CHICAGO, Nov. 4 /PRNewswire-FirstCall/ -- Strategic Hotels & Resorts today reported results for the third quarter ended September 30, 2009.
Third Quarter Recap -- Comparable funds from operations (Comparable FFO) was a loss of $0.07 per diluted share compared with income of $0.29 per diluted share in the prior year. -- Quarterly Comparable EBITDA was $31.2 million compared with $55.8 million in the prior year. -- North American total revenue per available room (Total RevPAR) decreased 21.9 percent and revenue per available room (RevPAR) decreased 22.6 percent driven by a 4.4 percentage point decrease in occupancy and a 17.8 percent decrease in average daily rate (ADR). Non-rooms revenue declined by 20.9 percent. -- European Total RevPAR decreased 20.3 percent (12.6 percent in constant dollars) and RevPAR decreased 18.6 percent (10.5 percent in constant dollars). -- North American gross operating profit (GOP) and EBITDA margins contracted 630 basis points and 680 basis points, respectively.
Chief Executive Officer Laurence Geller remarked, "Although operating performance continues to be impacted by challenges within the hospitality sector, recent macroeconomic trends, including 3.5% GDP growth in the third quarter, are reason for optimism that we are beginning to turn the corner on hotel demand.
"During the quarter we announced the appointment of new independent directors Raymond Gellein, former President of Starwood Hotels & Resorts'' Global Development Group, and Eugene Reilly, President of AMB Property Corporation''s Americas division. These appointments are in line with our previously announced strategy of strengthening the board composition in this volatile environment. The experience and outstanding credentials of these individuals in hospitality and real estate will enhance our execution strategy going forward."
Added Geller, "In October, we closed on the sale of the Four Seasons Mexico City at an attractive price in a difficult market. This transaction is directly aligned with our strategic asset disposition plan and provides an important source of liquidity to the company. Looking ahead, and in spite of the difficult near-term operating environment, we have confidence in the value and potential of our real estate platform."
Financial Results The company reported third quarter 2009 financial results as follows: -- Net loss attributable to common shareholders was $73.5 million, or $0.97 per diluted share, compared with net loss attributable to common shareholders of $65.7 million, or $0.88 per diluted share, for the third quarter of 2008. -- Comparable EBITDA was $31.2 million compared with $55.8 million for the third quarter of 2008. -- FFO was a loss of $37.1 million, or $0.49 per diluted share, compared with a loss of $72.1 million, or $0.95 per diluted share, in the third quarter of 2008. Comparable FFO was a loss of $5.2 million, or $0.07 per diluted share, compared with income of $22.3 million, or $0.29 per diluted share, in the third quarter of 2008.
The company reported financial results for the nine month period ending September 30, 2009 as follows:
-- Net loss attributable to common shareholders was $202.6 million, or $2.69 per diluted share, compared with a net loss attributable to common shareholders of $63.1 million, or $0.84 per diluted share, for the nine month period ending September 30, 2008. -- Comparable EBITDA was $87.5 million compared with $185.6 million for the nine month period ending September 30, 2008. -- FFO was a loss of $100.5 million, or $1.34 per diluted share, compared with a net loss of $12.3 million, or $0.16 per diluted share, in the nine months ending September 30, 2008. Comparable FFO was a loss of $19.0 million, or $0.25 per diluted share, compared with income of $81.2 million, or $1.07 per diluted share, in the nine month period ending September 30, 2008. Impairment Losses
Third quarter 2009 results include an impairment loss totaling $30.8 million for the write-down of the carrying value of the Renaissance Le Parc to its estimated fair value. This one-time charge has been excluded from Comparable EBITDA, FFO and FFO per share metrics.
Transaction Update
During the quarter, the company entered into a joint venture agreement on its 60-acre ocean front land parcel near the Four Seasons Punta Mita Resort in Nayarit, Mexico with Cantiles de Mita, S.A. de C.V., a wholly owned subsidiary of DINE, the master developer of Punta Mita and original seller of the land parcel. In exchange for an interest in the land, the company was released from its final installment payment of $17.5 million which was due in August 2009 and received a preferred position which entitles the company to receive the first $12.0 million of distributions generated from the project with any excess distributions split equally among the partners.
Subsequent Event
The company closed on the sale of the Four Seasons Mexico City to Meridia Capital for a gross sales price of $54.0 million, or $225,000 per room. The transaction closed on October 29, 2009.
