Attached files
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| 8-K - 8-K - STRATEGIC HOTELS & RESORTS, INC | d494058d8k.htm |
 Investor
Presentation March 2013
Exhibit 99.1 |
 I.
BEE’s Unique Value Proposition
II.
Company Overview
III.
Industry Update
IV.
Operating Trends
V.
Financial Overview
BEE’s Unique Value Proposition
1 |
 o
The only pure play high-end lodging REIT
o
High-end outperforms the industry in a recovery
o
Industry leading asset management expertise
o
Assets are in pristine condition
o
Embedded organic growth through revenue growth and ROI opportunities
o
Historically low supply growth environment, particularly in BEE markets
o
Replacement cost, excluding land, estimated at over $750,000 per
key
o
Solid balance sheet positioned for growth
The best investment proposition in the lodging space
2
BEE’s Unique Value Proposition |
 BEE’s
Unique Value Proposition 3
High-end,
Unique &
Irreplaceable
Portfolio
Industry
Leading
Asset
Management
Platform
Conservative
Balance
Sheet
Management
Disciplined
Capital
Allocation
Strategy |
 Highlights
o
Best portfolio in public markets
o
Locations in high-barrier-to-entry markets
o
City-center and resort destinations
o
World-class amenities
o
Historically low supply growth
Westin St. Francis
Ritz-Carlton Laguna Niguel
InterContinental Chicago
BEE’s Unique Value Proposition
4
High-end,
Unique &
Irreplaceable
Portfolio |
 Highlights
o
Highest EBITDA per room in competitive
set
o
Market share penetration exceeds peak
o
Unique F&B offerings with strong ROI
results
o
Maintaining fixed cost reductions
in recovery
o
Strong relationships with and rigorous
oversight of brand managers
EBITDA Per Available Room
Annual RevPAR Index
BEE’s Unique Value Proposition
Note: All metrics represent full-year 2012 results.
BEE
portfolio
reflects
Total
United
States
portfolio
as
of
12/31/2012.
Source: Public filings
Source: Smith Travel Research
5
112.0
110.8
109.4
112.1
113.7
113.6
100.0
104.0
108.0
112.0
116.0
2007
2008
2009
2010
2011
2012
Industry
Leading
Asset
Management
Platform
$81
$74
$71
$57
$53
$52
$0
$20
$40
$60
$80
$100
BEE
LHO
PEB
SHO
HST
DRH |
 Highlights
o
Reduced Net Debt / EBITDA to 6.6x from over 14.0x
o
Raised over $660 million in equity since 2010
o
Refinanced property mortgages with staggered maturities
o
Executed an $86 million preferred equity tender at a 15% discount
o
Maintain focus on liquidity; two assets currently unencumbered
BEE’s Unique Value Proposition
6
December 31, 2012
Note: Assumes full extension periods for all loans.
(a)
EBITDA reflects mid-point of 2013 guidance range.
$115.5
$130.0
$96.9
$195.0
$357.5
$66.5
$154.7
$145.0
$300.0
Capacity
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
2013
2014
2015
2016
2017
2018
2019
2020
2021
Bank
Life Co.
CMBS
Corporate
$284.7
$454.4
Key Stats
(a)
Net Debt/EBITDA
6.6x
Net Debt+Pref /EBITDA
8.0x
Net Debt/TEV
45.0%
Avg. Maturity (yrs)
4.5
Unencumbered assets
2
Corporate liquidity (MM)
$200.0
Mix of Debt
Bank Debt
42.6%
Life Insurance Co.
28.3%
CMBS
29.0%
Conservative
Balance
Sheet
Management |
 Highlights
o
Execution of complex and accretive restructurings
o
Hotel del Coronado and Fairmont Scottsdale Princess
o
InterContinental Miami
o
Four Seasons Jackson Hole and Silicon Valley
o
Marriott Champs Elysees and InterContinental Prague
BEE’s Unique Value Proposition
7
o
Assessment and development of ROI projects
o
Recent success in acquiring hotels through off-market transactions
o
Maximized proceeds through well-timed asset sales
Disciplined
Capital
Allocation
Strategy
Hotel del Coronado
JW Marriott Essex House
Fairmont Scottsdale Princess |
 I.
BEE’s Unique Value Proposition
II.
Company Overview
III.
Industry Update
IV.
Operating Trends
V.
