(ORLANDO, Fla.) November 16, 2012 — CNL Lifestyle Properties, Inc., a real estate investment trust (“we,” “our” or “us”), today announced its operating results for the quarter ended September 30, 2012. As of November 14, 2012, we owned a portfolio of 177 lifestyle properties, 73 of which are wholly-owned and run by operators under long-term, triple-net leases with a weighted average lease rate of 8.5 percent, 53 of which are managed by independent operators, one of which is held for development and 50 of which are owned through unconsolidated joint venture arrangements. Of our joint venture investments, 14 are leased and 36 are managed by independent operators. Diversification by asset class based on initial purchase price is 32.5 percent senior housing, 18.7 percent ski and mountain lifestyle, 15.6 percent golf, 13.4 percent attractions, 5.1 percent marinas and 14.7 percent in additional lifestyle properties, including lodging.
Financial Highlights
The following table presents selected comparable financial data through September 30, 2012 (in millions except ratios and per share data):
|
|
Quarter ended |
|
Year ended | ||
|
|
September 30, |
|
September 30, | ||
|
|
2012 | 2011 | 2012 | 2011 | |
| Total revenues |
$ 176.0 |
$ 154.5 |
|
$ 386.8 |
$ 342.3 |
| Total expenses |
136.4 |
126.5 |
|
362.4 |
321.1 |
| Net income (loss) |
23.6 |
(1.2) |
|
(21.1) |
(37.6) |
| Net income (loss) per share |
0.08 |
– |
|
(0.07) |
(0.12) |
| FFO |
75.0 |
51.3 |
|
107.8 |
86.4 |
| FFO per share |
0.24 |
0.17 |
|
0.35 |
0.29 |
| MFFO |
73.5 |
54.3 |
|
104.8 |
93.5 |
| MFFO per share |
0.23 |
0.18 |
|
0.34 |
0.31 |
| Adjusted EBITDA |
78.0 |
68.1 |
|
146.2 |
122.4 |
| Cash flow from operating activities |
|
|
82.8 |
92.9 |
|
|
|
|
|
|
|
|
| As of September 30, 2012: |
|
|
|
|
|
| Total assets |
|
|
|
$ 2,983.6 |
|
| Total debt |
|
|
|
1,092.7 |
|
| Leverage ratio |
|
|
|
36.6% |
* |
|
|
|
|
|
|
|
| * 43.5% including our share of unconsolidated assets and debts | |||||
See detailed financial information and full reconciliation of Funds from Operations (“FFO”), Modified Funds from Operations (“MFFO”) and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), which are non Generally Accepted Accounting Principle (“GAAP”) measures, below.
The Company had net income for the quarter ended September 30, 2012 as compared to a net loss for the same period in 2011. The change was primarily attributable to (i) an increase in rental income from leased properties and net operating income from managed properties of approximately $6.5 million related to properties acquired during the second half of 2011, (ii) an increase of net operating income from “same-store” managed properties of approximately $5.2 million primarily relating to improved performance at our attractions and additional lifestyle properties, and (iii) a reduction in loss on lease termination and impairment provision of approximately $21.8 million including approximately $13.2 million that was recorded as a component of discontinued operations; offset in part, by (i) a reduction in rental income of approximately $3.6 million related to the 32 golf facilities as a result of lease modification as well as lower net operating income in 2012 versus rental income in 2011 from the nine properties that were recently converted from a leased to managed structure and (ii) an increase in bad debt expense, asset management fees, general and administrative expense and interest expense and loan cost amortization of approximately $5.5 million.
The decrease in net loss and loss per share for the nine months ended September 30, 2012 as compared to the same period in 2011 was primarily attributable to (i) an increase in rental income from leased properties and net operating income from managed properties of approximately $15.4 million related to properties acquired during the second half of 2011, (ii) an increase of net operating income from “same-store” managed properties of approximately $5.1 million primarily relating to an increase in visitation and spending at our attractions properties, and (iii) a reduction in loss on lease termination and impairment provision of approximately $18.9 million including approximately $12.6 million that was recorded as a component of discontinued operations; offset in part, by (i) a reduction in rental income of approximately $8.7 million related to the 32 golf facilities as a result of lease modification as well as lower net operating income in 2012 versus rental income in 2011 from the nine properties that were recently converted from a leased to managed structure and (ii) an increase in bad debt expense, asset management fees and interest expense and loan cost amortization of approximately $14.9 million.
