Strategic Hotels & Resorts Reports First Quarter 2010 Results
Comparable EBITDA was $22.0 million compared with $22.8 million in the prior year period, a decline of 3.3 percent.
Announces Successful Closing of Loan Refinancing
Strategic Hotels & Resorts (NYSE: BEE) today reported results for the first quarter ended March 31, 2010.
First Quarter Recap
- Comparable funds from operations (Comparable FFO) was a loss of $0.15 per diluted share, unchanged from the prior year.
- Comparable EBITDA was $22.0 million compared with $22.8 million in the prior year period, a decline of 3.3 percent.
- North American total revenue per available room (Total RevPAR) decreased 3.7 percent and revenue per available room (RevPAR) decreased 4.3 percent, driven by a 1.6 percentage point increase in occupancy and a 6.9 percent decrease in average daily rate (ADR), as compared to the first quarter 2009. In addition, non-rooms revenue declined by 3.0 percent between periods.
- European Total RevPAR increased 10.6 percent in the first quarter over the prior year period (5.1 percent in constant dollars) and RevPAR increased 14.5 percent (6.4 percent in constant dollars), driven by a 3.0 percentage point increase in occupancy and a 9.0 percent increase in ADR (1.3 percent in constant dollars) between periods.
- North American gross operating profit (GOP) and EBITDA margins contracted 190 basis points and 180 basis points, respectively, as compared to the first quarter of 2009. Excluding cancellation fees of $6.7 million in the first quarter of 2009 and $1.5 million in the first quarter of 2010, GOP margins expanded 50 basis points and EBITDA margins expanded 80 basis points, as compared to the first quarter 2009.
Chief Executive Officer Laurence Geller remarked, “We are encouraged by signs of improvement beginning to take place within the lodging space and particularly within the high-end segment. By the end of the first quarter we observed the beginnings of positive trends in our sector which we are optimistic will accelerate through the balance of the year. This is supported by an uptick in occupancy at our properties in the first quarter. We will continue to focus our full attention on improving profitability portfolio-wide by maintaining cost savings and productivity enhancement measures initiated throughout the economic downturn. Our adjusted margin performance in the first quarter is a good indication of the effectiveness of these programs.”
Financial Results
The company reported first quarter 2010 financial results as follows:
- Net loss attributable to common shareholders was $40.3 million, or $0.53 per diluted share, for the first quarter of 2010, compared with net loss attributable to common shareholders of $43.2 million, or $0.57 per diluted share, for the first quarter of 2009.
- Comparable EBITDA was $22.0 million compared with $22.8 million for the first quarter of 2009.
- Fully-diluted FFO was a loss of $5.4 million, or $0.07 per diluted share, compared with a loss of $10.5 million, or $0.14 per diluted share, in the first quarter of 2009. Comparable FFO was a loss of $11.5 million, or $0.15 per diluted share, compared with a loss of $11.4 million, or $0.15 per diluted share, in the first quarter of 2009.
Balance Sheet Activity
Today, the company successfully closed on a $317.8 million non-recourse, cross-collateralized mortgage agreement with Metropolitan Life Insurance Company secured by the Westin St. Francis and Fairmont Chicago hotels. Under the terms of the agreement, the existing $220.0 million Westin St. Francis mortgage, which was set to mature in August 2011, and the $123.8 million Fairmont Chicago mortgage, which was set to mature in April 2012, are replaced with a new mortgage maturing in June of 2017 with a fixed interest rate of 6.09 percent. The company paid down the existing combined principal amount by $26.0 million as part of the agreement.
In January, the company entered into an amendment with Aareal Bank AG on the euro 104.0 million non-recourse loan securing the InterContinental Prague hotel. Under the terms of the amendment, the loan remains non-recourse and the loan maturity is extended by three years from its initial maturity of March 2012 to March 2015. During the remainder of the initial term, scheduled principal amortization is suspended and the financial performance covenants are waived.
Mr. Geller remarked, “We continue to strengthen our financial position and the recent new debt terms secured at the InterContinental Prague, Westin St. Francis and Fairmont Chicago properties represent ongoing progress toward that objective.”
Appointment of New Chief Financial Officer
On March 9th, the company announced the appointment of Diane M. Morefield as Executive Vice President and Chief Financial Officer. Ms. Morefield succeeded James Mead who departed March 8th. Ms. Morefield is former Chief Financial Officer of Equity International (EI). Prior to that she served as Chief Financial Officer of Joseph Freed & Associates, LLC and from 1997 until 2006 Ms. Morefield was Senior Vice President with Equity Office Properties Trust.