Financial Overview
Company Overview
8 |
 Properties
%
Rooms
%
2012
Property
EBITDA
(1)
%
Urban
10
56%
5,180
63%
$118.4
59%
Resorts
8
44%
3,091
37%
$81.9
41%
Total
18
8,271
$200.3
(1)
$ in millions and represents pro rata share
Top-Tier Market Exposure
Hotels in gateway urban cities and top tier resort locations
9 |
 o
o
o
o
Notable 2010
capital projects
Notable 2011
capital projects
Westin St. Francis Michael Mina
Bourbon Steak
InterContinental Miami Guestroom
Portfolio Well-Positioned to Enhance Cash Flow Growth
10
o
o
o
pt
o
Notable 2012
capital projects
Fairmont Scottsdale
Princess Ballroom
Fairmont Scottsdale Princess – Meeting space expansion
Hotel del Coronado – Guestrooms enhancement
InterContinental Miami – Public space revitalization and
restaurant re-concept
Four Seasons Jackson Hole – Restaurant re-concept
o
o
InterContinental Miami – Guestrooms enhancement
InterContinental Chicago – Michael Jordan’s Steak House
Four Seasons Washington, D.C. – Retail outlet renovation
Marriott Lincolnshire Resort – Lobby renovation
Westin St. Francis – Michael Mina Steakhouse conversion
InterContinental Chicago – Guestrooms enhancement |
 o
Guestrooms enhancement
InterContinental
Chicago
In Progress / Planned Capital Projects
11
o
ENO Wine Room
o
Meeting space upgrade and expansion
Four Seasons
Washington, D.C.
o
Exterior upgrade
Loews Santa
Monica
o
Guestrooms enhancement
Ritz-Carlton
Laguna Niguel
o
Guestrooms enhancement
Marriott
Lincolnshire
o
Execution of Property Improvement Plan
JW Marriott
Essex House
2013 owner funded cap-ex forecasted to be between $30.0 million and $35.0 million |
 Fairmont
Scottsdale Princess – Palomino Ballroom
o
Completed in 2012
o
40,000 square feet of indoor/outdoor meeting space
o
Investment totaled $22.8 million in owner-funded capital;
funded 50 / 50 with joint-venture partner
o
Group room nights for 2013 projected to increase by 16%
(15,000 room nights)
o
2013 RevPAR expected to increase 11% with EBITDA
increasing over 25%
o
Positive initial feedback from meeting planners and guests
12 |
 InterContinental Miami –
Innovative Repositioning
o
Completed an approximate ~$30 million renovation:
o
Rooms
and
suites
-
$19
million
o
Lobby
and
restaurant
-
$10
million
o
Meeting
space
-
$1
million
o
Renovation includes a 19 story digital canvas illuminating the
hotel exterior
o
2012 RevPAR increased over 15% and EBITDA increased 29%
o
2013 RevPAR and EBITDA expected to be at or near previous
peak
13 |
 I.
BEE’s Unique Value Proposition
II.
Company Overview
III.
Industry Update
IV.
Operating Trends
V.
Financial Overview
Industry Update
14 |
 o
Lodging demand historically correlates with GDP (~80%)
o
Customer demographics for luxury / high-end very strong
o
Supply growth remains historically low and lack of active development pipeline
U.S. Luxury Supply & Demand Change (TTM)
Source: Smith Travel Research
Demand growth exceeds supply growth by 310 bps which should
result in significant ADR growth as recovery continues
Luxury Lodging Supply & Demand Dynamics
15 |
 16
Source: Smith Travel Research and PWC
Source: Smith Travel Research
Luxury
Outperformance:
2.2% CAGR
Luxury
Outperformance:
4.1% CAGR
Annual % Change in RevPAR
Trailing Twelve Month Occupancy
o
Luxury hotel RevPAR growth outperforms in a recovery
o
1992
–
2000:
9
consecutive
years
of
annual
luxury
RevPAR
growth
totaling
109%
or
8.5%
annually
o
2002
–
2007:
5
consecutive
years
of
annual
luxury
RevPAR
growth
totaling
48%
or
8.2%
annually
Luxury outperformed Total U.S. hotels
2.0% -
4.0% in previous two downturns
Luxury occupancy exceeding previous cycle peaks
Luxury Hotels Outperform in a Recovery
16
52.0%
56.0%
60.0%
64.0%
68.0%
72.0%
76.0%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Total U.S.
