Exhibit 99.1
CAREY WATERMARK INVESTORS INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Our pro forma condensed consolidated balance sheet as of September 30, 2019 has been prepared as if the significant disposition during the fourth quarter of 2019 (noted herein) had occurred as of September 30, 2019. Our pro forma condensed consolidated statements of operations for the nine months ended September 30, 2019 and for the year ended December 31, 2018 have been prepared based on our historical financial statements as if the significant disposition during the fourth quarter of 2019 had occurred on January 1, 2018. Pro forma adjustments are intended to reflect the estimated effect of our disposition activity described in Note 2. In our opinion, all adjustments necessary to reflect the effects of this disposition have been made.
The pro forma condensed consolidated financial information for the nine months ended September 30, 2019 should be read in conjunction with our historical consolidated financial statements and notes thereto in our Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2019. The pro forma condensed consolidated financial information for the year ended December 31, 2018 should be read in conjunction with our historical consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2018. This pro forma information is presented for informational purposes only and does not purport to be indicative of our financial results as if the transaction reflected herein had occurred on the date disclosed above or been in effect during the periods indicated above, nor are they necessarily indicative of our financial position or results of operations of future periods. The provisional accounting for the disposition is preliminary and therefore subject to change. Any such changes could have a material effect on the pro forma condensed consolidated financial information.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, 2019
(in thousands)
|
| | | | | | | | | | | | |
| | | CWI Historical | | Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center Disposition | | Pro Forma |
| Assets | | | | | | |
| Investments in real estate: | | | | | | |
| Hotels, at cost | | $ | 2,085,575 |
| | $ | (82,205 | ) | A | $ | 2,003,370 |
|
| Accumulated depreciation | | (295,974 | ) | | 12,433 |
| A | (283,541 | ) |
| Net investments in hotels | | 1,789,601 |
| | (69,772 | ) | | 1,719,829 |
|
| Assets held for sale | | 15,203 |
| | — |
| | 15,203 |
|
| Equity investments in real estate | | 106,890 |
| | — |
| | 106,890 |
|
| Operating lease right-of-use assets | | 47,461 |
| | — |
| | 47,461 |
|
| Cash and cash equivalents | | 78,831 |
| | 34,309 |
| B | 113,140 |
|
| Intangible assets, net | | 65,184 |
| | — |
| | 65,184 |
|
| Restricted cash | | 61,443 |
| | (2,831 | ) | A | 58,612 |
|
| Accounts receivable, net | | 22,091 |
| | (397 | ) | A | 21,694 |
|
| Other assets | | 24,761 |
| | (410 | ) | A | 24,351 |
|
| Total assets | | $ | 2,211,465 |
| | $ | (39,101 | ) | | $ | 2,172,364 |
|
| Liabilities and Equity | | | | | | |
| Non-recourse debt, net, including debt attributable to Assets held for sale | | $ | 1,274,847 |
| | $ | (50,796 | ) | A | $ | 1,224,051 |
|
| WPC Credit Facility | | 35,000 |
| | — |
| | 35,000 |
|
| Accounts payable, accrued expenses and other liabilities | | 107,047 |
| | (1,629 | ) | A | 105,418 |
|
| Operating lease liabilities | | 71,540 |
| | — |
| | 71,540 |
|
| Due to related parties and affiliates | | 3,040 |
| | — |
| | 3,040 |
|
| Other liabilities held for sale | | 208 |
| | — |
| | 208 |
|
| Distributions payable | | 20,171 |
| | — |
| | 20,171 |
|
| Total liabilities | | 1,511,853 |
| | (52,425 | ) | | 1,459,428 |
|
| Commitments and contingencies | | | | | | |
| Common stock | | 142 |
| | — |
| | 142 |
|
| Additional paid-in capital | | 1,195,949 |
| | — |
| | 1,195,949 |
|
| Distributions and accumulated losses | | (548,011 | ) | | 13,324 |
| C | (534,687 | ) |
| Accumulated other comprehensive loss | | (266 | ) | | — |
| | (266 | ) |
| Total stockholders’ equity | | 647,814 |
| | 13,324 |
| | 661,138 |
|
| Noncontrolling interests | | 51,798 |
| | — |
| | 51,798 |