Earnings Call
The company will conduct its third quarter 2009 conference call for investors and other interested parties on November 5, 2009 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 30443392. To participate on the web cast, log on to http://www.strategichotels.com/ or https://www.theconferencingservice.com/prereg/key.process?key=PQUGYJWCM 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 November 5, 2009, through 11:59 p.m. ET on November 12, 2009. To access the replay, dial 888-286-8010 (toll international: 617-801-6888) and request replay pin number 86018676. 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 third quarter information section.
Portfolio Definitions
North American hotel comparisons for the third quarter 2009 are derived from the company''s hotel portfolio at September 30, 2009, consisting of properties in which operations are included in the consolidated results of the company.
European hotel comparisons for the third quarter 2009 are derived from the company''s European owned and leased hotel properties at September 30, 2009.
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 18 properties with an aggregate of 8,118 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. 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: economic conditions generally and in the real estate market specifically, including further deterioration of the global economic downturn and the extent of its effect on business and leisure travel and the lodging industry; demand for hotel rooms in our current and proposed market areas; outbreak of contagious diseases such as the H1N1 virus; our liquidity and refinancing demands; availability of capital; the recovery of financing markets and our ability to obtain or refinance debt; our ability to comply with covenants contained in our debt facilities; rising interest rates and operating costs; rising insurance premiums; cash available for capital expenditures; competition; ability to dispose of existing properties in a manner consistent with our disposition strategy and liquidity needs; 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 in the Company''s most recent form 10-K and subsequent 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 Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Rooms $108,143 $138,209 $309,356 $416,809 Food and beverage 56,554 73,802 174,304 244,083 Other hotel operating revenue 21,062 25,174 73,032 81,402 ------ ------ ------ ------ 185,759 237,185 556,692 742,294 Lease revenue 1,224 1,528 3,513 4,217 ----- ----- ----- ----- Total revenues 186,983 238,713 560,205 746,511 ------- ------- ------- ------- Operating Costs and Expenses: Rooms 30,579 34,064 86,770 102,637 Food and beverage 43,686 54,439 130,642 170,959 Other departmental expenses 53,911 61,922 163,292 188,700 Management fees 6,496 9,851 20,918 30,507 Other hotel expenses 13,328 13,937 41,043 45,296 Lease expense 4,355 4,702 12,480 13,563 Depreciation and amortization 38,364 32,356 107,678 90,156 Impairment losses and other charges 30,795 96,679 81,009 96,679 Corporate expenses 5,519 6,541 21,399 21,537 ----- ----- ------ ------ Total operating costs and expenses 227,033 314,491 665,231 760,034 ------- ------- ------- ------- Operating loss (40,050) (75,778) (105,026) (13,523) Interest expense (26,903) (22,050) (77,128) (67,554) Interest income 202 443 714 1,497 Loss on early extinguishment of debt - - (883) - Equity in earnings of joint ventures 1,573 2,367 2,144 3,170 Foreign currency exchange (loss) gain (1,193) 2,604 (287) 4,082 Other income (expenses), net 125 (55) 168 (494) --- --- --- ---- Loss before income taxes, distributions in excess of noncontrolling interest capital, loss on sale of noncontrolling interests in hotel properties and discontinued operations (66,246) (92,469) (180,298) (72,822) Income tax benefit (expense) 358 (103) (424) (6,750) Distributions in excess of noncontrolling interest capital - (1,715) - (2,499) --- ------ --- ------ Loss before loss on sale of noncontrolling interests in hotel properties and discontinued operations (65,888) (94,287) (180,722) (82,071) Loss on sale of noncontrolling interests in hotel properties - - - (46) --- --- --- --- Loss