Strategic Hotels & Resorts Reports Second Quarter 2010 Results
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Strategic Hotels & Resorts Reports Second Quarter 2010 Results
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Catégorie : Monde - Économie du secteur
- Chiffres et études
Ceci est un communiqué de presse sélectionné par notre comité éditorial et mis en ligne gratuitement le 05-08-2010
Improving Operating Fundamentals Lead to Strong Rate and Margin Growth and a Return to Positive Comparable FFO per Share
Strategic Hotels & Resorts (BEE 4.68, -0.01, -0.21%) today reported results for the second quarter ended June 30, 2010.
Chief Executive Officer Laurence Geller remarked, "During the first half of the year we made tremendous progress in advancing our strategic plan. We are especially encouraged by significant revenue and profitability growth which was driven by broadly improving lodging demand and strength within both the corporate group and transient segments of our business. We view this as an important leading indicator of improving corporate confidence.
"Moving into the second half of the year, we remain optimistic that the overall market recovery, and in particular growth in luxury lodging demand, will ideally position Strategic Hotels and Resorts to both maximize future earnings and continue to execute the repositioning of its balance sheet, on which we made substantial progress during the quarter," commented Geller.
Second Quarter Recap
Comparable funds from operations (Comparable FFO) was $0.02 per diluted share compared with a loss of $0.03 per diluted share in the prior year.
Comparable EBITDA was $35.1 million compared with $33.6 million in the prior year period, an increase of 4.6 percent.
North American total revenue per available room (Total RevPAR) increased 5.9 percent and revenue per available room (RevPAR) increased 7.3 percent, driven by a 2.7 percentage point increase in occupancy and a 3.3 percent increase in average daily rate (ADR), compared to the second quarter 2009. In addition, non-rooms revenue increased by 4.5 percent between periods.
European Total RevPAR increased 4.9 percent in the second quarter over the prior year period (9.0 percent in constant dollars) and RevPAR increased 4.7 percent (8.5 percent in constant dollars), driven by a 3.9 percentage point increase in occupancy and a 0.5 percent decrease in ADR (3.2 percent increase in constant dollars) between periods.
North American gross operating profit (GOP) contracted 10 basis points and EBITDA margins expanded 50 basis points compared to the second quarter of 2009. Excluding cancellation fees of $6.6 million in the second quarter of 2009 and $2.1 million in the second quarter of 2010, GOP margins expanded 200 basis points and EBITDA margins expanded 280 basis points.
Financial Results
The company reported second quarter 2010 financial results as follows:
Net loss attributable to common shareholders was $47.4 million, or $0.42 per diluted share, compared with net loss attributable to common shareholders of $86.0 million, or $1.14 per diluted share, for the second quarter of 2009.
Comparable EBITDA was $35.1 million compared with $33.6 million for the second quarter of 2009, an increase of 4.6 percent.
Fully-diluted FFO was a loss of $16.2 million, or $0.15 per diluted share, compared with a loss of $52.8 million, or $0.70 per diluted share, in the second quarter of 2009. Comparable FFO was $1.9 million, or $0.02 per diluted share, compared with a loss of $2.5 million, or $0.03 per diluted share, in the second quarter of 2009.
The company reported financial results for the six month period ending June 30, 2010 as follows:
Net loss attributable to common shareholders was $87.7 million, or $0.94 per diluted share, compared with a net loss attributable to common shareholders of $129.2 million, or $1.72 per diluted share, for the six month period ending June 30, 2009.
Comparable EBITDA was $57.1 million compared with $56.3 million for the six month period ending June 30, 2009, an increase of 1.4 percent.
Fully-diluted FFO was a loss of $21.6 million, or $0.23 per diluted share, compared with a loss of $63.4 million, or $0.84 per diluted share, in the six month period ending June 30, 2009. Comparable FFO was a loss of $9.6 million, or $0.10 per diluted share, compared with a loss of $13.9 million, or $0.18 per diluted share, in the six month period ending June 30, 2009.
