Strategic Hotels & Resorts Reports Second Quarter 2008 Results
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Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on Thursday 07 August 2008
Strategic Hotels & Resorts
(NYSE: BEE) today reported results for the second quarter ended June 30,
2008.
Second Quarter Company Highlights
-- Comparable funds from operations (Comparable FFO) was $0.49 per diluted
share. Excluding residential sales, Comparable FFO was $0.48 per
diluted share, unchanged from the prior year.
-- Comparable EBITDA was $74.1 million. Excluding residential sales,
Comparable EBITDA was $73.2 million, an increase of 0.9 percent
compared with $72.6 million in the prior year. Property-level EBITDA
increased 7.3% for the comparable year-over-year portfolio.
-- The company's cost management programs led to 60 basis points of EBITDA
margin expansion in North America during the second quarter of 2008.
-- The company closed on the sale of the Hyatt Regency Phoenix on July 2nd
for a gross sales price of $96.0 million yielding an 11.0% unleveraged
IRR over the company's ownership period.
Operating Results
-- North American total revenue per available room (Total RevPAR)
increased 2.7 percent and revenue per available room (RevPAR) increased
2.5 percent driven by a 3.5 percent increase in average daily rate
(ADR) during the second quarter of 2008.
-- European Same Store Total RevPAR increased 8.1 percent and RevPAR
increased 7.4 percent driven by a 13.4 percent increase in ADR during
the second quarter of 2008.
Laurence Geller, chief executive officer said, "Our second quarter
results reflect successful execution of the corporate strategies we
identified last year to deal with a slowing market. We generated additional
liquidity through the sale of the Hyatt Regency Phoenix, and improved
operating margins through the diligent application of cost management
programs at both the corporate and property levels. These successful asset
management systems, combined with the high quality of our portfolio, the
benign supply dynamic, and the capital investments we've made during the
past years, position us to compete in today's market and thrive in the
inevitable recovery.
"Lodging demand is linked to the overall economic environment which is
complex, multi-faceted and difficult to predict today. As such, it is
appropriate for our company to continue to take prudent and conservative
steps to manage through this uncertain period."
Financial Results
The company reported net income available to common shareholders of
$11.6 million, or $0.15 per diluted share for the second quarter of 2008,
compared with a net loss available to common shareholders of $25.3 million,
or $0.34 per diluted share for the second quarter of 2007.
For the six-month period ending June 30, 2008, the company reported net
income available to common shareholders of $4.5 million, or $0.06 per
diluted share, compared with a net loss available to common shareholders of
$34.9 million, or $0.46 per diluted share in the prior year period.
Adjusted EBITDA for the second quarter of 2008 was $79.7 million
compared with $39.4 million for the second quarter of 2007. Comparable
EBITDA for the second quarter of 2008 was $74.1 million compared with $79.0
million in the second quarter of 2007.
For the six-month period ending June 30, 2008, Adjusted EBITDA was
$133.9 million compared with $90.0 million in the prior year period.
Comparable EBITDA for the six-month period was $129.8 million compared with
$135.5 million in the prior period.
Funds from Operations (FFO) for the second quarter of 2008 was $41.6
million, or $0.55 per diluted share, compared with $1.1 million, or $0.01
per diluted share in the second quarter of 2007. Comparable FFO for the
second quarter of 2008 was $37.4 million, or $0.49 per diluted share,
compared with $39.9 million, or $0.53 per diluted share in the second
quarter of 2007.
For the six-month period ending June 30, 2008, FFO was $61.8 million,
or $0.81 per diluted share, compared with $17.6 million, or $0.23 per
diluted share in the prior year period. Comparable FFO for the six-month
period was $60.8 million, or $0.80 per diluted share, compared with $62.4
million, or $0.82 per diluted share in the prior period.
Residential activity for the second quarter of 2008 contributed $0.9
million of EBITDA and $0.6 million of FFO, or $0.01 per diluted share,
compared to $6.4 million of EBITDA and $3.8 million of FFO, or $0.05 per
diluted share in the second quarter of 2007. Residential activity in the
second quarter of 2007 included sales of hotel condominium units at the
Hotel del Coronado.
For the six-month period ending June 30, 2008, residential activity
contributed $1.0 million of EBITDA and $0.7 million of FFO, or $0.01 per
diluted share, compared to $6.2 million of EBITDA and $3.6 million of FFO,
or $0.05 per diluted share in the prior period.
Subsequent Events
On July 8, 2008 the company announced its Board of Directors had
authorized a $50 million share repurchase program in conjunction with the
sale of the Hyatt Regency Phoenix to Di Napoli Capital Partners L.L.C., in
a joint venture with Pacific Coast Capital Partners, for a gross price of
$96.0 million.
Quarterly Distribution
The Board of Directors previously declared on June 5, 2008 a quarterly
dividend of $0.24 per share of common stock, payable to shareholders of
record as of the close of business on June 30, 2008. The dividend was paid
on July 10, 2008. Additionally, for shareholders of record as of June 20,
2008, the Board declared a quarterly dividend of $0.53125 per share of 8.50
percent Series A Cumulative Redeemable Preferred Stock, $0.51563 per share
of 8.25 percent Series B Cumulative Redeemable Preferred Stock, and
$0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred
Stock. The preferred stock dividends were paid on June 30, 2008.
2008 Outlook
Management is revising its full year 2008 guidance. The company
estimates that Comparable EBITDA will be in the range of $248.4 million to
$255.9 million, Comparable FFO in the range of $111.1 million to $118.6
million, and Comparable FFO per diluted share in the range of $1.46 to
$1.56.
The company expects full year 2008 North American RevPAR and Total
RevPAR to be in the range from a decrease of 1.0 percent to an increase of
1.0 percent.
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