from continuing operations (65,888) (94,287) (180,722) (82,117) Income from discontinued operations, net of tax - 37,319 - 44,587 --- ------ --- ------ Net loss (65,888) (56,968) (180,722) (37,530) Net loss attributable to the noncontrolling interests in SHR''s operating partnership 844 739 2,297 487 Net income attributable to the noncontrolling interests in consolidated affiliates (696) (1,778) (1,044) (2,887) ---- ------ ------ ------ Net loss attributable to SHR (65,740) (58,007) (179,469) (39,930) Preferred shareholder dividends (7,721) (7,721) (23,164) (23,164) ------ ------ ------- ------- Net loss attributable to SHR common shareholders $(73,461) $(65,728) $(202,633) $(63,094) ======== ======== ========= ======== Basic and Diluted Loss Per Share: Loss from continuing operations attributable to SHR common shareholders $(0.97) $(1.37) $(2.69) $(1.43) Income from discontinued operations attributable to SHR - 0.49 - 0.59 --- ---- --- ---- Net loss attributable to SHR common shareholders $(0.97) $(0.88) $(2.69) $(0.84) ====== ====== ====== ====== Weighted average common shares outstanding 75,441 75,022 75,265 75,015 ====== ====== ====== ====== Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Consolidated Balance Sheets (in thousands, except share data) September 30, December 31, 2009 2008 ---- ---- Assets Investment in hotel properties, net $2,321,965 $2,383,860 Goodwill 82,647 120,329 Intangible assets, net of accumulated amortization of $4,260 and $3,096 34,009 32,277 Investment in joint ventures 83,167 82,122 Cash and cash equivalents 88,481 80,954 Restricted cash and cash equivalents 18,778 37,358 Accounts receivable, net of allowance for doubtful accounts of $2,657 and $2,203 65,179 70,945 Deferred financing costs, net of accumulated amortization of $10,701 and $6,655 13,054 10,375 Deferred tax assets 39,894 38,260 Other assets 46,316 52,687 ------ ------ Total assets $2,793,490 $2,909,167 ========== ========== Liabilities and Equity Liabilities: Mortgages and other debt payable $1,302,650 $1,301,535 Exchangeable senior notes, net of discount 168,284 165,155 Bank credit facility 269,000 206,000 Accounts payable and accrued expenses 258,439 281,918 Deferred tax liabilities 35,404 34,236 Deferred gain on sale of hotels 105,498 104,251 ------- ------- Total liabilities 2,139,275 2,093,095 Noncontrolling interests in SHR''s operating partnership 3,464 5,330 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) 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) 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) 138,940 138,940 Common shares ($0.01 par value; 150,000,000 common shares authorized; 75,179,918 and 74,410,012 common shares issued and outstanding) 752 744 Additional paid-in capital 1,233,578 1,228,774 Accumulated deficit (889,732) (710,263) Accumulated other comprehensive loss (75,526) (93,637) ------- ------- Total SHR''s shareholders'' equity 626,993 783,539 Noncontrolling interests in consolidated affiliates 23,758 27,203 ------ ------ Total equity 650,751 810,742 ------- ------- Total liabilities and equity $2,793,490 $2,909,167 ========== ========== Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) FINANCIAL HIGHLIGHTS Supplemental Financial Data (in thousands, except per share information) September 30, 2009 ------------------ Pro Rata Share Consolidated -------------- ------------ Capitalization -------------- Common shares outstanding 75,180 75,180 Operating partnership units outstanding 971 971 Stock options outstanding 885 885 Restricted stock units outstanding 933 933 --- --- Combined shares, options and units outstanding 77,969 77,969 Common stock price at end of period $2.59 $2.59 ----- ----- Common equity capitalization $201,940 $201,940 Preferred equity capitalization (at $25.00 face value) 370,236 370,236 Consolidated debt (excludes discount on exchangeable senior notes) 1,751,650 1,751,650 Pro rata share of unconsolidated debt 282,825 - Pro rata share of consolidated debt (107,065) - Cash and cash equivalents (88,481) (88,481) ------- ------- Total enterprise value $2,411,105 $2,235,345 ========== ========== Net Debt / Total Enterprise Value 76.3% 74.4% Preferred Equity / Total Enterprise Value 15.3% 