Balance Sheet Activity
On June 8, the company successfully tendered for $180.0 million of 3.5 percent exchangeable senior notes, representing 100 percent of the aggregate principal amount of the outstanding notes prior to the tender offer. Payment of the aggregate consideration of approximately $181.2 million, including accrued and unpaid interest, was made on June 10.
On May 19, the company closed on the sale of 75.9 million shares of common stock at a public offering price of $4.60 per share, including 9.9 million shares of common stock issued pursuant to the exercise in full of the underwriters' over-allotment option. The company received approximately $332.5 million from the offering after deducting the underwriting discounts, commissions and expenses related to the offering. The company used the net proceeds from the offering to fund its tender offer for the outstanding 3.5 percent exchangeable senior notes due 2012 and used the remaining proceeds to reduce the outstanding balance on its line of credit facility.
On May 5, 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 $220.0 million Westin St. Francis mortgage and the $123.8 million Fairmont Chicago mortgage were replaced with a new mortgage maturing in June of 2017 with a fixed interest rate of 6.09 percent.
Earnings Call
The company will conduct its second quarter 2010 conference call for investors and other interested parties on Thursday, August 5, 2010 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by telephone at 888-713-4205 (toll international: 617-213-4862) with pass code 22765440. To participate on the web cast, log on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=176522&eventID=3196573 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 August 5, 2010, through 11:59 p.m. ET on August 12, 2010. To access the replay, dial 888-286-8010 (toll international: 617-801-6888) and request replay pin number 93256263. 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 second quarter information section.
Portfolio Definitions
North American hotel comparisons for the second quarter 2010 are derived from the company's hotel portfolio at June 30, 2010, consisting of properties in which operations are included in the consolidated results of the company.
European hotel comparisons for the second quarter 2010 are derived from the company's European owned and leased hotel properties at June 30, 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.
Financial Tables Follow...
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
June 30,
--------
2010 2009
---- ----
Revenues:
Rooms $106,526 $99,942
Food and beverage 67,754 58,498
Other hotel operating revenue 20,599 25,786
------ ------
194,879 184,226
Lease revenue 1,088 1,169
----- -----
Total revenues 195,967 185,395
------- -------
Operating Costs and Expenses:
Rooms 29,037 27,535
Food and beverage 46,081 42,180
Other departmental expenses 53,405 51,724
Management fees 6,934 7,420
Other hotel expenses 14,551 13,153
Lease expense 3,888 4,159
Depreciation and amortization 33,683 33,674
Impairment losses and other
charges - 49,755
Corporate expenses 7,556 5,292
----- -----
Total operating costs and
expenses 195,135 234,892
------- -------
Operating income (loss) 832 (49,497)
Interest expense (27,016) (26,259)
Interest income 158 97
Loss on early extinguishment of
debt (886) -
Loss on early termination of
derivative financial
instruments (18,263) -
Equity in earnings (losses) of
joint ventures 459 432
Foreign currency exchange gain
(loss) 5,256 (1,140)
Other income, net 462 82
--- ---
Loss before income taxes and
discontinued operations (38,998) (76,285)
Income tax expense (1,413) (690)
------ ----
Loss from continuing operations (40,411) (76,975)
Income (loss) from discontinued
operations, net of tax 1,849 (1,191)
----- ------
Net loss (38,562) (78,166)
Net loss attributable to the
noncontrolling interests in
SHR's operating partnership 245 1,007
Net (income) loss attributable
