,824 | ||||||||||||
Income from discontinued operations, net of tax | — | 604 | — | 159,039 | ||||||||||||
Net Income | 23,653 | 88,073 | 36,067 | 311,863 | ||||||||||||
Net income attributable to the noncontrolling interests in SHR's operating partnership | (67 | ) | (281 | ) | (104 | ) | (1,130 | ) | ||||||||
Net (income) loss attributable to the noncontrolling interests in consolidated affiliates | (16,888 | ) | 217 | (13,454 | ) | 4,258 | ||||||||||
Net Income Attributable to SHR | 6,698 | 88,009 | 22,509 | 314,991 | ||||||||||||
Preferred shareholder dividends | — | (7,169 | ) | — | (16,993 | ) | ||||||||||
Net Income Attributable to SHR Common Shareholders | $ | 6,698 | $ | 80,840 | $ | 22,509 | $ | 297,998 | ||||||||
Basic Income Per Common Share: | ||||||||||||||||
Income from continuing operations attributable to SHR common shareholders | $ | 0.02 | $ | 0.36 | $ | 0.08 | $ | 0.65 | ||||||||
Income from discontinued operations attributable to SHR common shareholders | — | — | — | 0.74 | ||||||||||||
Net income attributable to SHR common shareholders | $ | 0.02 | $ | 0.36 | $ | 0.08 | $ | 1.39 | ||||||||
Weighted average shares of common stock outstanding | 276,380 | 222,013 | 257,056 | 214,450 | ||||||||||||
Diluted Income Per Common Share: | ||||||||||||||||
Income from continuing operations attributable to SHR common shareholders | $ | 0.02 | $ | 0.35 | $ | 0.07 | $ | 0.60 | ||||||||
Income from discontinued operations attributable to SHR common shareholders | — | — | — | 0.70 | ||||||||||||
Net income attributable to SHR common shareholders | $ | 0.02 | $ | 0.35 | $ | 0.07 | $ | 1.30 | ||||||||
Weighted average shares of common stock outstanding | 278,383 | 233,463 | 284,208 | 225,900 | ||||||||||||
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Balance Sheets
(in thousands, except share data)
June 30, 2015 | December 31, 2014 | |||||||
Assets | ||||||||
Investment in hotel properties, net | $ | 3,276,411 | $ | 2,828,400 | ||||
Goodwill | 21,629 | 38,128 | ||||||
Intangible assets, net of accumulated amortization of $11,783 and $7,288 | 93,936 | 94,324 | ||||||
Investment in unconsolidated affiliates | 22,850 | 22,850 | ||||||
Cash and cash equivalents | 98,586 | 442,613 | ||||||
Restricted cash and cash equivalents | 77,790 | 81,510 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $688 and $492 | 71,486 | 51,382 | ||||||
Deferred financing costs, net of accumulated amortization of $8,203 and $7,814 | 14,580 | 11,440 | ||||||
Deferred tax assets | 1,419 | 1,729 | ||||||
Prepaid expenses and other assets | 56,727 | 46,781 | ||||||
Total assets | $ | 3,735,414 | $ | 3,619,157 | ||||
Liabilities, Noncontrolling Interests and Equity | ||||||||
Liabilities: | ||||||||
Mortgages payable, net of discount | $ | 1,460,637 | $ | 1,705,778 | ||||
Credit facility, including an unsecured term loan of $300,000 and $0 | 344,000 | — | ||||||
Accounts payable and accrued expenses | 234,306 | 224,505 | ||||||
Preferred stock redemption liability | — | 90,384 | ||||||
Distributions payable | — | 104 | ||||||
Deferred tax liabilities | 46,117 | 46,137 | ||||||
Total liabilities | 2,085,060 | 2,066,908 | ||||||
Commitments and contingencies | ||||||||
Noncontrolling interests in SHR’s operating partnership | 9,619 | 10,500 | ||||||
Equity: | ||||||||
SHR’s shareholders’ equity: | ||||||||
Common stock ($0.01 par value per share; 350,000,000 shares of common stock authorized; 275,494,707 and 267,435,799 shares of common stock issued and outstanding) | 2,755 | 2,674 | ||||||
Additional paid-in capital | 2,451,209 | 2,348,284 | ||||||
Accumulated deficit | (867,960 | ) | (890,469 | ) | ||||
Accumulated other comprehensive loss | (7,586 | ) | (13,032 | ) | ||||
Total SHR’s shareholders’ equity | 1,578,418 | 1,447,457 | ||||||
Noncontrolling interests in consolidated affiliates | 62,317 | 94,292 | ||||||
Total equity | 1,640,735 | 1,541,749 | ||||||
Total liabilities, noncontrolling interests and equity | $ | 3,735,414 | $ | 3,619,157 | ||||
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Financial Highlights
Supplemental Financial Data
(in thousands, except per share information)
June 30, 2015 | ||||||||
Pro Rata Share | Consolidated | |||||||
Capitalization | ||||||||
Shares of common stock outstanding | 275,495 | 275,495 | ||||||
Operating partnership units outstanding | 794 | 794 | ||||||
Restricted stock units outstanding | 1,205 | 1,205 | ||||||
