Eagle Hospitality Announces 2006 Results.2006 FFO FFO See: Funds from operations Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share Increases 19.7% to $0.91 COVINGTON, Ky. -- 2006 Highlights: * Net income to common shareholders of $3.1 million * FFO of $0.91 per diluted share * EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $45.3 million (48.1% increase over prior year) * RevPAR increases 10.6% over prior year * Acquisition of the Embassy Suites Boston at Logan International Airport For the Logan airport in Billings, Montana, see . Logan International Airport (IATA: BOS, ICAO: KBOS, FAA LID: BOS) in the East Boston neighborhood of Boston, Massachusetts, United States (and partly in the Town of Winthrop, Massachusetts), is one * Board forms Special Committee to explore strategic alternatives * Conference call scheduled for February 22, 2007 at 9:00 am Eastern Time to discuss results & 2007 Outlook. Eagle Hospitality Properties Trust, Inc. (NYSE NYSE See: New York Stock Exchange :EHP EHP abbr. 1. effective horsepower 2. electric horsepower ) today announced that 2006 net income available to common shareholders increased 4.4% to $3.1 million from $3.0 million in 2005. Fourth quarter 2006 net income available to common shareholders decreased to $0.2 million from $0.3 million in fourth quarter 2005. 2006 funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO") increased 19.7% to $0.91 per diluted share, or $21.3 million, compared with $0.76 per diluted share, or $17.5 million, in 2005. For the fourth quarter, FFO increased 16.7% to $0.21 per diluted share, or $5.0 million, compared to $0.18 per diluted share or $4.2 million in the fourth quarter 2005. Net income available to common shareholders and FFO for 2006 includes the full year of preferred equity dividends, or $8.3 million, compared with half the year in 2005, or $4.5 million. In addition, the current year includes $1.3 million in tax expense, compared with a tax benefit of $2.8 million for the prior year. 2006 earnings before interest, income taxes, depreciation and amortization ("EBITDA") increased 48.1% to $45.3 million from $30.6 million in 2005. Fourth quarter 2006 EBITDA increased 28.1% to $11.5 million from $9.0 million in the fourth quarter 2005. FFO and EBITDA are non-GAAP operating measures. Please see the disclosure at the end of this release regarding these non-GAAP measures. "2006 proved to be an exciting year for our Company. The asset management function was fully integrated into our Company's business model through a combination of internal and external resources. Aggressive revenue management strategies were combined with cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. initiatives to generate favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. revenue growth and profitability gains," stated Bill Blackham, President and Chief Executive Officer of Eagle Hospitality. "The portfolio outperformed the overall lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a industry and our expectations," remarked Mr. Blackham. "Our recent post-IPO acquisitions continue to generate impressive RevPAR gains and our Midwest hotels greatly benefited from our asset management efforts that combined resulted in a terrific year." Hotel Operating Performance: 4Q RevPAR exceeded management's expectations due to continued strong transient A malfunction that occurs at random intervals and lasts for a short duration such as a spike or surge in a power line or a memory cell that intermittently fails. See spike and power surge. transient - 1. demand throughout the portfolio. The combination of capital investments and asset management initiatives yielded favorable results. 2006 portfolio room revenue per available room ("RevPAR") increased 10.6% to $98.52 from $89.10 for 2005. Average daily rate ("ADR ADR - Astra Digital Radio ") rose to $136.60, a 7.9% improvement over 2005, while occupancy increased 2.5% to 72.1%. Please see the RevPAR table disclosure at the end of this release regarding the hotels included the in current year and prior year results. "It was encouraging to see a notable improvement from our Midwest properties in 2006," noted Mr. Blackham. "Following a challenging 2005, our Midwest hotels generated more than a 10% RevPAR increase, outperforming the overall industry." Fourth quarter 2006 RevPAR exceeded the Company's expectations with a 12.2% increase to $93.24 from $83.09 in 2005. ADR rose to $137.89, an 8.4% improvement over 2005, while occupancy increased 3.5% to 67.6%. Embassy Suites San Juan San Juan, city, Argentina San Juan (săn wän, Span. sän hwän), city (1991 pop. 353,476), capital of San Juan prov., W Argentina. It is a commercial and industrial center in an agricultural region. Hotel & Casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. , Embassy Suites Cleveland, and Embassy Suites Columbus/Dublin led the portfolio's RevPAR growth. Embassy Suites San Juan Hotel & Casino benefited from exceptional revenue management as the hotel improved its fourth quarter RevPAR by more than 37% over the prior year period. The hotel's management team made impressive gains during the second half of the year as the hotel's market share on a trailing twelve month basis improved by over 9% versus prior year. In addition, hurricane threats and some renovation disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in 2005 created favorable year-over-year comparisons. For the fourth quarter 2006, Embassy Suites Cleveland and Embassy Suites Columbus/Dublin both experienced double-digit RevPAR growth over the prior year period. The hotels benefited from several large corporate preferred bookings during the quarter which provided both properties with a significant base of business. The hotels worked closely with the Company's asset management team to ensure that revenue opportunities were maximized. The Company's hotels generated $52.3 million of hotel operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for 2006 compared with $45.6 million for 2005. Hotel operating income margins across the Company's portfolio increased 169 basis points ("bps") from the prior year. Hotels that generated the largest hotel operating income increases in 2006 include: Marriott Burr burr (bur) bur. burr n. Variant of