CHICAGO, May 3 /PRNewswire-FirstCall/ -- Strategic Hotels &
Resorts (NYSE:BEE), today reported results for the first quarter of
2006. First Quarter Financial Highlights -- Increase of 11.7
percent Total RevPAR and 13.4 percent RevPAR in the Total North
American portfolio for first quarter 2006. Growth was driven by
22.2 percent RevPAR growth at properties acquired in 2005. --
Increase of 8.9 percent Total RevPAR and 9.4 percent RevPAR in the
North American same store portfolio for first quarter 2006. RevPAR
growth was driven by 9.1 percent increase in ADR and 0.2 percent
rise in occupancy. -- North American same store property EBITDA
margin expansion of 190 basis points. -- Quarterly Comparable
EBITDA of $37.3 million. -- Quarterly Comparable FFO of $0.34 per
fully converted share. First Quarter Activities -- Closed on a 45
percent managing joint venture ownership interest in the Hotel del
Coronado in San Diego, California. -- Completed a public offering
for $115.0 million of 8.25% Series B Cumulative Redeemable
Preferred Stock. -- Closed on the acquisition of the Four Seasons
Washington, D.C. for $169.7 million. -- Completed an offering of
20.7 million shares of common stock comprised of 8.0 million
primary shares from the company and 12.7 million secondary shares
from selling shareholders. Net proceeds to the company, after
underwriting discounts and offering expenses, were $151.9 million.
-- Reached an agreement to terminate the management contract at the
Marriott Rancho Las Palmas in Rancho Mirage, California, resulting
in a one-time charge of $10.4 million. The agreement increases the
ranges of options available to the company in respect to its future
plans for the resort, including a potential sale. -- Closed on the
acquisition of the LaSolana Hotel and Villas development sites in
Nayarit, Mexico, which is adjacent to the company's existing Four
Seasons Punta Mita Hotel. -- Formally changed the company name to
Strategic Hotels & Resorts, Inc. and changed our New York Stock
Exchange trading symbols to "BEE" for common stock and "BEE PrB"
for Series B Cumulative Redeemable Preferred Stock. -- Increased
quarterly dividend payment by 4.5 percent to $0.23 per share of
common stock. Subsequent Events -- Entered into an agreement to
acquire the Westin St. Francis in San Francisco, California for
$440.0 million. -- Priced a public offering for $143.8 million of
8.25% Series C Cumulative Redeemable Preferred Stock. Laurence
Geller, Chief Executive Officer of Strategic Hotels & Resorts,
commented, "We are very pleased with the healthy results. Our
continued growth and consistent improvements in performance reflect
directly on clearly focused business objectives and our disciplined
and prudent investment of human and financial capital. During the
first quarter we further enhanced our portfolio of high-end hotels
and resorts with the acquisition of the Four Seasons Washington,
D.C. and a substantial joint venture interest in the Hotel del
Coronado in San Diego, a National Historic Landmark. We also
completed common and preferred equity offerings resulting in over
$250 million in net proceeds to the company. Finally, I am pleased
to report we were able to increase our quarterly dividend by 4.5
percent during the quarter, signifying strong confidence in our
business fundamentals." "Same store" hotel comparisons for first
quarter 2006 are derived from the company's North American
portfolio at March 31, 2006 consisting of properties held for five
or more quarters, in which operations are included in the
consolidated results of the company, and that have not sustained
substantial property damage or business interruption or undergone
large-scale capital projects during the reporting periods being
compared. As a result, same store comparisons exclude the
InterContinental Chicago and InterContinental Miami, both acquired
on April 1, 2005, the Fairmont Chicago, acquired on September 1,
2005, the Four Seasons Washington, D.C., acquired on March 1, 2006,
the unconsolidated Hotel del Coronado acquired on January 9, 2006,
and the Hyatt Regency New Orleans, which was taken out of service
on August 29, 2005, due to damage resulting from Hurricane Katrina.
