Strategic Hotels & Resorts Q3 U.S. Same Store RevPAR Increases 11.7 Percent Driven by 9.7 Percent ADR Growth
United States same store revenue per available room (RevPAR) increased 11.7 percent, driven by a 9.7 percent increase in average daily rate (ADR) and a 1.4 percentage point increase in occupancy compared to the third quarter of 2010. Total revenue per available room (Total RevPAR) increased 8.8 percent between periods.
Strategic Hotels & Resorts, Inc. (NYSE: BEE) reported results for the third quarter ended September 30, 2011.
Third Quarter Highlights
- Net loss attributable to common shareholders was $11.9 million, or $0.06 per diluted share, in the third quarter of 2011, compared with a net loss attributable to common shareholders of $39.4 million, or $0.26 per diluted share, in the third quarter of 2010.
- Comparable funds from operations (Comparable FFO) was $0.06 per diluted share compared with $0.06 per diluted share in the prior year period.
- Comparable EBITDA was $43.6 million compared with $37.4 million in the prior year period, a 16.6 percent increase between periods.
- United States same store revenue per available room (RevPAR) increased 11.7 percent, driven by a 9.7 percent increase in average daily rate (ADR) and a 1.4 percentage point increase in occupancy compared to the third quarter of 2010. Total revenue per available room (Total RevPAR) increased 8.8 percent between periods.
- North American same store RevPAR increased 11.1 percent, driven by a 9.4 percent increase in ADR and a 1.3 percentage point increase in occupancy compared to the third quarter of 2010. Total RevPAR increased 7.7 percent between periods.
- Total North American RevPAR, which includes results from the recently acquired Four Seasons Jackson Hole and Four Seasons Silicon Valley hotels, increased by 10.8 percent, driven by an 8.9 percent increase in ADR and a 1.3 percentage point increase in occupancy compared to the third quarter of 2010. Total RevPAR increased 7.1 percent between periods.
- United States same store EBITDA margins expanded 200 basis points compared to the third quarter of 2010. North American same store EBITDA margins expanded 170 basis points and Total North American EBITDA margins expanded 160 basis points between periods.
- European RevPAR increased 5.4 percent (0.7 percent decrease in constant dollars), driven by a 5.1 percent increase in ADR (1.0 percent decrease in constant dollars) and a 0.3 percentage point increase in occupancy compared to the third quarter of 2010. European Total RevPAR increased 5.8 percent (0.1 percent decrease in constant dollars) between periods.
"Once again, our overall performance was very strong in the quarter," said Laurence Geller, Chief Executive Officer of Strategic Hotels & Resorts, Inc. "As we look ahead, we continue to see favorable group booking trends, which is one of our best forward-looking indicators. Confirmed group nights for 2012 in our U.S. portfolio have increased over six percent compared to the same time last year and group production has remained very healthy since August. We remain optimistic about increasing demand in our portfolio since our core customer base continues to spend and book group, leisure and corporate travel, despite the lingering global and domestic challenges and uncertainty."
The company reported financial results for the nine month period ended September 30, 2011 as follows:
- Net loss attributable to common shareholders was $7.8 million, or $0.04 per diluted share, compared with a net loss attributable to common shareholders of $127.1 million, or $1.12 per diluted share, for the nine month period ended September 30, 2010.
- Comparable FFO was $0.09 per diluted share compared with $0.02 per diluted share in the nine month period ended September 30, 2010.
- Comparable EBITDA was $114.8 million compared with $97.6 million for the nine month period ended September 30, 2010, an increase of 17.7 percent.
Third Quarter 2011 Transaction Review
- On July 6th, the Company closed an $85.0 million limited recourse loan secured by the InterContinental Miami hotel. The loan bears interest at a floating rate of LIBOR plus 350 basis points and has a five-year initial term with two, one-year extension options, upon satisfaction of certain financial and other conditions.
- On July 14th, the Company closed a $110.0 million limited recourse loan secured by the Loews Santa Monica Beach hotel. The loan bears interest at a floating rate of LIBOR plus 385 basis points and has a four-year initial term with three, one-year extension options, upon satisfaction of certain financial and other conditions.