bur. burr 1. a plant seed capsule carrying many hooked structures which catch in animal coats thus promoting dissemination of the plant. Ridge (increased more than 131%), Embassy Suites Phoenix/Scottsdale (increased more than 22%), and Embassy Suites San Juan Hotel & Casino (increased more than 22%). Please see the hotel operating income table disclosure at the end of this release regarding the hotels included in the current year and prior year results. Marriott Burr Ridge performed above management's projections every quarter in 2006. Strong leadership at the property working together with asset management facilitated aggressive sales efforts. The hotel contributed one of the largest hotel operating income gains to the portfolio due to strong revenue growth and a successful property tax appeal. Aggressive revenue strategies and ongoing market mix changes throughout the year at Embassy Suites Phoenix/Scottsdale promoted robust ADR growth. The combination of strong rate growth and cost control programs enabled the hotel to produce more than a 22% increase in hotel operating income over 2005. During the fourth quarter 2006, the Company's hotel operating income margins increased 279 bps from fourth quarter 2005. The hotel operating income margin increase was largely due to Embassy Suites Cleveland and Embassy Suites San Juan Hotel & Casino's strong revenue growth and controlled operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . Although the Company saw a meaningful improvement from its Midwest properties, transient demand in the Cincinnati metropolitan area remained soft. Enplanements into the Cincinnati Airport were significantly affected by the reduction in Delta Air Lines flights. In addition, group business proved to be an ongoing challenge at the Cincinnati Marriott and Embassy Suites Cincinnati. Both hotels were negatively impacted by the decreased activity at the Northern Kentucky Convention Center located directly across the street. In addition to competition from newly renovated convention centers in the region, groups booking business at the convention center were also increasingly rate sensitive. The hotels have been working closely with asset management to increase self-contained group business and improve their transient business strategies. Investment Strategy: Company acquired Embassy Suites Boston for $53.4 million on July 21, 2006. Total acquisitions completed since the Company's IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. now exceeds $224 million. In 2006, the Company executed on its investment strategy of acquiring high-quality hotels in high barrier-to-entry urban and select resort markets with the acquisition of Embassy Suites Boston at Logan International Airport. Eagle Hospitality acquired the 273-room Embassy Suites on July 21, 2006 for $53.4 million ($196,000 per suite). Prism Hotels & Resorts ("Prism") was selected to manage the hotel because of its urban hotel experience, as well as its substantial turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. expertise. The Company is encouraged with the upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside opportunities it believes Prism will produce at the hotel. At present, Embassy Suites Boston is still in its transitional phase. Prism intends to increase corporate and leisure business at the hotel while eliminating lower rated business for a strong 2007. The acquisition of Embassy Suites Boston demonstrated management's continued discipline and commitment to its investment strategy and its ability to find opportunities. The Company has increased its portfolio diversification Portfolio diversification Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country). since the Company's October 2004 IPO through the acquisition of four properties in dynamic markets. For 2006, the four properties acquired by the Company since the IPO generated an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. EBITDA yield of approximately 10% on the Company's total invested capital. Capital Reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. Program: Company invested $10.7 million during 2006 in existing assets. During 2006, the Company invested $10.7 million in capital improvements throughout the portfolio. Major investments included: $2.4 million at Hyatt Regency Regency, in British history, the period of the last nine years (1811–20) of the reign of George III, when the king's insanity had rendered him unfit to rule and the government was vested in the prince of Wales (later George IV) as regent. Rochester, $2.1 million at Embassy Suites San Juan Hotel & Casino, $2.1 million at Hilton Glendale, and $2.1 million at Embassy Suites Tampa. Investments at Hyatt Regency Rochester created a high quality guest product that enabled management to drive room rates. The benefits from this capital investment are expected to continue into 2007. A new guest room bedding package and select case good and furniture upgrades were made at Embassy Suites San Juan Hotel & Casino. In addition, the hotel's business center was enhanced. The Company believes these property-level investments have allowed the hotel's management team to improve its transient room rates and better compete against neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. resorts. At Hilton Glendale, the Company refurbished the hotel's meeting space, restaurant, and fitness center with only minimal group displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. . The Company believes that the meeting space renovations will enable the hotel to better compete for future group business. Guest room refurbishments and physical system upgrades completed during the year at the Embassy Suites Tampa are also expected to improve the overall guest experience. Subsequent Events: Formation of Special Committee On January 29, 2007, the Company announced that its Board of Directors established a Special Committee of independent directors to explore strategic alternatives to enhance shareholder value, including a possible sale of the Company. The Special Committee has retained Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. as its financial advisor. There can be no assurance that the
exploration of strategic alternatives will result in any transaction.