Total North American portfolio comparisons are derived from the
company's hotel portfolio at March 31, 2006, in which operations
are included in the consolidated results of the company, and that
have not sustained substantial property damage or business
interruption or undergone large-scale capital projects during the
reporting periods being compared. As a result, total North American
portfolio comparisons exclude the Four Seasons Washington, D.C.,
which underwent a major renovation in the comparable period of
2005, the unconsolidated Hotel del Coronado, and the Hyatt Regency
New Orleans, which was taken out of service on August 29, 2005, due
to damage resulting from Hurricane Katrina. Operating Results The
company reported a net loss from continuing operations available to
common shareholders of $1.4 million, or $0.03 per diluted share,
for the first quarter compared with net income from continuing
operations available to common shareholders of $6.8 million, or
$0.20 per diluted share, for the first quarter of 2005. Adjusted
EBITDA for the first quarter was $27.0 million compared to $28.1
million for the first quarter of 2005. Excluding the Marriott
Rancho Las Palmas termination costs of $10.4 million, Comparable
EBITDA was $37.3 million for the first quarter versus Comparable
EBITDA of $28.1 million for first quarter 2005. FFO in the first
quarter was $13.7 million, or $0.24 per fully converted share,
compared to $19.3 million, or $0.48 per fully converted share, in
the first quarter of 2005. Excluding the Marriott Rancho Las Palmas
termination costs of $10.4 million and the related deferred tax
benefit of $4.0 million, Comparable FFO was $20.0 million, or $0.34
per fully converted share, for the first quarter versus Comparable
FFO of $19.2 million, or $0.48 per fully converted share, for first
quarter 2005. "Fully converted" per share results represent FFO
before certain minority interest adjustments, divided by the
weighted average total number of shares and operating partnership
units convertible into shares. North American same store portfolio
Total RevPAR increased 8.9 percent during the first quarter over
the prior period in 2005, driven by 8.3 percent growth in non-rooms
revenues and 9.4 percent growth in RevPAR. Same store ADR grew 9.1
percent and occupancy increased 0.2 percent. Total RevPAR for the
total North American portfolio grew 11.7 percent for the quarter,
driven by 9.4 percent growth in non-rooms revenues and 13.4 percent
growth in RevPAR. Total North American portfolio ADR grew 10.9
percent and occupancy increased 1.6 percent. Total RevPAR and
RevPAR growth in properties acquired in 2005 (InterContinental
Chicago, InterContinental Miami, and Fairmont Chicago) increased
18.4 percent and 22.2 percent, respectively. For the company's
European hotels, RevPAR for the first quarter increased by 0.6
percent over the first quarter of 2005, due to an 8.2 percent
decrease in ADR and a 6.7 percent increase in occupancy. North
American same store EBITDA margins improved by 190 basis points in
the first quarter compared with the prior period in 2005 due to
increases in ADR, offset by declining margins at the Loews Santa
Monica Beach Hotel which unionized in February 2005, and the Hyatt
Regency Phoenix, at which operations continue to be impacted by
construction of the adjacent Phoenix Civic Center. Portfolio Update
As previously announced, the company closed on an agreement to
acquire a 45 percent managing joint venture ownership interest in
the Hotel del Coronado in San Diego, California. The remaining
joint venture interests are held by an affiliate of Kohlberg Kravis
Roberts & Co. (41 percent) and KSL Resorts (14 percent). The
agreed upon market value of the new joint venture was $745 million,
of which Strategic Hotel & Resorts' total equity investment was
$70.2 million. The company closed on the acquisition of the Four
Seasons Washington, D.C. for a purchase price of $169.7 million
including fees and costs. The company closed on the acquisition of
the LaSolana Hotel and Villas development sites in Nayarit, Mexico,
which is adjacent to the company's existing Four Seasons Punta Mita
Hotel. The company entered into an agreement to terminate the
management agreement on the Marriott Rancho Las Palmas Resort in
Rancho Mirage, California in order to increase the range of options
available to the company with respect to its future plans for the
resort including a potential sale. Under the agreement, the company
is required to pay Marriott Hotel Services (MHS) an initial
termination fee of $5.0 million upon termination and an additional
termination fee of $5.0 million in 2009, provided that the
additional termination fee will not be required if the company has
entered into a qualifying hotel management contract with MHS, or an
affiliate, by December 31, 2008. The company also agreed to
reimburse MHS for severance costs for MHS employees at the resort.
The company estimates the present value of the termination fees and
estimated severance costs will be $10.4 million. This one-time
charge was recorded in hotel operating expenses in the first
quarter 2006 financial statements. In addition, a deferred tax
benefit of approximately $4.0 million related to this charge also
has been recorded in the first quarter financial statements.
Balance Sheet and Capital Markets Activity During the first
quarter, the company closed a public offering of 4,600,000 shares
of its 8.25% Series B Cumulative Redeemable Preferred Stock. Net
proceeds totaled $110.9 million after underwriting discounts and
offering expenses. A common stock offering of 20,731,640 shares was
completed during the first quarter at a price of $20.00 per share.
The company sold a total of 8,000,000 primary shares of common
stock and certain shareholders affiliated or associated with
Prudential Financial, Inc. and Whitehall Street Real Estate Limited
Partnerships VII and IX sold 12,731,640 secondary shares of common
stock. The 8,000,000 shares of common stock sold by the company
resulted in net proceeds of $151.9 million, after underwriting
discounts and offering expenses. Quarterly Dividend Distribution
The Board of Directors declared a quarterly dividend of $0.23 per
share of common stock, which represents a 4.5 percent increase to
the company's quarterly dividend payments. The dividend was payable
to shareholders of record as of March 31, 2006 and was paid on
April 20, 2006. Additionally, for shareholders of record as of
March 15, 2006, the Board declared a quarterly dividend of $0.53125
per share of 8.50% Series A Cumulative Redeemable Preferred Stock
and $0.34375 per share of 8.25% Series B Cumulative Redeemable
Preferred Stock. Both of these were paid on March 31, 2006. The
Series B payment represented a pro rata distribution of the
scheduled quarterly dividend of $0.5156 per share due to the
closing of the Series B offering on January 31, 2006. Recent Events
Following the close of the first quarter, the company entered into
an agreement to acquire the Westin St. Francis in San Francisco,
California for $440.0 million. The company priced a public offering
of 5,750,000 shares, including the exercise of the over allotment
option of 750,000 shares, of its 8.25% Series C Cumulative
Redeemable Preferred Stock. The company expects to raise net
proceeds of $138.7 million after discounts, commissions and
estimated expenses. 2006 Outlook Management reaffirms its full year
2006 guidance for Comparable FFO per fully converted share and has
modified Comparable EBITDA and Comparable FFO to reflect recent
acquisition and funding activity. Comparable EBITDA will be in the
range of $179.0 million to $187.8 million, Comparable FFO will be
in the range of $87.3 million to $96.1 million, and Comparable FFO
per fully converted share will be in the range of $1.45 to $1.60.
