Add
SHO to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| SHO > SEC Filings for SHO > Form 8-K on 25-Jan-2013 | All Recent SEC Filings |
25-Jan-2013
Completion of Acquisition or Disposition of Assets, Results of Ope
On January 25, 2013, Sunstone Hotel Investors, Inc. (the "Company") completed the sale of a four-hotel 1,222-room portfolio and a commercial laundry facility (collectively, the "Portfolio"), in Rochester, Minnesota, to an unaffiliated third party (the "Buyer"), for a gross price of $230.0 million. The four hotels include the 660-room Kahler Grand, the 271-room Kahler Inn & Suites, the 202-room Marriott Rochester and the 89-room Residence Inn by Marriott Rochester. The Company has retained a $25.0 million preferred equity investment in the four-hotel Portfolio that yields an 11% dividend. In addition, the Company has retained a $14.0 million liability related to the Portfolio's pension plan, which could be triggered in certain circumstances, including termination of the pension plan. The Company has also provided a $3.7 million working cash advance to the Buyer that will be repaid to the Company from the Portfolio's available cash flow. Concurrent with the Portfolio sale, the Company has defeased the outstanding $26.7 million mortgage secured by the Kahler Grand for a total cost of approximately $30.0 million, prepaid the $0.4 million loan secured by the commercial laundry facility, and has written off $51,000 in related deferred financing fees.
There are no material relationships between the Buyer and the Company or any of its affiliates, or any director or officer of the Company, or any associate of any such director or officer, other than in respect of the Portfolio sale.
On January 25, 2013, the Company issued a press release reporting its preliminary financial results for the three months and year ended December 31, 2012. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
On January 25, 2013, the Company issued a press release reporting the Portfolio sale and its preliminary earnings results for the three months and year ended December 31, 2012. A copy of that press release is attached to this Current Report on Form 8-K as Exhibit 99.1, and is incorporated by reference herein. The press release has also been posted in the investor relations/press releases section of the Company's website at www.sunstonehotels.com.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
(b) The following pro forma financial statements are furnished herewith:
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2012
Notes to Unaudited Pro Forma Consolidated Balance Sheet as of September 30,
2012
Unaudited Pro Forma Consolidated Statements of Operations for the Nine
Months Ended September 30, 2012 and 2011
Notes to Unaudited Pro Forma Consolidated Statements of Operations for the
Nine Months Ended September 30, 2012 and 2011
Unaudited Pro Forma Consolidated Statements of Operations for the Years
Ended December 31, 2011, 2010 and 2009
Notes to Unaudited Pro Forma Consolidated Statements of Operations for the
Years Ended December 31, 2011, 2010 and 2009
(d) The following exhibits are furnished herewith:
Exhibit No. Description
99.1 Press release dated January 25, 2013
The Company's historical financial information as of and for the nine months ended September 30, 2012 and 2011 was derived from historical information originally reported in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC") on November 6, 2012. The Company's historical information for the years ended December 31, 2011, 2010 and 2009 was derived from its audited historical information originally reported in the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2012.
The following unaudited pro forma financial information gives effect to the following transactions:
† The January 2013 sale of the Kahler Grand, the Kahler Inn & Suites, the Marriott Rochester, the Residence Inn by Marriott Rochester and a commercial laundry facility (the "Portfolio" sale), all located in Rochester, Minnesota for a gross sale price of $230.0 million;
† The January 2013 defeasance of debt secured by the Kahler Grand, and prepayment of debt secured by the commercial laundry facility, along with the related write-off of $51,000 in deferred financing fees; and
† The September 2012 sale of the Doubletree Guest Suites Minneapolis, the Hilton Del Mar, the Marriott Troy and an office building next to the Marriott Troy, along with the August 2012 sale of the Marriott Del Mar (collectively, the "2012 Dispositions").
The unaudited pro forma consolidated balance sheet as of September 30, 2012 is presented as if the Portfolio sale and related repayment of debt in January 2013 had occurred on September 30, 2012. The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2012 and 2011 are presented as if the Portfolio sale and related repayment of debt in January 2013 had occurred on January 1, 2011. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2011, 2010 and 2009 are presented as if the Portfolio sale and related repayment of debt in January 2013 along with the 2012 Dispositions had occurred on January 1, 2009. In the opinion of the Company's management, all significant adjustments necessary to reflect the effects of the Portfolio sale and related repayment of debt along with the 2012 Dispositions transactions that can be factually supported within the SEC regulations covering the preparation of pro forma financial statements have been made.
The unaudited pro forma consolidated financial statements and related notes are presented for informational purposes only and do not purport to represent the Company's financial position or results of operations as if the transactions had occurred on the dates discussed above. They also do not project or forecast the Company's consolidated financial position or results of operations for any future date or period.