Combined shares and units outstanding | 277,494 | 277,494 | ||||||
Common stock price at end of period | $ | 12.12 | $ | 12.12 | ||||
Common equity capitalization | $ | 3,363,227 | $ | 3,363,227 | ||||
Consolidated debt | 1,805,618 | 1,805,618 | ||||||
Pro rata share of consolidated debt | (110,250 | ) | — | |||||
Cash and cash equivalents | (98,586 | ) | (98,586 | ) | ||||
Total enterprise value | $ | 4,960,009 | $ | 5,070,259 | ||||
Net Debt / Total Enterprise Value | 32.2 | % | 33.7 | % | ||||
Common Equity / Total Enterprise Value | 67.8 | % | 66.3 | % | ||||
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Disposition of Hotel Properties
2015 Dispositions
Effective January 1, 2015, the Company adopted new accounting guidance which amends the requirements for reporting discontinued operations. Under the guidance, only disposals that represent a strategic shift that has (or will have) a major effect on the Company's results of operations would qualify as discontinued operations.
On May 21, 2015, the Company, along with its joint venture partner, sold the Hyatt Regency La Jolla hotel for sales proceeds of approximately $118,293,000. The $89,228,000 mortgage loan secured by the hotel was repaid at the time of closing. A $40,613,000 gain on the sale was recorded in other income, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2015. The portion of the gain attributable to the joint venture partner was $16,649,000, which is reflected in net income attributable to the noncontrolling interests in consolidated affiliates in the condensed consolidated statements of operations for the three and six months ended June 30, 2015. The disposition of the Hyatt Regency La Jolla hotel does not represent a strategic shift that has had a major effect on the Company's results of operations; therefore, the hotel's results of operations are included in continuing operations for all periods presented.
2014 Dispositions
During the six months ended June 30, 2014, the Company sold the following hotels:
Hotel | Location | Date Sold | Sales Proceeds | Gain on sale | ||||||||
Four Seasons Punta Mita Resort and La Solana land parcel | Punta Mita, Mexico | February 28, 2014 | $ | 206,867,000 | $ | 63,879,000 | ||||||
Marriott London Grosvenor Square | London, England | March 31, 2014 | $ | 209,407,000 | (a) | $ | 92,889,000 | |||||
(a) | There was an outstanding balance of £67,301,000 ($112,150,000) on the mortgage loan secured by the Marriott London Grosvenor Square hotel, which was repaid at the time of closing. The net proceeds we received were $97,257,000. |
The results of operations of hotels sold prior to January 1, 2015 are classified as discontinued operations and segregated in the consolidated statements of operations for all periods presented. The following is a summary of income from discontinued operations, net of tax, for the three and six months ended June 30, 2014 (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2014 | 2014 | |||||||
Hotel operating revenues | $ | — | $ | 17,767 | ||||
Operating costs and expenses | — | 11,485 | ||||||
Depreciation and amortization | — | 1,275 | ||||||
Total operating costs and expenses | — | 12,760 | ||||||
Operating income | — | 5,007 | ||||||
Interest expense | — | (1,326 | ) | |||||
Interest income | — | 2 | ||||||
Loss on early extinguishment of debt | — | (272 | ) | |||||
Foreign currency exchange gain | — | 32 | ||||||
Income tax expense | — | (833 | ) | |||||
Gain on sale, net of tax | 604 | 156,429 | ||||||
Income from discontinued operations, net of tax | $ | 604 | $ | 159,039 | ||||
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Investments in Unconsolidated Affiliates
(in thousands)
We had a 36.4% equity ownership interest in the Hotel del Coronado that we accounted for using the equity method of accounting until we acquired the remaining 63.6% equity ownership interest not previously owned by us on June 11, 2014. We had a 50.0% equity ownership interest in the Fairmont Scottsdale Princess hotel that we accounted for using the equity method of accounting until we acquired the remaining 50.0% equity ownership interest not previously owned by us on March 31, 2014. For purposes of this analysis, the operating results reflect the 36.4% equity ownership interest we held in the Hotel del Coronado prior to June 11, 2014 and the 50.0% equity ownership interest we held in the Fairmont Scottsdale Princess hotel prior to March 31, 2014.