- On July 20th, the Company closed a $130.0 million limited recourse loan secured by the Four Seasons Washington, D.C. hotel. The loan bears interest at a floating rate of LIBOR plus 315 basis points and has a three-year initial term with two, one-year extension options, upon satisfaction of certain financial and other conditions.
- On July 28th, the Company closed a $145.0 million limited recourse loan secured by the InterContinental Chicago hotel. The loan bears interest at a fixed rate of 5.61 percent and has a ten-year term.
2011 Guidance
Based on the results of the first three quarters and current forecasts for the fourth quarter, management is narrowing its full year guidance range for 2011. For the year ending December 31, 2011, the Company anticipates that Comparable EBITDA will be in the range of $150.0 million to $156.0 million and Comparable FFO in the range of $0.10 and $0.13 per diluted share. Management is also raising its guidance for North American same store RevPAR growth to be in the range between 9.0 percent and 10.0 percent, and maintaining its guidance for Total RevPAR growth to be in the range between 8.0 percent and 9.0 percent.
Portfolio Definitions
United States same store hotel comparisons for the third quarter of 2011 are derived from the Company's hotel portfolio at September 30, 2011, consisting of properties located in the United States 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 contain 10 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.
North American same store hotel comparisons for the third quarter of 2011 are derived from the Company's hotel portfolio at September 30, 2011, 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 contain 11 properties, including the Four Seasons Punta Mita Resort and excluding 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.
Total North American hotel comparisons are derived from the Company's hotel portfolio at September 30, 2011, consisting of properties in which operations are included in the consolidated results of the company, including the Four Seasons Jackson Hole and Four Seasons Silicon Valley hotels.
European hotel comparisons for the third quarter of 2011 are derived from the Company's European owned and leased hotel properties at September 30, 2011, consisting of the Marriott London Grosvenor Square and the Marriott Hamburg.
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.
The following tables reconcile projected 2011 net loss attributable to common shareholders to projected Comparable EBITDA, Comparable FFO and Comparable FFO per diluted share (in millions, except per share data):
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) | |||||||||||||||
Investments in the Hotel del Coronado and Fairmont Scottsdale Princess | |||||||||||||||
(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 decreased from 100% to 50%. We account for these investments using the equity | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
September 30, 2011 | September 30, 2010 | ||||||||||||||
Fairmont | Fairmont | ||||||||||||||
Hotel del | Scottsdale | Hotel del | Scottsdale | ||||||||||||
Coronado | Princess | Total | Coronado | Princess | Total | ||||||||||
Total revenues (100%) | $ 40,765 | $ 10,280 | $ 51,045 | $ 39,683 | $ - | $ 39,683 | |||||||||
Property EBITDA (100%) | $ 16,995 | $ (2,452) | $ 14,543 | $ 15,593 | $ - | $ 15,593 | |||||||||
Equity in earnings (losses) of unconsolidated affiliates (SHR ownership) | |||||||||||||||
Property EBITDA | $ 5,830 | $ (1,226) | $ 4,604 | $ 7,017 | $ - | $ 7,017 | |||||||||
Depreciation and amortization | (1,665) | (1,806) | (3,471) | (2,015) | - | (2,015) | |||||||||