The company expects 2006 North American same store Total RevPAR
growth to be in the range of 7.5 percent to 9.5 percent and 2006
North American same store RevPAR growth to be in the range of 9.0
percent to 11.0 percent. The following tables reconcile projected
2006 net (loss) to projected Comparable FFO and Comparable EBITDA
(in millions, except per share data): Low Range High Range Net
(Loss) $(11.8) $(3.2) Deferred Tax on Realized Portion of Deferred
Gain 1.3 1.3 Realized Portion of Deferred Gain on Sale Leasebacks
(4.5) (4.5) Depreciation 82.2 82.2 Depreciation from Unconsolidated
Affiliates 15.2 15.2 Minority Interest 0.3 0.5 Adjustments from
Consolidated Joint Ventures (1.7) (1.7) Adjustments for Termination
Costs & Deferred Tax Benefit 6.3 6.3 Comparable Funds from
Operations 87.3 96.1 Comparable FFO per Fully Converted Share $1.45
$1.60 Low Range High Range Net (Loss) $(11.8) $(3.2) Preferred
Shareholder Dividends 24.6 24.6 Realized Portion of Deferred Gain
on Sale Leasebacks (4.5) (4.5) Depreciation 82.2 82.2 Minority
Interest 0.3 0.5 Adjustments from Consolidated Joint Ventures (3.7)
(3.7) Interest Expense 43.8 43.8 Adjustments from Unconsolidated
Affiliates 36.5 36.5 Income Taxes 1.2 1.2 Adjustments for
Termination Costs 10.4 10.4 Comparable EBITDA $179.0 $187.8 Second
Quarter 2006 Guidance For the second quarter of 2006, the company
anticipates that Comparable EBITDA will be in the range of $49.3
million to $51.6 million, Comparable FFO will be in the range of
$26.3 million to $28.6 million, and Comparable FFO per fully
converted share will be in the range of $0.43 to $0.47. The company
expects second quarter 2006 North American same store Total RevPAR
growth to be in the range of 7.0 percent to 9.0 percent and second
quarter 2006 North American same store RevPAR growth to be in the
range of 9.5 percent to 11.5 percent. The following tables
reconcile projected second quarter 2006 net income to projected
Comparable FFO and Comparable EBITDA. Low Range High Range Net
Income $3.1 $5.4 Deferred Tax on Realized Portion of Deferred Gain
0.3 0.3 Realized Portion of Deferred Gain on Sale Leasebacks (1.1)
(1.1) Depreciation 19.7 19.7 Depreciation from Unconsolidated
Affiliates 4.5 4.5 Minority Interest 0.2 0.2 Adjustments from
Consolidated Joint Ventures (0.4) (0.4) Comparable Funds from
Operations 26.3 28.6 Comparable FFO per Fully Converted Share $0.43
$0.47 Low Range High Range Net Income $3.1 $5.4 Preferred
Shareholder Dividends 5.9 5.9 Realized Portion of Deferred Gain on
Sale Leasebacks (1.1) (1.1) Depreciation 19.7 19.7 Minority
Interest 0.2 0.2 Adjustments from Consolidated Joint Ventures (0.9)
(0.9) Interest Expense 9.7 9.7 Adjustments from Unconsolidated
Affiliates 10.0 10.0 Income Taxes 2.7 2.7 Comparable EBITDA $49.3
$51.6 Earnings Conference Call The company will conduct its first
quarter conference call for investors and other interested parties
on Thursday, May 4th at 9:00 a.m. Eastern Time (ET). Interested
individuals are invited to listen to the call by dialing (888)
802-2266. To participate on the webcast, log on to
http://www.strategichotels.com/ or http://www.earnings.com/
approximately 15 minutes before 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 news release. These
materials are available on the Strategic Hotels & Resorts
website at http://www.strategichotels.com/ within the investor
relations section. About the Company Strategic Hotels &
Resorts, Inc. is a real estate investment trust (REIT) which owns
and asset manages high-end hotels and resorts. The company has
ownership interests in 18 properties with an aggregate of 8,463
rooms. For further information, please visit the company's website
at http://www.strategichotels.com/ . This press release contains
forward-looking statements about Strategic Hotel& Resorts, Inc.