The Company does not anticipate any further public comment on this issue
unless and until the Special Committee deems it necessary and
appropriate.
As a result of the Board of Director's decision to establish a Special Committee of independent directors to explore strategic alternatives, the Company has suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. its marketing efforts to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose selected stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. assets. Capital Structure & Capacity As of December 31, 2006, the Company had $253.5 million of debt outstanding, which included $163.8 million (65%) of fixed-rate debt with a weighted average interest rate of 5.5%. The remaining $89.7 million (35%) was floating-rate debt with a weighted average interest rate of 7.6%. The combined mortgage debt of the Company had a weighted average interest rate of 6.2%. Interest expense for the twelve month period was $13.7 million, resulting in a corporate EBITDA to interest coverage ratio of 3.3 times with a debt to adjusted EBITDA ratio of approximately 5.4 times. At the end of the year, the Company had $3.7 million of unrestricted cash and cash equivalents on its balance sheet and $3.1 million of restricted cash. Dividends On December 1, 2006 Eagle Hospitality's Board of Directors declared a quarterly cash dividend of $0.175 per share of its common stock and partnership units for the fourth quarter of 2006. The fourth quarter dividend was paid on January 16, 2007 to holders of record on December 29, 2006. This represents a 6.9% annualized dividend yield based on the Company's closing common share price of $10.18 on February 20, 2007. The Board of Directors also declared a quarterly dividend of $0.515625 per 8.25% Series A Cumulative Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Share for the period from October 1, 2006 to December 31, 2006. The preferred dividend preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) was paid on January 2, 2007 to holders of record on December 14, 2006. During 2006, the Company paid $0.70 per common share in distributions. For tax purposes, approximately 20% of these distributions are a return of capital and 80% is ordinary income. These distributions occurred in January, April, July and October to our common shareholders and the operating partnership unit holders at $0.175 per share/unit. 2007 Outlook: "We expect that 2007 will be another good year for our Company and the lodging industry," commented Mr. Blackham. "Industry fundamentals remain strong and we expect room rates to drive healthy industry-wide RevPAR growth, although double-digit growth as in recent years will be less likely." The Company believes that its post-IPO acquisitions still have upside opportunities and that they will continue to produce favorable results given their dynamic locations. In addition, Management is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that asset management will continue to locate additional opportunities within the Company's stabilized assets as it did in 2006. Increases in wages, benefits, taxes, and energy are expected throughout the lodging industry and Eagle's portfolio. Increased brand-related costs and fees will also impact margins. Cost-saving opportunities will be investigated to help offset these rising operating costs operating costs npl → gastos mpl operacionales . As a result, the Company expects to see moderate but positive hotel operating income margin increases over 2006. Capital investments scheduled for 2007 and those made throughout the portfolio since 2005 are expected to improve the portfolio's competitive positioning. The Company anticipates investing approximately $13.5 - $16.5 million during 2007. Major investments are planned at Embassy Suites Boston ($1.5 million) for brand related programs, Hyatt Regency Rochester ($1.3 million) for public space renovations, Embassy Suites Phoenix/Scottsdale ($1.9 million) for meeting room renovations and guestroom enhancements, Hilton Glendale ($2.8 million) for guestroom enhancements, and Embassy Suites Columbus/Dublin ($1.4 million) for guestroom enhancements. The Company's 2007 outlook and major assumptions are as follows: [TABLE OMITTED] These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are subject to risks and uncertainties and exclude the impact of any strategic initiatives undertaken as a result of the Special Committee's review of strategic alternatives. See our disclosure regarding forward-looking statements at the end of this release. Earnings Conference Call and Webcast Eagle Hospitality plans to host a conference call on February 22, 2007 at 9:00 am Eastern Time. The number to call for the live interactive teleconference is 1-800- 322-5044, participant code 93912871. The live webcast of Eagle Hospitality's quarterly conference call will be available online at the Company's website, www.eaglehospitality.com, as well as http://phx.corporate-ir.net/phoenix.zhtml? p=irol-eventDetails&c=179874&eventID=1469799 (Due to its length, this URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) on February 22, 2007 beginning at 9:00 am Eastern Time. The webcast replay will be available until July 2, 2007 through the Company's website, www.eaglehospitality.com. About Eagle Hospitality Properties Trust Eagle Hospitality is a real estate investment trust focused on investment opportunities in the full-service and all-suite hotel industry. The Company owns 13 upper upscale full-service and all-suite hotels encompassing approximately 3,516 guestrooms with premier brands including Hilton, Embassy Suites, Marriott and Hyatt. The hotels are located in Arizona, California, Colorado, Florida, New York Florida is the name of some places in the U.S. state of New York:
