Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2013 Results

 Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2013 Results  Full Year 2013 RevPAR increased 8.8 percent in the Company's Total North American Portfolio and EBITDA margins expanded by 290 basis points  Initiates Full Year 2014 RevPAR growth guidance in the range of 5.0 percent to 7.0 percent  PR Newswire  CHICAGO, Feb. 25, 2014  CHICAGO, Feb. 25, 2014 /PRNewswire/ -- Strategic Hotels & Resorts, Inc. (NYSE: BEE) today reported results for the fourth quarter and full year ended December 31, 2013.  ($ in millions, except per share and operating        Fourth Quarter metrics) Earnings Metrics                                      2013    2012    % Change Net income (loss) attributable to common shareholders $3.2    $(36.4) N/A Net income (loss) per diluted share                   $0.02   $(0.18) N/A Comparable funds from operations (Comparable FFO)     $28.7   $12.2   134.9% ^(a) Comparable FFO per diluted share ^(a)                 $0.14   $0.06   133.3% Comparable EBITDA ^(a)                                $58.3   $44.7   30.6% Total North American Portfolio Operating Metrics ^(b) Average Daily Rate (ADR)                              $293.19 $276.26 6.1% Occupancy                                             71.3%   69.1%   2.2 pts Revenue per Available Room (RevPAR)                   $209.17 $190.82 9.6% Total RevPAR                                          $419.59 $365.15 14.9% EBITDA Margins                                        25.9%   21.3%   460 bps North American Same Store Operating Metrics ^(c) ADR                                                   $292.75 $275.64 6.2% Occupancy                                             73.7%   71.3%   2.4 pts RevPAR                                                $215.75 $196.66 9.7% Total RevPAR                                          $415.35 $359.73 15.5% EBITDA Margins                                        26.7%   21.5%   520 bps  Note: Fourth quarter and full year results include payments pursuant to the JW Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in 2012 and 2013, respectively.    ($ in millions, except per share and operating        Full Year metrics) Earnings Metrics                                      2013    2012    % Change Net loss attributable to common shareholders          $(13.2) $(79.5) N/A Net loss per diluted share                            $(0.06) $(0.40) N/A Comparable FFO ^(a)                                   $89.5   $53.7   66.6% Comparable FFO per diluted share ^(a)                 $0.43   $0.26   65.4% Comparable EBITDA ^(a)                                $213.2  $175.4  21.5% Total North American Portfolio Operating Metrics ^(b) ADR                                                   $289.90 $273.30 6.1% Occupancy                                             74.2%   72.3%   1.9 pts RevPAR                                                $214.98 $197.59 8.8% Total RevPAR                                          $401.56 $365.43 9.9% EBITDA Margins                                        24.4%   21.5%   290 bps North American Same Store Operating Metrics ^(c) ADR                                                   $270.07 $254.06 6.3% Occupancy                                             75.0%   73.2%   1.8 pts RevPAR                                                $202.58 $186.05 8.9% Total RevPAR                                          $373.90 $344.77 8.4% EBITDA Margins                                        23.4%   22.0%   140 bps        Fourth quarter and full year results include payments pursuant to the JW Note: Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in       2012 and 2013, respectively.       Please refer to tables provided later in this press release for a       reconciliation of net (loss)/income to Comparable FFO, Comparable FFO (a)   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.       Operating statistics reflect results from the Company's Total North (b)   American portfolio (see portfolio definitions later in this press       release).       Operating statistics reflect results from the Company's North American (c)   same store portfolio (see portfolio definitions later in this press       release).    "We achieved outstanding operating and financial results across the board in 2013, leading the industry in RevPAR growth and margin expansion," said Raymond L. "Rip" Gellein, Jr., Chairman and Chief Executive Officer of Strategic Hotels & Resorts, Inc. "We have very positive expectations for 2014, based on our group outlook, continued strength from the transient traveler, and our ability to continue expanding margins across the portfolio. We also look forward to continuing to deleverage the Company's balance sheet and reviewing growth opportunities that meet our strategic and financial thresholds. The luxury sector is well positioned for continued strength given the dearth of competitive new supply in virtually all of our major markets," summarized Gellein.   Fourth Quarter Highlights    oTotal consolidated revenues were $242.4 million in the fourth quarter of     2013, a 13.9 percent increase over the prior year period.   oTotal North American portfolio RevPAR increased 9.6 percent in the fourth     quarter of 2013, driven by a 6.1 percent increase in ADR and a 2.2     percentage point increase in occupancy compared to the fourth quarter of     2012. Total RevPAR increased 14.9 percent between periods. Excluding     payments received pursuant to the JW Marriott Essex House NOI guarantee,     Total RevPAR increased 10.6 percent in the fourth quarter of 2013 as     compared to the fourth quarter of 2012.   oComparable FFO was $0.14 per diluted share in the fourth quarter of 2013     compared with $0.06 per diluted share in the prior year period, a 133.3     percent increase over the prior year period.    oComparable EBITDA was $58.3  million in the fourth quarter of 2013     compared with $44.7 million in the prior year period, a 30.6 percent     increase.    oNet income attributable to common shareholders was $3.2 million, or $0.02     per diluted share, in the fourth quarter of 2013, compared with a net loss     attributable to common shareholders of $36.4 million, or $0.18 per diluted     share, in the fourth quarter of 2012. Fourth quarter 2012 results include     $18.8 million of impairment losses and other related charges, a $7.8     million charge related to the termination of the management agreement at     the Hotel del Coronado and a $2.5 million severance charge. These charges     have been excluded from Comparable EBITDA, FFO and FFO per share.   