The unaudited pro forma financial statements should be read together with the Company's historical consolidated financial statements and related notes included in the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 2012 filed with the SEC on November 6, 2012, and the Company's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on February 28, 2012. The pro forma adjustments are based on available information and upon assumptions that management believes are reasonable; however, the Company cannot assure you that actual results would not differ from the pro forma information and perhaps in material and adverse ways. No attempt has been made to update matters in the unaudited pro forma financials except to the extent expressly provided above.
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2012
(In thousands, except share data)
Sunstone Hotel
Sunstone Hotels Investors,
Investors, Inc. Portfolio Repayment of Inc.
Historical Sale (A) Debt (B) Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 164,469 $ 195,255 $ (29,907 ) $ 329,817
Restricted cash 76,790 - (730 ) 76,060
Accounts receivable, net 28,534 (2,756 ) - 25,778
Inventories 2,664 (1,430 ) - 1,234
Prepaid expenses 9,554 (461 ) - 9,093
Total current assets 282,011 190,608 (30,637 ) 441,982
Investment in hotel properties,
net 2,800,682 (115,326 ) - 2,685,356
Other real estate, net 9,855 (9,667 ) - 188
Deferred financing fees, net 12,865 - (60 ) 12,805
Goodwill 13,088 (3,683 ) - 9,405
Other assets, net 26,441 3,596 - 30,037
Total assets $ 3,144,942 $ 65,528 $ (30,697 ) $ 3,179,773
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 25,267 $ (2,006 ) $ - $ 23,261
Accrued payroll and employee
benefits 22,326 - - 22,326
Due to Third-Party Managers 9,050 (5,386 ) - 3,664
Dividends payable 7,437 - - 7,437
Other current liabilities 37,829 (996 ) - 36,833
Current portion of notes
payable 77,579 - (1,520 ) 76,059
Total current liabilities 179,488 (8,388 ) (1,520 ) 169,580
Notes payable, less current
portion 1,318,102 - (26,209 ) 1,291,893
Capital lease obligations, less
current portion 15,630 - - 15,630
Other liabilities 14,789 14,000 - 28,789
Total liabilities 1,528,009 5,612 (27,729 ) 1,505,892
Commitments and contingencies
Preferred stock, Series C
Cumulative Convertible
Redeemable Preferred Stock,
$0.01 par value, 4,102,564
shares authorized, issued and
outstanding at September 30,
2012, liquidation preference of
$24.375 per share 100,000 - - 100,000
Equity:
Stockholders' equity:
Preferred stock, $0.01 par
value, 100,000,000 shares
authorized.
8.0% Series A Cumulative
Redeemable Preferred Stock,
7,050,000 shares issued and
outstanding at September 30,
2012, stated at liquidation
preference of $25.00 per share 176,250 - - 176,250
8.0% Series D Cumulative
Redeemable Preferred Stock,
4,600,000 shares issued and
outstanding at September 30,
2012, stated at liquidation
preference of $25.00 per share 115,000 - - 115,000
Common stock, $0.01 par value,
500,000,000 shares authorized,
135,237,438 shares issued and
outstanding at September 30,
2012 1,352 - - 1,352
Additional paid in capital 1,492,528 - - 1,492,528
Retained earnings 147,329 55,176 (2,968 ) 199,537
Cumulative dividends (467,707 ) - - (467,707 )
Accumulated other comprehensive
loss (4,740 ) 4,740 - -
Total stockholders' equity 1,460,012 59,916 (2,968 ) 1,516,960
Non-controlling interest in
consolidated joint ventures 56,921 - - 56,921
Total equity 1,516,933 59,916 (2,968 ) 1,573,881
Total liabilities and equity $ 3,144,942 $ 65,528 $ (30,697 ) $ 3,179,773
|
See accompanying notes to unaudited pro forma consolidated balance sheet.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2012
The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2012 is based on the Company's historical unaudited consolidated balance sheet as of September 30, 2012, as adjusted to assume that the following transactions which occurred in January 2013, had occurred on September 30, 2012:
† The sale of the Kahler Grand, the Kahler Inn & Suites, the Marriott Rochester, the Residence Inn by Marriott Rochester and a commercial laundry facility (the "Portfolio" sale), all located in Rochester, Minnesota for a gross sale price of $230.0 million; and
† The defeasance of debt on the Kahler Grand and the prepayment of debt on the commercial laundry facility, whose debt totaled $27.7 million as of September 30, 2012.
In management's opinion, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2012 is presented for illustrative purposes only, and is not necessarily indicative of what the Company's actual financial position would have been had the transactions described above occurred on September 30, 2012, nor does it purport to represent the Company's future financial position.
