On March 31, 2017, Ashford Prime completed the acquisition of the Park Hyatt Beaver Creek (WTCC Beaver Creek Investors V, LLC) in Beaver Creek, Colorado. The fair value of the hotel property acquired at the time of the acquisition was approximately $145.5 million.The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisitions and related transactions occurred on the date indicated or what may result in the future.
ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2016
(in thousands, except share amounts)
|
| | | | | | | | | | | | | | | | |
| | Ashford Prime Consolidated Historical (A) | | WTCC Beaver Creek Investors V, LLC (B) | | Adjustments | | | Ashford Prime
Consolidated
Pro Forma |
| Assets | | | | | | | | |
| Investment in hotel properties, gross | $ | 1,258,412 |
| | $ | 96,495 |
| | $ | 145,500 |
| (C) (i) | | $ | 1,403,912 |
|
| | | | | | (96,495 | ) | (C) (viii) | | |
| Accumulated depreciation | (243,880 | ) | | (17,378 | ) | | 17,378 |
| (C) (viii) | | (243,880 | ) |
| Investment in hotel properties, net | 1,014,532 |
| | 79,117 |
| | 66,383 |
| | | 1,160,032 |
|
| Cash and cash equivalents | 126,790 |
| | 4,430 |
| | (145,500 | ) | (C) (i) | | 150,878 |
|
| | | | | | (5,252 | ) | (C) (ii) | | |
| | | | | | 66,435 |
| (C) (iii) | | |
| | | | | | (2,824 | ) | (C) (ix) | | |
| | | | | | 66,517 |
| (D) | | |
| | | | | | 40,282 |
| (E) | | |
| Restricted cash | 37,855 |
| | 4,600 |
| | — |
| | | 42,455 |
|
| Accounts receivable, net of allowance | 18,194 |
| | 1,956 |
| | — |
| | | 20,150 |
|
| Inventories | 1,479 |
| | 431 |
| | — |
| | | 1,910 |
|
| Note receivable | 8,098 |
| | — |
| | — |
| | | 8,098 |
|
| Deferred costs, net | 1,020 |
| | — |
| | — |
| | | 1,020 |
|
| Prepaid expenses | 3,669 |
| | 659 |
| | — |
| | | 4,328 |
|
| Investment in Ashford Inc., at fair value | 8,407 |
| | — |
| | — |
| | | 8,407 |
|
| Derivative assets | 1,149 |
| | — |
| | — |
| | | 1,149 |
|
| Other assets | 2,249 |
| | 37 |
| | (8 | ) | (C) (iv) | | 2,278 |
|
| Intangible asset, net | 22,846 |
| | — |
| | — |
| | | 22,846 |
|
| Due from Ashford Trust OP, net | 488 |
| | — |
| | — |
| | | 488 |
|
| Due from AQUA U.S. Fund | 2,289 |
| | — |
| | — |
| | | 2,289 |
|
| Due from related party, net | 377 |
| | — |
| | — |
| | | 377 |
|
| Due from third-party hotel managers | 7,555 |
| | 3,716 |
| | — |
| | | 11,271 |
|
| Total assets | $ | 1,256,997 |
| | $ | 94,946 |
| | $ | 86,033 |
| | | $ | 1,437,976 |
|
| Liabilities and Equity | | | | | | | | |
| Liabilities: | | | | | | | | |
| Indebtedness | $ | 764,616 |
| | $ | 59,862 |
| | 67,500 |
| (C) (iii) | | $ | 831,051 |
|
| | | | | | $ | (59,862 | ) | (C) (v) | | |
| | | | | | (1,065 | ) | (C) (iii) | |
|
|
| Accounts payable and accrued expenses | 44,791 |
| | 10,569 |
| | — |
| | | 55,360 |
|
| Dividends payable | 5,038 |
| | — |
| | — |
| | | 5,038 |
|
| Due to Ashford Inc. | 5,085 |
| | — |
| | — |
| | | 5,085 |
|
| Due to affiliate | 2,500 |
| | 14 |
| | (14 | ) | (C) (vi) | | 2,500 |
|
| Due to third-party hotel managers | 973 |
| | — |
| | — |
| | | 973 |
|
| Intangible liability, net | 3,625 |
| | — |
| | — |
| | | 3,625 |
|
| Other liabilities | 1,432 |
| | 264 |
| | (264 | ) | (C) (vii) | | 1,432 |
|
| Total liabilities | 828,060 |
| | 70,709 |
| | 6,295 |
| | | 905,064 |
|
| 5.50% Series B cumulative convertible preferred stock, $.01 par value, 2,890,850 shares issued and outstanding at December 31, 2016 and 4,965,850 shares issued and outstanding as adjusted | 65,960 |
| | — |
| | 40,282 |
| (E) | | 106,242 |
|
| Redeemable noncontrolling interests in operating partnership | 59,544 |
| | — |
| | — |
| | | 59,544 |
|
| Equity: | | | | | | | |
|
| Common stock, $0.01 par value, 200,000,000 shares authorized, 26,021,552 shares issued and outstanding at December 31, 2016 and 31,771,552,shares issued and outstanding as adjusted | 260 |
| | — |
| | 58 |
| (D) | | 318 |
|
| Additional paid-in capital | 401,790 |
| | 23,234 |
| | (5,252 | ) | (C) (ii) | | 468,249 |
|
| | | | | | (8 | ) | (C) (iv) | | |
| | | | | | 59,862 |
| (C) (v) | | |
| | | | | | 14 |
| (C) (vi) | | |
| | | | | | 264 |