(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: availability of capital; ability to obtain or refinance
debt; rising interest rates; rising insurance premiums; cash
available for capital expenditures; competition; demand for hotel
rooms in our current and proposed market areas; economic conditions
generally and in the real estate market specifically; delays in
construction and development; demand for hotel condominiums;
marketing challenges associated with entering new lines of
business; risks related to natural disasters; the pace and extent
of the recovery of the New Orleans economy and tourism industry;
the successful collection of insurance proceeds and rehabilitation
of the New Orleans property; 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. 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. Consolidated Statements of
Operations (in thousands, except per share data) Three Months Ended
March 31, 2006 2005 Revenues: Rooms $76,799 $55,984 Food and
beverage 46,301 34,011 Other hotel operating revenue 14,121 11,983
137,221 101,978 Lease revenue 3,801 4,071 Total revenues 141,022
106,049 Operating Costs and Expenses: Rooms 17,993 12,026 Food and
beverage 32,486 23,946 Other departmental expenses 37,320 27,582
Management fees 4,003 4,255 Other hotel expenses 18,819 5,683 Lease
expense 3,224 3,573 Depreciation and amortization 14,513 9,677
Corporate expenses 5,673 4,757 Total operating costs and expenses
134,031 91,499 Operating income 6,991 14,550 Interest expense
(7,850) (7,054) Interest income 1,212 284 Equity in (losses)
earnings of joint ventures (1,619) 402 Other income, net 1,613
1,187 Income before income taxes, minority interests and
discontinued operations 347 9,369 Income tax benefit (expense)
2,236 (940) Minority interest expense in SHR's operating
partnership (116) (1,996) Minority interest expense in consolidated
hotel joint ventures (196) - Income from continuing operations
2,271 6,433 Income from discontinued operations 12 666 Net income
2,283 7,099 Preferred shareholder dividends (3,706) (349) Net
(loss) income available to common shareholders $(1,423) $6,750
Basic (Loss) Income Per Share: (Loss) income from continuing
operations available to common shareholders per share $(0.03) $0.20
Income from discontinued operations per share 0.00 0.02 Net (loss)
income available to common shareholders per share $(0.03) $0.22
Weighted-average common shares outstanding 46,763 30,247 Diluted
(Loss) Income Per Share: (Loss) income from continuing operations
available to common shareholders per share $(0.03) $0.20 Income
from discontinued operations per share 0.00 0.02 Net (loss) income
available to common shareholders per share $(0.03) $0.22
Weighted-average common shares outstanding 46,763 30,357
Consolidated Balance Sheets (in thousands, except share data) March
31, December 31, 2006 2005 Assets Property and equipment $1,491,774
$1,300,250 Less accumulated depreciation (231,452) (217,695) Net
property and equipment 1,260,322 1,082,555 Goodwill 106,667 66,656
Intangible assets (net of accumulated amortization of $1,529 and
$1,340, respectively) 1,940 2,129 Investment in hotel joint venture
86,491 15,533 Cash and cash equivalents 77,801 65,017 Restricted
cash and cash equivalents 23,741 32,115 Accounts receivable (net of
allowance for doubtful accounts of $464 and $427, respectively)
46,864 31,286 Deferred financing costs (net of accumulated
amortization of $1,377 and $969, respectively) 7,154 7,544 Other
assets 89,471 119,687 Insurance recoveries receivable 31,398 25,588
Total assets $1,731,849 $1,448,110 Liabilities and Shareholders'
Equity Liabilities: Mortgages and other debt payable $625,710
$633,380 Bank credit facility 30,000 26,000 Accounts payable and
accrued expenses 120,664 90,486 Distributions payable 14,654 11,531
Deferred gain on sale of hotels 101,605 99,970 Total liabilities
892,633 861,367 Minority interests in SHR's operating partnership
11,504 76,030 Minority interests in consolidated hotel joint
ventures 11,085 11,616 Shareholders' equity: 8.5% Series A
Cumulative Redeemable Preferred Stock ($0.01 par value; 4,000,000
shares issued and outstanding; liquidation preference $25.00 per
share) 97,553 97,553 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) 110,878 - Common shares
($0.01 par value; 150,000,000 common shares authorized; 59,133,344
and 43,878,273 common shares issued and outstanding, respectively)
591 439 Additional paid-in capital 908,839 688,250 Deferred
compensation (5,483) (1,916) Accumulated deficit (239,330)
(241,613) Accumulated distributions (70,607) (53,142) Accumulated
other comprehensive income 14,186 9,526 Total shareholders' equity
816,627 499,097 Total liabilities and shareholders' equity
$1,731,849 $1,448,110 Non-GAAP Financial Measures In addition to
REIT hotel income, six other non-GAAP financial measures are
presented for the Company that we believe are useful to investors
as key measures of our operating performance: Funds from Operations
(FFO); FFO - Fully Converted; and Comparable FFO; Earnings Before
Interest Expense, Taxes, Depreciation and Amortization (EBITDA);
and Adjusted EBITDA; and Comparable EBITDA. A reconciliation of
these measures to net (loss) income available to 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 that would not have certain drawbacks
associated with net income under GAAP. NAREIT defines FFO as net
income (or loss) (computed in accordance with GAAP) excluding
(losses) or gains from sales of 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 Converted, which is FFO
plus minority interest expense on convertible minority interests.
