Strategic Hotels & Resorts Reports First Quarter 2010 Results
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Strategic Hotels & Resorts Reports First Quarter 2010 Results
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Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2010-05-06
Management Expects Positive Lodging Trends to Accelerate Throughout 2010 Announces Successful Closing of Loan Refinancing
Strategic Hotels & Resorts (NYSE: BEE) today reported results for the first quarter ended March 31, 2010.
First Quarter Recap
-- Comparable funds from operations (Comparable FFO) was a loss of $0.15
per diluted share, unchanged from the prior year.
-- Comparable EBITDA was $22.0 million compared with $22.8 million in the
prior year period, a decline of 3.3 percent.
-- North American total revenue per available room (Total RevPAR)
decreased 3.7 percent and revenue per available room (RevPAR)
decreased 4.3 percent, driven by a 1.6 percentage point increase in
occupancy and a 6.9 percent decrease in average daily rate (ADR), as
compared to the first quarter 2009. In addition, non-rooms revenue
declined by 3.0 percent between periods.
-- European Total RevPAR increased 10.6 percent in the first quarter over
the prior year period (5.1 percent in constant dollars) and RevPAR
increased 14.5 percent (6.4 percent in constant dollars), driven by a
3.0 percentage point increase in occupancy and a 9.0 percent increase
in ADR (1.3 percent in constant dollars) between periods.
-- North American gross operating profit (GOP) and EBITDA margins
contracted 190 basis points and 180 basis points, respectively, as
compared to the first quarter of 2009. Excluding cancellation fees of
$6.7 million in the first quarter of 2009 and $1.5 million in the
first quarter of 2010, GOP margins expanded 50 basis points and EBITDA
margins expanded 80 basis points, as compared to the first quarter
2009.
Chief Executive Officer Laurence Geller remarked, "We are encouraged by signs of improvement beginning to take place within the lodging space and particularly within the high-end segment. By the end of the first quarter we observed the beginnings of positive trends in our sector which we are optimistic will accelerate through the balance of the year. This is supported by an uptick in occupancy at our properties in the first quarter. We will continue to focus our full attention on improving profitability portfolio-wide by maintaining cost savings and productivity enhancement measures initiated throughout the economic downturn. Our adjusted margin performance in the first quarter is a good indication of the effectiveness of these programs."
Financial Results
The company reported first quarter 2010 financial results as follows:
-- Net loss attributable to common shareholders was $40.3 million, or
$0.53 per diluted share, for the first quarter of 2010, compared with
net loss attributable to common shareholders of $43.2 million, or
$0.57 per diluted share, for the first quarter of 2009.
-- Comparable EBITDA was $22.0 million compared with $22.8 million for
the first quarter of 2009.
-- Fully-diluted FFO was a loss of $5.4 million, or $0.07 per diluted
share, compared with a loss of $10.5 million, or $0.14 per diluted
share, in the first quarter of 2009. Comparable FFO was a loss of
$11.5 million, or $0.15 per diluted share, compared with a loss of
$11.4 million, or $0.15 per diluted share, in the first quarter of
2009.
Balance Sheet Activity
Today, the company successfully closed on a $317.8 million non-recourse, cross-collateralized mortgage agreement with Metropolitan Life Insurance Company secured by the Westin St. Francis and Fairmont Chicago hotels. Under the terms of the agreement, the existing $220.0 million Westin St. Francis mortgage, which was set to mature in August 2011, and the $123.8 million Fairmont Chicago mortgage, which was set to mature in April 2012, are replaced with a new mortgage maturing in June of 2017 with a fixed interest rate of 6.09 percent. The company paid down the existing combined principal amount by $26.0 million as part of the agreement.
In January, the company entered into an amendment with Aareal Bank AG on the euro 104.0 million non-recourse loan securing the InterContinental Prague hotel. Under the terms of the amendment, the loan remains non-recourse and the loan maturity is extended by three years from its initial maturity of March 2012 to March 2015. During the remainder of the initial term, scheduled principal amortization is suspended and the financial performance covenants are waived.
Mr. Geller remarked, "We continue to strengthen our financial position and the recent new debt terms secured at the InterContinental Prague, Westin St. Francis and Fairmont Chicago properties represent ongoing progress toward that objective."
Appointment of New Chief Financial Officer
On March 9th, the company announced the appointment of Diane M. Morefield as Executive Vice President and Chief Financial Officer. Ms. Morefield succeeded James Mead who departed March 8th. Ms. Morefield is former Chief Financial Officer of Equity International (EI). Prior to that she served as Chief Financial Officer of Joseph Freed & Associates, LLC and from 1997 until 2006 Ms. Morefield was Senior Vice President with Equity Office Properties Trust.
Earnings Call
The company will conduct its first quarter 2010 conference call for investors and other interested parties on Thursday, May 6, 2010 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by telephone at 888-713-4216 (toll international: 617-213-4868) with pass code 17333584. To participate on the web cast, log on to http://www.strategichotels.com/ or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=176522&eventID =3012013 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning at 1:00 p.m. ET on May 6, 2010, through 11:59 p.m. ET on May 13, 2010. To access the replay, dial 888-286-8010 (toll international: 617-801-6888) and request replay pin number 77012976. A replay of the call will also be available on the Internet at http://www.strategichotels.com/ or http://www.earnings.com/ for 30 days after 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 release. These materials are available on the Strategic Hotels & Resorts' website at www.strategichotels.com within the first quarter information section.
Portfolio Definitions
North American hotel comparisons for the first quarter 2010 are derived from the company's hotel portfolio at March 31, 2010, consisting of properties in which operations are included in the consolidated results of the company.
European hotel comparisons for the first quarter 2010 are derived from the company's European owned and leased hotel properties at March 31, 2010, consisting of the Marriott London Grosvenor Square, the Paris Marriott Champs-Elysees, the Marriott Hamburg, and the InterContinental Prague.
About the Company
Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States, Mexico and Europe. The company currently has ownership interests in 17 properties with an aggregate of 8,002 rooms. For a list of current properties and for further information, please visit the company's website at http://www.strategichotels.com/.
This press release contains forward-looking statements about Strategic Hotels & Resorts (the "Company"). Except for historical information, the matters discussed in this press release are forward-looking statements subject to certain risks and uncertainties. These forward-looking statements include statements regarding our future financial results, stabilization in the lodging space, positive trends in the lodging industry and our continued focus on improving profitability. 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: demand for hotel rooms in our current and proposed market areas; availability of capital; ability to obtain or refinance debt or comply with covenants contained in our debt facilities; rising interest rates and operating costs; rising insurance premiums; cash available for capital expenditures; competition; economic conditions generally and in the real estate market specifically, including further deterioration of the current global economic downturn and the extent of its effect on business and leisure travel and the lodging industry; ability to dispose of existing properties in a manner consistent with our disposition strategy; delays and cost overruns in construction and development; demand for hotel condominiums; marketing challenges associated with entering new lines of business; risks related to natural disasters; 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, including those appearing under the heading "Item 1A. Risk Factors" in the Company's most recent Form 10-K and subsequent Form 10-Qs. 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.
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