| (C) (vii) | | |
| | | | | | 66,459 |
| (D) | | |
| | | | | | (78,114 | ) | (C) (viii) | | |
| Retained earnings (accumulated deficit) | (93,254 | ) | | 1,003 |
| | (2,824 | ) | (C) (ix) | | (96,078 | ) |
| | | | | | (1,003 | ) | (C) (viii) | | |
| Total stockholders’ equity of the Company | 308,796 |
| | 24,237 |
| | 39,456 |
| | | 372,489 |
|
| Noncontrolling interest in consolidated entities | (5,363 | ) | | — |
| | — |
| | | (5,363 | ) |
| Total equity | 303,433 |
| | 24,237 |
| | 39,456 |
| | | 367,126 |
|
| Total liabilities and equity | $ | 1,256,997 |
| | $ | 94,946 |
| �� | $ | 86,033 |
| | | $ | 1,437,976 |
|
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| |
| (A) | Represents the historical consolidated balance sheet of Ashford Prime as of December 31, 2016, as reported in its Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 28, 2017. |
| |
| (B) | Represents the historical balance sheet of WTCC Beaver Creek Investors V, LLC as of December 31, 2016, as included in Exhibit 99.1 of this Current Report on Form 8-K/A. |
| |
| (C) | Represents adjustments for Ashford Prime’s purchase of the Park Hyatt Beaver Creek as of December 31, 2016, which includes; (i) the cash consideration to be paid for the acquisition of Park Hyatt Beaver Creek; (ii) cash consideration paid for the net working capital acquired from the acquisition of the Park Hyatt Beaver Creek; (iii) the cash proceeds and deferred loan costs associated with the financing of a mortgage loan in connection with the acquisition of the Park Hyatt Beaver Creek; (iv) the removal of derivatives not acquired; (v) the removal of indebtedness not assumed; (vi) the removal of due to affiliates not assumed; (vii) the removal of other liabilities not assumed; (viii) the removal of the historical cost of the investment in hotel property of the Park Hyatt Beaver Creek; and (ix) direct and incremental transaction costs associated with the acquisition of Park Hyatt Beaver Creek. |
| |
| (D) | Represents the sale of 5.8 million shares of Ashford Prime common stock in a public offering. |
| |
| (E) | Represents the sale of 2.1 million shares of Ashford Prime Series B cumulative convertible preferred stock in a public offering. |
ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2016
(in thousands, except share and per share amounts) |
| | | | | | | | | | | | | | | | |
| | Ashford Prime
Consolidated
Historical(A) | | WTCC Beaver Creek Investors V, LLC (B) | | Adjustments | | | Ashford Prime
Consolidated
Pro Forma |
| Revenue | | | | | | | | |
| Rooms | $ | 287,844 |
| | $ | 18,777 |
| | $ | — |
| | | $ | 306,621 |
|
| Food and beverage | 95,618 |
| | 11,622 |
| | — |
| | | 107,240 |
|
| Other | 22,267 |
| | 10,148 |
| | — |
| | | 32,415 |
|
| Total hotel revenue | 405,729 |
| | 40,547 |
| | — |
| | | 446,276 |
|
| Other | 128 |
| | — |
| | — |
| | | 128 |
|
| Total revenue | 405,857 |
| | 40,547 |
| | — |
| | | 446,404 |
|
| Expenses | | | | | | | | — |
|
| Hotel operating expenses: | | | | | | | | — |
|
| Rooms | 65,541 |
| | 3,880 |
| | — |
| | | 69,421 |
|
| Food and beverage | 68,471 |
| | 8,340 |
| | — |
| | | 76,811 |
|
| Other expenses | 113,114 |
| | 12,716 |
| | — |
| | | 125,830 |
|
| Management fees | 15,456 |
| | 3,124 |
| | — |
| | | 18,580 |
|
| Total hotel operating expenses | 262,582 |
| | 28,060 |
| | — |
| | | 290,642 |
|
| Property taxes, insurance and other | 20,539 |
| | 2,354 |
| | — |
| | | 22,893 |
|
| Depreciation and amortization | 45,897 |
| | 3,718 |
| | (627 | ) | (C) (i) | | 48,988 |
|
| Advisory services fee | 14,955 |
| | — |
| | — |
| | | 14,955 |
|
| Transaction costs | 457 |
| | — |
| | — |
| | | 457 |
|
| Corporate general and administrative | 14,286 |
| | — |
| | — |
| | | 14,286 |
|
| Total operating expenses | 358,716 |
| | 34,132 |
| | (627 | ) | | | 392,221 |
|
| Operating income (loss) | 47,141 |
| | 6,415 |
| | 627 |
| | | 54,183 |
|
| Equity in earnings (loss) of unconsolidated entity | (2,587 | ) | | — |
| | — |
| | | (2,587 | ) |
| Interest income | 167 |
| | — |
| | — |
| | | 167 |
|
| Gain (loss) on sale of hotel property | 26,359 |
