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
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 www.strategichotels.com within the first quarter information section.