Strategic Hotels & Resorts Reports First Quarter 2012 Financial
Strategic Hotels & Resorts Reports First Quarter 2012 Financial Results
North American Same Store RevPAR Increases 9.4 Percent and EBITDA Margins Expand 170 Basis Points in Quarter; Continued Balance Sheet Improvement; Company Declares Second Quarter Preferred Dividend Payment
CHICAGO, May 1, 2012 - Strategic Hotels & Resorts, Inc. (NYSE: BEE) today reported results for the first quarter ended March 31, 2012.
($ in millions, except per
share and operating
metrics) First Quarter
———
Earnings Metrics 2012 2011 % Change
— —— —— -
Net loss attributable to
common shareholders $(31.5) $(35.4) N/A
Net loss attributable to
common shareholders per
diluted share $(0.17) $(0.23) N/A
Comparable funds from
operations (Comparable
FFO) (a) $3.1 $(3.8) N/A
Comparable FFO per diluted
share (a) $0.02 $(0.02) N/A
Comparable EBITDA (a) $33.3 $28.7 15.9%
Total United States
Portfolio Operating
Metrics (b)
———
Average Daily Rate (ADR) $251.54 $239.49 5.0%
Occupancy 68.7% 66.4% 2.3 pts
Revenue per Available Room
(RevPAR) $172.86 $158.91 8.8%
Total RevPAR $338.85 $314.41 7.8%
EBITDA Margins 20.1% 17.9% 220 bps
North American Same Store
Operating Metrics (c)
——
ADR $238.09 $226.44 5.1%
Occupancy 67.3% 64.7% 2.6 pts
RevPAR $160.27 $146.49 9.4%
Total RevPAR $300.74 $279.33 7.7%
EBITDA Margins 17.2% 15.5% 170 bps
—— ——
(a) Please refer to tables provided later in this press release for a reconciliation of net loss to Comparable FFO, Comparable FFO per share and Comparable EBITDA. Comparable FFO, Comparable FFO per share and Comparable EBITDA are non-GAAP measures and are further explained with the reconciliation tables.
(b) Operating statistics reflect results from the Company’s Total United States portfolio (see portfolio definitions later in this press release).
(c) Operating statistics reflect results from the Company’s North American same store portfolio (see portfolio definitions later in this press release).
“Our continued excellent results reflect the ongoing strength in demand for high-end hotels and resorts across all our business segments. The ongoing economic recovery, combined with our sustained productivity enhancements, has once more resulted in significant top line growth and healthy margin expansion,” said Laurence Geller, President and Chief Executive Officer. “Moreover, newly developed high-end room supply remains negligible for the foreseeable future, providing us a strong, sustainable competitive advantage in our markets.”
First Quarter Highlights
— Net loss attributable to common shareholders was $31.5 million, or $0.17
per diluted share in the first quarter of 2012, compared with net loss
attributable to common shareholders of $35.4 million, or $0.23 per
diluted share in the first quarter of 2011.
— Comparable FFO was $0.02 per diluted share in the first quarter of 2012,
compared with a loss of $0.02 per diluted share in the prior year
period.
— Comparable EBITDA was $33.3 million in the first quarter of 2012,
compared with $28.7 million in the prior year period, a 15.9 percent
increase between periods.
— Total United States portfolio RevPAR increased 8.8 percent in the first
quarter of 2012, driven by a 2.3 percentage point increase in occupancy
and a 5.0 percent increase in ADR, compared to the first quarter of
2011. Total RevPAR increased 7.8 percent between periods with non-rooms
revenue increasing by 7.9 percent between periods.
— Occupancy growth in the Total United States portfolio was driven by a
5.8 percent increase in group occupied room nights and a 3.6 percent
increase in transient occupied room nights. Group ADR increased 6.5
percent compared to the first quarter 2011 and transient ADR increased
3.7 percent.
— RevPAR increased 9.7 percent in the first quarter of 2012 in the
Company’s Total United States urban portfolio and 7.8 percent in the
Company’s Total United States resort portfolio, compared to the first
quarter of 2011.