to the noncontrolling interests
in consolidated affiliates (1,371) (1,101)
------ ------
Net loss attributable to SHR (39,688) (78,260)
Preferred shareholder dividends (7,722) (7,722)
------ ------
Net loss attributable to SHR
common shareholders $(47,410) $(85,982)
======== ========
Basic and Diluted Loss Per
Share:
Loss from continuing operations
attributable to SHR common
shareholders $(0.44) $(1.12)
Income (loss) from discontinued
operations attributable to SHR 0.02 (0.02)
---- -----
Net loss attributable to SHR
common shareholders $(0.42) $(1.14)
====== ======
Weighted average common shares
outstanding 111,573 75,381
======= ======
Six Months Ended
June 30,
--------
2010 2009
---- ----
Revenues:
Rooms $196,545 $191,034
Food and beverage 125,650 113,127
Other hotel operating revenue 40,894 50,989
------ ------
363,089 355,150
Lease revenue 2,275 2,289
----- -----
Total revenues 365,364 357,439
------- -------
Operating Costs and Expenses:
Rooms 55,480 53,535
Food and beverage 88,293 83,029
Other departmental expenses 104,108 104,447
Management fees 12,903 13,712
Other hotel expenses 28,127 26,404
Lease expense 8,129 8,125
Depreciation and amortization 69,540 66,253
Impairment losses and other
charges - 50,214
Corporate expenses 13,956 15,588
------ ------
Total operating costs and
expenses 380,536 421,307
------- -------
Operating income (loss) (15,172) (63,868)
Interest expense (51,708) (50,225)
Interest income 316 509
Loss on early extinguishment of
debt (886) (883)
Loss on early termination of
derivative financial
instruments (18,263) -
Equity in earnings (losses) of
joint ventures (101) 571
Foreign currency exchange gain
(loss) 11,442 801
Other income, net 694 43
--- ---
Loss before income taxes and
discontinued operations (73,678) (113,052)
Income tax expense (635) (2,222)
---- ------
Loss from continuing operations (74,313) (115,274)
Income (loss) from discontinued
operations, net of tax 1,140 440
----- ---
Net loss (73,173) (114,834)
Net loss attributable to the
noncontrolling interests in
SHR's operating partnership 687 1,453
Net (income) loss attributable
to the noncontrolling interests
in consolidated affiliates 228 (348)
--- ----
Net loss attributable to SHR (72,258) (113,729)
Preferred shareholder dividends (15,443) (15,443)
------- -------
Net loss attributable to SHR
common shareholders $(87,701) $(129,172)
======== =========
Basic and Diluted Loss Per
Share:
Loss from continuing operations
attributable to SHR common
shareholders $(0.95) $(1.73)
Income (loss) from discontinued
operations attributable to SHR 0.01 0.01
---- ----
Net loss attributable to SHR
common shareholders $(0.94) $(1.72)
====== ======
Weighted average common shares
outstanding 93,706 75,166
====== ======
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Balance Sheets
(in thousands, except share data)
December
June 30, 31,
2010 2009
---- ----
Assets
Investment in hotel
properties, net $2,088,127 $2,162,584
Goodwill 71,449 75,758
Intangible assets, net of
accumulated amortization
of $5,320 and $4,400 32,388 34,046
Investment in joint
ventures 46,089 46,745
Cash and cash equivalents 71,822 116,310
Restricted cash and cash
equivalents 33,117 22,829
Accounts receivable, net of
allowance for doubtful
accounts of $2,532 and
$2,657 50,352 54,524
Deferred financing costs,
net of accumulated
amortization of $12,682
and $12,543 6,583 11,225
Deferred tax assets 30,268 34,244
Other assets 39,843 39,878
------ ------
Total assets $2,470,038 $2,598,143
========== ==========
Liabilities and Equity
Liabilities:
Mortgages payable $1,239,112 $1,300,745
Exchangeable senior notes,
net of discount - 169,452
Bank credit facility 55,000 178,000
Accounts payable and
accrued expenses 259,144 236,269
Deferred tax liabilities 15,069 16,940
Deferred gain on sale of
hotels 84,341 101,852
------ -------
Total liabilities 1,652,666 2,003,258
Noncontrolling interests in
SHR's operating
partnership 4,191 2,717