Interest expense | (2,648) | (198) | (2,846) | (1,981) | - | (1,981) | |||||||||
Other expenses, net | (83) | (96) | (179) | (15) | - | (15) | |||||||||
Income taxes | (125) | - | (125) | (272) | - | (272) | |||||||||
Equity in earnings (losses) of unconsolidated affiliates | $ 1,309 | $ (3,326) | $ (2,017) | $ 2,734 | $ - | $ 2,734 | |||||||||
EBITDA Contribution | |||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates | $ 1,309 | $ (3,326) | $ (2,017) | $ 2,734 | $ - | $ 2,734 | |||||||||
Depreciation and amortization | 1,665 | 1,806 | 3,471 | 2,015 | - | 2,015 | |||||||||
Interest expense | 2,648 | 198 | 2,846 | 1,981 | - | 1,981 | |||||||||
Income taxes | 125 | - | 125 | 272 | - | 272 | |||||||||
EBITDA Contribution | $ 5,747 | $ (1,322) | $ 4,425 | $ 7,002 | $ - | $ 7,002 | |||||||||
FFO Contribution | |||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates | $ 1,309 | $ (3,326) | $ (2,017) | $ 2,734 | $ - | $ 2,734 | |||||||||
Depreciation and amortization | 1,665 | 1,806 | 3,471 | 2,015 | - | 2,015 | |||||||||
FFO Contribution | $ 2,974 | $ (1,520) | $ 1,454 | $ 4,749 | $ - | $ 4,749 | |||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2011 | September 30, 2010 | ||||||||||||||
Fairmont | Fairmont | ||||||||||||||
Hotel del | Scottsdale | Hotel del | Scottsdale | ||||||||||||
Coronado | Princess | Total | Coronado | Princess | Total | ||||||||||
Total revenues (100%) | $ 101,255 | $ 12,389 | $ 113,644 | $ 94,167 | $ - | $ 94,167 | |||||||||
Property EBITDA (100%) | $ 34,748 | $ (3,196) | $ 31,552 | $ 30,871 | $ - | $ 30,871 | |||||||||
Equity in (losses) earnings of unconsolidated affiliates (SHR ownership) | |||||||||||||||
Property EBITDA | $ 12,022 | $ (1,598) | $ 10,424 | $ 13,892 | $ - | $ 13,892 | |||||||||
Depreciation and amortization | (4,963) | (2,257) | (7,220) | (6,003) | - | (6,003) | |||||||||
Interest expense | (7,382) | (248) | (7,630) | (5,711) | - | (5,711) | |||||||||
Other expenses, net | (1,547) | (640) | (2,187) | (163) | - | (163) | |||||||||
Income taxes | 554 | - | 554 | 111 | - | 111 | |||||||||
Equity in (losses) earnings of unconsolidated affiliates | $ (1,316) | $ (4,743) | $ (6,059) | $ 2,126 | $ - | $ 2,126 | |||||||||
EBITDA Contribution | |||||||||||||||
Equity in (losses) earnings of unconsolidated affiliates | $ (1,316) | $ (4,743) | $ (6,059) | $ 2,126 | $ - | $ 2,126 | |||||||||
Depreciation and amortization | 4,963 | 2,257 | 7,220 | 6,003 | - | 6,003 | |||||||||
Interest expense | 7,382 | 248 | 7,630 | 5,711 | - | 5,711 | |||||||||
Income taxes | (554) | - | (554) | (111) | - | (111) | |||||||||
EBITDA Contribution | $ 10,475 | $ (2,238) | $ 8,237 | $ 13,729 | $ - | $ 13,729 | |||||||||
FFO Contribution | |||||||||||||||
Equity in (losses) earnings of unconsolidated affiliates | $ (1,316) | $ (4,743) | $ (6,059) | $ 2,126 | $ - | $ 2,126 | |||||||||
Depreciation and amortization | 4,963 | 2,257 | 7,220 | 6,003 | - | 6,003 | |||||||||
FFO Contribution | $ 3,647 | $ (2,486) | $ 1,161 | $ 8,129 | $ - | $ 8,129 | |||||||||
Spread over | |||||||||||||||
Debt | Interest Rate | LIBOR | Loan Amount | Maturity (b) | |||||||||||
Hotel del Coronado | |||||||||||||||
CMBS Mortgage and Mezzanine | 5.80% (a) | 480 bp (a) | $ 425,000 | March 2016 | |||||||||||
Cash and cash equivalents | (22,939) | ||||||||||||||
Net Debt | $ 402,061 | ||||||||||||||
Fairmont Scottsdale Princess | |||||||||||||||
CMBS Mortgage | 0.60% | 36 bp | $ 133,000 | April 2015 | |||||||||||
Cash and cash equivalents | (1,066) | ||||||||||||||
Net Debt | $ 131,934 | ||||||||||||||
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 | ||||||||||||
