Investor Presentation January 2014 Exhibit 99.1 |
I. BEE’s Unique Value Proposition II. Industry Update & Operating Trends III. Financial Overview BEE’s Unique Value Proposition 1 |
o 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 excellent condition o Embedded organic growth through revenue growth, margin expansion, 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 has outperformed its peers in 1-Year, 3-Year and 5-Year Total Shareholder Return 3 BEE’s Consistent Outperformance 587.9% 232.7% BEE Peers (1) SNL Hotel REITs RMS 1-yr 41.6% 18.9% 16.2% 2.5% 3-yr 84.1% 11.8% 13.2% 36.1% 5-yr 587.9% 232.7% 220.0% 172.8% Source: SNL Financial as of 1/22/14 (1) Includes DRH, LHO, PEB, SHO and HST (1) 172.8% 220.0% 0 100 200 300 400 500 600 700 800 2009 2010 2011 2012 2013 2014 BEE Peers SNL Hotel REITs RMS |
BEE’s Strategic Path to Creating Shareholder Value 4 Owning a high-end unique & irreplaceable portfolio Operating an industry leading asset management platform Conservatively managing the balance sheet Allocating capital in a disciplined manner |
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 5 Four Seasons Jackson Hole Owning a high-end unique & irreplaceable portfolio |
Top-Tier Market Exposure Hotels in gateway urban cities and top tier resort locations Hamburg, Germany Chicago Lincolnshire Resort Punta Mita Resort Chicago Miami Santa Monica Beach Hotel Half Moon Bay La Jolla St. Francis Laguna Niguel London, England Scottsdale Jackson Hole Silicon Valley 6 New York 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 Washington, D.C. |
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 BEE’s Unique Value Proposition Note: All metrics represent full-year 2012 results. BEE portfolio reflects Total North American excl. JW Marriott Essex House portfolio as of 12/31/2012. Source: Public filings Source: Smith Travel Research BEE portfolio reflects Total United States portfolio excl. JW Marriott Essex House 7 $81 $74 $71 $57 $53 $52 $0 $20 $40 $60 $80 $100 BEE LHO PEB SHO HST DRH Annual RevPAR Index Operating an industry leading asset management platform 112.0 110.8 109.4 112.1 113.7 113.6 114.6 100.0 104.0 108.0 112.0 116.0 2007 2008 2009 2010 2011 2012 TTM |
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 excl. JW Marriott Essex House as of 12/31/2012 Source: Public filings BEE delivers industry leading results BEE Outperforms Competitors 8 $189 $174 $160 $142 $139 $134 $0 $50 $100 $150 $200 BEE PEB LHO HST SHO DRH $81 $74 $71 $57 $53 $52 $0 $20 $40 $60 $80 $100 BEE LHO PEB SHO HST DRH $171 $84 $79 $71 $59 $55 $0 $40 $80 $120 $160 $200 BEE PEB HST LHO SHO DRH $264 $214 $203 $191 $176 $175 $0 $60 $120 $180 $240 $300 BEE PEB LHO HST SHO DRH |
9 BEE Continues to Outperform Competitors Source: Company filings Note: Based on the average reported same-store RevPAR growth from each year, however may not reflect a same-store comparison over entire 3-year period BEE portfolio reflects Total North American portfolio excl. JW Marriott Essex House Source: Company filings As of 9/30/13 BEE portfolio reflects Total North American portfolio excl. JW Marriott Essex House o Growth outperformance as a result of high quality assets and industry leading asset management platform Average RevPAR Growth 2010-2012 2013 YTD Same-store RevPAR Growth 1 7.5% 7.2% 6.1% 5.5% 5.1% 4.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% BEE PEB HST DRH SHO LHO 8.4% 6.9% 5.9% 5.5% 4.0% 2.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% BEE PEB DRH HST SHO LHO (1) |
o Total RevPAR is key top-line performance metric o Focus on maximizing RevPAR, non-rooms revenue, and EBITDA per room BEE Total Revenue Mix Peers Total Revenue Mix Note: All metrics represent the full-year 2012. BEE portfolio reflects the Total North American portfolio excl. Marriott Essex House Peers include: DRH, HST, LHO, SHO Source: Public filings BEE revenue driven more heavily by non-rooms revenue relative to peers, maximizing EBITDA per available room BEE Revenue Mix Compared to Peers 10 66% 28% 6% Food & Beverage Other Rooms 53% 36% 11% Rooms Other Food & Beverage |