16.6% Common Equity / Total Enterprise Value 8.4% 9.0% 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 Nine Months Ended Ended September 30, September 30, ------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Total revenues (100%) $38,424 $44,054 $96,620 $118,323 Property EBITDA (100%) $14,274 $19,547 $32,221 $45,698 Equity in earnings of joint venture (SHR 45% ownership) Property EBITDA $6,423 $8,796 $14,499 $20,564 Depreciation and amortization (1,938) (1,848) (5,763) (5,495) Interest expense (1,894) (3,506) (5,925) (11,494) Other income expenses, net (91) (104) (233) (138) Income taxes (751) (694) (551) (392) ---- ---- ---- ---- Equity in earnings of joint venture $1,749 $2,644 $2,027 $3,045 ====== ====== ====== ====== EBITDA Contribution from investment in Hotel del Coronado Equity in earnings of joint venture $1,749 $2,644 $2,027 $3,045 Depreciation and amortization 1,938 1,848 5,763 5,495 Interest expense 1,894 3,506 5,925 11,494 Income taxes 751 694 551 392 --- --- --- --- EBITDA Contribution for investment in Hotel del Coronado $6,332 $8,692 $14,266 $20,426 ====== ====== ======= ======= FFO Contribution from investment in Hotel del Coronado Equity in earnings of joint venture $1,749 $2,644 $2,027 $3,045 Depreciation and amortization 1,938 1,848 5,763 5,495 ----- ----- ----- ----- FFO Contribution for investment in Hotel del Coronado $3,687 $4,492 $7,790 $8,540 ====== ====== ====== ====== Spread Interest over Loan Debt Rate LIBOR Amount Maturity ---- ------- ----- ------ --------- CMBS Mortgage and Mezzanine 2.33% 208 bp $610,000 January 2011 (a) Revolving Credit Facility 2.75% 250 bp 18,500 January 2011 (a) ------ 628,500 Cash and cash equivalents (53,882) ------- Net Debt $574,618 ======== (a) Includes extension options. LIBOR Effective Cap Notional Cap Date Rate Amount Maturity --- ---- ---- ------ -------- CMBS Mortgage and Mezzanine Loan and Revolving Credit Facility Cap June 2009 3.0% $630,000 January 2010 CMBS Mortgage and Mezzanine Loan and Revolving Credit Facility Cap February 2010 5.0% $630,000 January 2011 Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR) Leasehold Information (in thousands) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Paris Marriott Champs Elysees: Property EBITDA $6,119 $7,278 $13,371 $17,374 Revenue (a) $6,119 $7,278 $13,371 $17,374 Lease Expense (3,136) (3,433) (8,983) (9,705) Less: Deferred Gain on Sale Leaseback (1,202) (1,263) (3,448) (3,842) ------ ------ ------ ------ Adjusted Lease Expense (4,338) (4,696) (12,431) (13,547) ------ ------ ---- ------ EBITDA Contribution from Leasehold $1,781 $2,582 $940 $3,827 ====== ====== ==== ====== Marriott Hamburg: Property EBITDA $1,505 $1,612 $4,280 $4,841 Revenue (a) $1,224 $1,528 $3,513 $4,217 Lease Expense (1,219) (1,269) (3,497) (3,858) Less: Deferred Gain on Sale Leaseback (55) (59) (159) (178) --- --- ---- ---- Adjusted Lease Expense (1,274) (1,328) (3,656) (4,036) ---- ---- ----- ---- EBITDA Contribution from Leasehold $(50) $200 $(143) $181 ==== ==== ===== ==== Total Leaseholds: Property EBITDA $7,624 $8,890 $17,651 $22,215 Revenue (a) $7,343 $8,806 $16,884 $21,591 Lease Expense (4,355) (4,702) (12,480) (13,563) Less: Deferred Gain on Sale Leaseback (1,257) (1,322) (3,607) (4,020) ------ ------ ------ ------ Adjusted Lease Expense (5,612) (6,024) (16,087) (17,583) ------ ------ ---- ------ EBITDA Contribution from Leasehold $1,731 $2,782 $797 $4,008 ====== ====== ==== ====== September 30, December 31, Security Deposits (b): 2009 2008 ---- ---- Paris Marriott Champs Elysees $10,227 $15,507 Marriott Hamburg 7,317 6,984 ----- ----- Total $17,544 $22,491 ======= ======= (a) For the three and nine months ended September 30, 2009 and 2008, Revenue for the Paris Marriott Champs Elysees represents Property EBITDA. For the three and nine months ended September 30, 2009 and 2008, 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. Below, 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, and provide an explanatory description by footnote of the items excluded from FFO, FFO - Fully Diluted, and EBITDA. 