We also present Comparable FFO, which is FFO- Fully Converted
excluding the impact of any gains or losses on early extinguishment
of debt, impairment losses and other non- recurring charges. We
believe that the presentation of FFO, FFO - Fully Converted and
Comparable FFO provides useful information to 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. EBITDA represents net (loss) income available to
common shareholders excluding: (i) interest expense, (ii) income
tax expense, 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 tax expense 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 minority interests of our
operating partnership into our common stock and includes preferred
dividends. We believe this treatment of minority interest provides
more useful information for management and our investors and
appropriately considers our current capital structure. We also
present Adjusted EBITDA, which eliminates the effect of realizing
deferred gains on our sale leasebacks. We also present Comparable
EBITDA, which eliminates the effect of gains or losses on sales of
assets, early extinguishment of debt, impairment losses and other
non-recurring charges. We believe EBITDA, Adjusted 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, Adjusted 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
Converted, Comparable FFO, EBITDA, Adjusted 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, Fully Converted FFO, Comparable
FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA should not be
considered as an alternative measure of our net income or operating
performance. FFO, FFO - Fully Converted, Comparable FFO, EBITDA,
Adjusted 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 Converted, Comparable
FFO, EBITDA, Adjusted 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) income available to
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 Converted, Comparable FFO, EBITDA, Adjusted EBITDA and
Comparable EBITDA to the most directly comparable GAAP financial
performance measure, which is net (loss) income available to common
shareholders, and provide an explanatory description by footnote of
the items excluded from FFO, FFO - Fully Converted, EBITDA and
Adjusted EBITDA. Prior year amounts have been adjusted to conform
to the current year presentation of a fully converted basis.
Reconciliation of Net (Loss) Income Available to Common
Shareholders to EBITDA, Adjusted EBITDA and Comparable EBITDA (in
thousands) Three Months Ended March 31, 2006 2005 Net (loss) income
available to common shareholders $(1,423) $6,750 Depreciation and
amortization - continuing operations 14,513 9,677 Depreciation and
amortization - discontinued operations - 910 Interest expense -
continuing operations 7,850 7,054 Interest expense - discontinued
operations - 428 Income taxes - continuing operations (2,236) 940
Minority interests 117 2,203 Adjustments from consolidated joint
ventures (1,081) - Adjustments from unconsolidated affiliates 6,558
937 Preferred shareholder dividends 3,706 349 EBITDA (a) 28,004
29,248 Realized portion of deferred gain on sale leasebacks (1,052)
(1,142) Adjusted EBITDA (a) $26,952 $28,106 Gain on sale of assets
- discontinued operations (13) - Gain on sale of assets -
continuing operations (30) - Termination costs 10,384 - Comparable
EBITDA $37,293 $28,106 (a) EBITDA and Adjusted EBITDA have not been
adjusted for the following amounts included in net (loss) income
available to common shareholders because these (losses) gains have
either occurred during the prior two years or are reasonably likely
to occur within two years (in thousands): -- Gain on sale of assets
from discontinued operations amounted to $13 for the three months
ended March 31, 2006. -- Gain on sale of assets from continuing
operations amounted to $30 for the three months ended March 31,
2006. -- Termination costs related to the termination of the
management agreement at the Marriott Rancho Las Palmas amounted to
$10,384 for the three months ended March 31, 2006. Reconciliation
of Net (Loss) Income Available to Common Shareholders to Funds From
Operations (FFO), FFO - Fully Converted and Comparable FFO (in
thousands) Three Months Ended March 31, 2006 2005 Net (loss) income
available to common shareholders $(1,423) $6,750 Depreciation and
amortization - continuing operations 14,513 9,677 Depreciation and
amortization - discontinued operations - 910 Gain on sale of assets
- continuing operations (30) - Gain on sale of assets -
discontinued operations (13) - Realized portion of deferred gain on
sale leasebacks (1,052) (1,142) Deferred tax expense on realized
portion of deferred gain on sale leasebacks 316 344 Minority
interests adjustments (795) (2,629) Adjustments from consolidated
joint ventures (582) - Adjustments from unconsolidated affiliates
1,830 510 FFO (a) 12,764 14,420 Convertible minority interests 912
4,832 FFO - Fully Converted (a) $13,676 $19,252 Termination costs
10,384 - Deferred tax benefit on termination costs (4,045) -
Comparable FFO $20,015 $19,252 Comparable FFO per weighted-average
fully converted shares and units outstanding $0.34 $0.48
Weighted-average fully converted shares and units outstanding
58,149 39,967 (a) FFO and FFO - Fully Converted have not been
adjusted for the following amounts included in net (loss) income
available to common shareholders because these (losses) gains have
either occurred during the prior two years or are reasonably likely
to occur within two years (in thousands): -- Termination costs
related to the termination of the management agreement at the
Marriott Rancho Las Palmas amounted to $10,384 for the three months
ended March 31, 2006. -- Deferred tax benefit on termination costs
amounted to $4,045 for the three months ended March 31, 2006.