oTransient occupied room nights in the Total North American portfolio     increased 5.0 percent, offsetting a 1.2 percent decline in group occupied     rooms in the fourth quarter of 2013 compared to the fourth quarter of     2012. Transient ADR increased 4.7 percent compared to the fourth quarter     of 2012 and group ADR increased 6.2 percent compared to the fourth quarter     of 2012. Transient revenues increased 9.9 percent compared to the fourth     quarter of 2012 and group revenues increased 4.9 percent, compared to the     fourth quarter of 2012.   oTotal United States RevPAR increased 9.7 percent in the fourth quarter of     2013, driven by a  6.4 percent increase in ADR and a 2.2 percentage point     increase in occupancy, compared to the fourth quarter of 2012. Total     RevPAR increased 15.1 percent between periods. Excluding payments     received pursuant to the JW Marriott Essex House NOI guarantee, Total     RevPAR increased 10.6 percent in the fourth quarter of 2013 as compared to     the fourth quarter of 2012.   oNorth American same store RevPAR increased 9.7 percent in the fourth     quarter of 2013, driven by a  6.2 percent increase in ADR and a 2.4     percentage point increase in occupancy, compared to the fourth quarter of     2012. Total RevPAR increased 15.5 percent between periods. Excluding     payments received pursuant to the JW Marriott Essex House NOI guarantee,     Total RevPAR increased 10.1 percent in the fourth quarter of 2013 as     compared to the fourth quarter of 2012.   oEuropean RevPAR increased 4.4 percent (a 2.2 percent increase in constant     dollars) in the fourth quarter of 2013, driven by a 1.1 percent increase     in ADR (a 1.1 percent decline in constant dollars) and a 2.7 percentage     point increase in occupancy. European Total RevPAR increased 5.8 percent     in the fourth quarter of 2013 over the prior year period (a 3.8 percent     increase in constant dollars).    oTotal North American portfolio EBITDA margins expanded 460 basis points in     the fourth quarter of 2013 compared to the fourth quarter of 2012. North     American same store EBITDA margins expanded 520 basis points between     periods. Excluding payments received pursuant to the JW Marriott Essex     House NOI guarantee, EBITDA margins expanded 180 basis points and 160     basis points in the Total North American and North American same store     portfolios, respectively, between periods.  Full Year Highlights    oTotal consolidated revenues were $900.0 million in 2013, a 16.1 percent     increase over the prior year period.   oTotal North American RevPAR increased 8.8 percent in 2013, driven by a 6.1     percent increase in ADR and a 1.9 percentage point increase in occupancy,     compared to the full year 2012. Total RevPAR increased 9.9 percent     between periods. Excluding payments received pursuant to the JW Marriott     Essex House NOI guarantee, Total RevPAR increased 8.8 percent in 2013     compared to 2012.   oComparable FFO was $0.43 per diluted share in 2013 compared with $0.26 per     diluted share in the prior year, a 65.4 percent increase.    oComparable EBITDA was $213.2  million in 2013 compared with $175.4 million     in the prior year, a 21.5 percent increase.   oNet loss attributable to common shareholders was $13.2 million, or $0.06     per diluted share, in 2013 compared with a net loss attributable to common     shareholders of $79.5 million, or $0.40 per diluted share, in the prior     year. Full year 2012 results include $18.8 million of impairment losses     and other related charges, a $7.8 million charge related to the     termination of the management agreement at the Hotel del Coronado, and a     $2.5 million severance charge. These charges have been excluded from     Comparable EBITDA, FFO and FFO per share.   oTransient occupied room nights in the Total North American portfolio     increased 3.1 percent and group occupied room nights increased 1.6 percent     in 2013 compared to 2012. Transient ADR increased 6.1 percent in 2013 and     group ADR increased 4.8 percent compared to 2012. Transient revenues     increased 9.4 percent in 2013 and group revenues increased 6.5 percent,     compared to 2012.   oTotal United States RevPAR increased 8.6 percent in 2013, driven by a 5.9     percent increase in ADR and a  1.8 percentage point increase in occupancy,     compared to the full year 2012. Total RevPAR increased 9.7 percent     between periods. Excluding payments received pursuant to the JW Marriott     Essex House NOI guarantee, Total RevPAR increased 8.6 percent in 2013     compared to 2012.   oNorth American same store RevPAR increased 8.9 percent, driven by a 6.3     percent increase in ADR and a  1.8 percentage point increase in occupancy,     compared to the full year 2012. Total RevPAR increased 8.4 percent     between periods.   oEuropean RevPAR decreased 1.7 percent (2.1 percent in constant dollars) in     2013, driven by a 2.4 percentage decrease in ADR (2.8 percent in constant     dollars) offsetting a 0.6 percentage point increase in occupancy between     years. European Total RevPAR decreased 1.2 percent in between years (1.6     percent in constant dollars).   oTotal North American portfolio EBITDA margins expanded 290 basis points in     2013 compared to the full year 2012. Excluding payments received pursuant     to the JW Marriott Essex House NOI guarantee, EBITDA margins expanded 210     basis points compared to the full year 2012. North American same store     EBITDA margins expanded 140 basis points between periods.  Preferred Dividends  On November 27, 2013, the Company's Board of Directors declared a quarterly dividend of $0.53125 per share of 8.5 percent Series A Cumulative Redeemable Preferred Stock paid on December 31, 2013 to shareholders of record as of the close of business on December 16, 2013, a quarterly dividend of $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock paid on December 31, 2013 to shareholders of record as of the close of business on December 16, 2013 and a quarterly dividend of $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock paid on December 31, 2013 to shareholders of record as of the close of business on December 16, 2013.  2013 Transaction Activity    oOn December 12, 2013, the Company announced the signing of an agreement     with Cascade Investment, L.L.C. to sell the Four Seasons Punta Mita Resort     and adjacent La Solana land parcel for gross consideration of $200     million, subject to certain working capital adjustments. The transaction     is expected to close in the first quarter of 2014.   oOn October 16, 2013, the Company sold the Lakeshore Athletic Club property     adjacent to the Fairmont Chicago hotel for $10.5 million to the owner of     Lakeshore Sport & Fitness.   oOn September 9, 2013, the Company closed on amendments to the     cross-collateralized mortgage agreements secured by the Westin St. Francis     and Fairmont Chicago hotels, which eliminated future principal     amortization payments totaling $37.2 million in scheduled payments from     the signing the amendment through the remaining term of the two     agreements.   