Positive Operating Trends Continue as North American Same Store RevPAR Increases 9.5 Percent and EBITDA Margins Expand 180 Basis Points in Quarter
Strategic Hotels & Resorts, Inc. (NYSE: BEE) today reported results for the second quarter ended June 30, 2012.
| ($ in millions, except per share and operating metrics) | Second Quarter | ||
| Earnings Metrics | 2012 | 2011 | % Change |
| Net (loss)/income attributable to common shareholders | $(3.0) | $39.5 | N/A |
| Net (loss)/income per diluted share | $(0.01) | $0.22 | N/A |
| Comparable funds from operations (Comparable FFO)?(a) | $21.4 | $8.8 | 143.1% |
| Comparable FFO per diluted share?(a) | $0.11 | $0.05 | 120.0% |
| Comparable EBITDA?(a) | $50.9 | $42.5 | 19.8% |
| Total United States Portfolio Operating Metrics?(b) | |||
| Average Daily Rate (ADR) | $257.16 | $241.93 | 6.3% |
| Occupancy | 75.1% | 73.3% | 1.8 pts |
| Revenue per Available Room (RevPAR) | $193.19 | $177.41 | 8.9% |
| Total RevPAR | $368.20 | $344.22 | 7.0% |
| EBITDA Margins | 25.6% | 24.0% | 160 bps |
| North American Same Store Operating Metrics?(c) | |||
| ADR | $253.70 | $239.77 | 5.8% |
| Occupancy | 76.5% | 74.0% | 2.5 pts |
| RevPAR | $194.11 | $177.35 | 9.5% |
| Total RevPAR | $360.28 | $333.34 | 8.1% |
| EBITDA Margins | 25.2% | 23.4% | 180 bps |
| (a) | Please refer to tables provided later in this press release for a reconciliation of net (loss)/income 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 world class portfolio and unique asset management expertise continues to drive industry leading results,” commented Laurence Geller, President and Chief Executive Officer of Strategic Hotels & Resorts, Inc. “Notably, the positive operating trends we have previously been reporting continue unabated. Looking forward to the remainder of the year, we reiterate our full year guidance.”
Second Quarter Highlights
Net loss attributable to common shareholders was $3.0 million, or $0.01 per diluted share in the second quarter of 2012, compared with net income attributable to common shareholders of $39.5 million, or $0.22 per diluted share in the second quarter of 2011. Second quarter 2011 results include a $101.0 million gain on sale primarily related to the disposition of the Company’s leasehold interest the Paris Marriott Champs Elysees hotel.
Comparable FFO was $0.11 per diluted share in the second quarter of 2012, compared with $0.05 per diluted share in the prior year period.
Comparable EBITDA was $50.9 million in the second quarter of 2012, compared with $42.5 million in the prior year period, a 19.8 percent increase between periods.
Total United States portfolio RevPAR increased 8.9 percent in the second quarter of 2012, driven by a 6.3 percentage increase in ADR and a 1.8 percent point increase in occupancy, compared to the second quarter of 2011. Total RevPAR increased 7.0 percent between periods with non-rooms revenue increasing by 4.9 percent between periods.
Occupancy growth in the Total United States portfolio was driven by an 8.1 percent increase in transient room nights. Transient ADR increased 6.5 percent compared to the second quarter of 2011 and group ADR increased 5.4 percent.
RevPAR increased 9.9 percent in the second quarter of 2012 in the Company’s Total United States urban portfolio and 7.6 percent in the Company’s Total United States resort portfolio, compared to the second quarter of 2011.
North American same store RevPAR increased 9.5 percent in the second quarter of 2012, driven by a 5.8 percentage increase in ADR and a 2.5 percent point increase in occupancy. Total RevPAR increased 8.1 percent with non-rooms revenue increasing by 6.5 percent between periods.
European RevPAR decreased 6.6 percent (0.9 percent in constant dollars) in the second quarter of 2012, driven by a 6.2 percentage point decrease in ADR (0.6 percent in constant dollars) and a 0.3 percent point decrease in occupancy between periods. European Total RevPAR decreased 6.5 percent in the second quarter over the prior year period (0.7 percent in constant dollars).
Total United States portfolio EBITDA margins expanded 160 basis points in the second quarter of 2012, compared to the second quarter of 2011. North American same store EBITDA margins expanded 180 basis points.
Group room nights currently booked for 2012 are 0.5 percent higher compared to room nights booked for 2011 at the same time last year at rates 4.5 percent higher, resulting in a 5.0 percent RevPAR increase.
The company reported financial results for the six month period ended June 30, 2012 as follows:
Net loss attributable to common shareholders was $34.5 million, or $0.18 per diluted share, compared with net income attributable to common shareholders of $4.1 million, or $0.02 per diluted share, for the six month period ended June 30, 2011.
Comparable FFO was $0.12 per diluted share compared with $0.03 per diluted share in the six month period ended June 30, 2011.
Comparable EBITDA was $84.2 million compared with $71.2 million for the six month period ended June 30, 2011, an 18.2 percent increase between periods.
Preferred Dividends
On June 29, 2012, the Company paid 14 quarters of accrued and unpaid dividends on the Series A, B and C Cumulative Redeemable Preferred Stock 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.
Capital Raise
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 $114.1 million from the offering after deducting underwriting discounts and commissions and transaction expenses 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 and second quarter and current forecasts for the remainder of the year, the Company is reaffirming its guidance range for full year 2012 RevPAR growth, Total RevPAR growth, Comparable EBITDA, and Comparable FFO per diluted share.
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 second quarter of 2012 are derived from the Company’s hotel portfolio at June 30, 2012, consisting of all 14 properties located in the United States, including unconsolidated joint ventures.
North American same store hotel comparisons for the second quarter of 2012 are derived from the Company’s hotel portfolio at June 30, 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 13 properties and exclude the unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess hotels.
European hotel comparisons for the second quarter of 2012 are derived from the Company’s European owned and leased hotel properties at June 30, 2012, consisting of the Marriott London Grosvenor Square and the Marriott Hamburg hotels.
Earnings Call
The Company will conduct its second quarter 2012 conference call for investors and other interested parties on Tuesday, August 7, 2012 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to access the call by dialing 888.680.0879 (toll international: 617.213.4856) with passcode 21706752. To participate on the webcast, log on to the company’s website at http://www.strategichotels.com or http://www.media-server.com/m/acs/20929d29a6f5df7c9ab0aabd2ea13d8c 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 August 7, 2012 through 11:59 p.m. ET on August 14, 2012. To access the replay, dial 888.286.8010 (toll international: 617.801.6888) with passcode 38723267. 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 Investor Relations section of the website.
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