MeriStar Hospitality Corporation Reports Fourth-Quarter, Year-End Results
WASHINGTON, D.C. -- MeriStar Hospitality Corporation
Funds from operations (FFO) for the 2000 fourth quarter were $49.6 million, with FFO per diluted share advancing 4.5 percent to $0.93. Revenues rose 7.5 percent to $94.2 million. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) improved 5.7 percent to $79.3 million. FFO per share for the fourth quarter exceeded consensus analysts' expectations by $0.01.
The company's hotels reported strong fourth quarter operating results, with fourth-quarter revenue per available room (RevPAR) improving 6.0 percent to $70.05. Average daily rate (ADR) rose 4.7 percent to $105.18, and occupancy improved 1.2 percent to 66.6 percent.
For the full year 2000, FFO increased to $226.1 million and FFO per diluted share rose 5.9 percent to $4.11. Revenues rose 6.9 percent to $400.8 million and EBITDA advanced 6.5 percent to $341.1 million.
RevPAR for all hotels owned for the full year rose 5.7 percent to $77.71. Average daily rate improved 5.6 percent to $107.60 and occupancy increased 0.1 percent to 72.2 percent.
"We had very positive results across our entire portfolio, in every quarter in 2000," said Paul W. Whetsell, chairman and CEO of MeriStar Hospitality. "We saw the same trends of strong room demand and low supply growth in the fourth quarter as we did throughout the year. Northern California properties again posted very strong results in the fourth quarter, with RevPAR increasing 31.3 percent.
Tampa/Clearwater, Southern California and Southwest Florida showed RevPAR improvements of 14.5 percent, 7.6 percent, and 7.5 percent, respectively."
Operating Performance in Significant Markets
RevPAR and EBITDA contributions in significant markets for the
fourth quarter and year-end 2000, are as follows:
Three Months Ended Dec 31, 2000
EBITDA
RevPAR Contribution % of Total
Change in (000's) EBITDA
------- ---------- --------
New Jersey 5.4% $8,730,079 11.1%
Northern California 31.3% 7,841,123 10.0%
Mid-Atlantic 5.2% 7,268,207 9.3%
Southern California 7.6% 5,584,923 7.1%
Southwest Florida 7.5% 5,214,892 6.7%
Orlando 3.6% 4,320,665 5.5%
Tampa/Clearwater 14.5% 3,348,099 4.3%
Chicago 1.8% 3,062,486 3.9%
Dallas 2.0% 2,586,519 3.3%
Houston 1.4% 2,606,023 3.3%
Atlanta 0.8% 2,133,589 2.7%
Connecticut -3.5% 2,020,103 2.6%
Colorado -5.6% 1,524,238 1.9%
Twelve Months Ended Dec 31, 2000
EBITDA
RevPAR Contribution % of Total
Change in (000's) EBITDA
------- ----------- --------
New Jersey 6.3% $34,567,814 10.3%
Northern California 26.2% 31,267,127 9.3%
Mid-Atlantic 8.7% 31,149,974 9.3%
Southern California 12.8% 23,711,603 7.1%
Southwest Florida 6.9% 21,949,067 6.5%
Orlando 3.7% 16,807,851 5.0%
Tampa/Clearwater 3.8% 15,796,711 4.7%
Chicago 1.0% 13,936,636 4.1%
Dallas -2.0% 12,033,625 3.6%
Houston 4.8% 11,692,738 3.5%
Atlanta 1.8% 9,019,707 2.7%
Connecticut 0.8% 8,786,421 2.6%
Colorado -1.9% 7,657,752 2.3%
"We continue to focus on increasing cash flow from our existing assets and strengthening our balance sheet," said John Emery, chief
operating officer. "In mid-January 2001, we sold $500 million of senior, unsecured notes, which mature in 2008 and 2011, and used the proceeds to reduce outstanding debt under our revolving credit facility and term loans. Through this transaction, we have further extended our debt maturities at attractive, long-term fixed rates."
Key Financial Information: Operating Performance in Significant Markets
- Total debt to annual EBITDA of 4.8x
- Annual interest coverage ratio of 2.7x
- $98 million available on revolving line of credit
- Weighted average cost of debt of 7.9%
- Capitalized interest of $2.9 million and $8.6 million, respectively, for the three months and year ended December 31, 2000, compared to $4.4 million and $12.5 million for the same 1999 periodsCapital expenditures were $12.2 million and $63.2 million, respectively, for the quarter and year ended December 31, 2000
- 1.7 million shares were repurchased during the fourth quarter at an average price of 18.72
- Long-Term Debt
Long-term debt as of December 31, 2000 consists of the following:
Balance Interest Rate Maturity
Revolver $ 402,000 LIBOR + 165bps 2003
Term Loan A 300,000 LIBOR + 165bps 2003
Term Loan B 196,000 LIBOR + 200bps 2004
Convertible Notes 154,300 4.75% 2004
Subordinated Notes 202,429 8.75% 2007
CMBS 324,554 7.76% 2009
Mortgage Debt and Other 59,036 8.85% Various
$1,638,319
At December 31, 2000, the company had $700 million of swap agreements that effectively fix 30-day LIBOR at an average rate of 6.54 percent. The maturities on these agreements range from September 2001 to August 2003. In mid-January 2001, $300 million of swaps were terminated in conjunction with the sale of $500 million of senior unsecured notes.