Equity:
SHR's shareholders' equity:
8.50% Series A Cumulative
Redeemable Preferred Stock
($0.01 par value;
4,488,750 shares
issued and outstanding;
liquidation preference
$25.00 per share and
$126,527 in the aggregate) 108,206 108,206
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 and
$129,231 in the aggregate) 110,775 110,775
8.25% Series C Cumulative
Redeemable Preferred Stock
($0.01 par value;
5,750,000 shares
issued and outstanding;
liquidation preference
$25.00 per share and
$161,539 in the aggregate) 138,940 138,940
Common shares ($0.01 par
value; 250,000,000 common
shares authorized;
151,277,509 and
75,253,252 common shares
issued and outstanding) 1,512 752
Additional paid-in capital 1,554,347 1,233,856
Accumulated deficit (1,026,502) (954,208)
Accumulated other
comprehensive loss (96,784) (69,341)
------- -------
Total SHR's shareholders'
equity 790,494 568,980
Noncontrolling interests in
consolidated affiliates 22,687 23,188
------ ------
Total equity 813,181 592,168
------- -------
Total liabilities and
equity $2,470,038 $2,598,143
========== ==========
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
FINANCIAL HIGHLIGHTS
Supplemental Financial Data
(in thousands, except per share information)
June 30, 2010
-------------
Pro Rata
Share Consolidated
--------- ------------
Capitalization
--------------
Common shares outstanding 151,278 151,278
Operating partnership units
outstanding 955 955
Restricted stock units
outstanding 1,064 1,064
----- -----
Combined shares, options and
units outstanding 153,297 153,297
Common stock price at end of
period $4.39 $4.39
----- -----
Common equity capitalization $672,974 $672,974
Preferred equity capitalization
(at $25.00 face value) 370,236 370,236
Consolidated debt 1,294,112 1,294,112
Pro rata share of unconsolidated
debt 282,825 -
Pro rata share of consolidated
debt (107,065) -
Cash and cash equivalents (71,822) (71,822)
------- -------
Total enterprise value $2,441,260 $2,265,500
========== ==========
Net Debt / Total Enterprise Value 57.3% 54.0%
Preferred Equity /Total
Enterprise Value 15.2% 16.3%
Common Equity /Total Enterprise
Value 27.5% 29.7%
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Discontinued Operations
The results of operations of hotels sold are classified as
discontinued operations and segregated in the
consolidated statements of operations for all periods presented. The
following hotels were sold
during 2009 (in thousands):
Net Sales
Hotel Date Sold Proceeds
----- --------- ---------
Renaissance Paris Hotel Le Parc December 21,
Trocadero 2009 $50,275
October 29,
Four Seasons Mexico City 2009 $52,156
The following is a summary of income (loss) from discontinued
operations for the three and six months ended June 30, 2010 and 2009
(in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Hotel operating revenues $- $7,224 $- $15,783
--- ------ --- -------
Operating costs and
expenses - 6,918 (21) 13,830
Depreciation and
amortization - 1,537 - 3,061
--- ----- --- -----
Total operating costs and
expenses - 8,455 (21) 16,891
--- ----- --- ------
Operating (loss) income - (1,231) 21 (1,108)
Interest income - 1 - 3
Foreign currency exchange
gain (loss) - 31 (118) 105
Income tax benefit - 8 - 1,440
Gain on sale (a) 1,849 - 1,237 -
----- --- ----- ---
Income (loss) from
discontinued operations $1,849 $(1,191) $1,140 $440
====== ======= ====== ====
(a) In the second quarter of 2010, we agreed to accept payment of
$1,850,000 to settle the remaining obligation owed to us by the
purchaser of the Hyatt Regency New Orleans hotel, which was sold in
December 2007. We recognized a $1,850,000 gain on sale of the
hotel, which we had previously deferred.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Investment in the Hotel del Coronado
(in thousands)
On January 9, 2006, we purchased a 45% interest in the joint venture
that owns the Hotel del Coronado. We account for this investment
using the equity method of accounting.