| | — |
| | — |
| | | 26,359 |
|
| Other income (expense) | (165 | ) | | — |
| | — |
| | | (165 | ) |
| Interest expense and amortization of premiums and loan costs | (40,881 | ) | | (2,579 | ) | | (138 | ) | (C) (ii) | | (43,598 | ) |
| Write-off of loan costs and exit fees | (2,595 | ) | | — |
| | — |
| | | (2,595 | ) |
| Unrealized gain (loss) on investment in Ashford Inc. | (1,970 | ) | | — |
| | — |
| | | (1,970 | ) |
| Unrealized gain (loss) on derivatives | 425 |
| | (7 | ) | | 7 |
| (C) (iii) | | 425 |
|
| Income (loss) before income taxes | 25,894 |
| | 3,829 |
| | 496 |
| | | 30,219 |
|
| Income tax (expense) benefit | (1,574 | ) | | — |
| | (440 | ) | (C) (iv) | | (2,014 | ) |
| Net income (loss) | 24,320 |
| | 3,829 |
| | 56 |
| | | 28,205 |
|
| (Income) loss from consolidated entities attributable to noncontrolling interests | (3,105 | ) | | — |
| | — |
| | | (3,105 | ) |
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (1,899 | ) | | — |
| | (267 | ) | (C) (v) | | (2,166 | ) |
| Net income (loss) attributable to the Company | 19,316 |
| | 3,829 |
| | (211 | ) | | | 22,934 |
|
| Preferred dividends | (3,860 | ) | | — |
| | (2,853 | ) | (D) | | (6,713 | ) |
| Net income (loss) available to common stockholders | $ | 15,456 |
| | $ | 3,829 |
| | $ | (3,064 | ) | | | $ | 16,221 |
|
| Income (loss) per share – basic: | | | | | | | |
|
| Net income (loss) attributable to common stockholders | $ | 0.57 |
| | | | | | | $ | 0.49 |
|
| Weighted average common shares outstanding—basic | 26,648 |
| | | | 5,750 |
| (E) | | 32,398 |
|
| Income (loss) per share – diluted: | | | | | | | |
|
| Net income (loss) attributable to common stockholders | $ | 0.55 |
| | | | | | | $ | 0.49 |
|
| Weighted average common shares outstanding—diluted | 31,195 |
| | | | 5,750 |
| (E) | | 36,945 |
|
| Dividends declared per common share | $ | 0.46 |
| | | | | | | $ | 0.46 |
|
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
| (A) | Represents the historical consolidated statement of operations of Ashford Prime for the year ended December 31, 2016, as reported in its Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 28, 2017. |
| |
| (B) | Represents the historical consolidated statement of operations of WTCC Beaver Creek Investors V, LLC for the the year ended December 31, 2016, as reported in this Current Report on Form 8-K/A. |
| |
| (C) | Represents adjustments for Ashford Prime’s purchase of the Park Hyatt Beaver Creek Resort & Spa for the year ended December 31, 2016; which include; (i) adjustment to depreciation expense based on Ashford Prime's new cost basis in the acquired hotel. The estimated useful lives are 7.5 to 39 years for building and improvements and 1.5 to 5 years for furniture, fixtures and equipment ; (ii) an adjustment to reflect the interest expense associated with the financing of a mortgage loan related to the acquisition of the Park Hyatt Beaver Creek; (iii) adjustment to unrealized loss on derivatives related to derivatives not acquired; (iv) adjustment to income tax expense to reflect total income tax expense as if the consolidated group filed with the Park Hyatt Beaver Creek for the year ended December 31, 2016; (v) adjustment to (income) loss attributable to redeemable noncontrolling interests in operating partnership for the incremental operating results of the Park Hyatt Beaver Creek based on ownership interests of 11.78% for the year ended December 31, 2016. |
| |
| (D) | adjustment for preferred dividends on 2.1 million shares of our Series B cumulative convertible preferred stock for the year ended December 31, 2016. |
| |
| (E) | adjustment to basic and diluted weighted average shares outstanding for the year ended December 31, 2016, for the issuance of 5.8 million shares of Ashford Prime common stock. Additionally, the assumed conversion of the 2.1 million shares of Ashford Prime Series B cumulative convertible preferred stock into 2.7 million shares of Ashford Prime common stock has been excluded from the pro forma diluted EPS calculation for the year ended December 31, 2016, as the impact would be anti-dilutive. |