— North American same store RevPAR increased 9.4 percent in the first
quarter of 2012, driven by a 2.6 percentage point increase in occupancy
and a 5.1 percent increase in ADR. Total RevPAR increased 7.7 percent
with non-rooms revenue increasing by 6.8 percent between periods.
— European RevPAR increased 13.8 percent (17.1 percent in constant
dollars) in the first quarter of 2012, driven by a 6.6 percentage point
increase in occupancy and a 4.2 percent increase in ADR (7.2 percent
increase in constant dollars) between periods. European Total RevPAR
increased 7.2 percent in the first quarter over the prior year period
(10.3 percent in constant dollars).
— Total United States portfolio EBITDA margins expanded 220 basis points
in the first quarter of 2012, compared to the first quarter of 2011..
North American same store EBITDA margins expanded 170 basis points.
— Group room nights currently booked for 2012 are 0.7 percent higher
compared to room nights booked for 2011 at the same time last year at
rates 4.3 percent higher, resulting in a 5.0 percent RevPAR increase.
Preferred Dividends
For the second quarter 2012, the Company’s board of directors authorized, and the Company declared a quarterly dividend of $0.53125 per share of 8.5 percent Series A Cumulative Redeemable Preferred Stock (Series A) payable on June 29, 2012 to shareholders of record as of June 15, 2012, a quarterly dividend of $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock (Series B) payable on June 29, 2012 to shareholders of record as of June 15, 2012 and a quarterly dividend of $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock (Series C) payable on June 29, 2012 to shareholders of record as of June 15, 2012, contingent upon the Company’s ability to meet, on the payment date, the requirements of the Maryland General Corporation Law with respect to the payment of dividends (the “Maryland Dividend Requirement”). While the Company cannot make any guarantees, it currently expects to be able to meet the Maryland Dividend Requirement on the June 29, 2012 payment date.
The Company had previously announced the declaration of accrued and unpaid dividends on the Series A, B and C Preferred Stock through March 31, 2012 payable on June 29, 2012 to shareholders of record as of June 15, 2012, contingent upon the Company’s ability to meet the Maryland Dividend Requirement on the payment date. In total, 14 quarters of preferred dividends have been declared payable on June 29, 2012 to shareholders of record as of June 15, 2012, equating to $7.4375 per share of Series A Preferred Stock and $7.21882 per share of Series B and Series C Preferred Stock.
Subsequent Event
On April 23rd, the Company closed on the sale of 18.4 million shares of common stock at a public offering price of $6.50 per share, including 2.4 million shares of common stock issued pursuant to the exercise in full of the underwriters’ over-allotment option. The Company received approximately $114.8 million from the offering after deducting underwriting discounts and commissions related to the offering. The Company used the net proceeds from the offering to reduce borrowings under its secured bank credit facility, fund the payment of accrued and unpaid preferred dividends, and fund capital expenditures and working capital.
2012 Guidance
Based on the results of the first quarter and current forecasts for the remainder of the year, management is reaffirming its guidance range for full year 2012 RevPAR growth, Total RevPAR growth and Comparable EBITDA, and adjusting its guidance range for Comparable FFO per fully diluted share to reflect the shares issued in the common equity offering which closed on April 23rd.
For the year ending December 31, 2012, the Company anticipates that Comparable EBITDA will be in the range of $165.0 million to $180.0 million and Comparable FFO in the range of $0.21 and $0.29 per fully diluted share. Management is also reaffirming its guidance for North American same store RevPAR growth in the range between 6.0 percent to 8.0 percent and Total RevPAR growth in the range between 5.0 percent and 7.0 percent.
Portfolio Definitions
Total United States portfolio hotel comparisons for the first quarter 2012 are derived from the Company’s hotel portfolio at March 31, 2012, consisting of all 14 properties located in the United States, including unconsolidated joint ventures.
North American same store hotel comparisons for the first quarter 2012 are derived from the Company’s hotel portfolio at March 31, 2012, consisting of properties located in North America and held for five or more quarters, in which operations are included in the consolidated results of the Company. As a result, same store comparisons include 11 properties and exclude the Four Seasons Jackson Hole and Four Seasons Silicon Valley hotels, which were acquired on March 11, 2011, and the unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess hotels.