|
| Total equity | | 699,612 |
| | 13,324 |
| | 712,936 |
|
| Total liabilities and equity | | $ | 2,211,465 |
| | $ | (39,101 | ) | | $ | 2,172,364 |
|
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Nine Months Ended September 30, 2019
(in thousands except share and per share amounts)
|
| | | | | | | | | | | | |
| | | CWI Historical | | Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center Disposition | | Pro Forma |
| Revenue | | | | | | |
| Hotel Revenues | | | | | | |
| Rooms | | $ | 298,126 |
| | $ | (13,291 | ) | D | $ | 284,835 |
|
| Food and beverage | | 127,126 |
| | (434 | ) | D | 126,692 |
|
| Other operating revenue | | 40,483 |
| | (822 | ) | D | 39,661 |
|
| Business interruption income | | 3,627 |
| | — |
| | 3,627 |
|
| Total Hotel Revenues | | 469,362 |
| | (14,547 | ) | | 454,815 |
|
| Expenses | | | | | | |
| Rooms | | 66,227 |
| | (3,022 | ) | D | 63,205 |
|
| Food and beverage | | 86,866 |
| | (303 | ) | D | 86,563 |
|
| Other hotel operating expenses | | 21,366 |
| | (438 | ) | D | 20,928 |
|
| Property taxes, insurance, rent and other | | 55,539 |
| | (1,086 | ) | D | 54,453 |
|
| Sales and marketing | | 43,672 |
| | (2,007 | ) | D | 41,665 |
|
| General and administrative | | 41,624 |
| | (1,248 | ) | D | 40,376 |
|
| Repairs and maintenance | | 15,013 |
| | (376 | ) | D | 14,637 |
|
| Management fees | | 12,971 |
| | (436 | ) | D | 12,535 |
|
| Utilities | | 11,510 |
| | (304 | ) | D | 11,206 |
|
| Depreciation and amortization | | 57,845 |
| | (1,825 | ) | D | 56,020 |
|
| Total Hotel Operating Expenses | | 412,633 |
| | (11,045 | ) | | 401,588 |
|
| Asset management fees to affiliate and other expenses | | 11,073 |
| | (315 | ) | D | 10,758 |
|
| Corporate general and administrative expenses | | 9,211 |
| | (9 | ) | D | 9,202 |
|
| Gain on hurricane-related property damage | | (880 | ) | | — |
| | (880 | ) |
| Transaction costs | | 1,483 |
| | — |
| | 1,483 |
|
| Total Expenses | | 433,520 |
| | (11,369 | ) | | 422,151 |
|
| Operating income before net gain on sale of real estate | | 35,842 |
| | (3,178 | ) | | 32,664 |
|
| Net gain on sale of real estate | | 5,881 |
| | — |
| | 5,881 |
|
| Operating Income | | 41,723 |
| | (3,178 | ) | | 38,545 |
|
| Interest expense | | (50,205 | ) | | 1,473 |
| | (48,732 | ) |
| Equity in earnings of equity method investments in real estate, net | | 101 |
| | — |
| | 101 |
|
| Net loss on extinguishment of debt | | (136 | ) | | — |
| | (136 | ) |
| Other income | | 605 |
| | (1 | ) | D | 604 |
|
| Loss before income taxes | | (7,912 | ) | | (1,706 | ) | | (9,618 | ) |
| Provision for income taxes | | (2,133 | ) | | (52 | ) | D | (2,185 | ) |
| Net Loss | | (10,045 | ) | | (1,758 | ) | | (11,803 | ) |
| Income attributable to noncontrolling interests | | (6,474 | ) | | — |
| | (6,474 | ) |
| Net Loss Attributable to CWI Stockholders | | $ | (16,519 | ) | | $ | (1,758 | ) | | $ | (18,277 | ) |
| Basic and Diluted Loss Per Share | | $ | (0.12 | ) | | | | $ | (0.13 | ) |
| Basic and Diluted Weighted-Average Shares Outstanding | | 141,332,118 |
| | | | 141,332,118 |
|
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
CAREY WATERMARK INVESTORS INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Year Ended December 31, 2018
(in thousands except share and per share amounts)
|
| | | | | | | | | | | |
| | CWI Historical | | Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center Disposition | | Pro Forma |
| Revenues | | | | | |
| Hotel Revenues | | | | | |
| Rooms | $ | 385,189 |
| | $ | (16,637 | ) | D | $ | 368,552 |
|
| Food and beverage | 159,020 |
| | (603 | ) | D | 158,417 |
|
| Other operating revenue | 46,099 |
| | (1,075 | ) | D | 45,024 |
|
| Business interruption income | 23,579 |
| | — |
| | 23,579 |
|
| Total Hotel Revenues | 613,887 |
| | (18,315 | ) | | 595,572 |
|
| Expenses | | | | | |
| Rooms | 88,761 |
| | (3,778 | ) | D | 84,983 |
|
| Food and beverage | 112,708 |
| | (387 | ) | D | 112,321 |
|
| Other hotel operating expenses | 26,400 |
| | (516 | ) | D | 25,884 |
|
| Property taxes, insurance, rent and other | 62,586 |
| | (1,104 | ) | D | 61,482 |
|
| Sales and marketing | 57,763 |