Seasonality by Geographic Region Same store revenues have been
adjusted to show hotel performance on a comparable
quarter-over-quarter basis. Adjustments include (i) exclusion of
Hyatt Regency New Orleans due to a hurricane that ceased
significant operations in August 2005; (ii) exclusion of Marriott
Schaumburg and Embassy Suites Lake Buena Vista Resort as these
properties were sold in the fourth quarter of 2005 and their
results of operations were reclassified to discontinued operations;
and (iii) presentation of the hotels without regard to either
ownership structure or leaseholds. Acquisition properties and the
related dates of purchase are as follows: InterContinental Chicago
and InterContinental Miami (April 1, 2005), Fairmont Chicago
(September 1, 2005), Hotel Del Coronado (January 9, 2006) and Four
Seasons Washington, D.C. (March 1, 2006). United States Hotels (as
of March 31, 2006) Acquisition property revenues - 5 Properties and
3,014 Rooms Same store property revenues - 7 Properties and 3,039
Rooms Three Months Ended June September December March 30, 30, 31,
31, 2005 2005 2005 2006 Total Acquisition property revenues $28,664
$31,964 $44,027 $72,388 $177,043 Same store property revenues
67,093 63,468 71,883 71,768 274,212 Total revenues $95,757 $95,432
$115,910 $144,156 $451,255 Same store seasonality % 24.5% 23.1%
26.2% 26.2% 100.0% Mexican Hotels (as of March 31, 2006) Same store
property revenues - 2 Properties and 385 Rooms Three Months Ended
June September December March 30, 30, 31, 31, 2005 2005 2005 2006
Total Same store property revenues $15,990 $12,646 $15,891 $20,119
$64,646 Same store seasonality % 24.7% 19.6% 24.6% 31.1% 100.0%
Total North American Hotels (as of March 31, 2006) Acquisition
property revenues - 5 Properties and 3,014 Rooms Same store
property revenues - 9 Properties and 3,424 Rooms Three Months Ended
June September December March 30, 30, 31, 31, 2005 2005 2005 2006
Total Acquisition property revenue $28,664 $31,964 $44,027 $72,388
$177,043 Same store property revenue 76,114 87,774 84,322 91,887
338,858 Total revenues $104,778 $119,738 $128,349 $164,275 $517,140
Same store seasonality % 22.5% 25.9% 24.9% 27.0% 100.0% European
Hotels (as of March 31, 2006) Same store property revenues - 3
Properties and 841 Rooms Three Months Ended June September December
March 30, 30, 31, 31, 2005 2005 2005 2006 Total Same store property
revenues $23,179 $23,582 $18,923 $17,303 $82,987 Same store
seasonality % 27.9% 28.4% 22.8% 20.9% 100.0% Operating Statistics
by Geographic Region Operating results have been adjusted to show
hotel performance on a comparable period basis. Adjustments include
(i) exclusion of InterContinental Chicago, InterContinental Miami,
Fairmont Chicago, Hotel del Coronado and Four Seasons Washington,
D.C.'s partial year results; (ii) exclusion of Hyatt Regency New
Orleans due to a hurricane that ceased significant operations in
August 2005; (iii) exclusion of Marriott Schaumburg and Embassy
Suites Lake Buena Vista Resort as these properties were sold in the
fourth quarter of 2005 and their results of operations were
reclassified to discontinued operations; and (iv) presentation of
the European hotels without regard to either ownership structure or
leaseholds. United States Hotels (as of March 31, 2006) 7
Properties 3,039 Rooms Three Months Ended March 31, 2006 2005
Change Average Daily Rate $184.63 $172.82 6.8% Average Occupancy
74.5% 74.5% - pts RevPAR $137.54 $128.80 6.8% Total RevPAR $267.28
$250.33 6.8% Property EBITDA Margin (excludes termination costs -
see note (d) on page 17) 26.3% 24.6% 1.7 pts Mexican Hotels (as of
March 31, 2006) 2 Properties 385 Rooms Three Months Ended March 31,
2006 2005 Change Average Daily Rate $503.56 $442.55 13.8% Average
Occupancy 74.3% 72.3% 2.0 pts RevPAR $374.34 $319.75 17.1% Total
RevPAR $581.90 $499.56 16.5% Property EBITDA Margin 39.0% 37.5% 1.5
pts Total North American Hotels (as of March 31, 2006) 9 Properties
3,424 Rooms Three Months Ended March 31, 2006 2005 Change Average
Daily Rate $220.95 $202.46 9.1% Average Occupancy 74.5% 74.3% 0.2
pts RevPAR $164.56 $150.36 9.4% Total RevPAR $303.17 $278.48 8.9%
Property EBITDA Margin (excludes termination costs - see note (d)
on page 17) 29.1% 27.2% 1.9 pts European Hotels (as of March 31,
2006) 3 Properties 841 Rooms Three Months Ended March 31, 2006 2005
Change Average Daily Rate $197.72 $215.27 (8.2)% Average Occupancy
76.5% 69.8% 6.7 pts RevPAR $151.18 $150.21 0.6 % Total RevPAR
$228.59 $220.71 3.6 % Property EBITDA Margin 29.7% 30.7% (1.0)pts
Selected Financial and Operating Information by Property (In
Thousands, Except Operating Information) The following tables
present selected financial and operating information by property
for the three months ended March 31, 2006 and 2005. Property EBITDA
reflects property net operating income plus depreciation and
amortization. Three Months Ended March 31, 2006 2005