European hotel comparisons for the first quarter 2012 are derived from the Company’s European owned and leased hotel properties at March 31, 2012, consisting of the Marriott London Grosvenor Square and the Marriott Hamburg.
Earnings Call
The Company will conduct its first quarter 2012 conference call for investors and other interested parties on Wednesday, May 2, 2012 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to access the call by dialing 888.679.8018 (toll international: 617.213.4845) with passcode 35186130. To participate on the webcast, log on to the company’s website at http://www.strategichotels.com or http://edge.media-server.com/m/p/9s7959dw/lan/en 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 12:00 p.m. ET on May 2, 2012 through 11:59 p.m. ET on May 9, 2012. To access the replay, dial 888.286.8010 (toll international: 617.801.6888) with passcode 48871579. 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 http://www.strategichotels.com within the first quarter information section.
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 7,762 rooms and 840,000 square feet of meeting space. 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, Inc. (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 the Company’s future financial results, stabilization in the lodging space, positive trends in the lodging industry and the Company’s 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: the effects of the recent global economic recession upon business and leisure travel and the hotel markets in which the Company invests; the Company’s liquidity and refinancing demands; the Company’s ability to obtain or refinance maturing debt; the Company’s ability to maintain compliance with covenants contained in the Company’s debt facilities; the Company’s ability to meet the requirements of the Maryland General Corporation Law with respect to the payment of preferred dividends on the June 29, 2012 payment date; stagnation or further deterioration in economic and market conditions, particularly impacting business and leisure travel spending in the markets where the Company’s hotels operate and in which the Company invests, including luxury and upper upscale product; general volatility of the capital markets and the market price of the Company’s shares of common stock; availability of capital; the Company’s ability to dispose of properties in a manner consistent with the Company’s investment strategy and liquidity needs; hostilities and security concerns, including future terrorist attacks, or the apprehension of hostilities, in each case that affect travel within or to the United States, Mexico, Germany, England or other countries where the Company invests; difficulties in identifying properties to acquire and completing acquisitions; the Company’s failure to maintain effective internal control over financial reporting and disclosure controls and procedures; risks related to natural disasters; increases in interest rates and operating costs, including insurance premiums and real property taxes; contagious disease outbreaks, such as the H1N1 virus outbreak; delays and cost-overruns in construction and development; marketing challenges associated with entering new lines of business or pursuing new business strategies; the Company’s failure to maintain the Company’s status as a REIT; changes in the competitive environment in the Company’s industry and the markets where the Company invests; changes in real estate and zoning laws or regulations; legislative or regulatory changes, including changes to laws governing the taxation of REITS; changes in generally accepted accounting principles, policies and guidelines; and litigation, judgments or settlements.
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 the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
The following tables reconcile projected 2012 net loss attributable to common shareholders to projected Comparable EBITDA, Comparable FFO and Comparable FFO per diluted share (in millions, except per share data):