oOn March 12, 2013, the Company, along with certain affiliates of     Blackstone Real Estate Partners VI L.P., its joint-venture partner, closed     on a $475 million loan secured by the Hotel del Coronado, bearing interest     at LIBOR plus 365 basis points and has an initial two-year term with     three, one-year extension options.  2014 Guidance  For the full year 2014, the Company is providing the following guidance ranges for its Total United States and United States same-store portfolios. Comparable EBITDA and Comparable FFO per share ranges assume the pending sale of the Four Seasons Punta Mita Resort and adjacent La Solana land parcel closes in the first quarter and proceeds are used to reduce the outstanding balance on the Company's revolving credit facility, partially redeem preferred equity, and other general corporate purposes.    Operating Metrics                   RevPAR                            5.0% - 7.0%  Total RevPAR                      4.5% - 6.5%  EBITDA Margin expansion           120 – 200 basis points Corporate Metrics Comparable EBITDA                 $220M - $240M  Comparable FFO per diluted share  $0.53 - $0.63    Full year 2014 RevPAR and Total RevPAR growth guidance ranges have been reduced by 100 basis points and the EBITDA margin expansion guidance range has been reduced by 20 basis points as the result of anticipated displacement related to renovation activity.  The Company is additionally providing the following guidance for 2014:    oCorporate general and administrative expenses in the range of $22.0     million to $24.0 million, excluding costs associated with the Orange     Capital activist campaign;   oConsolidated interest expense in the range of $85 million to $90 million,     including approximately $8 million of non-cash interest expense;   oPreferred dividend expense of $17.6 million, which assumes the redemption     of the Series A Preferred Equity at the end of the first quarter,     contingent on the closing of the sale of the Four Seasons Punta Mita     Resort;   oCapital expenditures totaling approximately $75 million to $80 million,     including spending of $40 million from property-level furniture, fixtures     and equipment (FF&E) reserves and an additional $35 million to $40 million     of owner-funded spending; and   oNo effect from any additional acquisition, disposition or capital raising     activity that may occur during the year.  Portfolio Definitions  Total United States portfolio hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's hotel portfolio at December 31, 2013, consisting of all 15 properties located in the United States, including unconsolidated joint ventures.  North American same store hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's hotel portfolio at December 31, 2013, consisting of properties located in North America and held for five or more quarters in the case of fourth quarter results and eight or more quarters for full year results, in which operations are included in the consolidated results of the Company. As a result, same store comparisons contain 14 properties for the fourth quarter, including the Four Seasons Punta Mita Resort, but excluding the unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess hotels. Same store comparisons for the full year contain 13 properties, also excluding the JW Marriott Essex House Hotel, which was acquired on September 14, 2012.  European hotel comparisons for the fourth quarter and full year 2013 are derived from the Company's European owned and leased hotel properties at December 31, 2013, consisting of the Marriott London Grosvenor Square and the Marriott Hamburg hotels.  Earnings Call  The Company will conduct its fourth quarter and full-year 2013 conference call for investors and other interested parties on Wednesday, February 26, 2014 at 10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by dialing 877.415.3177 (toll international: 857.244.7320) with passcode 66838542. To participate on the webcast, log on to http://edge.media-server.com/m/p/vpa3u2wm/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 2:00 p.m. ET on February 26, 2014 through 11:59 p.m. ET on March 5, 2014. To access the replay, dial 888.286.8010 (toll international: 617.801.6888) with passcode 62181703. A replay of the call will also be available on the Internet at http://www.strategichotels.com or http://www.reuters.com/finance/markets/earnings 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.  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 18 properties with an aggregate of 8,271 rooms and 851,600 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.  This press release contains forward-looking statements about Strategic Hotels & 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. These forward-looking statements include statements regarding the Company's future financial results, stabilization in the lodging space, positive trends in the lodging industry and the Company's continued focus on improving profitability. 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: failure to complete or close on transactions or the failure of closing conditions to be satisfied, including the closing of the disposition of the Four Seasons Punta Mita Resort; a change in the proposed use of proceeds from the disposition of the Four Seasons Punta Mita Resort; the effects of the recent global economic recession upon business and leisure travel and the hotel markets in which the Company invests; the Company's liquidity and refinancing demands; the Company's ability to obtain, refinance or extend maturing debt; the Company's ability to maintain compliance with covenants contained in its debt facilities; stagnation or further deterioration in economic and market conditions, particularly impacting business and leisure travel spending in the markets where the Company's hotels operate and in which the Company invests, including luxury and upper upscale product; general volatility of the capital markets and the market price of the Company's shares of common stock; availability of capital; the Company's ability to dispose of properties in a manner consistent with its investment strategy and liquidity needs; hostilities and security concerns, including future terrorist attacks, or the apprehension of hostilities, in each case that affect travel within or to the United States, Mexico, Germany, England or other countries where the Company invests; difficulties in identifying properties to acquire and completing acquisitions; the Company's failure to maintain effective internal control over financial reporting and disclosure controls and procedures; risks related to natural disasters; increases in interest rates and operating costs, including insurance premiums and real property taxes; contagious disease outbreaks, such as the H1N1 virus outbreak; delays and cost-overruns in construction and development; marketing challenges associated with entering new lines of business or pursuing new business strategies; the Company's failure to maintain its status as a REIT; changes in the competitive environment in the Company's industry and the markets where the Company invests; changes in real estate and zoning laws or regulations; legislative or regulatory changes, including changes to laws governing the taxation of REITs; changes in generally accepted accounting principles, policies and guidelines; and litigation, judgments or settlements.  