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| Morgans Hotel Group Reports Third Quarter 2008 Results |
NEW YORK--(BUSINESS WIRE)--Nov. 5, 2008--Morgans Hotel Group Co. (NASDAQ: MHGC) ("MHG") today reported financial results for the third quarter ended September 30, 2008
Highlights
-- Revenue per available room ("RevPAR") for Owned Comparable
Hotels(1) increased by 9.5% over the comparable period in
2007, compared to the domestic industry average decrease of
1.1%.
-- RevPAR for System-Wide Comparable Hotels(2) increased by 1.9%
(3.5% in constant dollars) over the comparable period in 2007.
-- EBITDA margins at System-Wide Comparable Hotels increased by
90 basis points over the comparable period in 2007. MHG
achieved a 1% reduction in operating expenses due to the
implementation of plans put into effect in the first quarter
of 2008 in anticipation of an economic slowdown.
-- Adjusted EBITDA(3) excluding hotels under renovation increased
by 7.8% over the comparable period in 2007, a growth rate of
4.0 times the related RevPAR growth rate.
-- A restructuring plan was implemented in October 2008 which is
projected to result in approximately $10 million in annual
cost savings including approximately $6 million in corporate
expenses.
-- In September 2008, MHG received a return of its $30 million
deposit on the Echelon project in Las Vegas and eliminated
approximately $41 million of future funding obligations for
the project.
-----
(1)"Owned Comparable Hotels" includes all wholly-owned hotels operated
by MHG except for hotels under renovation during the period or the
relevant comparison period for the prior year and development
projects. Owned Comparable Hotels for the third quarter of 2008
excludes Mondrian Los Angeles and Morgans, which were under
renovation in the third quarter of 2008, and Royalton, which was
under renovation in the third quarter of 2007.
(2)"System-Wide Comparable Hotels" includes all hotels operated by MHG
except for hotels under renovation during the period or the
relevant comparison period for the prior year and development
projects. System-Wide Comparable Hotels for the third quarter of
2008 excludes Mondrian Los Angeles and Morgans, which were under
renovation in the third quarter of 2008, Royalton, which was under
renovation in the third quarter of 2007, and the Hard Rock Hotel &
Casino in Las Vegas ("Hard Rock"), which was added in February
2007 and under renovation/expansion in 2008.
(3)Adjusted earnings before interest, taxes, depreciation and
amortization, as further described below.
-- MHG authorized a $30 million stock repurchase program on July
1, 2008, and completed the program in October 2008.
-- MHG's liquidity, as measured by cash and cash equivalents and
availability under its revolving credit facility, was
approximately $242.1 million at September 30, 2008.
-- With the completion of the redesigned Mondrian Los Angeles and
Morgans properties in September 2008, MHG has no significant
deferred capital requirements at its owned hotels.
-- Mondrian South Beach is currently on schedule to open in time
for the 2008/2009 winter season.
-- The construction of Mondrian SoHo and Ames Boston and the
expansion of Hard Rock are all currently on schedule to open
in the latter half of 2009.