| | (2,675 | ) | D | 55,088 |
|
| General and administrative | 53,417 |
| | (1,567 | ) | D | 51,850 |
|
| Repairs and maintenance | 19,857 |
| | (518 | ) | D | 19,339 |
|
| Management fees | 17,849 |
| | (549 | ) | D | 17,300 |
|
| Utilities | 14,701 |
| | (352 | ) | D | 14,349 |
|
| Depreciation and amortization | 77,170 |
| | (2,375 | ) | D | 74,795 |
|
| Total Hotel Operating Expenses | 531,212 |
| | (13,821 | ) | | 517,391 |
|
| Asset management fees to affiliate and other expenses | 15,294 |
| | (421 | ) | D | 14,873 |
|
| Corporate general and administrative expenses | 11,602 |
| | (8 | ) | D | 11,594 |
|
| Gain on hurricane-related property damage | (1,340 | ) | | — |
| | (1,340 | ) |
| Total Expenses | 556,768 |
| | (14,250 | ) | | 542,518 |
|
| Operating income before net gain on sale of real estate | 57,119 |
| | (4,065 | ) | | 53,054 |
|
| Net gain on sale of real estate | 31,260 |
| | — |
| | 31,260 |
|
| Operating income | 88,379 |
| | (4,065 | ) | | 84,314 |
|
| Interest expense | (66,597 | ) | | 2,014 |
| D | (64,583 | ) |
| Equity in losses of equity method investments in real estate, net | (1,315 | ) | | — |
| | (1,315 | ) |
| Net loss on extinguishment of debt | (511 | ) | | — |
| | (511 | ) |
| Other income | 665 |
| | — |
| | 665 |
|
| Income before income taxes | 20,621 |
| | (2,051 | ) | | 18,570 |
|
| Provision for income taxes | (4,877 | ) | | (83 | ) | D | (4,960 | ) |
| Net Income | 15,744 |
| | (2,134 | ) | | 13,610 |
|
| Income attributable to noncontrolling interests | (7,688 | ) | | — |
| | (7,688 | ) |
| Net Income Attributable to CWI Stockholders | $ | 8,056 |
| | $ | (2,134 | ) | | $ | 5,922 |
|
| Basic and Diluted Income Per Share | $ | 0.06 |
| | | | $ | 0.04 |
|
| Basic and Diluted Weighted-Average Shares Outstanding | 139,376,034 |
| | | | 139,376,034 |
|
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
CAREY WATERMARK INVESTORS INCORPORATED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Basis of Presentation
The pro forma condensed consolidated balance sheet as of September 30, 2019 and the pro forma condensed consolidated statement of operations for the nine months ended September 30, 2019 were derived from our historical consolidated financial statements included in our Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2019. The pro forma condensed consolidated statement of operations for the year ended December 31, 2018 was derived from our historical consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Note 2. Pro Forma Adjustments
Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center Disposition
On November 21, 2019, Carey Watermark Investors Incorporated sold its 100% ownership interest in the Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center to an unaffiliated third-party for a contractual sales price of $85.5 million with net proceeds after the repayment of the related mortgage loan of approximately $34.1 million, including the release of $3.1 million of restricted cash.
Balance Sheet Adjustments
A. These adjustments represent the elimination of the carrying value of the assets and liabilities of the Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center.
B. These adjustments represent the net proceeds received from the disposition of the Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center and were calculated as follows:
|
| | | | |
| | | Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center Disposition |
| Net proceeds from purchaser, net of closing costs | | $ | 34,057 |
|
| Changes in working capital | | 252 |
|
| Net pro forma cash proceeds from purchaser, net of closing costs | | $ | 34,309 |
|
C. This adjustment represents the pro forma gain on sale of real estate and is not reflected in the pro forma condensed consolidated statements of operations as the effect of the transaction is nonrecurring.
Statements of Operations Adjustments
D. These adjustments represent the elimination of the revenue and expenses of Hampton Inn & Suites/Homewood Suites Denver Downtown Convention Center that were recorded during the nine months ended September 30, 2019 and the year ended December 31, 2018.