Additional risks are discussed in the Company's filings with the Securities and Exchange Commission, including those appearing under the heading "Item 1A. Risk Factors" in the Company's most recent Form 10-K and subsequent Form 10-Qs. 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 the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.  The following tables reconcile projected 2014 net income attributable to common shareholders to projected Comparable EBITDA, Comparable FFO and Comparable FFO per diluted share ($ in millions, except per share data):                                                       Low Range  High Range Net Income Attributable to Common Shareholders       $52.9      $72.9 Depreciation and Amortization                        112.8      112.8 Interest Expense                                     86.0       86.0 Income Taxes                                         2.3        2.3 Non-controlling Interests                            0.4        0.4 Adjustments from Consolidated Affiliates             (15.5)     (15.5) Adjustments from Unconsolidated Affiliates           23.5       23.5 Preferred Shareholder Dividends                      17.6       17.6 Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2) Gain on Sale of Assets                               (59.8)     (59.8) Comparable EBITDA                                    $220.0     $240.0                                                         Low Range  High Range Net Income Attributable to Common Shareholders       $52.9      $72.9 Depreciation and Amortization                        112.0      112.0 Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2) Gain on Sale of Assets                               (59.8)     (59.8) Non-controlling Interests                            0.3        0.3 Adjustments from Consolidated Affiliates             (8.0)      (8.0) Adjustments from Unconsolidated Affiliates           14.9       14.9 Comparable FFO                                       112.1      132.1 Comparable FFO per Diluted Share                     $0.53      $0.63      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Consolidated Statements of Operations  (in thousands, except per share data)                                Three Months Ended       Years Ended                              December 31,             December 31,                              2013        2012         2013         2012 Revenues: Rooms                        $ 126,917   $ 117,255    $ 506,348    $ 429,689 Food and beverage            81,426      73,483       294,969      264,893 Other hotel operating        32,709      20,799       93,535       75,857 revenue Lease revenue                1,385       1,273        5,161        4,778 Total revenues               242,437     212,810      900,013      775,217 Operating Costs and Expenses: Rooms                        36,160      33,288       144,464      121,794 Food and beverage            59,504      54,794       225,213      193,431 Other departmental expenses  56,226      55,189       220,523      200,219 Management fees              7,829       6,227        27,126       23,085 Other hotel expenses         15,239      15,221       60,618       53,117 Lease expense                1,234       1,155        4,818        4,580 Depreciation and             24,507      26,055       101,943      99,458 amortization Impairment losses and other  —           18,406       728          18,406 charges Corporate expenses           7,161       8,150        25,807       31,578 Total operating costs and    207,860     218,485      811,240      745,668 expenses Operating income (loss)      34,577      (5,675)      88,773       29,549 Interest expense             (20,405)    (16,862)     (84,276)     (75,489) Interest income              14          95           59           213 Equity in (losses) earnings of unconsolidated            (265)       (11,431)     2,987        (13,485) affiliates Foreign currency exchange    8           15           44           (1,258) gain (loss) Other (expenses) income,     (359)       455          (314)        1,820 net Income (loss) before income taxes and discontinued       13,570      (33,403)     7,273        (58,650) operations Income tax expense           (153)       (257)        (557)        (800) Income (loss) from           13,417      (33,660)     6,716        (59,450) continuing operations Income from discontinued     2,248       1,362        3,171        1,189 operations, net of tax Net Income (Loss)            15,665      (32,298)     9,887        (58,261) Net (income) loss attributable to the          (60)        58           (38)         184 noncontrolling interests in SHR's operating partnership Net (income) loss attributable to the          (6,341)     1,880        1,126        2,771 noncontrolling interests in consolidated affiliates Net Income (Loss)            9,264       (30,360)     10,975       (55,306) Attributable to SHR Preferred shareholder        (6,041)     (6,041)      (24,166)     (24,166) dividends Net Income (Loss) Attributable to SHR Common   $ 3,223     $ (36,401)   $ (13,191)   $ (79,472) Shareholders Basic Income (Loss) Per Share: Income (loss) from continuing operations        $ 0.01      $ (0.18)     $ (0.08)     $ (0.40) attributable to SHR common shareholders Income from discontinued operations attributable to   0.01        —            0.02         — SHR common shareholders Net income (loss) attributable to SHR common   $ 0.02      $ (0.18)     $ (0.06)     $ (0.40) shareholders Weighted average common      206,814     206,836      206,334      201,109 shares outstanding Diluted Income (Loss) Per Share: Income (loss) from continuing operations        $ 0.01      $ (0.18)     $ (0.08)     $ (0.40) attributable to SHR common shareholders Income from discontinued operations attributable to   0.01        —            0.02         — SHR common shareholders Net income (loss) attributable to SHR common   $ 0.02      $ (0.18)     $ (0.06)     $ (0.40) shareholders Weighted average common      208,986     206,836      206,334      201,109 shares outstanding      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Consolidated