"Due to proactive cost saving initiatives and strong performance at our core properties, we delivered solid results in the third quarter, outperforming our peers despite the slowdown in the economy," said Fred Kleisner, President and CEO of MHG. "RevPAR at Owned Comparable Hotels increased 9.5% for the quarter, compared to a domestic industry average decrease of 1.1% for the same period, demonstrating the strength of our underlying business model and brands. Additionally, we have built-in EBITDA growth for 2009 from recently completed renovations and four development and expansion projects, each of which has financing in place." "We are in a very strong position in terms of our balance sheet, cash and financial obligations. The company has significant liquidity available, is generating significant cash-flow with limited financial commitments and no significant near-term consolidated debt maturities. We are very confident in our ability to manage, and continue to expand, the business through the current downturn. We believe our unique assets, combined with effective cost saving initiatives, strong liquidity and built-in EBITDA growth, position us well for long-term value creation." Third Quarter Operating Results RevPAR for MHG's System-Wide Comparable Hotels was $246.65, an increase of 1.9% (3.5% in constant dollars) for the third quarter of 2008 over the comparable period in 2007. RevPAR at Owned Comparable Hotels increased by 9.5% to $237.91, led by Delano and Hudson. EBITDA margins at System-Wide Comparable Hotels improved by 90 basis points as compared to the comparable period in 2007. MHG achieved this increase through a 1% reduction in comparable operating costs at these hotels due to the implementation of cost saving initiatives related to labor, marketing and other hotel level expenses. Adjusted EBITDA excluding hotels under renovation increased by 7.8% from the comparable period in 2007 as a result of cost saving initiatives. Due to an estimated $4.0 million of EBITDA displacement at Mondrian LA, Morgans and Hard Rock, which were under renovation and classified as non-comparable hotels in the third quarter of 2008, Adjusted EBITDA decreased by 11.7% to $21.2 million. During the quarter, MHG's percentage ownership interest at Hard Rock, based on cash contributions, was reduced from 27.4% to 20.5%, resulting in a weighted average of 22.9% for the quarter and a lower proportionate share of both Adjusted Debt and Adjusted EBITDA. Had MHG's percentage interest remained at the 2007 level of 33.3%, Adjusted EBITDA would have been approximately $1.0 million higher in the third quarter of 2008. MHG's concentration in key international gateway cities such as New York, Miami and San Francisco drove RevPAR growth in excess of the U.S. industry average growth for the quarter. An increase in business from international guests offset declines in domestic travel. MHG recorded a net loss of $9.0 million for the third quarter of 2008, compared to a net loss of $10.0 million in the comparable period in 2007. Balance Sheet and Liquidity As of September 30, 2008, consolidated debt excluding the Clift lease obligation was $648.9 million. MHG's cash and cash equivalents balance at September 30, 2008 was $59.7 million. As of September 30, 2008, MHG's liquidity, measured by cash and cash equivalents and availability under its revolving credit facility, was $242.1 million. As of September 30, 2008, there were no borrowings outstanding under MHG's revolving credit facility, which is secured by three owned hotels - Delano, Royalton and Morgans. All of MHG's long-term debt at September 30, 2008 was at fixed rates, either directly or as a result of hedging arrangements. As of September 30, 2008, MHG estimates that its total future commitments in 2008 and 2009 for development projects currently consist of approximately $30 million. These include approximately $10 million for Mondrian South Beach during the fourth quarter of 2008, $5 million of which has been funded to date, $11 million to fund the letter of credit posted for the Hard Rock expansion in 2009, and approximately $4 million for the creation of 30 new hotel rooms from the conversion of SRO ("Single Room Occupancy") rental units at Hudson in 2009. With the re-launch of Mondrian Los Angeles and Morgans in September 2008, all major renovations have been completed and there are no significant deferred capital requirements at our owned hotels. In October 2008, MHG completed its $30 million stock repurchase plan authorized on July 1, 2008 of which approximately $14.5 million was expended during the third quarter. In total, approximately 2.8 million shares were repurchased by the Company under this plan. As of November 5, 2008, there were approximately 29.4 million shares of MHG outstanding and approximately 1.0 million operating company units outstanding, which may be redeemed for common stock. Development Activity The following outlines MHG's development projects currently under construction and the expected completion dates of the projects.
2008 2009
---- ----
Mondrian South Beach x
Hard Rock Expansion x
Mondrian SoHo x
Ames Boston x
MHG is also in the process of converting the first phase of approximately 30 SRO units at Hudson into additional hotel rooms which it expects to complete in the first half of 2009. MHG intends to pursue the conversion of the remaining 70 SRO units into hotel rooms over the next several years. 2008 Outlook The global economic environment has had an adverse impact on travel since the middle of September and it is difficult to predict future results. Through September 2008, the Company was on target to achieve its Adjusted EBITDA guidance of $97 million to $100 million for 2008. However due to the recent trends in the economy and the slowdown we have experienced in travel and demand in our markets, MHG is lowering its 2008 guidance as follows:
Owned Comparable Hotel RevPAR Growth 1% to 3%
System-Wide Comparable Hotel RevPAR Growth: 0% to (2%)
Adjusted EBITDA: $97 million to $100
million
The above annual amounts reflect approximately $12.0 to $15.0 million in estimated EBITDA displacement due to the renovations at Mondrian Los Angeles, Morgans and Hard Rock. As a result, MHG believes that the 2008 Adjusted EBITDA level is not indicative of the normalized "run rate" Adjusted EBITDA of the portfolio. Although MHG is in the process of formulating its outlook for 2009, the following should be noted:
-- Based on our historical performance, a 1% change in RevPAR is
estimated to impact Adjusted EBITDA by approximately $2
million, before taking into account recent major expense
reductions.