Low Range High Range
——-
Net Loss Attributable to Common Shareholders $(79.3) $(64.3)
Depreciation and Amortization 105.0 105.0
Interest Expense 83.1 83.1
Income Taxes 1.1 1.1
Non-controlling Interests (0.3) (0.3)
Adjustments from Consolidated Affiliates (5.7) (5.7)
Adjustments from Unconsolidated Affiliates 28.3 28.3
Preferred Shareholder Dividends 24.2 24.2
Realized Portion of Deferred Gain on Sale
Leasebacks (0.2) (0.2)
Adjustment for Value Creation Plan 8.8 8.8
—- —-
Comparable EBITDA $165.0 $180.0
Low Range High Range
— —-
Net Loss Attributable to Common
Shareholders $(79.3) $(64.3)
Depreciation and Amortization 103.8 103.8
Realized Portion of Deferred Gain
on Sale Leasebacks (0.2) (0.2)
Non-controlling Interests (0.2) (0.2)
Adjustments from Consolidated
Affiliates (2.9) (2.9)
Adjustments from Unconsolidated
Affiliates 15.5 15.5
Adjustment for Value Creation
Plan 8.8 8.8
Other Adjustments (1.5) (1.5)
—— ——
Comparable FFO $44.0 $59.0
Comparable FFO per Diluted Share
(a) $0.21 $0.29
(a) Comparable FFO per Diluted Share has been adjusted to reflect the 18.4 million shares issued in the Company’s common equity offering which closed on April 23rd, 2012.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 31,
—
2012 2011
—— ——
Revenues:
Rooms $94,510 $91,470
Food and beverage 62,479 62,882
Other hotel operating revenue 20,125 19,973
Lease revenue 1,165 1,215
——- ——-
Total
revenues 178,279 175,540
Operating Costs and Expenses:
Rooms 28,576 26,627
Food and beverage 47,393 46,007
Other departmental expenses 49,565 50,673
Management fees 5,616 5,774
Other hotel expenses 13,609 13,358
Lease expense 1,168 1,196
Depreciation and amortization 25,490 30,605
Corporate expenses 13,810 14,477
——— ———
Total
operating
costs and
expenses 185,227 188,717
Operating loss (6,948) (13,177)
Interest expense (19,605) (19,548)
Interest income 30 32
Equity in earnings (losses) of unconsolidated affiliates 920 (1,600)
Foreign currency exchange (loss) gain (5) 139
Other income, net 452 3,925
—- ——-
Loss before income taxes and discontinued operations (25,156) (30,229)
Income tax (expense) benefit (465) 1,648
—— ——-
Loss from continuing operations (25,621) (28,581)
Income from discontinued operations, net of tax - 162
—- —-
Net loss (25,621) (28,419)
Net loss attributable to the noncontrolling interests in
SHR’s operating partnership 117 138
Net loss attributable to the noncontrolling interests in
consolidated affiliates 29 595
—- —-
Net loss attributable to SHR (25,475) (27,686)
Preferred shareholder dividends (6,041) (7,721)
——— ———
Net loss attributable to SHR common shareholders $(31,516) $(35,407)
======== ========
Basic and Diluted Loss Per Share:
Loss from
continuing
operations
attributable to
SHR common
shareholders $(0.17) $(0.23)
Income from
discontinued
operations
attributable to
SHR common
shareholders - -
Net loss
attributable to
SHR common
shareholders $(0.17) $(0.23)
Weighted average
common shares
outstanding 186,430 157,333
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2012 2011
—— ——
Assets
Investment in hotel
properties, net $1,676,881 $1,692,431
Goodwill 40,359 40,359
Intangible assets, net
of accumulated
amortization of $9,435
and $8,915 31,108 30,635
Investment in
unconsolidated
affiliates 126,198 126,034
Cash and cash
equivalents 58,205 72,013
Restricted cash and
cash equivalents 40,703 39,498
Accounts receivable,
net of allowance for
doubtful accounts of
$1,575 and $1,698 49,359 43,597
Deferred financing
costs, net of
accumulated
amortization of $4,434
and $3,488 9,955 10,845
Deferred tax assets 1,968 2,230
Prepaid expenses and
other assets 38,852 29,047
Total assets $2,073,588 $2,086,689
========== ==========
Liabilities, Noncontrolling Interests and Equity
Liabilities:
Mortgages and other
debt payable $1,000,128 $1,000,385
Bank credit facility 59,000 50,000
Accounts payable and
accrued expenses 246,384 249,179
Distributions
payable 78,540 72,499
Deferred tax
liabilities 47,475 47,623
——— ———
Total liabilities 1,431,527 1,419,686
Noncontrolling