Three Months Ended June 30, 2014 | ||||||||||||
Hotel del Coronado | Fairmont Scottsdale Princess | Total | ||||||||||
Total revenues (100%) | $ | 33,821 | $ | — | $ | 33,821 | ||||||
Property EBITDA (100%) | $ | 11,202 | $ | — | $ | 11,202 | ||||||
Equity in earnings of unconsolidated affiliates (SHR ownership) | ||||||||||||
Property EBITDA | $ | 4,075 | $ | — | $ | 4,075 | ||||||
Depreciation and amortization | (1,572 | ) | — | (1,572 | ) | |||||||
Interest expense | (1,518 | ) | — | (1,518 | ) | |||||||
Other expenses, net | (18 | ) | — | (18 | ) | |||||||
Income taxes | (87 | ) | — | (87 | ) | |||||||
Equity in earnings of unconsolidated affiliates | $ | 880 | $ | — | $ | 880 | ||||||
EBITDA Contribution: | ||||||||||||
Equity in earnings of unconsolidated affiliates | $ | 880 | $ | — | $ | 880 | ||||||
Depreciation and amortization | 1,572 | — | 1,572 | |||||||||
Interest expense | 1,518 | — | 1,518 | |||||||||
Income taxes | 87 | — | 87 | |||||||||
EBITDA Contribution | $ | 4,057 | $ | — | $ | 4,057 | ||||||
FFO Contribution: | ||||||||||||
Equity in earnings of unconsolidated affiliates | $ | 880 | $ | — | $ | 880 | ||||||
Depreciation and amortization | 1,572 | — | 1,572 | |||||||||
FFO Contribution | $ | 2,452 | $ | — | $ | 2,452 | ||||||
Six Months Ended June 30, 2014 | ||||||||||||
Hotel del Coronado | Fairmont Scottsdale Princess | Total | ||||||||||
Total revenues (100%) | $ | 67,863 | $ | 35,006 | $ | 102,869 | ||||||
Property EBITDA (100%) | $ | 20,761 | $ | 13,191 | $ | 33,952 | ||||||
Equity in earnings of unconsolidated affiliates (SHR ownership) | ||||||||||||
Property EBITDA | $ | 7,426 | $ | 6,595 | $ | 14,021 | ||||||
Depreciation and amortization | (3,526 | ) | (1,551 | ) | (5,077 | ) | ||||||
Interest expense | (3,418 | ) | (168 | ) | (3,586 | ) | ||||||
Other expenses, net | (25 | ) | (30 | ) | (55 | ) | ||||||
Income taxes | 143 | — | 143 | |||||||||
Equity in earnings of unconsolidated affiliates | $ | 600 | $ | 4,846 | $ | 5,446 | ||||||
EBITDA Contribution | ||||||||||||
Equity in earnings of unconsolidated affiliates | $ | 600 | $ | 4,846 | $ | 5,446 | ||||||
Depreciation and amortization | 3,526 | 1,551 | 5,077 | |||||||||
Interest expense | 3,418 | 168 | 3,586 | |||||||||
Income taxes | (143 | ) | — | (143 | ) | |||||||
EBITDA Contribution | $ | 7,401 | $ | 6,565 | $ | 13,966 | ||||||
FFO Contribution | ||||||||||||
Equity in earnings of unconsolidated affiliates | $ | 600 | $ | 4,846 | $ | 5,446 | ||||||
Depreciation and amortization | 3,526 | 1,551 | 5,077 | |||||||||
FFO Contribution | $ | 4,126 | $ | 6,397 | $ | 10,523 | ||||||
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Leasehold Information
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Marriott Hamburg: | ||||||||||||||||
Property EBITDA | $ | 1,321 | $ | 1,687 | $ | 2,560 | $ | 3,199 | ||||||||
Revenue (a) | $ | 1,013 | $ | 1,319 | $ | 2,044 | $ | 2,618 | ||||||||
Lease expense | (1,017 | ) | (1,260 | ) | (2,051 | ) | (2,518 | ) | ||||||||
Less: Deferred gain on sale-leaseback | (43 | ) | (54 | ) | (87 | ) | (107 | ) | ||||||||
Adjusted lease expense | (1,060 | ) | (1,314 | ) | (2,138 | ) | (2,625 | ) | ||||||||
Comparable EBITDA contribution from leasehold | $ | (47 | ) | $ | 5 | $ | (94 | ) | $ | (7 | ) | |||||
Security Deposit (b): | June 30, 2015 | December 31, 2014 | ||||||
Marriott Hamburg | $ | 2,117 | $ | 2,299 | ||||
(a) | For the three and six months ended June 30, 2015 and 2014, Revenue for the Marriott Hamburg hotel represents lease revenue. |
(b) | The security deposit is recorded in prepaid expenses and other assets on the consolidated balance sheets. |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Non-GAAP Financial Measures