-- Approximately $9.0 million of the estimated EBITDA
displacement in 2008 related to the out of service rooms at
Mondrian Los Angeles and Morgans. These renovations were
completed in September 2008 and all rooms at these hotels have
been fully renovated and are back in service.
-- In October 2008, MHG implemented a restructuring plan which is
projected to reduce operating costs by approximately $10
million annually. This is comprised of approximately $6
million in corporate expense reductions and approximately $4
million in hotel operating expense reductions.
Conference Call
MHG will host a conference call to discuss the third quarter financial results today at 5:00 PM Eastern time. The call will be webcast live over the Internet at www.morganshotelgroup.com under the About Us, Investor Overview section. Participants should follow the instructions provided on the website for the download and installation of audio applications necessary to join the webcast. The call can also be accessed live over the phone by dialing 800-683-1525 or 973-872-3197 for international callers; the password is 69508338. A replay of the call will be available two hours after the call and can be accessed by dialing 800-642-1687 or 706-645-9291 for international callers; the password is 69508338. The replay will be available from November 5, 2008 through November 12, 2008. About Morgans Hotel Group Morgans Hotel Group Co. (NASDAQ: MHGC) operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. MHG has other property transactions in various stages of completion, including projects in Miami Beach, Florida; Chicago, Illinois; SoHo, New York; Las Vegas, Nevada; Palm Springs, California; Boston, Massachusetts; and Dubai, UAE. For more information please visit www.morganshotelgroup.com. Forward-Looking and Cautionary Statements Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; risks associated with the acquisition, development and integration of properties; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; the impact of any material litigation; the loss of key members of our senior management; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in MHG's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and other documents filed by MHG with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of the date hereof, based upon information known to management as of the date hereof, and MHG assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized.
----------------------------------------------------------------------
Income Statement
(In Thousands, except per
share amounts)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues :
Rooms $ 45,500 $ 39,974 $138,521 $132,502
Food & beverage 23,269 24,222 76,392 76,572
Other hotel 3,134 3,182 9,957 10,425
--------- --------- --------- ---------
Total hotel revenues 71,903 67,378 224,870 219,499
Management and other fees 5,799 4,720 14,887 13,691
--------- --------- --------- ---------
Total revenues 77,702 72,098 239,757 233,190
Operating Costs and Expenses :
Rooms 12,097 11,061 37,162 36,044
Food & beverage 16,816 16,185 54,538 50,977
Other departmental 1,792 1,846 5,801 5,816
Hotel, selling, general and
administrative 15,003 13,742 45,375 43,845
Property taxes, insurance and
other 5,447 3,534 13,229 13,490
--------- --------- --------- ---------
Total hotel operating
expenses 51,155 46,368 156,105 150,172
Corporate expenses :
Stock based compensation 4,781 10,664 12,130 16,065
Other 7,575 7,450 22,872 20,664
Depreciation and amortization 7,587 5,055 19,696 14,739
--------- --------- --------- ---------
Total operating costs and
expenses 71,098 69,537 210,803 201,640
Operating income 6,604 2,561 28,954 31,550
Interest expense, net 10,222 10,690 31,053 32,504
Equity in loss of
unconsolidated joint ventures 7,617 5,931 16,526 12,867