Notes and Management Assumptions: A. Reflects the Portfolio sale as follows (in thousands): Gross sale price $ 230,000 Preferred equity investment (1) (25,000 ) Estimated closing costs (6,092 ) Working capital advances (2) (3,653 ) Net sale price $ 195,255 |
(2) Includes a working cash advance to the buyer of the Portfolio that will be repaid to the Company from the Portfolio's available cash flow.
Other balance sheet adjustments for the Portfolio sale reflect the disposal of the net book value of the investment in hotel properties and related capital accounts and associated increase to retained earnings for the net estimated gain on sale using values in existence as the September 30, 2012 pro forma consolidated balance sheet date.
B. Reflects the Repayment of Debt as follows:
† Defeasance of debt on the Kahler Grand and the prepayment of debt on the commercial laundry facility, whose debt totaled $27.7 million as of September 30, 2012;
† Total defeasance and prepayment costs of $2.9 million, which will be included in discontinued operations in the Company's first quarter 2013 statement of operations;
† Write-off of related deferred financing fees which totaled approximately $60,000 as of September 30, 2012. This write-off will be included in discontinued operations in the Company's first quarter 2013 statement of operations; and
† Release of $0.7 million of restricted cash from the lender escrow reserves.
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(In thousands, except per share data)
Sunstone Hotel Sunstone Hotel
Investors, Inc. Portfolio Repayment of Debt Investors, Inc.
Historical Sale (A) (B) Pro Forma
REVENUES
Room $ 443,022 $ (27,693 ) $ - $ 415,329
Food and beverage 148,574 (5,564 ) - 143,010
Other operating 51,243 (13,465 ) - 37,778
Total revenues 642,839 (46,722 ) - 596,117
OPERATING EXPENSES
Room 112,566 (5,546 ) - 107,020
Food and beverage 104,426 (4,656 ) - 99,770
Other operating 20,074 (8,300 ) - 11,774
Advertising and promotion 31,760 (1,386 ) - 30,374
Repairs and maintenance 24,561 (1,765 ) - 22,796
Utilities 21,039 (2,200 ) - 18,839
Franchise costs 22,443 (1,022 ) - 21,421
Property tax, ground lease and
insurance 52,237 (1,994 ) - 50,243
Property general and
administrative 73,202 (4,790 ) - 68,412
Corporate overhead 18,975 (88 ) - 18,887
Depreciation and amortization 102,899 (6,331 ) - 96,568
Total operating expenses 584,182 (38,078 ) - 546,104
Operating income 58,657 (8,644 ) - 50,013
Interest and other income 155 - - 155
Interest expense (59,309 ) - 1,209 (58,100 )
Loss on extinguishment of debt (191 ) - - (191 )
LOSS FROM CONTINUING OPERATIONS $ (688 ) $ (8,644 ) $ 1,209 $ (8,123 )
Basic and diluted loss
attributable to continuing
operations per common share $ (0.01 ) $ (0.07 )
Weighted average basic and
diluted common shares
outstanding 124,271 124,271
|
See accompanying notes to unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2012 and 2011.
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
(In thousands, except per share data)
Sunstone Hotel Sunstone Hotel
Investors, Inc. Portfolio Repayment of Debt Investors, Inc.
Historical Sale (A) (B) Pro Forma
REVENUES
Room $ 380,826 $ (26,716 ) $ - $ 354,110
Food and beverage 124,838 (5,370 ) - 119,468
Other operating 45,454 (12,884 ) - 32,570
Total revenues 551,118 (44,970 ) - 506,148
OPERATING EXPENSES
Room 96,160 (5,273 ) - 90,887
Food and beverage 93,165 (4,728 ) - 88,437
Other operating 18,112 (8,115 ) - 9,997
Advertising and promotion 27,250 (1,392 ) - 25,858
Repairs and maintenance 22,094 (1,685 ) - 20,409
Utilities 20,914 (2,530 ) - 18,384
Franchise costs 19,046 (944 ) - 18,102
Property tax, ground lease and
insurance 43,641 (2,048 ) - 41,593
Property general and
administrative 64,595 (4,351 ) - 60,244
Corporate overhead 20,771 (84 ) - 20,687
Depreciation and amortization 88,241 (5,659 ) - 82,582
Impairment loss 10,862 - - 10,862
Total operating expenses 524,851 (36,809 ) - 488,042
Operating income 26,267 (8,161 ) - 18,106
Equity in earnings of
unconsolidated joint venture 21 - - 21
Interest and other income 2,970 - - 2,970
Interest expense (55,449 ) - 1,305 (54,144 )
Gain on remeasurement of equity
interests 69,230 - - 69,230
INCOME FROM CONTINUING
OPERATIONS $ 43,039 $ (8,161 ) $ 1,305 $ 36,183
Basic and diluted income
available to continuing
operations per common share $ 0.37 $ 0.31
Weighted average basic and
diluted common shares
outstanding 117,186 117,186
|
|
|