Exhibit 99.2
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On February 28, 2014, certain direct and indirect wholly-owned subsidiaries of Strategic Hotel Funding, L.L.C., the operating company of Strategic Hotels & Resorts, Inc. ("SHR") closed on the sale of the Four Seasons Punta Mita Resort and an adjacent 48-acre land parcel commonly referred to as La Solana (the "Disposition"). SHR received net proceeds of approximately $183.2 million and intends to use the proceeds to redeem its 8.50% Series A Cumulative Redeemable Preferred Stock and reduce indebtedness under its bank credit facility. The following unaudited pro forma financial information gives effect to the Disposition. The historical financial information as of December 31, 2013 and for the year then ended has been derived from SHR's audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2013.
The unaudited pro forma balance sheet data as of December 31, 2013 is presented as if the Disposition had occurred on December 31, 2013. The unaudited pro forma statement of operations data for the year ended December 31, 2013 is presented as if the Disposition had occurred on January 1, 2013.
The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what SHR's results of operations would actually have been if the transaction had in fact occurred on the earlier date discussed above. It also does not project or forecast SHR's consolidated results of operation for any future date or period.
Strategic Hotels & Resorts, Inc. ("SHR")
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2013
(In thousands)
|
| | | | | | | | | | | |
| | SHR Historical | | Disposition (1a) | | SHR Pro Forma |
| Assets | | | | | |
| Investment in hotel properties, net | $ | 1,795,338 |
| | | | $ | 1,795,338 |
|
| Goodwill | 38,128 |
| | | | 38,128 |
|
| Intangible assets, net | 29,502 |
| | | | 29,502 |
|
| Assets held for sale | 135,901 |
| | (135,901 | ) | | — |
|
| Investment in unconsolidated affiliates | 104,973 |
| | | | 104,973 |
|
| Cash and cash equivalents | 73,655 |
| | 183,179 |
| (1b) | 256,834 |
|
| Restricted cash and cash equivalents | 75,916 |
| | | | 75,916 |
|
| Accounts receivable, net | 39,660 |
| | | | 39,660 |
|
| Deferred financing costs, net | 8,478 |
| | | | 8,478 |
|
| Prepaid expenses and other assets | 35,600 |
| | | | 35,600 |
|
| Total assets | $ | 2,337,151 |
| | $ | 47,278 |
| | $ | 2,384,429 |
|
| Liabilities, Noncontrolling Interests and Equity | | | | | |
| Liabilities: | | | | | |
| Mortgages and other debt payable | $ | 1,163,696 |
| | | | $ | 1,163,696 |
|
| Bank credit facility | 110,000 |
| | | | 110,000 |
|
| Liabilities of assets held for sale | 17,027 |
| | (17,027 | ) | | — |
|
| Accounts payable and accrued expenses | 189,889 |
| | | | 189,889 |
|
| Deferred tax liabilities | 46,137 |
| | | | 46,137 |
|
| Total liabilities | 1,526,749 |
| | (17,027 | ) | | 1,509,722 |
|
| Commitments and contingencies | | | | | |
| Noncontrolling interests in SHR’s operating partnership | 7,534 |
| | | | 7,534 |
|
| Equity: | | | | | |
| SHR’s shareholders’ equity: | | | | | |
| 8.50% Series A Cumulative Redeemable Preferred Stock | 99,995 |
| | | | 99,995 |
|
| 8.25% Series B Cumulative Redeemable Preferred Stock | 87,064 |
| | | | 87,064 |
|
| 8.25% Series C Cumulative Redeemable Preferred Stock | 92,489 |
| | | | 92,489 |
|
| Common stock | 2,056 |
| | | | 2,056 |
|
| Additional paid-in capital | 1,705,306 |
| | | | 1,705,306 |
|
| Accumulated deficit | (1,234,952 | ) | | 64,305 |
| (1c) | (1,170,647 | ) |
| Accumulated other comprehensive loss | (41,445 | ) | | | | (41,445 | ) |
| Total SHR’s shareholders’ equity | 710,513 |
| | 64,305 |
| | 774,818 |
|
| Noncontrolling interests in consolidated affiliates | 92,355 |
| | | | 92,355 |
|