Luxury
o
Luxury occupancy exceeding recent cycle peaks |
 ADR
RevPAR
EBITDA Per Available Room
Non –
Rooms Revenue Per Available Room
Note: All metrics represent full-year 2012 results
BEE portfolio reflects Total North American portfolio as of 12/31/2012
Source: Public filings
BEE delivers industry leading results
BEE Outperforms Competitors
17
$171
$84
$79
$71
$59
$55
$0
$40
$80
$120
$160
$200
BEE
PEB
HST
LHO
SHO
DRH
$81
$74
$71
$57
$53
$52
$0
$20
$40
$60
$80
$100
BEE
LHO
PEB
SHO
HST
DRH
$189
$174
$160
$142
$139
$134
$0
$50
$100
$150
$200
BEE
PEB
LHO
HST
SHO
DRH
$264
$214
$203
$191
$176
$175
$0
$60
$120
$180
$240
$300
BEE
PEB
LHO
HST
SHO
DRH |
 o
Total RevPAR is key top-line performance metric
o
Focus on maximizing RevPAR, non-rooms revenue, and yield per square foot
BEE Total Revenue Mix
Peers Total Revenue Mix
Note: All metrics represent the full-year 2012. BEE portfolio reflects the
Total North American portfolio Peers include: DRH, HST, LHO, SHO
Source: Public filings
BEE Revenue Mix Compared to Peers
18
53%
36%
11%
Rooms
Other
Food &
Beverage
66%
28%
6%
Food &
Beverage
Other
Rooms
BEE revenue driven more heavily by non-rooms revenue relative to peers, maximizing EBITDA per available
room |
 ~350 basis
point outperformance (1) Portfolio includes Total North American portfolio
for the full year 2012 Peers include: DRH, HST, LHO, & SHO
Source: Public filings
Industry Leading Operating Margins
19
BEE’s margins significantly outperform when adjusted for same revenue mix BEE
(1)
Peers
Peer Margins at
BEE's Room /
F&B
Mix
Revenue
Rooms
59%
71%
59%
Food & Beverage
41%
29%
41%
Total Rooms / F&B
100%
100%
100%
Departmental Profit Margin
Rooms
71%
74%
74%
Food & Beverage
30%
27%
27%
EBITDA
26%
26%
22% |
 I.
BEE’s Unique Value Proposition
II.
Company Overview
III.
Industry Update
IV.
Operating Trends
V.
Financial Overview
Operating Trends
20 |
 o
Group pace remains the most reliable forward looking indicator
Year-Over-Year Group Pace
Group
room
nights
12%
below
peak
(1)
(1)
2013 production in the year assumes 200,000 group room nights
Group Booking Outlook
21
(1)
0
200,000
400,000
600,000
800,000
1,000,000
2007
2008
2009
2010
2011
2012
2013
Definite through January
Production in the year
Group room nights on the books for 2013 are up 6.6% compared to 2012; ADR up 3.9% compared to 2012 rate |
 ADR:
+1% from
Peak RevPAR:
-1% from
Peak Occupancy
ADR
RevPAR
Property EBITDA (in millions)
Note: North America Same Store portfolio, excludes: Fairmont Scottsdale Princess, Hotel del
Coronado, and JW Marriott Essex House. 2013 forecast assumes midpoint of guidance
range. Operating performance improving; returning to peak
Embedded Portfolio Growth
22
60%
64%
68%
72%
76%
2007
2008
2009
2010
2011
2012
2013F
$120
$160
$200
$240
$280
2007
2008
2009
2010
2011
2012
2013F
$100
$120
$140
$160
$180
$200
2007
2008
2009
2010
2011
2012
2013F
$140
$160
$180
$200
2007
2008
2009
2010
2011
2012
2013F |
 I.
BEE’s Unique Value Proposition
II.
Company Overview
III.
Industry Update
IV.
Operating Trends
V.
Financial Overview
Financial Overview
23 |
 Raised over
$660 million in equity: o
$333 mm follow-on public offering (May 2010)
o
$145 mm Woodbridge transaction acquiring two Four
Seasons hotels plus PIPE (February 2011)
o
$70 mm equity placement to GIC for share in
InterContinental Chicago (June 2011)
o
$115 mm overnight equity offering (April 2012)
Asset sales:
o
Sold InterContinental Prague for €110.6mm (December 2010)
o
Sold leasehold position at Marriott Paris Champs-Elysees for
approximately $60 million (April 2011)
o
Sold stake in BuyEfficient for $9mm (January 2011)
Debt repayments:
o
Tendered and fully retired $180mm unsecured convertible
recourse notes (May 2010)
Hotel del Coronado complex restructuring (February 2011):
o
Negotiated new joint-venture with Blackstone and KSL
o
Closed new CMBS mortgage financing totaling $425mm
Accomplishments
Since
January
1
st
,
2010
24
Fairmont Scottsdale Princess complex restructuring (June
2011):
o
Negotiated new joint venture structure with Walton Street Capital
o
Negotiated amendment and extension to CMBS debt for four
years at below market terms
New line of credit (June 2011):
o
Reduced lenders in bank syndicate from 21 banks to 10 banks
o
Achieved three year term with one year extension
Debt refinancings:
o
Seven property loans refinanced totaling nearly $900 million
Preferred equity tender (December 2011):
o
Successfully tendered for approximately 22% of outstanding
preferred equity at a 15% discount to par plus accrued preferred
dividends
Reinstatement of preferred equity dividends (June 2012):
o
Paid 14 quarters of preferred equity dividends
Acquired the Essex House in New York City (September
2012):
o
Acquired a 51% interest in the property
o
Closed new mortgage financing totaling $190.0 million |
 Full Year 2012
Results (EBITDA in millions) 25
(a)
(a)
Portfolio excludes the JW Marriott Essex House hotel.