(1) Portfolio includes Total North American portfolio excl. JW Marriott Essex House for the full year 2012 Peers include: DRH, HST, LHO, PEB, & SHO Source: Public filings Industry Leading Operating Margins 11 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 23% 26% 21% ~200 basis point outperformance BEE’s margins significantly outperform when adjusted for same revenue mix |
o Reduced Net Debt / EBITDA to 6.3x 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 Eliminated of $11.9 million in annual loan principal amortization o Maintain focus on liquidity; two assets currently unencumbered BEE’s Unique Value Proposition 12 September 30, 2013 Note: Assumes full extension periods for all loans. Line of credit balance excludes letters of credit. (a) EBITDA Conservatively managing the balance sheet Key Stats (a) Net Debt/EBITDA 6.3x Net Debt+Pref /EBITDA 7.7x Net Debt/TEV 38.8% Avg. Maturity (yrs) 3.8 Unencumbered assets 2 Corporate liquidity (MM) $200.0 Mix of Debt Bank Debt 42.0% Life Insurance Co. 27.7% CMBS 30.3% Undrawn $137.0 $113.4 $130.0 $95.0 $194.5 $350.5 $172.9 $144.9 $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 $367.4 $445.5 $163.0 Outstanding $66.5 reflects mid-point of 2013 guidance range. |
13 BEE’s Executing Strategy Raised over $660 million in equity: o $333 million follow-on public offering (May 2010) o $145 million Woodbridge transaction acquiring two Four Seasons hotels plus PIPE (February 2011) o $70 million equity placement to GIC for share in InterContinental Chicago (June 2011) o $115 million overnight equity offering (April 2012) Asset sales: o Sold InterContinental Prague for 110.6 million (December 2010) o Sold leasehold position at Marriott Paris Champs-Elysees for approximately $60 million (April 2011) o Sold stake in BuyEfficient for $9 million (January 2011) o Sold LSAC for $10.5 million (October 2013) o Agreed to sell the Four Seasons Punta Mita and La Solana land parcel for $200.0 million (December 2013) Debt repayments: o Tendered and fully retired $180 million 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 $425 million 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 (2011) o Amended mortgage loans to eliminate principal amortization (2013) 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 Raymond “Rip” Gellein a member of the board of directors throughout entire execution. Note: |
Hotel del Coronado JW Marriott Essex House Fairmont Scottsdale Princess BEE’s Unique Value Proposition 14 Allocating capital in a disciplined manner o Execution of complex and accretive restructurings o Hotel del Coronado and Fairmont Scottsdale Princess o Assessment and development of ROI projects o InterContinental Miami o Recent success in acquiring hotels through off-market transactions o Four Seasons Jackson Hole and Silicon Valley, JW Marriott Essex House o Maximized proceeds through well-timed asset sales o Marriott Champs Elysees and InterContinental Prague |
o InterContinental Miami – Guestrooms renovation o InterContinental Chicago – Michael Jordan’s Steak House o InterContinental Chicago – Guestrooms renovation o Loews Santa Monica – Exterior façade enhancement o Ritz-Carlton Laguna Niguel – Guestrooms enhancement o Four Seasons Washington, D.C. – ENO wine room Notable 2013 capital projects Notable 2011 capital projects InterContinental Chicago Guestroom InterContinental Miami Guestroom Portfolio Well-Positioned to Enhance Cash Flow Growth 15 o Fairmont Scottsdale Princess – Meeting space expansion o Hotel del Coronado – Guestrooms enhancement o InterContinental Miami – Public space revitalization and restaurant re-concept o Four Seasons Jackson Hole – Restaurant re-concept Notable 2012 capital projects Fairmont Scottsdale Princess Ballroom |
I. BEE’s Unique Value Proposition II. Industry Update & Operating Trends III. Financial Overview Industry Update & Operating Trends 16 |
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 180 bps which should result in significant ADR growth as recovery continues Luxury Lodging Supply & Demand Dynamics + 1.8% 17 -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% Supply % Change Demand % Change |