We present five non-GAAP financial measures that we believe are useful to management and investors as key measures of our operating performance: Funds from Operations (FFO) attributable to SHR common shareholders; FFO—Fully Diluted; Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA); and Comparable EBITDA.
EBITDA represents net income (or loss) attributable to SHR common shareholders excluding: (i) interest expense, (ii) income taxes, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; (iii) depreciation and amortization; and (iv) preferred stock dividends. EBITDA also excludes interest expense, income taxes and depreciation and amortization of our unconsolidated affiliates. EBITDA is presented on a full participation basis, which means we have assumed conversion of all redeemable noncontrolling interests of our operating partnership into our common stock. We believe this treatment of noncontrolling interests provides useful information for management and our investors and appropriately considers our current capital structure. We also present Comparable EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks, as well as the effect of gains or losses on sales of assets, early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe EBITDA and Comparable EBITDA are useful to management and investors in evaluating our operating performance because they provide management and investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help management and investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA and Comparable EBITDA as measures in determining the value of acquisitions and dispositions.
We compute FFO attributable to SHR common shareholders in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT adopted a definition of FFO in order to promote an industry-wide standard measure of REIT operating performance. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding losses or gains from sales of depreciable property, impairment of depreciable real estate, real estate-related depreciation and amortization, and our portion of these items related to unconsolidated affiliates. We also present FFO—Fully Diluted, which is FFO attributable to SHR common shareholders plus income or loss on income attributable to redeemable noncontrolling interests in our operating partnership. We also present Comparable FFO, which is FFO—Fully Diluted excluding the impact of any gains or losses on early extinguishment of debt, impairment losses on non-depreciable assets, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe that the presentation of FFO attributable to SHR common shareholders, FFO—Fully Diluted and Comparable FFO provides useful information to management and investors regarding our results of operations because they are measures of our ability to fund capital expenditures and expand our business. In addition, FFO is widely used in the real estate industry to measure operating performance without regard to items such as depreciation and amortization. We also present Comparable FFO per diluted share as a non-GAAP measure of our performance. We calculate Comparable FFO per diluted share for a given operating period as our Comparable FFO (as defined above) divided by the weighted average of fully diluted shares outstanding, excluding shares related to the JW Marriott Essex House Hotel put option. Dilutive securities may include shares granted under share-based compensation plans and operating partnership units. No effect is shown for securities that are anti-dilutive.