Balance Sheets  (in thousands, except share data)                                                       December 31,                                                     2013          2012 Assets Investment in hotel properties, net                 $ 1,795,338   $ 1,970,560 Goodwill                                            38,128        40,359 Intangible assets, net of accumulated amortization  29,502        30,631 of $12,213 and $10,812 Assets held for sale                                135,901       — Investment in unconsolidated affiliates             104,973       112,488 Cash and cash equivalents                           73,655        80,074 Restricted cash and cash equivalents                75,916        58,579 Accounts receivable, net of allowance for doubtful  39,660        45,620 accounts of $1,745 and $1,602 Deferred financing costs, net of accumulated        8,478         11,695 amortization of $12,354 and $7,049 Deferred tax assets                                 —             2,203 Prepaid expenses and other assets                   35,600        54,208 Total assets                                        $ 2,337,151   $ 2,406,417 Liabilities, Noncontrolling Interests and Equity Liabilities: Mortgages and other debt payable                    $ 1,163,696   $ 1,176,297 Bank credit facility                                110,000       146,000 Liabilities of assets held for sale                 17,027        — Accounts payable and accrued expenses               189,889       228,397 Deferred tax liabilities                            46,137        47,275 Total liabilities                                   1,526,749     1,597,969 Commitments and contingencies Noncontrolling interests in SHR's operating         7,534         5,463 partnership Equity: SHR's shareholders' equity: 8.50% Series A Cumulative Redeemable Preferred Stock ($0.01 par value per share; 4,148,141 shares issued and outstanding; liquidation preference      99,995        99,995 $25.00 per share plus accrued distributions and $103,704 in the aggregate) 8.25% Series B Cumulative Redeemable Preferred Stock ($0.01 par value per share; 3,615,375 shares issued and outstanding; liquidation preference      87,064        87,064 $25.00 per share plus accrued distributions and $90,384 in the aggregate) 8.25% Series C Cumulative Redeemable Preferred Stock ($0.01 par value per share; 3,827,727 shares issued and outstanding; liquidation preference      92,489        92,489 $25.00 per share plus accrued distributions and $95,693 in the aggregate) Common stock ($0.01 par value per share; 350,000,000 shares of common stock authorized;      2,056         2,043 205,582,838 and 204,308,710 shares of common stock issued and outstanding) Additional paid-in capital                          1,705,306     1,730,535 Accumulated deficit                                 (1,234,952)   (1,245,927) Accumulated other comprehensive loss                (41,445)      (58,871) Total SHR's shareholders' equity                    710,513       707,328 Noncontrolling interests in consolidated            92,355        95,657 affiliates Total equity                                        802,868       802,985 Total liabilities, noncontrolling interests and     $ 2,337,151   $ 2,406,417 equity      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Financial Highlights  Supplemental Financial Data  (in thousands, except per share information)                                                    December31, 2013                                                  ProRataShare  Consolidated Capitalization Shares of common stock outstanding               205,583         205,583 Operating partnership units outstanding          797             797 Restricted stock units outstanding               1,699           1,699 Combined shares and units outstanding            208,079         208,079 Common stock price at end of period              $  9.45         $ 9.45 Common equity capitalization                     $  1,966,347    $ 1,966,347 Preferred equity capitalization (at $25.00 face  289,102         289,102 value) Consolidated debt                                1,273,696       1,273,696 Pro rata share of unconsolidated debt            231,400         — Pro rata share of consolidated debt              (132,794)       — Cash and cash equivalents                        (73,655)        (73,655) Total enterprise value                           $  3,554,096    $ 3,455,490 Net Debt / Total Enterprise Value                36.6         %  34.7        % Preferred Equity / Total Enterprise Value        8.1          %  8.4         % Common Equity / Total Enterprise Value           55.3         %  56.9        %        Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Discontinued Operations   The results of operations of hotels sold or held for sale are classified as discontinued operations and segregated in the consolidated statements of operations for all periods presented. On December 12, 2013, we entered into an agreement to sell the Four Seasons Punta Mita Resort and the adjacent La Solana land parcel for $200,000,000.    The following is a summary of income from discontinued operations for the three months and years ended December 31, 2013 and 2012 (in thousands):                      Three Months Ended December 31,    Years Ended December 31,                    2013               2012            2013           2012 Hotel operating    $   12,300         $   11,262      $  37,964      $ 33,100 revenues Operating costs    9,061              8,010           30,203         26,909 and expenses Depreciation and   1,052              993             4,075          4,006 amortization Impairment losses and other   —                  437             —              437 charges Total operating costs and          10,113             9,440           34,278         31,352 expenses Operating income   2,187              1,822           3,686          1,748 Interest income    —                  —               —              4 Foreign currency exchange (loss)    (142)              79              (1)            (352) gain Other income,      375                —               375            — net Income tax         (172)              (539)           (889)          (211) expense Income from discontinued       $   2,248          $   1,362       $  3,171       $ 1,189 operations      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Investments in Unconsolidated Affiliates (in thousands)   We have a 36.4% and 50.0% ownership interest in the Hotel del Coronado and the Fairmont Scottsdale Princess hotel, respectively. We account for these investments using the equity method of accounting.                   