Source: Smith Travel Research and PWC Source: Smith Travel Research Luxury Outperformance: 4.4% CAGR Luxury Outperformance: 2.2% 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 115% or 8.9% annually o 2002 – 2007: 5 consecutive years of annual luxury RevPAR growth totaling 48% or 8.2% annually Luxury Hotels Outperform in a Recovery 18 Luxury Outperformance: 2.3% CAGR Luxury outperformed by 200-400 basis points in previous recoveries Luxury occupancy exceeds previous peaks 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 68.0% 70.0% 72.0% 74.0% 76.0% -20% -15% -10% -5% 0% 5% 10% 15% 20% Total U.S. Luxury o Luxury occupancy exceeding recent cycle peaks |
o Group pace remains the most reliable forward looking indicator Year-Over-Year Group Pace Group room nights 10% below peak (2) (1) Group Pace excludes the JW Marriott Essex House & Four Seasons Punta Mita (2) 2014 production assumed to be 95% of 2013 Group room nights on the books for 2014 are up 5.7% compared to 2013; ADR up 1.7% compared to 2013 rate 2014 Group Booking Outlook 19 (2) (1) 0 200,000 400,000 600,000 800,000 1,000,000 2007 2008 2009 2010 2011 2012 2013 2014 Definite through December Production in the year |
ADR: +1% from Peak RevPAR: at 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 20 60% 64% 68% 72% 76% 2007 2008 2009 2010 2011 2012 2013F $140 $160 $180 $200 2007 2008 2009 2010 2011 2012 2013F $100 $120 $140 $160 $180 $200 2007 2008 2009 2010 2011 2012 2013F $120 $160 $200 $240 $280 2007 2008 2009 2010 2011 2012 2013F |
I. BEE’s Unique Value Proposition II. Industry Update & Operating Trends III. Financial Overview Financial Overview 21 |
3 Quarter 2013 Results (EBITDA in millions) 22 (1) Excludes one-time items at the Hotel del Coronado and Fairmont Chicago 3Q 2012 3Q 2013 Operations (Total North America Portfolio) ADR $278 7.4% $299 RevPAR $213 10.7% $236 Total RevPAR $371 9.0% $405 EBITDA Margins 23.2% 240 bps 25.6% Corporate Results Comparable EBITDA $46.6 29.1% $60.1 Comparable FFO / share $0.08 75.0% $0.14 rd (1) |
YTD 2013 Results (EBITDA in millions) 23 Excludes one-time items at the Hotel del Coronado and Fairmont Chicago (1) Nine Months Ended Nine Months Ended September 30, 2012 September 30, 2013 Operations (Total North America Portfolio) ADR $272 6.3% $289 RevPAR $199 8.8% $217 Total RevPAR $365 8.3% $395 EBITDA Margins 22.0% 180 bps 23.7% Corporate Results Comparable EBITDA $130.7 18.5% $154.8 Comparable FFO / share $0.21 38.1% $0.29 (1) |
(a) Portfolio excludes Fairmont Scottsdale Princess, Hotel del Coronado, and JW Marriott Essex House 2013 Guidance (EBITDA in millions) 24 2012 Actual 2013 Guidance Operations (Same Store N.A. Portfolio) (a) RevPAR $186 7.5%-8% $200-$201 Total RevPAR $345 6.5%-7% $367-$369 EBITDA Margins 22.0% 125 - 150bps 23.3%-23.5% Corporate Results Comparable EBITDA $175 17%-23% $205-$215 Comparable FFO / share $0.26 35%-54% $0.38-$0.43 |
o 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 excellent condition o Embedded organic growth through revenue growth, margin expansion, 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 25 BEE’s Unique Value Proposition |
26 BEE’s Leadership Team Prior Experience Management Years with BEE Former President of the Global Development Group for Starwood Hotels and Resorts Former Director, Chairman and CEO of Starwood Vacation Ownership and served as Chairman and Co-CEO of Vistana, a company he sold to Starwood Serves on the Board of Directors of Marriott Vacations Worldwide 5 years Raymond L. “Rip” Gellein Jr. Chairman & CEO Diane Morefield Executive VP & CFO 4 years Former CFO of Equity International; 12 year tenure at Sam Zell related entities including Equity Office Serves on the Board and is Audit Committee Chair of Spirit Realty Capital Senior officer with Barclays Bank real estate group Richard Moreau Executive VP & COO 16 years Former Principal at Gremor Hospitality Executive / officer positions at Hyatt Hotels, Inn America Corporation and Howard Johnson Company Stephen Briggs Senior VP & CAO 6 years Held various senior management positions at Equity Office Properties Trust Member of Best Financial Practices Council of NAREIT Paula Maggio Executive VP, Secretary & General Counsel 13 years Former lawyer for Altheimer & Gray |