Minority interest in joint
ventures 683 461 3,282 2,583
Other non-operating (income)
loss 3,472 3,229 5,940 (888)
--------- --------- --------- ---------
Pre tax loss (15,390) (17,750) (27,847) (15,516)
Income taxes benefit (6,109) (7,415) (10,621) (6,498)
--------- --------- --------- ---------
Net loss before minority
interest (9,281) (10,335) (17,226) (9,018)
Minority interest (284) (314) (520) (274)
Net income (loss) $ (8,997) $(10,021) $(16,706) $ (8,744)
Weighted aveage shares
outstanding - diluted 31,231 34,068 31,953 32,771
Loss per share $ (0.29) $ (0.29) $ (0.52) $ (0.27)
----------------------------------------------------------------------
Hotel Operating (In Constant Dollars, if
Statistics (In Actual Dollars) different)
Three Months Three Months
Ended Sept. 30, % Ended Sept. 30, %
2008 2007 Change 2008 2007 Change
------- ------- ------ ------- ------- ------
Hudson
Occupancy 95.7% 94.1% 1.7%
ADR $282.99 $267.26 5.9%
RevPAR $270.82 $251.49 7.7%
Delano
Occupancy 77.1% 57.4% 34.3%
ADR $415.06 $401.89 3.3%
RevPAR $320.01 $230.68 38.7%
Clift
Occupancy 86.3% 81.0% 6.5%
ADR $250.49 $257.68 -2.8%
RevPAR $216.17 $208.72 3.6%
Mondrian Scottsdale
Occupancy 44.1% 52.1% -15.4%
ADR $133.75 $151.08 -11.5%
RevPAR $ 58.98 $ 78.71 -25.1%
Total Owned -
Comparable
Occupancy 84.8% 81.2% 4.4%
ADR $280.56 $267.68 4.8%
RevPAR $237.91 $217.36 9.5%
St. Martins Lane
Occupancy 71.9% 78.2% -8.1% 71.9% 78.2% -8.1%
ADR $442.14 $460.07 -3.9% $454.27 $443.63 2.4%
RevPAR $317.90 $359.77 -11.6% $326.62 $346.92 -5.9%
Sanderson
Occupancy 72.0% 81.6% -11.8% 72.0% 81.6% -11.8%
ADR $505.04 $536.55 -5.9% $518.90 $517.38 0.3%
RevPAR $363.63 $437.82 -16.9% $373.61 $422.18 -11.5%
Shore Club
Occupancy 63.5% 60.5% 5.0%
ADR $295.58 $320.06 -7.6%
RevPAR $187.69 $193.64 -3.1%
System-wide -
Comparable
Occupancy 79.7% 78.1% 2.2% 79.7% 78.1% 2.2%
ADR $309.32 $310.02 -0.2% $311.17 $307.15 1.3%
RevPAR $246.65 $242.00 1.9% $248.13 $239.76 3.5%
Morgans
Occupancy 83.0% 84.5% -1.8%
ADR $404.02 $333.82 21.0%
RevPAR $335.34 $282.08 18.9%
Royalton
Occupancy 91.8%
ADR $383.22 $ -
RevPAR $351.80 $ -
Mondrian LA
Occupancy 61.4% 81.2% -24.4%
ADR $353.72 $333.71 6.0%
RevPAR $217.18 $270.97 -19.9%
Hard Rock(1)(2)
Occupancy 92.4% 96.1% -3.9%
ADR $190.00 $223.54 -15.0%
RevPAR $175.56 $214.82 -18.3%
----------------------------------------------------------------------
Hotel Operating (In Constant Dollars, if
Statistics (In Actual Dollars) different)
Nine Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2008 2007 Change 2008 2007 Change
------- ------- ------ ------- ------- ------
Hudson
Occupancy 91.2% 91.4% -0.2%
ADR $277.22 $261.84 5.9%
RevPAR $252.82 $239.32 5.6%
Delano
Occupancy 82.8% 73.7% 12.3%
ADR $538.31 $549.09 -2.0%
RevPAR $445.72 $404.68 10.1%
Clift
Occupancy 77.8% 73.2% 6.3%
ADR $258.01 $256.13 0.7%
RevPAR $200.73 $187.49 7.1%
Mondrian Scottsdale
Occupancy 55.4% 59.1% -6.3%
ADR $201.52 $198.18 1.7%
RevPAR $111.64 $117.12 -4.7%
Total Owned -
Comparable
Occupancy 82.5% 80.9% 2.0%
ADR $299.32 $287.60 4.1%
RevPAR $246.94 $232.67 6.1%
St. Martins Lane
Occupancy 75.4% 77.4% -2.6% 75.4% 77.4% -2.6%
ADR $444.60 $448.37 -0.8% $444.60 $439.73 1.1%
RevPAR $335.23 $347.04 -3.4% $335.23 $340.35 -1.5%
Sanderson
Occupancy 74.3% 77.4% -4.0% 74.3% 77.4% -4.0%
ADR $507.57 $521.08 -2.6% $507.57 $511.04 -0.7%
RevPAR $377.12 $403.32 -6.5% $377.12 $395.54 -4.7%
Shore Club
Occupancy 67.1% 66.0% 1.7%
ADR $393.18 $426.81 -7.9%
RevPAR $263.82 $281.69 -6.3%
System-wide -
Comparable
Occupancy 79.2% 78.3% 1.1% 79.2% 78.3% 1.1%
ADR $336.33 $334.15 0.7% $336.33 $332.69 1.1%
RevPAR $266.37 $261.64 1.8% $266.30 $260.40 2.3%
Morgans
Occupancy 78.5% 85.7% -8.4%
ADR $341.31 $314.19 8.6%
RevPAR $267.93 $269.26 -0.5%
Royalton
Occupancy 87.2% 86.9% 0.3%
ADR $385.57 $328.92 17.2%
RevPAR $336.22 $285.83 17.6%
Mondrian LA
Occupancy 53.4% 83.7% -36.2%