(b)
2011 FFO excludes a one-time $10.7 million gain related to preferred equity
tender. (b)
2011
2012
Operations
(Total United States Portfolio)
ADR
$246
4.9%
$258
RevPAR
$175
7.0%
$187
Total RevPAR
$336
5.8%
$356
EBITDA Margins
21.5%
120 bps
22.7%
Corporate Results
Comparable EBITDA
$154.8
13.3%
$175.4
Comparable FFO / share
$0.14
85.7%
$0.26 |
 (a)
Portfolio excludes Fairmont Scottsdale Princess and the Hotel del Coronado
2013 Guidance (EBITDA in millions)
26
2012 Actual
2013 Guidance
Operations
(Same Store N.A. Portfolio)
(a)
RevPAR
$181
5%-7%
$190-$194
Total RevPAR
$332
4%-6%
$345-$352
EBITDA Margins
22.4%
75 -
125bps
23.2%-23.7%
Corporate Results
Comparable EBITDA
$175
11%-20%
$195-$210
Comparable FFO / share
$0.26
27%-54%
$0.33-$0.40 |
 o
The only pure play high-end lodging REIT
o
High-end outperforms the industry in a recovery
o
Industry leading asset management expertise
o
Assets are in pristine condition
o
Embedded organic growth through revenue growth and ROI opportunities
o
Historically low supply growth environment, particularly in BEE markets
o
Replacement cost, excluding land, estimated at over $750,000 per
key
o
Solid balance sheet positioned for growth
The best investment proposition in the lodging space
27
BEE’s Unique Value Proposition |
 Disclaimer
28
Except for historical information, the matters discussed in this presentation are
forward-looking statements subject to certain risks and uncertainties. Forward-looking statements relate
to expectations, beliefs, projections, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical facts. These forward-
looking statements are identified by their use of such terms and phrases such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,
“will,” “continue” and other similar terms and phrases, including
references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future
performance. 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: 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 or refinance maturing debt; the Company’s ability to
maintain compliance with covenants contained in the Company’s 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 the Company’s 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 presentation, 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.
|
 Non-GAAP
to GAAP Reconciliations 29
Reconciliation of Net Debt / EBITDA
($ in 000s)
YE 2012
(a)
Consolidated debt
$1,322,297
Pro rata share of unconsolidated debt
221,200
Pro rata share of consolidated debt
(135,160)
Cash and cash equivalents
(80,074)
Net Debt
$1,328,263
Comparable EBITDA
$202,500
Net Debt / EBITDA
6.6x
(b) Comparable EBITDA reflects mid-point of guidance range.
Reconciliation of Net Debt / TEV
($ in 000s)
YE 2012
Consolidated Debt
$1,322,297
Pro rata share of unconsolidated debt
221,200
Pro rata share of consolidated debt
(135,160)
Cash and cash equivalents
(80,074)
Net Debt
$1,328,263
Market Capitalization
$1,331,667
Total Debt
1,408,337
Preferred Equity
289,102
Cash and cash equivalents
(80,074)
Total Enterprise Value
$2,949,032
Net Debt / Enterprise Value
45.0%
Reconciliation of Net Debt + Preferred Equity / EBITDA
($ in 000s)
YE 2012
(a)
Preferred equity capitalization
$289,102
Consolidated debt
1,322,297
Pro rata share of unconsolidated debt
221,200
Pro rata share of consolidated debt
(135,160)
Cash and cash equivalents
(80,074)
Net Debt + Preferreds
$1,617,365
Comparable EBITDA
$202,500
Net Debt + Preferreds / EBITDA
8.0x
(a) Comparable EBITDA reflects mid-point of guidance range.
|
 Non-GAAP
to GAAP Reconciliations 30 |
 Non-GAAP
to GAAP Reconciliations 31 |
 Non-GAAP
to GAAP Reconciliations 32 |
 Thank
You |