27 BEE’s Highly Qualified & Independent Board of Directors Experience Chairman and CEO of Strategic Hotels & Resorts Former President of the Global Development Group for Starwood Hotels and Resorts Former Director, Chairman and CEO of Starwood Vacation Ownership and served as Chairman and Co-CEO of Vistana Serves on the Board of Directors of Marriott Vacations Worldwide Directors Raymond “Rip” Gellein Jr. Former Partner of Arthur Andersen, LLP Served as member of Arthur Andersen’s hospitality industry team Previously served as a Director of Gaylord Entertainment and Equity Inns Robert Bowen Kenneth Fisher Senior Partner of Fisher Brothers and Chairman and CEO of Fisher House Foundation Member of the Executive Committee of the City Investment Fund, LP and the Real Estate Board of New York’s Board of Governors Previously served on the Board of Directors of Realogy James Jeffs Managing Director and CIO of The Whittier Trust Company Former Chairman and CEO of Chaparral Resources, CIO and Senior VP of Trust Services America and President and CEO of TSA Capital Management Sir David Michels Former CEO of Hilton Group PLC and Hilton International Previously a Non-Exec. Director of Hilton Hotels, the CEO of Stakis PLC and worked for Grand Metropolitan Serves as Deputy Chairman and Senior Director of Marks & Spencer and is a member of Jumeirah Hotels Previously served as Deputy Chairman and Senior Director of easy Jet PLC Eugene Reilly CEO of the Americas for Prologis, which merged with his former company, AMB Property Corporation Former CIO of Cabot Properties Member of the Urban Land Institute William Prezant Partner in the law firm of Prezant & Mollath Serves on the Board of Directors of Forward Management and You Technologies Previously served as Director of MacGregor Golf Company Sheli Rosenberg Lead Independent Director Currently Of Counsel to Skadden, Arps, Slate, Meagher & Flom, LLP Former President, CEO and Vice Chairman of Equity Group Investments Previously a Principal of Rosenberg & Liebentritt PC and a Managing Partner of Schiff Hardin, LLP Serves as Lead Director of Equity Lifestyle Properties and Director of Nanosphere and Ventas Richard Kincaid Independent Years of Service 3 years 9 years 6 years 7 years 7 years 4 years 8 years 1 year 4 years President and Founder of the BeCause Foundation Former President, CEO and Director of Equity Office Properties Trust, where he also had positions of Executive Vice President, COO and CFO Serves on the Board of Directors of Rayonier and Vail Resorts |
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) 3Q 2013 (a) Consolidated debt $1,299,567 Pro rata share of unconsolidated debt 239,400 Pro rata share of consolidated debt (133,042) Cash and cash equivalents (79,801) Net Debt $1,326,124 Comparable EBITDA $210,000 Net Debt / EBITDA 6.3x (a) Comparable EBITDA reflects mid-point of guidance range. ($ in 000s) 3Q 2013 (a) Preferred equity capitalization $289,102 Consolidated debt 1,299,567 Pro rata share of unconsolidated debt 239,400 Pro rata share of consolidated debt (133,042) Cash and cash equivalents (79,801) Net Debt + Preferreds $1,615,226 Comparable EBITDA $210,000 Net Debt + Preferreds / EBITDA 7.7x (a) Comparable EBITDA reflects mid-point of guidance range. Reconciliation of Net Debt + Preferred Equity / EBITDA Reconciliation of Net Debt / TEV ($ in 000s) 3Q 2013 Consolidated Debt $1,299,567 Pro rata share of unconsolidated debt 239,400 Pro rata share of consolidated debt (133,042) Cash and cash equivalents (79,801) Net Debt $1,326,124 Market Capitalization $1,805,553 Total Debt 1,405,925 Preferred Equity 289,102 Cash and cash equivalents (79,801) Total Enterprise Value $3,420,779 Net Debt / Enterprise Value 38.8% |
Non-GAAP to GAAP Reconciliations 30 |
Non-GAAP to GAAP Reconciliations 31 |
Non-GAAP to GAAP Reconciliations 32 |
Thank You |