ADR $352.60 $324.34 8.7%
RevPAR $188.29 $271.47 -30.6%
Hard Rock(1)(2)
Occupancy 93.6% 95.4% -1.9%
ADR $197.39 $220.92 -10.7%
RevPAR $184.76 $210.76 -12.3%
For comparison purposes, includes January 2007 when MHG did not
(1) operate the hotel.
(2)As customary in the gaming industry, we present average occupancy
and average daily rate for the Hard Rock including
rooms provided on a complimentary basis which is not the practice
in the lodging industry
----------------------------------------------------------------------
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We believe that earnings before interest, income taxes, depreciation and amortization (EBITDA) is a useful financial metric to assess our operating performance before the impact of investing and financing transactions and income taxes. It also facilitates comparison between us and our competitors. Given the significant investments that we have made in the past in property, plant and equipment, depreciation and amortization expense comprises a meaningful portion of our cost structure. We believe that EBITDA will provide investors with a useful tool for assessing the comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. We disclose Adjusted EBITDA because we believe it provides a meaningful comparison to our EBITDA as it excludes other non-operating (income) expenses that do not relate to the on-going performance of our assets and excludes the operating performance of assets in which we do not have a fee simple ownership interest. It also excludes stock-based compensation expense. The use of EBITDA and Adjusted EBITDA has certain limitations. Our presentation of EBITDA and Adjusted EBITDA may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation expense for various long-term assets, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not reflect capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation, interest and income tax expense, capital expenditures and other items both in our reconciliations to our GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The term EBITDA is not defined under accounting principles generally accepted in the United States, or U.S. GAAP, and EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. In addition, EBITDA is impacted by reorganization of businesses and other restructuring-related charges. When assessing our operating performance, you should not consider this data in isolation, or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as we do. Adjusted Debt We disclose Adjusted Debt because we believe it provides a more meaningful comparison to our Adjusted EBITDA and is a useful tool to assess the value of MHG. Adjusted Debt is defined as long-term debt and capital lease obligations under U.S. GAAP less the lease obligation related to Clift. ---------------------------------------------------------------------- A reconciliation of net income (loss), the most directly comparable U.S. GAAP measures, to EBITDA and Adjusted EBITDA for each of the respective periods indicated is as follows:
EBITDA Reconciliation
(In Thousands) Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
------------------ ------------------
2008 2007 2008 2007
------- ------- -------- -------
Net loss $(8,997) $(10,021) $(16,706) $(8,744)
Interest expense, net 10,222 10,690 31,053 32,504
Income tax expense (6,109) (7,415) (10,621) (6,498)
Depreciation and amortization
expense 7,587 5,055 19,696 14,739
Proportionate share of interest
expense
from unconsolidated joint
ventures 9,080 11,316 21,393 24,626
Proportionate share of
depreciation expense
from unconsolidated joint
ventures 2,119 2,221 8,252 6,528
Proportionate share of
depreciation expense
of consolidated joint ventures (126) (228) (311) (444)
Minority interest (284) (314) (520) (274)
-------- --------- --------- --------