Three Months Ended December 31,   Three Months Ended December 31,                 2013                              2012                 Hotel del  Fairmont               Hotel del   Fairmont                            Scottsdale  Total                  Scottsdale  Total                 Coronado                          Coronado                            Princess                           Princess Total revenues  $ 33,115   $  23,634   $ 56,749   $ 29,888    $  20,546   $ 50,434 (100%) Property        $ 8,668    $  4,111    $ 12,779   $ 7,201     $  3,034    $ 10,235 EBITDA (100%) Equity in (losses) earnings of unconsolidated affiliates (SHR ownership) Property        $ 3,153    $  2,056    $ 5,209    $ 2,491     $  1,517    $ 4,008 EBITDA Depreciation and             (1,917)    (1,565)     (3,482)    (1,797)     (1,823)     (3,620) amortization Interest        (1,941)    (193)       (2,134)    (2,549)     (189)       (2,738) expense Other           (14)       (23)        (37)       (7,869)     (111)       (7,980) expenses, net Income taxes    85         —           85         90          —           90 Equity in (losses) earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240) unconsolidated affiliates EBITDA Contribution: Equity in (losses) earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240) unconsolidated affiliates Depreciation and             1,917      1,565       3,482      1,797       1,823       3,620 amortization Termination     —          —           —          7,820       —           7,820 fee Interest        1,941      193         2,134      2,549       189         2,738 expense Income taxes    (85)       —           (85)       (90)        —           (90) EBITDA          $ 3,139    $  2,033    $ 5,172    $ 2,442     $  1,406    $ 3,848 Contribution FFO Contribution: Equity in (losses) earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240) unconsolidated affiliates Depreciation and             1,917      1,565       3,482      1,797       1,823       3,620 amortization Termination     —          —           —          7,820       —           7,820 fee FFO             $ 1,283    $  1,840    $ 3,123    $ (17)      $  1,217    $ 1,200 Contribution                    Year Ended December 31, 2013        Year Ended December 31, 2012                             Fairmont                             Fairmont                 Hotel del                           Hotel del                             Scottsdale  Total                    Scottsdale  Total                 Coronado                            Coronado                             Princess                             Princess Total revenues  $ 148,482   $  93,133   $ 241,615   $ 140,220    $ 77,281    $ 217,501 (100%) Property        $ 47,155    $  18,883   $ 66,038    $ 40,722     $ 12,777    $ 53,499 EBITDA (100%) Equity in earnings (losses) of unconsolidated affiliates (SHR ownership) Property        $ 17,152    $  9,442    $ 26,594    $ 13,989     $ 6,389     $ 20,378 EBITDA Depreciation and             (7,564)     (6,570)     (14,134)    (6,895)      (7,145)     (14,040) amortization Interest        (8,325)     (778)       (9,103)     (10,093)     (778)       (10,871) expense Other           (242)       (58)        (300)       (7,931)      (155)       (8,086) expenses, net Income taxes    (191)       —           (191)       383          —           383 Equity in earnings (losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236) unconsolidated affiliates EBITDA Contribution Equity in earnings (losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236) unconsolidated affiliates Depreciation and             7,564       6,570       14,134      6,895        7,145       14,040 amortization Termination     —           —           —           7,820        —           7,820 fee Interest        8,325       778         9,103       10,093       778         10,871 expense Income taxes    191         —           191         (383)        —           (383) EBITDA          $ 16,910    $  9,384    $ 26,294    $ 13,878     $ 6,234     $ 20,112 Contribution FFO Contribution Equity in earnings (losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236) unconsolidated affiliates Depreciation and             7,564       6,570       14,134      6,895        7,145       14,040 amortization Termination     —           —           —           7,820        —           7,820 fee FFO             $ 8,394     $  8,606    $ 17,000    $ 4,168      $ 5,456     $ 9,624 Contribution    Investments in Unconsolidated Affiliates (Continued)  (in thousands)                                         Spreadover Debt                 InterestRate                   LoanAmount  Maturity(a)                                       LIBOR Hotel del Coronado CMBS Mortgage and    3.82     %       365bp         $  475,000   March2018 Mezzanine Cash and cash                                        (7,462) equivalents Net Debt                                             $  467,538 Fairmont Scottsdale Princess CMBS Mortgage        0.53     %       36 bp          $  117,000   April 2015 Cash and cash                                        (6,841) equivalents Net Debt                                             $  110,159  (a) Includes extension options.                      Effective Caps                               LIBORCapRate  NotionalAmount  Maturity                     Date Hotel del Coronado CMBS Mortgage and Mezzanine Loan      March 2013     3.00     %      $   475,000      March 2015 Caps Fairmont Scottsdale Princess CMBS Mortgage Loan  December 2013  4.00     %      $   117,000      April 2015 Cap      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Leasehold Information  (in thousands)                            Three Months Ended December  Years Ended December 31,                          31,                          2013            2012         2013          2012 Marriott Hamburg: Property EBITDA          $   1,741       $  1,472     $  6,298      $  5,876 Revenue (a)              $   1,385       $  1,273     $  5,161      $  4,778 Lease expense            (1,234)         (1,155)      (4,818)       (4,580) Less: Deferred gain on   (53)            (50)         (207)         (200) sale-leaseback Adjusted lease expense   (1,287)         (1,205)      (5,025)       (4,780) EBITDA contribution      $   98          $  68        $  136        $  (2) from leasehold                           December 31, Security Deposit (b):  2013      2012 Marriott Hamburg       $ 2,611   $ 2,507  (a) For the three months and years ended December31, 2013 and 2012, Revenue     for the Marriott Hamburg hotel represents lease revenue. (b) The security deposit is recorded in prepaid expenses and other assets on     the consolidated balance sheets.    Strategic Hotels& Resorts, Inc. and Subsidiaries (SHR)  Non-GAAP Financial Measures  We present five non-GAAP financial measures that we believe are useful to management and investors as key measures of our operating performance: Funds from Operations (FFO); FFO—Fully Diluted; Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA); and Comparable EBITDA.  