We caution investors that amounts presented in accordance with our definitions of FFO attributable to SHR common shareholders, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. FFO attributable to SHR common shareholders, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA should not be considered as an alternative measure of our net income (or loss) or operating performance. FFO attributable to SHR common shareholders, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that FFO attributable to SHR common shareholders, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily a better indicator of any trend as compared to comparable GAAP measures such as net income (or loss) attributable to SHR common shareholders. In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow. We have provided a quantitative reconciliation of FFO attributable to SHR common shareholders, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net income (or loss) attributable to SHR common shareholders.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Income Attributable to SHR Common Shareholders to EBITDA and Comparable EBITDA
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income attributable to SHR common shareholders | $ | 6,698 | $ | 80,840 | $ | 22,509 | $ | 297,998 | ||||||||
Depreciation and amortization—continuing operations | 40,331 | 28,058 | 77,995 | 50,263 | ||||||||||||
Depreciation and amortization—discontinued operations | — | — | — | 1,275 | ||||||||||||
Interest expense—continuing operations | 20,709 | 19,587 | 43,494 | 37,861 | ||||||||||||
Interest expense—discontinued operations | — | — | — | 1,326 | ||||||||||||
Income taxes—continuing operations | 2,452 | 207 | 2,671 | 246 | ||||||||||||
Income taxes—discontinued operations | — | — | — | 833 | ||||||||||||
Income taxes—sale of assets | — | — | — | 20,451 | ||||||||||||
Net income attributable to noncontrolling interests in SHR's operating partnership (a) | 67 | 281 | 104 | 1,130 | ||||||||||||
Adjustments attributable to noncontrolling interests in consolidated affiliates (b) | (3,209 | ) | (3,939 | ) | (7,046 | ) | (7,614 | ) | ||||||||
Adjustments attributable to unconsolidated affiliates (c) | — | 3,153 | — | 8,443 | ||||||||||||
Preferred shareholder dividends | — | 7,169 | — | 16,993 | ||||||||||||
EBITDA | 67,048 | 135,356 | 139,727 | 429,205 | ||||||||||||
Realized portion of deferred gain on sale-leaseback | (43 | ) | (54 | ) | (87 | ) | (107 | ) | ||||||||
Gain on sale of assets—continuing operations | (40,613 | ) | (767 | ) | (40,613 | ) | (767 | ) | ||||||||
Gain on sale of assets—discontinued operations | — | (604 | ) | — | (176,880 | ) | ||||||||||
Gain on consolidation of affiliates | — | (65,349 | ) | — | (143,466 | ) | ||||||||||
Impairment losses | 10,401 | — | 10,401 | — | ||||||||||||
Loss on early extinguishment of debt—continuing operations | 34,211 | — | 34,211 | — | ||||||||||||
Loss on early extinguishment of debt—discontinued operations | — | — | — | 272 | ||||||||||||
Foreign currency exchange (gain) loss—continuing operations | (40 | ) | 8 | 76 | 6 | |||||||||||
Foreign currency exchange gain—discontinued operations | — | — | — | (32 | ) | |||||||||||
Hotel acquisition costs | 346 | — | 1,066 | — | ||||||||||||
Non-cash interest rate derivative activity | 30 | — | 146 | — | ||||||||||||
Amortization of below market hotel management agreement | 513 | 108 | 1,026 | 108 | ||||||||||||
Activist shareholder costs | — | 104 | — | 1,637 | ||||||||||||
Adjustments attributable to noncontrolling interests in consolidated affiliates (d) | 16,559 | 109 | 16,559 | 109 | ||||||||||||
Comparable EBITDA | $ | 88,412 | $ | 68,911 | $ | 162,512 | $ | 110,085 | ||||||||
(a) | EBITDA is presented on a full participation basis, which means we have assumed conversion of all redeemable noncontrolling interests in SHR's operating partnership into shares of SHR's common stock. This adjustment reverses the net income that was allocated to the noncontrolling interests in SHR's operating partnership. |
(b) | This adjustment represents the portion of interest expense, income taxes and depreciation and amortization attributable to the noncontrolling interest in affiliates that are consolidated but not wholly owned by us. |