| Total equity | 802,868 |
| | 64,305 |
| | 867,173 |
|
| Total liabilities, noncontrolling interests and equity | $ | 2,337,151 |
| | $ | 47,278 |
| | $ | 2,384,429 |
|
Note to Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2013
| |
| 1. | Four Seasons Punta Mita Resort and La Solana Disposition - On February 28, 2014, SHR disposed of its ownership interests in the Four Seasons Punta Mita Resort and the La Solana land parcel. The following unaudited pro forma adjustments were made to account for this transaction: |
| |
| a) | Reflects the elimination of consolidated accounts related to the Four Seasons Punta Mita Resort and La Solana. |
| |
| b) | Reflects the net proceeds from the Disposition of approximately $183.2 million. |
| |
| c) | Reflects a $64.3 million gain related to the Disposition. |
Strategic Hotels & Resorts, Inc. ("SHR")
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2013
(in thousands, except per share amounts)
|
| | | | | | | | | | |
| | SHR Historical | | Disposition (1) | | SHR Pro Forma | |
| Revenues: | | | | | | |
| Rooms | $ | 506,348 |
| | | | $ | 506,348 |
| |
| Food and beverage | 294,969 |
| | | | 294,969 |
| |
| Other hotel operating revenue | 93,535 |
| | | | 93,535 |
| |
| Lease revenue | 5,161 |
| | | | 5,161 |
| |
| Total revenues | 900,013 |
| | | | 900,013 |
| |
Operating Costs and Expenses: | | | | | | |
| Rooms | 144,464 |
| | | | 144,464 |
| |
| Food and beverage | 225,213 |
| | | | 225,213 |
| |
| Other departmental expenses | 220,523 |
| | | | 220,523 |
| |
| Management fees | 27,126 |
| | | | 27,126 |
| |
| Other hotel expenses | 60,618 |
| | | | 60,618 |
| |
| Lease expense | 4,818 |
| | | | 4,818 |
| |
| Depreciation and amortization | 101,943 |
| | | | 101,943 |
| |
| Impairment losses and other charges | 728 |
| | | | 728 |
| |
| Corporate expenses | 25,807 |
| | | | 25,807 |
| |
| Total operating costs and expenses | 811,240 |
| | | | 811,240 |
| |
| Operating income | 88,773 |
| | | | 88,773 |
| |
| Interest expense | (84,276 | ) | | | | (84,276 | ) | |
| Interest income | 59 |
| | | | 59 |
| |
| Equity in earnings of unconsolidated affiliates | 2,987 |
| | | | 2,987 |
| |
| Foreign currency exchange gain | 44 |
| | | | 44 |
| |
| Other expenses, net | (314 | ) | | | | (314 | ) | |
| Income before income taxes | 7,273 |
| |
| | 7,273 |
| |
| Income tax expense | (557 | ) | | | | (557 | ) | |
| Income from continuing operations | $ | 6,716 |
| |
| | $ | 6,716 |
| |
| | | | | | | |
| Amounts Attributable to SHR: | | | | | | |
| Income from continuing operations | $ | 7,804 |
| |
| | $ | 7,804 |
| |
| | | | | | | |
| Loss from continuing operations attributable to SHR common shareholders per share: | | | | | | |
| Basic: | $ | (0.08 | ) | | | | $ | (0.08 | ) | |
| Diluted: | $ | (0.08 | ) | | | | $ | (0.08 | ) | |
| Weighted average common shares outstanding - basic and diluted | 206,334 |
| | | | 206,334 |
| |
Note to Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2013
| |
| 1. | Four Seasons Punta Mita Resort and La Solana Disposition - On February 28, 2014, SHR disposed of its ownership interest in the Four Seasons Punta Mita Resort and the La Solana land parcel. The consolidated accounts related to the Four Seasons Punta Mita Resort and La Solana were previously reflected as discontinued operations in the audited consolidated statement of operations included in SHR's Annual Report on Form 10-K for the year ended December 31, 2013; therefore, no pro forma adjustments were required to eliminate accounts from continuing operations. There are no pro forma adjustments for nonrecurring items related to this transaction, including the anticipated gain on the Disposition, which will be recognized in discontinued operations in the first quarter of 2014. |