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 Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net loss attributable to SHR common shareholders $(73,461) $(65,728) $(202,633) $(63,094) Depreciation and amortization - continuing operations 38,364 32,356 107,678 90,156 Depreciation and amortization - discontinued operations - - - 1,151 Interest expense - continuing operations 26,903 22,050 77,128 67,554 Income taxes - continuing operations (358) 103 424 6,750 Income taxes - discontinued operations - (146) - (321) Noncontrolling interests (844) (739) (2,297) (487) Adjustments from consolidated affiliates (a) (2,508) (1,986) (6,813) (6,258) Adjustments from unconsolidated affiliates 4,612 6,112 12,436 17,709 Preferred shareholder dividends 7,721 7,721 23,164 23,164 ----- ----- ------ ------ EBITDA 429 (257) 9,087 136,324 Realized portion of deferred gain on sale leasebacks (1,257) (1,322) (3,607) (4,020) (Gain) loss on sale of assets - continuing operations - (13) 5 (147) Gain on sale of assets - discontinued operations - (37,248) - (37,662) Loss on sale of noncontrolling interests in hotel properties - - - 46 Impairment losses and other charges 30,795 96,679 81,009 96,679 Impairment losses and other charges - adjustments from consolidated affiliates - - (169) - Foreign currency exchange loss (gain) (b) 1,193 (2,604) 287 (4,082) Hyatt Regency La Jolla noncontrolling interest (a) - (1,180) - (4,063) Distributions in excess of noncontrolling interest capital - 1,715 - 2,499 Loss on early extinguishment of debt - - 883 - --- --- --- --- Comparable EBITDA $31,160 $55,770 $87,495 $185,574 ======= ======= ======= ======== (a) The noncontrolling interest partner''s share of the Hyatt Regency La Jolla''s property EBITDA is not deducted from net income attributable to SHR common shareholders under GAAP accounting rules for the three and nine months ended September 30, 2008. Under new accounting rules effective January 1, 2009, the noncontrolling interest partner''s share of the Hyatt Regency La Jolla''s property EBITDA is included in adjustments from consolidated affiliates for the three and nine months ended September 30, 2009. (b) 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 Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net loss attributable to SHR common shareholders $(73,461) $(65,728) $(202,633) $(63,094) Depreciation and amortization - continuing operations 38,364 32,356 107,678 90,156 Depreciation and amortization - discontinued operations - - - 1,151 Corporate depreciation (305) (304) (913) (896) (Gain) loss on sale of assets - continuing operations - (13) 5 (147) Gain on sale of assets - discontinued operations - (37,248) - (37,662) Loss on sale of noncontrolling interests in hotel properties - - - 46 Realized portion of deferred gain on sale leasebacks (1,257) (1,322) (3,607) (4,020) Deferred tax expense on realized portion of deferred gain on sale leasebacks 375 393 1,076 1,197 Noncontrolling interests adjustments (511) (438) (1,440) (1,240) Adjustments from consolidated affiliates (a) (1,956) (1,368) (5,648) (4,004) Adjustments from unconsolidated affiliates 1,970 1,848 5,859 5,495 ----- ----- ----- ----- FFO (36,781) (71,824) (99,623) (13,018) Convertible noncontrolling interests (333) (301) (857) 753 ---- ---- ---- --- FFO - Fully Diluted (37,114) (72,125) (100,480) (12,265) Impairment losses and other charges 30,795 96,679 81,009 96,679 Impairment losses and other charges - adjustments from consolidated affiliates - - (169) - Foreign currency exchange loss (gain), net of tax (b) 1,137 (3,195) (279) (3,117) Hyatt Regency La Jolla noncontrolling interest (a) - (777) - (2,559) Distributions in excess of noncontrolling interest capital - 1,715 - 2,499 Loss on early extinguishment of debt - - 883 - --- --- --- --- Comparable FFO $(5,182) $22,297 $(19,036) $81,237 ======= ======= ======== ======= Comparable FFO per diluted share $(0.07) $0.29 $(0.25) $1.07 ====== ===== ====== ===== Weighted average diluted shares 75,441 76,010 75,265 76,137 ====== ====== ====== ====== (a) The noncontrolling interest partner''s share of the Hyatt Regency La Jolla''s property FFO is not deducted from net income attributable to SHR common shareholders under GAAP accounting rules for the three and nine months ended September 30, 2008. Under new accounting rules effective