(c) | This adjustment represents our portion of interest expense, income taxes and depreciation and amortization related to affiliates that are not consolidated. |
(d) | This adjustment represents the portion of gains or losses from sales of depreciable property and the portion of loss on early extinguishment of debt attributable to the noncontrolling interests in affiliates that are consolidated but not wholly owned by us. |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Income Attributable to SHR Common Shareholders to
Funds From Operations (FFO) Attributable to SHR Common Shareholders, FFO—Fully Diluted and Comparable FFO
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income attributable to SHR common shareholders | $ | 6,698 | $ | 80,840 | $ | 22,509 | $ | 297,998 | ||||||||
Depreciation and amortization—continuing operations | 40,331 | 28,058 | 77,995 | 50,263 | ||||||||||||
Depreciation and amortization—discontinued operations | — | — | — | 1,275 | ||||||||||||
Corporate depreciation | (127 | ) | (123 | ) | (255 | ) | (246 | ) | ||||||||
Gain on sale of assets—continuing operations | (40,613 | ) | (767 | ) | (40,613 | ) | (767 | ) | ||||||||
Gain on sale of assets, net of tax—discontinued operations | — | (604 | ) | — | (156,429 | ) | ||||||||||
Gain on consolidation of affiliates | — | (65,349 | ) | — | (143,466 | ) | ||||||||||
Realized portion of deferred gain on sale-leaseback | (43 | ) | (54 | ) | (87 | ) | (107 | ) | ||||||||
Adjustments attributable to noncontrolling interests in SHR's operating partnership (a) | (116 | ) | (95 | ) | (226 | ) | (193 | ) | ||||||||
Adjustments attributable to noncontrolling interests in consolidated affiliates (b) | 14,801 | (1,971 | ) | 12,558 | (3,806 | ) | ||||||||||
Adjustments attributable to unconsolidated affiliates (c) | — | 1,571 | — | 5,077 | ||||||||||||
FFO attributable to SHR common shareholders | 20,931 | 41,506 | 71,881 | 49,599 | ||||||||||||
Adjustments attributable to noncontrolling interests in SHR's operating partnership - other (d) | 183 | 376 | 330 | 1,323 | ||||||||||||
FFO—Fully Diluted | 21,114 | 41,882 | 72,211 | 50,922 | ||||||||||||
Impairment losses | 10,401 | — | 10,401 | — | ||||||||||||
Non-cash interest rate derivative activity | 2,489 | 2,184 | 5,718 | (110 | ) | |||||||||||
Loss on early extinguishment of debt—continuing operations | 34,211 | — | 34,211 | — | ||||||||||||
Loss on early extinguishment of debt—discontinued operations | — | — | — | 272 | ||||||||||||
Foreign currency exchange (gain) loss—continuing operations (a) | (40 | ) | 8 | 76 | 6 | |||||||||||
Foreign currency exchange gain—discontinued operations (a) | — | — | — | (32 | ) | |||||||||||
Amortization of debt discount | 40 | 623 | 690 | 623 | ||||||||||||
Amortization of below market hotel management agreement | 513 | 108 | 1,026 | 108 | ||||||||||||
Hotel acquisition costs | 346 | — | 1,066 | — | ||||||||||||
Activist shareholder costs | — | 104 | — | 1,637 | ||||||||||||
Excess of redemption liability over carrying amount of redeemed preferred stock | — | 3,203 | — | 6,912 | ||||||||||||
Adjustments attributable to noncontrolling interests in consolidated affiliates (e) | (90 | ) | — | (90 | ) | — | ||||||||||
Comparable FFO | $ | 68,984 | $ | 48,112 | $ | 125,309 | $ | 60,338 | ||||||||
Comparable FFO per fully diluted share | $ | 0.25 | $ | 0.21 | $ | 0.45 | $ | 0.28 | ||||||||
Weighted average diluted shares (b) | 279,380 | 225,348 | 278,145 | 217,875 | ||||||||||||
(a) | This adjustment represents the portion of depreciation and amortization attributable to the redeemable noncontrolling interests in our operating partnership. |
(b) | This adjustment represents the portion of depreciation and amortization and gains or losses from sales of depreciable property that are attributable to the noncontrolling interests in affiliates that are consolidated but not wholly owned by us. |
(c) | This adjustment represents our portion of depreciation and amortization related to affiliates that are not consolidated. |
(d) | This adjustment represents amounts other than depreciation and amortization that are attributable to the redeemable noncontrolling interests in our operating partnership. |