INTERCONTINENTAL CHICAGO Selected Financial Information (This table
includes financial information only for our period of ownership):
Total revenues $11,906 N/A Property EBITDA $1,743 N/A Selected
Operating Information (This table includes statistical information
only for our period of ownership. For the three months ended March
31, 2005, average occupancy was 52.7%, ADR was $145.78, RevPAR was
$76.80 and Total RevPAR was $124.63): Rooms 792 N/A Average
occupancy 62.3% N/A ADR $168.38 N/A RevPAR $104.83 N/A Total RevPAR
$167.03 N/A HYATT REGENCY PHOENIX Selected Financial Information:
Total revenues $12,158 $12,824 Property EBITDA $4,775 $5,106
Selected Operating Information: Rooms 696 696 Average occupancy
81.8% 81.6% ADR $151.33 $155.29 RevPAR $123.85 $126.68 Total RevPAR
$194.09 $204.73 FAIRMONT CHICAGO Selected Financial Information
(This table includes financial information only for our period of
ownership): Total revenues $12,189 N/A Property EBITDA $842 N/A
Selected Operating Information (This table includes statistical
information only for our period of ownership. For the three months
ended March 31, 2005, average occupancy was 61.1%, ADR was $151.01,
RevPAR was $92.20 and Total RevPAR was $173.15): Rooms 691 N/A
Average occupancy 62.4% N/A ADR $178.41 N/A RevPAR $111.37 N/A
Total RevPAR $196.00 N/A HOTEL DEL CORONADO Selected Financial and
Operating Information (No table has been provided since we did not
own the property for the entire periods presented. For the three
months ended March 31, 2006, average occupancy was 79.0%, ADR was
$303.97, RevPAR was $240.12 and Total RevPAR was $484.72. For the
three months ended March 31, 2005, average occupancy was 76.7%, ADR
was $283.33, RevPAR was $217.46 and Total RevPAR was $434.90) Three
Months Ended March 31, 2006 2005 INTERCONTINENTAL MIAMI Selected
Financial Information (This table includes financial information
only for our period of ownership): Total revenues $16,626 N/A
Property EBITDA $6,814 N/A Selected Operating Information (This
table includes statistical information only for our period of
ownership. For the three months ended March 31, 2005, average
occupancy was 85.3%, ADR was $179.68, RevPAR was $153.27 and Total
RevPAR was $256.71): Rooms 641 N/A Average occupancy 84.3% N/A ADR
$207.05 N/A RevPAR $174.48 N/A Total RevPAR $288.20 N/A HILTON
BURBANK AIRPORT AND CONVENTION CENTER Selected Financial
Information: Total revenues $7,993 $6,920 Property EBITDA $2,729
$2,230 Selected Operating Information: Rooms 488 488 Average
occupancy 79.1% 75.1% ADR $138.15 $121.02 RevPAR $109.31 $90.83
Total RevPAR $181.99 $157.56 MARRIOTT RANCHO LAS PALMAS RESORT
Selected Financial Information: Total revenues $10,249 $10,800
Property EBITDA (excludes termination costs - see note (d) on page
17) $2,346 $2,479 Selected Operating Information: Rooms 444 444
Average occupancy 69.0% 75.4% ADR $197.47 $188.02 RevPAR $136.21
$141.70 Total RevPAR $274.80 $289.58 HYATT REGENCY LA JOLLA AT
AVENTINE Selected Financial Information: Total revenues $10,873
$9,230 Property EBITDA $3,149 $2,101 Selected Operating
Information: Rooms 419 419 Average occupancy 78.4% 76.7% ADR
$185.20 $162.32 RevPAR $145.22 $124.47 Total RevPAR $288.33 $244.76
Three Months Ended March 31, 2006 2005 MARRIOTT LINCOLNSHIRE RESORT
Selected Financial Information: Total revenues $7,969 $7,441
Property EBITDA $990 $795 Selected Operating Information: Rooms 389
390 Average occupancy 52.7% 57.1% ADR $130.90 $116.39 RevPAR $69.04
$66.47 Total RevPAR $243.88 $227.14 LOEWS SANTA MONICA BEACH HOTEL
Selected Financial Information: Total revenues $11,133 $10,374
Property EBITDA $3,473 $3,321 Selected Operating Information: Rooms
342 342 Average occupancy 85.0% 86.7% ADR $268.61 $251.47 RevPAR
$228.22 $217.90 Total RevPAR $361.70 $337.04 RITZ-CARLTON HALF MOON
BAY Selected Financial Information: Total revenues $11,393 $9,648
Property EBITDA $1,413 $489 Selected Operating Information: Rooms
261 261 Average occupancy 65.3% 58.4% ADR $295.83 $277.65 RevPAR
$193.15 $162.04 Total RevPAR $485.01 $410.73 FOUR SEASONS
WASHINGTON, D.C. Selected Financial and Operating Information (No
table has been provided since we did not own the property for the
entire periods presented. For the three months ended March 31,
2006, average occupancy was 65.0%, ADR was $462.14, RevPAR was
$300.48 and Total RevPAR was $545.85. For the three months ended
March 31, 2005, average occupancy was 23.2%, ADR was $565.58,
RevPAR was $131.16 and Total RevPAR was $293.41): HYATT REGENCY NEW
ORLEANS Selected Financial Information: Total revenues N/A $17,657
Property EBITDA N/A $5,783 Selected Operating Information (For
2006, no statistics are provided as the hotel is under
redevelopment): Rooms 1,184 Average occupancy N/A 64.1% ADR N/A
$153.09 RevPAR N/A $98.11 Total RevPAR N/A $165.70 Three Months
Ended March 31, 2006 2005 FOUR SEASONS MEXICO CITY Selected