Three Months Ended
June 30,
--------
2010 2009
---- ----
Total revenues (100%) $30,748 $30,006
Property EBITDA (100%) $9,724 $9,441
Equity in earnings (losses) of joint
venture (SHR 45% ownership)
Property EBITDA $4,376 $4,248
Depreciation and
amortization (1,997) (1,922)
Interest expense (1,897) (1,970)
Other (expenses) income,
net (85) 41
Income taxes (154) (13)
---- ---
Equity in earnings (losses)
of joint venture $243 $384
==== ====
EBITDA Contribution from investment
in Hotel del Coronado
Equity in earnings (losses)
of joint venture $243 $384
Depreciation and
amortization 1,997 1,922
Interest expense 1,897 1,970
Income taxes 154 13
--- ---
EBITDA Contribution for investment in
Hotel del Coronado $4,291 $4,289
====== ======
FFO Contribution from investment in
Hotel del Coronado
Equity in earnings (losses)
of joint venture $243 $384
Depreciation and
amortization 1,997 1,922
----- -----
FFO Contribution for investment in
Hotel del Coronado $2,240 $2,306
====== ======
Six Months Ended
June 30,
--------
2010 2009
---- ----
Total revenues (100%) $54,484 $58,198
Property EBITDA (100%) $15,278 $17,947
Equity in earnings (losses) of joint
venture (SHR 45% ownership)
Property EBITDA $6,875 $8,076
Depreciation and
amortization (3,988) (3,825)
Interest expense (3,730) (4,031)
Other (expenses) income,
net (148) (142)
Income taxes 383 200
--- ---
Equity in earnings (losses)
of joint venture $(608) $278
===== ====
EBITDA Contribution from investment
in Hotel del Coronado
Equity in earnings (losses)
of joint venture $(608) $278
Depreciation and
amortization 3,988 3,825
Interest expense 3,730 4,031
Income taxes (383) (200)
---- ----
EBITDA Contribution for investment in
Hotel del Coronado $6,727 $7,934
====== ======
FFO Contribution from investment in
Hotel del Coronado
Equity in earnings (losses)
of joint venture $(608) $278
Depreciation and
amortization 3,988 3,825
----- -----
FFO Contribution for investment in
Hotel del Coronado $3,380 $4,103
====== ======
Spread
over
Interest
Debt Rate LIBOR Loan Amount Maturity
---- -------- ----- ----------- --------
CMBS Mortgage and January
Mezzanine 2.43% 208 bp $610,000 2011
January
Revolving Credit Facility 2.85% 250 bp 18,500 2011
628,500
Cash and cash equivalents (17,036)
-------
Net Debt $611,464
========
Effective
LIBOR Cap Notional
Cap Date Rate Amount Maturity
--- ---- --------- --------- --------
CMBS Mortgage and January January
Mezzanine Loan 2010 2.0% $630,000 2011
and Revolving Credit
Facility Cap
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Leasehold Information
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Paris Marriott
Champs Elysees:
Property EBITDA $5,670 $4,645 $9,075 $7,252
Revenue (a) $5,670 $4,645 $9,075 $7,252
Lease Expense (2,793) (2,985) (5,839) (5,847)
Less: Deferred
Gain on Sale
Leaseback (1,068) (1,146) (2,233) (2,246)
------ ------ ------ ------
Adjusted Lease
Expense (3,861) (4,131) (8,072) (8,093)
EBITDA
Contribution
from Leasehold $1,809 $514 $1,003 $(841)
====== ==== ====== =====
Marriott Hamburg:
Property EBITDA $1,356 $1,422 $2,750 $2,775
Revenue (a) $1,088 $1,169 $2,275 $2,289
Lease Expense (1,095) (1,174) (2,290) (2,278)
Less: Deferred
Gain on Sale
Leaseback (49) (53) (103) (104)
Adjusted Lease
Expense (1,144) (1,227) (2,393) (2,382)
EBITDA
Contribution
from Leasehold $(56) $(58) $(118) $(93)
==== ==== ===== ====
Total Leaseholds:
Property EBITDA $7,026 $6,067 $11,825 $10,027
Revenue (a) $6,758 $5,814 $11,350 $9,541
Lease Expense (3,888) (4,159) (8,129) (8,125)
Less: Deferred
Gain on Sale
Leaseback (1,117) (1,199) (2,336) (2,350)
Adjusted Lease
Expense (5,005) (5,358) (10,465) (10,475)
EBITDA
Contribution
from Leaseholds $1,753 $456 $885 $(934)
====== ==== ==== =====
December
June 30, 31,
Security Deposits
(b): 2010 2009
---- ----
Paris Marriott
Champs Elysees $11,423 $10,720
Marriott Hamburg 6,115 7,158
Total $17,538 $17,878
======= =======
(a) For the three and six months ended June 30, 2010 and 2009,
Revenue for the Paris Marriott Champs Elysees represents Property
EBITDA. For the three and six months ended June 30, 2010 and 2009,
Revenue for the Marriott Hamburg represents lease revenue.