(e) | This adjustment represents the portion of loss on early extinguishment of debt that is attributable to the noncontrolling interests in affiliates that are consolidated but not wholly owned by us. |
(f) | Excludes shares related to the JW Marriott Essex House Hotel put option. |
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Debt Summary
(dollars in thousands)
Debt | Interest Rate | Spread (a) | Loan Amount | Maturity (b) | |||||||
Hotel del Coronado | 3.84 | % | 365 bp | $ | 475,000 | March 2018 | |||||
Four Seasons Washington, D.C. | 2.44 | % | 225 bp | 120,000 | June 2019 | ||||||
JW Marriott Essex House Hotel | 3.14 | % | 295 bp | 225,000 | January 2020 | ||||||
Unsecured revolving credit facility (c) | 1.84 | % | 165 bp | 44,000 | May 2020 | ||||||
Unsecured term loan (c) | 1.79 | % | 160 bp | 300,000 | May 2020 | ||||||
Loews Santa Monica Beach Hotel | 2.74 | % | 255 bp | 120,000 | May 2021 | ||||||
InterContinental Chicago | 5.61 | % | Fixed | 141,618 | August 2021 | ||||||
Montage Laguna Beach (d) | 3.90 | % | Fixed | 150,000 | August 2021 | ||||||
Ritz-Carlton Half Moon Bay (e) | 2.59 | % | 240 bp | 115,000 | May 2022 | ||||||
InterContinental Miami | 3.99 | % | Fixed | 115,000 | September 2024 | ||||||
1,805,618 | |||||||||||
Unamortized discount (d) | (981 | ) | |||||||||
$ | 1,804,637 | ||||||||||
(a) | Spread over LIBOR (0.19% at June 30, 2015). |
(b) | Includes extension options. |
(c) | On May 27, 2015, we entered into a new $750,000,000 senior unsecured credit facility that is comprised of a $450,000,000 unsecured revolving credit facility and a $300,000,000 unsecured term loan. Interest on the unsecured revolving credit facility is payable monthly based upon a leverage-based grid with annual rates ranging from LIBOR plus 1.65% to LIBOR plus 2.40%. Interest on the unsecured term loan is also payable monthly based upon a leverage-based pricing grid with annual rates ranging from LIBOR plus 1.60% to LIBOR plus 2.35%. |
(d) | On January 29, 2015, we closed on the acquisition of the Montage Laguna Beach resort. In connection with the acquisition, we assumed the outstanding balance of the mortgage loan secured by the Montage Laguna Beach resort. We recorded the mortgage loan at its fair value, which included a debt discount, which is being amortized as additional interest expense over the maturity period of the loan. |
(e) | On May 27, 2015, we closed on a new $115,000,000 mortgage loan secured by the Ritz-Carlton Half Moon Bay hotel. The mortgage loan has two, one-year extension options, subject to certain conditions. |
Second Quarter 2015 Debt Repayments
On April 9, 2015, we repaid the $117,000,000 mortgage loan secured by the Fairmont Scottsdale Princess hotel.
On May 21, 2015, we sold the Hyatt Regency La Jolla hotel and repaid the $89,288,000 mortgage loan secured by the hotel at
the time of closing. We recorded a $193,000 loss on early extinguishment of debt, which included the write off of unamortized
deferred financing costs.
On May 27, 2015, we repaid the $209,558,000 mortgage loan secured by the Westin St. Francis hotel and the $93,124,000
mortgage loan secured by the Fairmont Chicago hotel using proceeds from the new mortgage loan secured by the Ritz-Carlton
Half Moon Bay hotel and proceeds from the $300,000,000 unsecured term loan. We recorded a $34,014,000 loss on early
extinguishment of debt, which included prepayment penalties of $32,917,000 and the write off of unamortized deferred
financing costs.
Debt Summary (Continued)
(dollars in thousands)
Future scheduled debt principal payments (including extension options) are as follows:
Years ending December 31, | Amount | |||
2015 (remainder) | $ | 1,126 | ||
2016 | 2,040 | |||
2017 | 3,066 | |||
2018 | 480,033 | |||
2019 | 125,276 | |||
Thereafter | 1,194,077 | |||
1,805,618 | ||||
Unamortized discount | (981 | ) | ||
$ | 1,804,637 | |||
Percent of fixed rate debt | 22.5 | % | ||
Weighted average interest rate (f) | 3.29 | % | ||
Weighted average maturity of fixed rate debt (debt with maturity of greater than one year) | 6.97 | |||
(f) Excludes the amortization of deferred financing costs.