EBITDA 13,492 11,304 52,236 62,437
Add : Other non operating
expense (income) 3,472 3,229 5,940 (888)
Add : Other non operating
expense
from unconsolidated joint
ventures 2,103 799 6,336 3,229
Less : Clift (2,620) (1,969) (6,074) (4,857)
Add : Stock based compensation 4,781 10,664 12,130 16,065
-------- --------- --------- --------
Adjusted EBITDA $21,228 $ 24,027 $ 70,568 $75,986
----------------------------------------------------------------------
Room Revenue Analysis Three Months Nine Months
(In Thousands, except
percentages) Ended Sept. 30, % Ended Sept. 30, %
--------------- -----------------
2008 2007 Change 2008 2007 Change
------- ------- ------ -------- -------- ------
Hudson $20,057 $18,619 8% $ 55,754 $ 52,576 6%
Delano 5,709 4,140 38% 23,694 21,536 10%
Clift 7,222 6,969 4% 19,958 18,590 7%
Mondrian Scottsdale 1,054 1,404 -25% 5,931 6,203 -4%
------- ------- ------ -------- -------- ------
Total Owned -
Comparable 34,042 31,132 9% 105,337 98,905 7%
Morgans 1,288 2,931 -56% 5,480 8,304 -34%
Royalton 5,434 - n/m 15,479 7,733 100%
Mondrian LA 4,737 5,911 -20% 12,226 17,560 -30%
------- ------- ------ -------- -------- ------
Total Owned $45,501 $39,974 14% $138,522 $132,502 5%
Hotel Revenue Analysis Three Months Nine Months
(In Thousands, except
percentages) Ended Sept. 30, % Ended Sept. 30, %
--------------- -----------------
2008 2007 Change 2008 2007 Change
------- ------- ------ -------- -------- ------
Hudson $26,048 $25,327 3% $ 72,822 $ 70,789 3%
Delano 11,929 9,093 31% 48,002 41,896 15%
Clift 11,585 11,240 3% 32,641 31,189 5%
Mondrian Scottsdale 2,171 3,404 -36% 11,735 12,579 -7%
------- ------- ------ -------- -------- ------
Total Owned -
Comparable 51,733 49,064 5% 165,200 156,453 6%
Morgans 3,585 5,745 -38% 13,215 16,900 -22%
Royalton 6,766 - n/m 20,499 10,286 99%
Mondrian LA 9,819 12,569 -22% 25,957 35,860 -28%
------- ------- ------ -------- -------- ------
Total Owned $71,903 $67,378 7% $224,871 $219,499 2%
----------------------------------------------------------------------
Hotel EBITDA Analysis Three Months Nine Months
(In Thousands, except Ended Sept. 30, Ended Sept. 30,
percentages) % %
----------------- ----------------
2008 2007 Change 2008 2007 Change
------- ------- ------ ------- ------- ------
Hudson $10,262 $10,173 1% $28,601 $27,568 4%
Delano 3,197 1,785 79% 17,473 14,553 20%
Clift 2,620 1,969 33% 6,074 4,857 25%
Mondrian Scottsdale -
Owned (633) (321) 97% 892 (476) n/m
-------- -------- ------ ------- -------- ------
Owned Comparable
Hotels 15,446 13,606 14% 53,040 46,502 14%
St Martins Lane 1,728 1,974 -12% 5,854 5,948 -2%
Sanderson 1,234 1,594 -23% 3,631 3,342 9%
Shore Club 136 108 26% 739 661 12%
-------- -------- ------ ------- -------- ------
Joint Venture
Comparable Hotels 3,098 3,676 -16% 10,224 9,951 3%
Total Comparable
Hotels 18,544 17,282 7% 63,264 56,453 12%
Morgans 295 1,326 -78% 2,021 3,691 -45%
Royalton 1,704 - n/m 4,554 2,582 76%
Mondrian LA - Owned 2,734 4,867 -44% 6,471 13,504 -52%
Hard Rock - Joint
Venture 2,329 4,696 -50% 8,287 11,531 -28%
-------- -------- ------ ------- -------- ------
Total Hotels $25,606 $28,171 -9% $84,597 $87,761 -4%
----------------------------------------------------------------------
Consolidated Hotel Adjusted EBITDA and Debt Analysis
(in thousands)
Adjusted EBITDA
Twelve Months Debt at
Ended Sept. 30,
Hotel Sept. 30 2008 2008
--------------------------------------- --------------- ---------
(1)Morgans $ 4,250 $ -
(1)Royalton 5,683 -
Hudson 44,108 250,000
Delano 22,342 -
(1)Mondrian LA 8,670 120,000
Mondrian Scottsdale 845 40,000
Management Fees 19,377 -
Corporate Expenses (27,426) 222,500
Other - 16,363
--------------- ---------
Total $ 77,849 $ 648,863
(1)Hotel was under renovation in the twelve months ended September 30,
2008 and had rooms out of service.