(b) The security deposits are recorded in other assets on the
consolidated balance sheets.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Non-GAAP Financial Measures
In addition to REIT hotel income, five other non-GAAP financial measures are presented for the Company that we believe are useful to management and investors as key measures of our operating performance: Funds from Operations (FFO); FFO - Fully Diluted; Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA); and Comparable EBITDA. A reconciliation of these measures to net loss attributable to SHR 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. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding losses or gains from sales of depreciable 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 Diluted, which is FFO plus income or loss on income attributable to convertible noncontrolling interests. 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, foreign currency exchange gains or losses and other non-recurring charges. We believe that the presentation of FFO, 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. Comparable FFO per diluted share, in accordance with NAREIT, is adjusted for the effects of dilutive securities. Dilutive securities may include shares granted under share-based compensation plans, operating partnership units and exchangeable debt securities. No effect is shown for securities that are anti-dilutive.
EBITDA represents net 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; and (iii) depreciation and amortization. EBITDA also excludes interest expense, income taxes 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 noncontrolling interests of our operating partnership into our common stock and includes preferred dividends. We believe this treatment of noncontrolling interests provides more 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 other non-recurring charges. 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 caution investors that amounts presented in accordance with our definitions of FFO, 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, FFO - Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA should not be considered as an alternative measure of our net loss or operating performance. FFO, 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, 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 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, FFO - Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net loss attributable to SHR common shareholders.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Loss Attributable to SHR Common Shareholders to
EBITDA and Comparable EBITDA
(in thousands)
Three Months Ended
June 30,
--------
2010 2009
---- ----
Net loss attributable to SHR common
shareholders $(47,410) $(85,982)
Depreciation and amortization -
continuing operations 33,683 33,674
Depreciation and amortization -
discontinued operations - 1,537
Interest expense 27,016 26,259
Income taxes - continuing operations 1,413 690
Income taxes -discontinued
operations - (8)
Noncontrolling interests (245) (1,007)
Adjustments from consolidated
affiliates (2,136) (2,741)
Adjustments from unconsolidated
affiliates 4,156 3,925
Preferred shareholder dividends 7,722 7,722
----- -----
EBITDA 24,199 (15,931)
Realized portion of deferred gain on
sale leasebacks (1,117) (1,199)
Loss on sale of assets -continuing
operations - 7
Gain on sale of assets -
discontinued operations (1,849) -
Impairment losses and other charges - 49,755
Impairment losses and other charges
-adjustments from consolidated
affiliates - (169)
Loss on early extinguishment of debt 886 -
Loss on early termination of
derivative financial instruments 18,263 -
Foreign currency exchange (gain)
loss -continuing operations (a) (5,256) 1,140
Foreign currency exchange (gain)
loss -discontinued operations (a) - (31)
Comparable EBITDA $35,126 $33,572
======= =======
Six Months Ended
June 30,
--------
2010 2009
---- ----
Net loss attributable to SHR common
shareholders $(87,701) $(129,172)
Depreciation and amortization -
continuing operations 69,540 66,253
Depreciation and amortization -
discontinued operations - 3,061
Interest expense 51,708 50,225
Income taxes - continuing operations 635 2,222
Income taxes -discontinued