interests in SHR’s
operating partnership 5,616 4,583
Equity:
SHR’s shareholders’
equity:
8.50% Series A
Cumulative
Redeemable
Preferred Stock
($0.01 par value
per share;
4,148,141 shares issued and
outstanding; liquidation
preference $25.00 per share
plus accrued distributions and
$132,352 and $130,148 in the
aggregate) 99,995 99,995
8.25% Series B
Cumulative
Redeemable
Preferred Stock
($0.01 par value
per share;
3,615,375 shares issued and
outstanding; liquidation
preference $25.00 per share
plus accrued distributions and
$114,619 and $112,775 in the
aggregate) 87,064 87,064
8.25% Series C
Cumulative
Redeemable
Preferred Stock
($0.01 par value
per share;
3,827,727 shares issued and
outstanding; liquidation
preference $25.00 per share
plus accrued distributions and
$121,351 and $119,377 in the
aggregate) 92,489 92,489
Common shares
($0.01 par value
per share;
250,000,000
common shares
authorized;
185,867,664 and 185,627,199 common
shares issued and outstanding) 1,858 1,856
Additional paid-
in capital 1,628,310 1,634,067
Accumulated
deficit (1,216,096) (1,190,621)
Accumulated other
comprehensive
loss (65,485) (70,652)
Total SHR’s shareholders’ equity 628,135 654,198
Noncontrolling
interests in
consolidated
affiliates 8,310 8,222
——- ——-
Total equity 636,445 662,420
Total liabilities, noncontrolling
interests and equity $2,073,588 $2,086,689
========== ==========
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
FINANCIAL HIGHLIGHTS
Supplemental Financial Data
(in thousands, except per share information)
March 31, 2012
Pro Rata Share Consolidated
——-
Capitalization
Common shares outstanding 185,868 185,868
Operating partnership units outstanding 853 853
Restricted stock units outstanding 1,077 1,077
Value Creation Plan units outstanding
under the deferral program 1,153 1,153
——- ——-
Combined shares and units outstanding 188,951 188,951
Common stock price at end of period $6.58 $6.58
——- ——-
Common equity capitalization $1,243,298 $1,243,298
Preferred equity capitalization (at
$25.00 face value) 289,102 289,102
Consolidated debt 1,059,128 1,059,128
Pro rata share of unconsolidated debt 212,275 -
Pro rata share of consolidated debt (45,548) -
Cash and cash equivalents (58,205) (58,205)
Total
enterprise
value $2,700,050 $2,533,323
===========
Net Debt / Total Enterprise Value 43.2% 39.5%
Preferred Equity /Total Enterprise
Value 10.7% 11.4%
Common Equity / Total Enterprise Value 46.0% 49.1%
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 hotel was sold during 2011 (in thousands):
Hotel Date Sold Net Sales Proceeds
——- — ——
Paris Marriott Champs
Elysees (Paris
Marriott) April 6, 2011 $58,012
The following is a summary of income from discontinued operations for the three months ended March 31, 2012 and 2011 (in thousands):
Three Months Ended
March 31,
—
2012 2011
—— ——
Hotel operating revenues $ - $8,805
- ———
Operating costs and expenses - 8,682
Operating
income - 123
Foreign currency exchange gain - 58
Other income, net - 326
Income tax expense - (359)
Gain on sale - 14
Income from
discontinued
operations $ - $162
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Investments in the Hotel del Coronado and Fairmont Scottsdale Princess Hotel
(in thousands)
On January 9, 2006, we purchased a 45% interest in the unconsolidated affiliate that owns the Hotel del Coronado. On February 4, 2011, we completed a recapitalization of the unconsolidated affiliate. As part of the recapitalization, a new unconsolidated
affiliate was formed to own the Hotel del Coronado and to invest cash in the asset. Pursuant to the terms of the recapitalization, we became a limited partner in the new unconsolidated affiliate, and our ownership interest in the Hotel del Coronado
decreased from 45% to 34.3%. On June 9, 2011, we completed a recapitalization of the Fairmont Scottsdale Princess hotel. As part of the recapitalization, our ownership interest in the Fairmont Scottsdale Princess Hotel decreased from 100% to 50%. We
account for these investments using the equity method of accounting.