Ohio is located at (41.556900, -89.460995)GR1. , Massachusetts and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . More information on the Company can be found at www.eaglehospitality.com. Cautionary Note Regarding Forward-Looking Statements Certain matters discussed in this press release, including its attachments, such as our expected operating performance, growth potential, improving market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , expected market demand, increased room rates, returns on refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur projects, improved operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , ability to obtain additional financing on favorable terms, disposition activity and acquisition activity, are forward-looking statements within the meaning of the federal securities laws. These statements are distinguished by use of the words "anticipates," "will," "expect," "intends" and words of similar meaning. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, including continued recovery in the Company's specific markets, the hotel industry as a whole, and increased penetration by the Company's hotels in their respective competitive markets, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from our current expectations are detailed in the Company's 2006 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and subsequent SEC reports. The Company does not undertake a duty to update forward-looking statements, including its expected operating results for the first quarter or the full year 2007. The Company may, in its discretion, provide information in future public announcements regarding its outlook that may be of interest to the investment community. The format and extent of future outlooks may be different from the format and extent of the information contained in this release.
Eagle Hospitality Properties Trust, Inc.
Definitions and Reconciliations of Non-GAAP
Financial Measures and Other Terms
The financial results presented above and in the accompanying financial tables include the results of the Company for the fourth quarter and year ended December 31, 2006. This release, including this attachment, contains certain non-GAAP financial measures, such as FFO and EBITDA. The definition and calculation of these non-GAAP financial measures as set forth in this release may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to below should not be considered an alternative to net income as an indication of our performance. In addition, these non-GAAP financial measures do not represent cash generated from operating activities in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and therefore should not be considered as an alternative measure of liquidity or as indicative of cash available to fund cash needs. The Company believes that FFO and EBITDA are key measures of a REIT's financial performance and should be considered along with, but not as an alternative to, net income, as a measure of the Company's operating performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is included in the accompanying financial tables. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] FFO is calculated in accordance with the definition of FFO, adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts "). FFO is calculated by the Company as net income or loss computed in accordance with GAAP, adjusted for gains or losses on sales of previously depreciated Depreciated may refer to:
[TABLE OMITTED] For comparative purposes this schedule includes the Embassy Suites Phoenix-Scottsdale, which was acquired on February 24, 2005, the Hilton Glendale, which was acquired on June 23, 2005, the Embassy Suites Hotel & Casino San Juan ("Embassy San Juan"), which was acquired on June 28, 2005 and the Embassy Suites Boston at Logan International Airport, for the entire period ending December 31, 2006 and 2005. This schedule assumes that the 3rd party lease for the Embassy Suites San Juan did not exist in order to compare hotel operational performance. [TABLE OMITTED] For comparative purposes this schedule includes the Embassy Suites Phoenix-Scottsdale, which was acquired on February 24, 2005, the Hilton Glendale, which was acquired on June 23, 2005, the Embassy Suites Hotel & Casino San Juan ("Embassy San Juan"), which was acquired on June 28, 2005 and the Embassy Suites Boston at Logan International Airport, for the entire period ending December 31, 2006 and 2005. This schedule assumes that the 3rd party lease for the Embassy Suites San Juan did not exist in order to compare hotel operational performance. [TABLE OMITTED] |
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