operations - (1,440)
Noncontrolling interests (687) (1,453)
Adjustments from consolidated
affiliates (3,618) (4,305)
Adjustments from unconsolidated
affiliates 7,558 7,824
Preferred shareholder dividends 15,443 15,443
------ ------
EBITDA 52,878 8,658
Realized portion of deferred gain on
sale leasebacks (2,336) (2,350)
Loss on sale of assets -continuing
operations - 5
Gain on sale of assets -
discontinued operations (1,237) -
Impairment losses and other charges - 50,214
Impairment losses and other charges
-adjustments from consolidated
affiliates - (169)
Loss on early extinguishment of debt 886 883
Loss on early termination of
derivative financial instruments 18,263 -
Foreign currency exchange (gain)
loss -continuing operations (a) (11,442) (801)
Foreign currency exchange (gain)
loss -discontinued operations (a) 118 (105)
Comparable EBITDA $57,130 $56,335
======= =======
(a) Foreign currency exchange gains or losses applicable to third-party
and inter-company debt and certain balance sheet items held by
foreign subsidiaries.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Loss Attributable to SHR Common Shareholders to
Funds From Operations (FFO), FFO - Fully Diluted and Comparable FFO
(in thousands, except per share data)
Three Months Ended
June 30,
--------
2010 2009
---- ----
Net loss attributable to SHR common
shareholders $(47,410) $(85,982)
Depreciation and amortization -
continuing operations 33,683 33,674
Depreciation and amortization -
discontinued operations - 1,537
Corporate depreciation (306) (304)
Loss on sale of assets -continuing
operations - 7
Gain on sale of assets -discontinued
operations (1,849) -
Realized portion of deferred gain on
sale leasebacks (1,117) (1,199)
Deferred tax expense on realized
portion of deferred gain on sale
leasebacks 333 358
Noncontrolling interests adjustments (227) (472)
Adjustments from consolidated
affiliates (1,336) (1,860)
Adjustments from unconsolidated
affiliates 2,048 1,954
----- -----
FFO (16,181) (52,287)
Convertible noncontrolling interests (18) (535)
--- ----
FFO - Fully Diluted (16,199) (52,822)
Impairment losses and other charges - 49,755
Impairment losses and other charges -
adjustments from consolidated
affiliates - (169)
Non-cash mark to market of interest
rate swaps 4,181 -
Loss on early extinguishment of debt 886 -
Loss on early termination of
derivative financial instruments 18,263 -
Foreign currency exchange (gain) loss,
net of tax (a) -continuing
operations (5,263) 792
Foreign currency exchange (gain) loss
(a) -discontinued operations - (31)
Comparable FFO $1,868 $(2,475)
====== =======
Comparable FFO per diluted share $0.02 $(0.03)
===== ======
Weighted average diluted shares 113,174 75,381
======= ======
Six Months Ended
June 30,
--------
2010 2009
---- ----
Net loss attributable to SHR common
shareholders $(87,701) $(129,172)
Depreciation and amortization -
continuing operations 69,540 66,253
Depreciation and amortization -
discontinued operations - 3,061
Corporate depreciation (610) (608)
Loss on sale of assets -continuing
operations - 5
Gain on sale of assets -discontinued
operations (1,237) -
Realized portion of deferred gain on
sale leasebacks (2,336) (2,350)
Deferred tax expense on realized
portion of deferred gain on sale
leasebacks 696 701
Noncontrolling interests adjustments (707) (929)
Adjustments from consolidated
affiliates (3,302) (3,692)
Adjustments from unconsolidated
affiliates 4,052 3,889
----- -----
FFO (21,605) (62,842)
Convertible noncontrolling interests 20 (524)
--- ----
FFO - Fully Diluted (21,585) (63,366)
Impairment losses and other charges - 50,214
Impairment losses and other charges -
adjustments from consolidated
affiliates - (169)
Non-cash mark to market of interest
rate swaps 4,181 -
Loss on early extinguishment of debt 886 883
Loss on early termination of
derivative financial instruments 18,263 -
Foreign currency exchange (gain) loss,
net of tax (a) -continuing
operations (11,456) (1,311)
Foreign currency exchange (gain) loss
(a) -discontinued operations 118 (105)
Comparable FFO $(9,593) $(13,854)
======= ========
Comparable FFO per diluted share $(0.10) $(0.18)
====== ======
Weighted average diluted shares 93,706 75,166
====== ======
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