Total FFO and FFO per share was approximately $75.0 million or $0.24 for the quarter ended September 30, 2012 as compared to approximately $51.3 million or $0.17 for the same period in 2011. The increase in FFO and FFO per share were attributable to (i) an increase in rental income from leased properties and net operating income from managed properties of approximately $6.5 million related to properties acquired during the second half of 2011, (ii) an increase in net operating income from “same-store” managed properties of approximately $5.2 million primarily relating to improved performance at our attractions and additional lifestyle properties, (iii) an increase in FFO contribution from unconsolidated entities of approximately $11.0 million, (iv) a reduction in loss on lease termination of approximately $5.3 million, and (v) a reduction in acquisition fees and costs of approximately $2.2 million; offset in part by, an increase in asset management fees, general and administrative expense, ground lease and permit fees, bad debt expense and interest expense and loan cost amortization of approximately $6.0 million.
Total FFO and FFO per share was approximately $107.8 million or $0.35 for the nine months ended September 30, 2012 as compared to approximately $86.4 million or $0.29 for the same period in 2011. The increase in FFO and FFO per share were attributable to (i) an increase in rental income from leased properties and net operating income from managed properties of approximately $15.4 million related to properties acquired the second half of 2011, (ii) an increase in net operating income from “same-store” managed properties of approximately $5.1 million primarily relating to an increase in visitation and spending at our attractions properties, (iii) an increase in FFO contribution from unconsolidated entities of approximately $12.6 million, (iv) a reduction in acquisition fees and costs of approximately $6.3 million, and (v) a reduction in interest and other income (expense) of approximately $2.1 million primarily due to the write-off of unamortized loan costs in 2011 as a result of prepaying existing debt with more favorable financing; offset in part, by (i) a reduction in rental income of approximately $5.8 million related to the 32 golf facilities as a result of a lease restructure and (ii) an increase in bad debt, interest expense and loan cost amortization and general and administrative expenses of approximately $15.2 million.
Total MFFO and MFFO per share was approximately $73.5 million or $0.23 for the quarter ended September 30, 2012 as compared to approximately $54.3 million or $0.18 for the same period in 2011. The increase in MFFO and MFFO per share were principally due to (i) an increase in rental income from leased properties (excluding straight-line adjustments for rental income) and net operating income from managed properties of approximately $7.0 million related to properties acquired during the second half of 2011, (ii) an increase in net operating income from “same-store” managed properties of approximately $5.2 million primarily relating to improved performance at our attractions and additional lifestyle properties, and (iii) an increase in MFFO contribution from unconsolidated entities of approximately $10.5 million; offset by, an increase in interest expense and loan costs amortization, asset management fees and general and administrative expense of approximately $4.3 million.
Total MFFO and MFFO per share was approximately $104.8 million or $0.34 for the nine months ended September 30, 2012 as compared to approximately $93.5 million or $0.31 for the nine months ended September 30, 2011. The increase in MFFO and MFFO per share were principally due to (i) an increase in rental income from leased properties (excluding straight-line adjustments for rental income) and net operating income from managed properties of approximately $15.1 million related to properties acquired during the second half of 2011, (ii) an increase in net operating income from “same-store” managed properties of approximately $5.1 million primarily relating to an increase in visitation and spending at our attractions properties, and (iii) an increase in MFFO contribution from unconsolidated entities of approximately $6.3 million; offset by, (i) an increase in interest expense and loan costs amortization, ground lease and permit fees, asset management fees and general and administrative expenses of approximately $15.0 million.
Adjusted EBITDA was approximately $78.0 million for the quarter ended September 30, 2012 as compared to approximately $68.1 million for the quarter ended September 30, 2011. The increase in adjusted EBITDA for the quarter ended September 30, 2012 was primarily attributable to (i) an increase in net cash received of $6.3 million on properties acquired the second half of 2011, (ii) an increase in net operating income from our “same-store” managed properties of $5.2 million, offset by a decrease in distributions received from our unconsolidated entities of approximately $1.5 million due to the timing difference of when distribution is received.
Adjusted EBITDA was approximately $146.2 million for the nine months ended September 30, 2012 as compared to approximately $122.4 million for the nine months ended September 30, 2011. The increase in adjusted EBITDA for the nine months ended September 30, 2012 was primarily attributable to (i) an increase in distributions from unconsolidated entities of approximately $12.2 million primarily from our three senior housing joint ventures, (ii) an increase in net cash received of $15.1 million on properties acquired during the second half of 2011 and (iii) an increase in net operating income from our “same-store” managed properties of $5.1 million primarily relating to an increase in visitation and spending at our attractions properties; offset by an increase in asset management fees and general and administrative expense of approximately $8.0 million.