Financial Information: Total revenues $6,069 $5,422 Property EBITDA
$1,467 $1,208 Selected Operating Information: Rooms 240 240 Average
occupancy 66.2% 63.9% ADR $242.16 $225.10 RevPAR $160.39 $143.93
Total RevPAR $280.97 $251.02 FOUR SEASONS PUNTA MITA RESORT
Selected Financial Information: Total revenues $14,050 $11,663
Property EBITDA $6,383 $5,199 Selected Operating Information: Rooms
145 140 Average occupancy 87.8% 86.5% ADR $831.67 $718.11 RevPAR
$730.52 $621.16 Total RevPAR $1,082.88 $925.63 Three Months Ended
March 31, 2006 2005 INTERCONTINENTAL PRAGUE Selected Financial
Information (Amounts below are 100% of operations, of which SHCI
owns 35%): Total revenues $6,293 $6,650 Property EBITDA $1,794
$2,192 Selected Operating Information: Rooms 372 372 Average
Occupancy 73.2% 68.7% ADR $147.98 $173.55 RevPAR $108.39 $119.29
Total RevPAR $187.96 $198.63 MARRIOTT HAMBURG Selected Financial
Information: Total revenues $4,681 $3,750 Property EBITDA $1,236
$1,279 Selected Operating Information: Rooms 277 277 Average
occupancy 81.0% 67.3% ADR $148.00 $150.85 RevPAR $119.91 $101.47
Total RevPAR $187.77 $150.42 PARIS MARRIOTT CHAMPS ELYSEES Selected
Financial Information: Total revenues $6,329 $6,306 Property EBITDA
$2,104 $1,661 Selected Operating Information: Rooms 192 192 Average
occupancy 76.1% 75.4% ADR $366.82 $371.88 RevPAR $279.17 $280.44
Total RevPAR $366.26 $364.93 Reconciliation of Property EBITDA to
EBITDA (in thousands) Three Months Ended March 31, 2006 2005
Property Property Hotel EBITDA EBITDA EBITDA EBITDA Hyatt Regency
New Orleans $- $(369) $5,783 $5,783 InterContinental Chicago (a)
1,743 1,743 - - Hyatt Regency Phoenix 4,775 4,775 5,106 5,106
Fairmont Chicago (b) 842 842 - - Hotel del Coronado (c) 9,793 - - -
InterContinental Miami (a) 6,814 6,814 - - Hilton Burbank Airport
and Convention Center 2,729 2,729 2,230 2,230 Marriott Rancho Las
Palmas Resort 2,346 (8,038) 2,479 2,479 Hyatt Regency La Jolla at
Aventine 3,149 3,149 2,101 2,101 Marriott Lincolnshire Resort 990
990 795 795 Loews Santa Monica Beach Hotel 3,473 3,473 3,321 3,321
Ritz-Carlton Half Moon Bay 1,413 1,413 489 489 Four Seasons
Washington, D.C. 1,313 1,313 - - Four Seasons Mexico City 1,467
1,467 1,208 1,208 Four Seasons Punta Mita Resort 6,383 6,383 5,199
5,199 InterContinental Prague (d) 1,794 - 2,192 - Marriott Hamburg
(e) 1,236 26 1,279 37 Paris Marriott Champs Elysees (e) 2,104 467
1,661 237 $52,364 $27,177 $33,843 $28,985 Adjustments: Corporate
expenses $(5,673) $(4,757) Interest income 1,212 284 Equity in
(losses) earnings of joint ventures (1,619) 402 Other income, net
1,613 1,187 Income from discontinued operations (excluding minority
interest) 13 873 Depreciation and amortization - discontinued
operations - 910 Interest expense - discontinued operations - 428
Minority interest expense in consolidated hotel joint ventures
(196) - Adjustments from consolidated joint ventures (1,081) -
Adjustments from unconsolidated affiliates 6,558 937 Other
adjustments - (1) EBITDA $28,004 $29,248 (a) On April 1, 2005, we
purchased an 85% controlling interest in the joint ventures that
own the InterContinental Chicago and Miami hotels. We consolidate
these hotels for reporting purposes. We have included the results
of this hotel in Property EBITDA above for our period of ownership.
(b) On September 1, 2005, we purchased the Fairmont Chicago. We
have included the results of this hotel in Property EBITDA above
for our period of ownership. (c) On January 9, 2006 we closed the
acquisition of a 45% joint venture ownership interest in SHC KSL
Partners, LP, the existing owner of the Hotel del Coronado in San
Diego, California. We account for our investment under the equity
method of accounting. Our equity in earnings of the hotel joint
venture is included in equity in (losses) earnings of joint
ventures in our consolidated statements of operations. (d) We have
a 35% interest in the joint venture that owns the InterContinental
Prague and account for our investment under the equity method of
accounting. Our equity in earnings of the hotel joint venture is
included in equity in (losses) earnings of joint ventures in our
consolidated statements of operations. (e) We have leasehold
interests in these properties. Therefore, EBITDA represents the
lease revenue less the lease expense recorded in our statements.
Property EBITDA represents the revenue less expenses generated by
the property that is recorded by our sub-lessee. DATASOURCE:
Strategic Hotels & Resorts, Inc. CONTACT: James Mead, Chief
Financial Officer of Strategic Hotels & Resorts, Inc.,
+1-312-658-5740; or Vicki Baker, General Inquiries,
+1-703-796-1798, or Leslie Loyet, Analyst Inquiries,
+1-312-640-6672, or Tim Grace, Media Inquiries, +1-312-640-6667,
all of Financial Relations Board Web site:
http://www.strategichotels.com/
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