January 1, 2009, the noncontrolling interest partner''s share of the Hyatt Regency La Jolla''s property EBITDA is included in adjustments from consolidated affiliates for the three and nine months ended September 30, 2009. (b) 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) Debt Summary (dollars in thousands) Interest Loan Debt Rate Spread (a) Amount Maturity (b) ---- ---- ---------- ------ ------------- Bank credit facility 4.00% 375 bp $269,000 March 2011 Westin St. Francis 0.95% 70 bp 220,000 August 2011 Fairmont Scottsdale 0.81% 56 bp 180,000 September 2011 InterContinental Chicago 1.31% 106 bp 121,000 October 2011 InterContinental Miami 0.98% 73 bp 90,000 October 2011 InterContinental Prague (c) 1.95% 120 bp (c) 152,204 March 2012 Loews Santa Monica Beach Hotel 0.88% 63 bp 118,250 March 2012 Ritz-Carlton Half Moon Bay 0.92% 67 bp 76,500 March 2012 Exchangeable senior notes, net of discount (d) 3.50% Fixed 168,284 April 2012 Fairmont Chicago 0.95% 70 bp 123,750 April 2012 Hyatt Regency La Jolla 1.25% 100 bp 97,500 September 2012 Marriott London Grosvenor Square (e) 1.64% 110 bp (e) 123,446 October 2013 ------- $1,739,934 ========== (a) Spread over LIBOR (0.25% at September 30, 2009). (b) Includes extension options, excluding the conditional one-year extension option on the bank credit facility. (c) Principal balance of euro 104,000,000 at September 30, 2009. Spread over three-month EURIBOR (0.75% at September 30, 2009). (d) Reflects the cash coupon. (e) Principal balance of 77,250,000 pounds Sterling at September 30, 2009. Spread over three-month GBP LIBOR (0.54% at September 30, 2009). U.S. Interest Rate Swaps Fixed Pay Rate Notional Swap Effective Date Against LIBOR Amount Maturity ------------------- ------------- ------ -------- April 2005 4.59% $75,000 April 2012 June 2005 4.12% 50,000 June 2012 June 2006 5.50% 75,000 June 2013 August 2006 5.42% 100,000 August 2013 March 2007 4.84% 100,000 July 2012 March 2009 0.78% 50,000 December 2009 March 2009 0.90% 75,000 April 2010 March 2009 1.12% 50,000 December 2010 March 2009 1.38% 50,000 August 2011 March 2009 1.02% 50,000 December 2010 March 2009 0.64% 50,000 December 2009 March 2009 1.04% 100,000 February 2011 March 2009 1.22% 50,000 August 2011 September 2009 4.90% 100,000 September 2014 ---- ------- 3.03% $975,000 ==== ======== European Interest Rate Swap Fixed Pay Rate Against GBP Notional Swap Effective Date LIBOR (f) Amount Maturity ------------------- --------- ------ -------- October 2007 3.22% - 5.72% 77,250 pounds Sterling October 2013 Fixed Pay Rate Notional Swap Effective Date Against EURIBOR Amount Maturity ------------------- --------------- ------ -------- September 2008 4.53% euro 104,000 March 2012 Forward-Starting Interest Rate Swaps Fixed Pay Rate Notional Swap Effective Date Against LIBOR Amount Maturity ------------------- ------------- ------ -------- December 2009 4.96% $100,000 December 2014 April 2010 5.42% 75,000 April 2015 December 2010 5.23% 100,000 December 2015 February 2011 5.27% 100,000 February 2016 ------- $375,000 ======== At September 30, 2009, future scheduled debt principal payments (including non-conditional extension options) are as follows: Years ending December 31, Amount ------------------------- ------ 2009 $- 2010 7,858 2011 887,858 2012 742,364 2013 113,570 Thereafter - --- 1,751,650 Less discount on exchangeable senior notes (11,716) ------- Total $1,739,934 . ========== Percent of fixed rate debt including U.S. and European swaps 81.6% Weighted average interest rate including U.S. and European swaps (g) 3.91% Weighted average maturity of fixed rate debt (debt with maturity of greater than one year) 3.44 (f) In April 2009, we modified the GBP LIBOR interest rate swap agreement, which adjusts the fixed pay rate from 5.72% to 3.22% for the period from January 15, 2009 through January 17, 2011. (g) Excludes the amortization of deferred financing costs, amortization of the discount on the exchangeable senior notes and the amortization of the interest rate swap costs.
Strategic Hotels & Resorts, Inc.
CONTACT: Ryan Bowie, Vice President and Treasurer of Strategic Hotels &
Resorts, +1-312-658-5766
Web Site: http://www.strategichotels.com/