----------------------------------------------------------------------
Balance Sheet
(In Thousands)
Sept. 30 Dec 31,
2008 2007
-------- --------
Cash $ 59,683 $122,712
Restricted cash 30,772 28,604
Property and equipment 569,742 535,609
Goodwill 73,698 73,698
Accounts receivable 15,716 13,755
Prepaid expenses and other assets 9,821 11,369
Investments in joint ventures 85,081 110,208
Other assets 44,401 47,168
-------- --------
Total assets $888,914 $943,123
======== ========
Long-term debt $648,863 $649,107
Capital lease obligations - Clift 81,207 80,092
Accounts payable and accrued expenses 21,423 36,126
Other liabilities 25,809 27,979
Deferred income taxes
Total liabilities 777,302 793,304
Minority interests 19,030 19,833
Stockholders' equity 92,582 129,986
-------- --------
Total liabilities and equity $888,914 $943,123
======== ========
----------------------------------------------------------------------
Adjusted Debt
(In Thousands)
A reconciliation of long-term debt and capital lease obligations, the most directly comparable U.S. GAAP measure, to Adjusted Debt is indicated as follows:
Sept.
30,
2008
--------
Adjusted Debt - Consolidated
---------------------------------------------------------
Long term debt and capital lease obligations $730,070
Less: Clift Capitalized Lease (81,207)
--------
Adjusted Debt - Consolidated 648,863
Other Data
(In Thousands)
Proportionate Share of Debt - Joint Ventures
-----------------------------------------------------------
London $ 93,887
Shore Club 8,492
Mondrian South Beach 57,953
Hard Rock 192,294
Mondrian SoHo 19,842
Ames Boston 6,650
--------
Proportionate share of debt - joint ventures 379,118
Investments in Non-Ebitda Producing Assets (1)
-----------------------------------------------------------
The Gale $ 19,873
Mondrian South Beach - represents equity investment of $24.2
million 82,163
and proportionate share of debt of $58.0 million
Hard Rock - proportionate share of excess land, intellectual
property rights and expansion costs 95,516
Equity investment in Echelon 18,851
Mondrian Soho - equity investment of $6.3 million and
proportionate
share of debt of $19.9 million 26,140
Ames Boston - equity investment of $6.8 million and
proportionate
share of total debt of $19.0 million 13,487
Mondrian Chicago - equity investment 2,292
--------
Investments in Non-EBITDA Producing Assets $258,322
(1)The equity investments listed in the table represent the cash
invested in the joint ventures. The following is the balance
shown in the financial statements, which includes equity in
income or losses of unconsolidated joint ventures:
Amount
--------
Mondrian South Beach 17,328
Hard Rock 21,116
Echelon 17,366
Mondrian SoHo 6,563
Ames Boston 7,049
Mondrian Chicago 2,471
CONTACT: Morgans Hotel Group
Richard Szymanski, 212-277-4188
or
The Abernathy MacGregor Group
Kate Finn, 212-371-5999
SOURCE: Morgans Hotel Group Co.
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