Three Months Ended Three Months Ended
March 31, 2012 March 31, 2011
Fairmont Fairmont
Hotel del Scottsdale Hotel del Scottsdale
Coronado Princess Total Coronado Princess Total
- - ——- - - ——-
Total revenues (100%) $30,843 $26,983 $7,826 $29,302 $ - $29,302
Property EBITDA (100%) $8,219 $8,655 $16,874 $7,298 $ - $7,298
Equity in (losses) earnings of unconsolidated affiliates (SHR ownership)
Property EBITDA $2,819 $4,327 $7,146 $2,606 $ - $2,606
Depreciation and
amortization (1,689) (1,771) (3,460) (1,635) - (1,635)
Interest expense (2,518) (203) (2,721) (2,305) - (2,305)
Other expenses, net (23) (58) (81) (739) - (739)
Income taxes 267 - 267 577 - 577
—- —- —- —- —- —-
Equity in (losses) earnings of
unconsolidated affiliates $(1,144) $2,295 $1,151 $(1,496) $ - $(1,496)
======= ====== ====== ======= ===================== =======
EBITDA Contribution:
Equity in (losses) earnings of
unconsolidated affiliates $(1,144) $2,295 $1,151 $(1,496) $ - $(1,496)
Depreciation and
amortization 1,689 1,771 3,460 1,635 - 1,635
Interest expense 2,518 203 2,721 2,305 - 2,305
Income taxes (267) - (267) (577) - (577)
—— —- —— —— —- ——
EBITDA Contribution $2,796 $4,269 $7,065 $1,867 $ - $1,867
====== ====== ====== ====== ===================== ======
FFO Contribution:
Equity in (losses) earnings of
unconsolidated affiliates $(1,144) $2,295 $1,151 $(1,496) $ - $(1,496)
Depreciation and
amortization 1,689 1,771 3,460 1,635 - 1,635
——- ——- ——- ——- —- ——-
FFO Contribution $545 $4,066 $4,611 $139 $ - $139
==== ====== ====== ==== ====================== ====
Spread over
——
Debt Interest Rate LIBOR Loan Amount Maturity (a)
—— ——— ——- —— ——
Hotel del Coronado
CMBS Mortgage and
Mezzanine 5.80% (b) 480 bp (b) $425,000 March 2016
Cash and cash equivalents (19,506)
Net Debt $405,494
========
Fairmont Scottsdale
Princess
CMBS Mortgage 0.60% 36 bp $133,000 April 2015
Cash and cash equivalents (3,051)
———
Net Debt $129,949
========
(a) Includes extension options.
(b) Subject to a 1% LIBOR floor.
Effective
Caps Date LIBOR Cap Rate Notional Amount Maturity
—— —— - -
Hotel del Coronado
CMBS Mortgage and
Mezzanine Loan Caps February 2011 2.00% $425,000 February 2013
CMBS Mortgage and
Mezzanine Loan Caps February 2013 2.50% $425,000 March 2013
Fairmont Scottsdale
Princess
CMBS Mortgage Loan Cap June 2011 4.00% $133,000 December 2013
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Leasehold Information
(in thousands)
Three Months Ended
March 31,
—
2012 2011
—— ——
Paris Marriott (a):
Property EBITDA $ - $3,249
Revenue (b) $ - $3,249
Lease expense - (3,051)
Less: Deferred gain on sale-
leaseback - (1,152)
—- ———
Adjusted lease expense - (4,203)
EBITDA contribution from leasehold $ - $(954)
================= =====
Marriott Hamburg:
Property EBITDA $1,400 $1,456
Revenue (b) $1,165 $1,215
Lease expense (1,168) (1,196)
Less: Deferred gain on sale-
leaseback (51) (53)
Adjusted lease expense (1,219) (1,249)
EBITDA contribution from leasehold $(54) $(34)
==== ====
Total Leaseholds:
Property EBITDA $1,400 $4,705
Revenue (b) $1,165 $4,464
Lease expense (1,168) (4,247)
Less: Deferred gain on sale-
leasebacks (51) (1,205)
Adjusted lease expense (1,219) (5,452)
EBITDA contribution from leaseholds $(54) $(988)
==== =====
March 31, December 31,
Security Deposit (c): 2012 2011
—— ——
Marriott Hamburg $2,535 $2,462
(a) On April 6, 2011, we sold our leasehold interest in the Paris Marriott. The results of
operations for the Paris Marriott have been classified as discontinued operations for all
periods presented.
(b) For the three months ended March 31, 2011, Revenue for the Paris Marriott represents Property
EBITDA. For the three months ended March 31, 2012 and 2011, Revenue for the Marriott Hamburg
represents lease revenue.
(c) The security deposit is recorded in 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); 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 other non-cash charges, such as the Value Creation Plan expense. We believe EBITDA and Comparable EBITDA are useful to management and in