Whetsell said that the company's hotels continue to experience strong demand. "Our January RevPAR was ahead of expectations and our forecasts show continued strength. The dramatic decrease in new supply continues to enhance our ability to maintain growth." Whetsell continued, "We remain comfortable with RevPAR growth estimates in the 3.5 percent to 4.5 percent range for 2001, based on current industry and internal projections. We expect to achieve FFO per share of $1.06-$1.08 for the 2001 first quarter and remain comfortable with our full-year projection of $4.30."
Whetsell said that the company continues to closely monitor changes in the economy and its impact on the REIT's hotels. "We monitor occupancy and rate information through our proprietary internal tracking systems, which allows us to spot trends ahead of the market and respond accordingly. We will proactively modify our marketing and operating strategies if we see a change in demand; however, based on the current performance of our hotels and expected industry fundamentals, we are not making significant modifications at this time."
He noted that the REIT also will benefit from regaining its leases on January 1, 2001 from MeriStar Hotels & Resorts, in accordance with the REIT Modernization Act. "The REIT will now focus closely on the cost side and bottom-line results with our hotel manager MeriStar Hotels & Resorts."
Washington, D.C.-based MeriStar Hospitality Corporation owns 114 principally upscale, full-service hotels in major market and resort locations with 29,090 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree. For more information about MeriStar Hospitality Corporation, visit the company's Web site:
This press release contains forward-looking statements about MeriStar Hospitality Corporation, including those statements regarding future operating results and the timing and composition of revenues, among others. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the following: the ability of the company to successfully implement its acquisition strategy and operating strategy; the company's ability to manage rapid expansion; changes in economic cycles; competition from other hospitality companies; and changes in the laws and government regulations applicable to the company.
MeriStar Hospitality Corporation
Statements of Operations (1)
(Unaudited, in thousands except per share amounts and operating
statistics)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenue
Participating lease
revenue $ 91,017 $ 85,652 $ 391,729 $ 368,012
Office rental and
other revenue 3,201 1,996 9,049 6,892
-------- -------- ---------
Total revenue 94,218 87,648 400,778 374,904
Expenses
Administrative and
general 3,185 1,665 9,445 5,708
Office rental and
other expense 934 506 2,731 1,964
Property taxes,
insurance and other 10,833 10,498 47,481 47,068
Depreciation and
amortization 28,817 29,235 111,947 103,099
Interest expense, net 29,999 25,777 117,524 100,398
-------- -------- ---------
Total expenses 73,768 67,681 289,128 258,237
-------- -------- ---------
Income before minority
interests, income taxes,
gain on sale of assets
and extraordinary gain
/(loss) 20,450 19,967 111,650 116,667
Minority interests 1,797 1,865 10,240 11,069
Income taxes 373 385 2,028 2,102
-------- -------- ---------
Income before gain on sale
of assets and
extraordinary gain/(loss) 18,280 17,717 99,382 103,496
Gain on sale of assets,
net of taxes - - 3,425
Extraordinary gain/(loss),
net of taxes - - 3,054 (4,532)
-------- -------- ---------
Net income $ 18,280 $ 17,717 $ 105,861 $ 98,964
========= ========= ========= =========
Diluted funds from operations
Income before gain on sale
of assets and extraordinary
gain/(loss) $ 18,280 $ 17,717 $ 99,382 $103,496
Minority interest to common
OP unit holders 1,656 1,724 9,675 10,504
Interest on convertible
debt 1,832 2,089 7,488 8,303
Hotel depreciation and
amortization 27,812 29,019 107,996 99,955
Deferred cost on sale
of asset - - 1,542
-------- -------- ---------
$ 49,580 $ 50,549 $ 226,083 $222,258
========= ========= ========= =========
Weighted average number of
diluted shares of common
stock outstanding 53,504 57,074 54,944 57,320
========= ========= ========= =========
Funds from operations per
diluted share $ 0.93 $ 0.89 $ 4.11 $ 3.88
========= ========= ========= =========
(1) Excludes the effect of SAB 101 which would be an increase to
participating lease revenue of $40,290 and $45,894 for the three
months ended December 31, 2000 and 1999, respectively.
Operating Information
EBITDA $ 79,266 $ 74,979 $ 341,121 $ 320,164
Occupancy 66.6% 65.8% 72.2% 72.1%
ADR $ 105.18 $ 100.46 $ 107.60 $ 101.92
RevPAR $ 70.05 $ 66.08 $ 77.71 $ 73.51
RevPAR Increase 6.01% 5.71%