EBITDA represents net income (or loss) attributable to SHR common shareholders excluding: (i)interest expense, (ii)income taxes, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; (iii)depreciation and amortization; and (iv)preferred stock dividends. EBITDA also excludes interest expense, income taxes and depreciation and amortization of our unconsolidated affiliates. EBITDA is presented on a full participation basis, which means we have assumed conversion of all redeemable noncontrolling interests of our operating partnership into our common stock. We believe this treatment of noncontrolling interests provides useful information for management and our investors and appropriately considers our current capital structure. We also present Comparable EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks, as well as the effect of gains or losses on sales of assets, early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe 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 and Comparable EBITDA as measures in determining the value of acquisitions and dispositions.  We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, with the exception of impairment of depreciable real estate. NAREIT adopted a definition of FFO in order to promote an industry-wide standard measure of REIT operating performance. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding losses or gains from sales of depreciable property, impairment of depreciable real estate, real estate-related depreciation and amortization, and our portion of these items related to unconsolidated affiliates. We also present FFO—Fully Diluted, which is FFO plus income or loss on income attributable to redeemable noncontrolling interests in our operating partnership. We also present Comparable FFO, which is FFO—Fully Diluted excluding the impact of any gains or losses on early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe that the presentation of FFO, FFO—Fully Diluted and Comparable FFO provides useful information to management and 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. We also present Comparable FFO per diluted share as a non-GAAP measure of our performance. We calculate Comparable FFO per diluted share for a given operating period as our Comparable FFO (as defined above) divided by the weighted average of fully diluted shares outstanding, excluding shares related to the JW Marriott Essex House Hotel put option. Dilutive securities may include shares granted under share-based compensation plans and operating partnership units. No effect is shown for securities that are anti-dilutive.  We caution investors that amounts presented in accordance with our definitions of FFO, FFO—Fully Diluted, Comparable FFO, 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, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA should not be considered as an alternative measure of our net income (or loss) or operating performance. FFO, FFO—Fully Diluted, Comparable FFO, 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 Diluted, Comparable FFO, 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 income (or loss) attributable to SHR common shareholders. In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow. We have provided a quantitative reconciliation of FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net income (or loss) attributable to SHR common shareholders.      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Reconciliation of Net Income (Loss) Attributable to SHR Common Shareholders to EBITDA and Comparable EBITDA  (in thousands)                                 Three Months Ended      Years Ended                               December 31,            December 31,                               2013       2012         2013         2012 Net income (loss) attributable to SHR common    $ 3,223    $ (36,401)   $ (13,191)   $ (79,472) shareholders Depreciation and amortization—continuing       24,507     26,055       101,943      99,458 operations Depreciation and amortization—discontinued     1,052      993          4,075        4,006 operations Interest expense—continuing   20,405     16,862       84,276       75,489 operations Income taxes—continuing       153        257          557          800 operations Income taxes—discontinued     172        539          889          211 operations Noncontrolling interests      60         (58)         38           (184) Adjustments from              (3,589)    (4,217)      (14,604)     (8,599) consolidated affiliates Adjustments from              5,553      6,956        23,489       27,562 unconsolidated affiliates Preferred shareholder         6,041      6,041        24,166       24,166 dividends EBITDA                        57,577     17,027       211,638      143,437 Realized portion of deferred  (53)       (50)         (207)        (200) gain on sale-leaseback Loss on sale of assets        430        —            1,185        — Loss on sale of assets—adjustments from       (85)       —            (455)        — consolidated affiliates Impairment losses and other charges—continuing            —          18,406       728          18,406 operations Impairment losses and other charges—discontinued          —          437          —            437 operations Foreign currency exchange (gain) loss—continuing        (8)        (15)         (44)         1,258 operations (a) Foreign currency exchange loss (gain)—discontinued      142        (79)         1            352 operations (a) Activist shareholder costs    342        —            342          — Adjustment for Value          —          (1,352)      —            1,407 Creation Plan Severance charges             —          2,485        —            2,485 Management agreement          —          7,820        —            7,820 termination fee (b) Comparable EBITDA             $ 58,345   $ 44,679     $ 213,188    $ 175,402        Foreign currency exchange gains or losses applicable to third-party and (a) inter-company debt and certain balance sheet items held by foreign     subsidiaries.     Our share of the Hotel del Coronado management agreement termination fee (b) included in both equity in (losses) earnings of unconsolidated affiliates     and net (income) loss attributable to the noncontrolling interest in     consolidated affiliates.      Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Reconciliation of Net Income (Loss) Attributable to SHR Common Shareholders to  Funds From Operations (FFO), FFO—Fully Diluted and Comparable FFO  (in thousands, except per share data)                                 Three Months Ended      Years Ended                               December 31,            December 31,                               2013       2012         2013         2012 Net income (loss) attributable to SHR common    $ 3,223    $ (36,401)   $ (13,191)   $ (79,472) shareholders Depreciation and amortization—continuing       24,507     26,055       101,943      99,458 operations Depreciation and amortization—discontinued     1,052      993          4,075        4,006 operations Corporate depreciation        (125)      (190)        (508)        (979) Loss on sale of assets        430        —            1,185        — Realized portion of deferred  (53)       (50)         (207)        (200) gain on sale-leaseback Noncontrolling interests      (123)      (127)        (400)        (501) adjustments Adjustments from              (1,813)    (1,906)      (7,378)      (4,091) consolidated affiliates Adjustments from              3,482      3,923        14,135       15,258 unconsolidated affiliates FFO                           30,580     (7,703)      99,654       33,479 Redeemable noncontrolling     183        69           438          317 interests FFO—Fully Diluted             30,763     (7,634)      100,092      33,796 Impairment losses and other charges—continuing            —          18,406       728          18,406 operations Impairment losses and other charges—discontinued          —          437          —            437 operations Non-cash mark to market of    (2,496)    (7,833)      (11,617)     (12,238) interest rate swaps Foreign currency exchange (gain) loss—continuing        (8)        (15)         (44)         1,258 operations (a) Foreign currency exchange loss (gain)—discontinued      142        (79)         1            352 operations (a) Activist shareholder costs    342        —            342          — Adjustment for Value          —          (1,352)      —            1,407 Creation Plan Severance charges             —          2,485        —            2,485 Management agreement          —          7,820        —            7,820 termination fee (b) Comparable FFO                $ 28,743   $ 12,235     $ 89,502     $ 53,723 Comparable FFO per fully      $ 0.14     $ 0.06       $ 0.43       $ 0.26 diluted share Weighted average diluted      209,800    209,307      209,328      203,605 shares (c)        Foreign currency exchange gains or losses applicable to third-party and (a) inter-company debt and certain balance sheet items held by foreign     subsidiaries.     Our share of the Hotel del Coronado management agreement termination fee (b) included in both equity in (losses) earnings of unconsolidated affiliates     and net (income) loss attributable to the noncontrolling interests in     consolidated affiliates. (c) Excludes shares related to the JW Marriott Essex House Hotel put option.    Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)  Debt Summary  (dollars in thousands)   Debt                    InterestRate  Spread(a)  LoanAmount   Maturity (b) Marriott London         4.28       %   375bp(c)  $ 115,958     October2014 Grosvenor Square (c) North Beach Venture     5.00       %   Fixed       1,469         January2015 Bank credit facility    3.17       %   300 bp      110,000       June2015 Four Seasons            3.32       %   315 bp      130,000       July2016 Washington, D.C. Westin St. Francis      6.09       %   Fixed       209,588       June2017 Fairmont Chicago        6.09       %   Fixed       93,124        June2017 JW Marriott Essex       4.75       %   400 bp      185,826       September House Hotel                                                      2017 Hyatt Regency La Jolla  4.50% /    %   400 bp /    89,312        December 2017 (d)                     10.00          Fixed InterContinental Miami  3.67       %   350 bp      85,000        July2018 Loews Santa Monica      4.02       %   385 bp      109,000       July2018 Beach Hotel InterContinental        5.61       %   Fixed       144,419       August2021 Chicago                                                    $ 1,273,696        Spread over LIBOR (0.17% at December31, 2013). Interest on the JW (a) Marriott Essex House Hotel loan is subject to a 0.75% LIBOR floor.     Interest on the Hyatt Regency La Jolla loan is subject to a 0.50% LIBOR     floor. (b) Includes extension options.     Principal balance of £70,040,000 at December31, 2013. On August 7, 2013,     the Company entered into an amendment to the mortgage loan. The amendment     extended the maturity of the loan to October 2014 and waived the July 2013 (c) and subsequent principal payments through the extended term. Pursuant to     the amendment, the spread over GBP LIBOR increases in steps during the     extension period from GBP LIBOR plus 2.10% in August 2013 to GBP LIBOR     plus 4.25% in April 2014. The spread in the table is the spread over     three-month GBP LIBOR (0.53% at December31, 2013).     Interest on $72,000,000 is payable at LIBOR plus 4.00%, subject to a 0.50% (d) LIBOR floor, and interest on $17,312,000 is payable at a fixed rate of     10.00%.    Interest Rate Swaps                       FixedPayRate  Notional Swap Effective Date                              Maturity                      AgainstLIBOR   Amount February 2010        4.90     %      $ 100,000   September2014 February 2010        4.96     %      100,000     December2014 December 2010        5.23     %      100,000     December2015 February 2011        5.27     %      100,000     February2016                      5.09     %      $ 400,000    Future scheduled debt principal payments (including extension options) are as follows:  Years ending December31,                                        Amount 2014                                                             $ 120,213 2015                                                             117,498 2016                                                             139,783 2017                                                             577,043 2018                                                             185,015 Thereafter                                                       134,144                                                                  $ 1,273,696 Percent of fixed rate debt including swaps                       68.0        % Weighted average interest rate including swaps (e)               6.21        % Weighted average maturity of fixed rate debt (debt with          3.92 maturity of greater than one year)    (e) Excludes the amortization of deferred financing costs and the amortization     of the interest rate swap costs.  SOURCE Strategic Hotels & Resorts, Inc.  Website: http://www.strategichotels.com Contact: Diane Morefield, EVP & Chief Financial Officer, Strategic Hotels & Resorts, (312) 658-5740, or Jonathan Stanner, Vice President, Capital Markets & Treasurer, Strategic Hotels & Resorts, (312) 658-5746  
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