Portfolio Performance
Although property-level operating results are not necessarily indicative of our consolidated results of operations for properties where we have long-term leases and report rental income and the cash flows we receive from our unconsolidated joint ventures, we believe that the property-level financial and operational performance reported to us by our tenants and operators is useful because it is representative of the changing health of our properties and trends in our portfolio. The following table summarizes the Company’s “same-store” comparable consolidated properties that we have owned during the entirety of both periods presented and have included information for both leased and managed properties. Property-level financial and operational performance from our unconsolidated properties has been excluded because we do not believe it is as relevant and meaningful particularly since we are entitled cash distribution preferences where we receive a stated return on our investment each year ahead of our partners. We have not included performance data on acquisitions during the current periods presented because we did not own those properties during the entirety of both periods (in millions except coverage ratio):
| Number | Quarter Ended September 30, |
|
TTM | ||||||||||||
| of | 2012 | 2011 | Increase/(Decrease) | Rent | |||||||||||
| Properties | Revenue | EBITDA | Revenue | EBITDA | Revenue | EBITDA | Coverage* | ||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
||
| Ski and mountain lifestyle |
15 |
|
$ 30,642 |
|
$ 9,835) |
|
$ 29,601 |
|
$ (12,692) |
|
3.5% |
|
22.5% |
|
1.19 |
| Golf |
49 |
|
43,227 |
|
9,077 |
|
42,733 |
|
6,787 |
|
1.2% |
|
33.7% |
|
1.69 |
| Attractions |
19 |
|
102,384 |
|
48,897 |
|
94,963 |
|
45,029 |
|
7.8% |
|
8.6% |
|
2.00 |
| Marinas |
17 |
|
11,914 |
|
4,736 |
|
12,302 |
|
5,024 |
|
-3.2% |
|
-5.7% |
|
0.82 |
| Additional lifestyle |
7 |
|
38,515 |
|
9,080 |
|
34,433 |
|
7,019 |
|
11.9% |
|
29.4% |
|
6.04 |
|
|
107 |
$ 226,682 | $ 61,955 | $ 214,032 | $ 51,167 |
5.9% |
|
21.1% |
|
1.32 | |||||
| Number | Nine Months Ended September 30, | ||||||||||||
| of | 2012 | 2011 | Increase/(Decrease) | ||||||||||
| Properties | Revenue (1) | EBITDA (1) | Revenue (1) | EBITDA (1) | Revenue | EBITDA | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ski and mountain lifestyle |
15 |
|
$ 244,814 |
|
$ 60,368 |
|
$ 277,662 |
|
$ 76,685 |
|
-11.8% |
|
-21.4% |
| Golf |
49 |
|
125,548 |
|
29,956 |
|
121,108 |
|
22,758 |
|
3.7% |
|
31.6% |
| Attractions |
19 |
|
167,635 |
|
47,977 |
|
156,039 |
|
44,134 |
|
7.4% |
|
8.7% |
| Marinas |
17 |
|
27,502 |
|
10,004 |
|
27,321 |
|
10,456 |
|
0.7% |
|
-4.3% |
| Additional lifestyle |
7 |
|
100,801 |
|
17,493 |
|
92,701 |
|
15,964 |
|
8.7% |
|
9.6% |
|
|
107 |
$ 666,300 | $ 165,798 | $ 674,831 | $ 169,997 |
-1.3% |
|
-2.5% |
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*As of September 30, 2012 on trailing 12-month (“TTM”) basis for properties subject to lease calculated as property-level EBITDA before recurring capital expenditures divided by base rent.
For the quarter ended September 30, 2012, our tenants and managers reported to us an increase in revenue and property-level EBITDA of 5.9% and 21.1%, respectively, as compared to the same period in the prior year. The increase was primarily attributable to our ski and mountain lifestyle, golf, attractions and additional lifestyle properties. Our ski and mountain lifestyle properties and the Omni Mount Washington Resort have increased their revenue and EBTIDA during the quarter ended September 30, 2012 due to favorable weather during the summer months for concerts, attractions and other events. Our golf properties have begun to see an increase in EBITDA as a result of implementing more focused cost controls leading to improved operating margins. Additionally, in connection with a lease restructure with our largest golf tenant in April 2012, we have made significant capital improvements across our properties with the overall goal of improving profitability by enhancing the customer experience and driving revenue in the form of more rounds of golf, more membership sales, and more social and event catering. Our additional lifestyle properties, which include three waterpark hotels, and our attractions properties, have experienced an increase in visitations. We believe that all of these trends are a result of favorable weather patterns and a general improvement in consumer confidence and spending.
For the nine months ended September 30, 2012, our tenants and managers reported to us a decrease in revenue and property-level EBITDA of 1.3% and 2.5%, respectively, as compared to the same period in the prior year. The decrease in revenue was primarily attributable to a decline in revenues during the winter months from our ski and mountain lifestyle properties and the Omni Mount Washington Resort. Many of these properties experienced unprecedented low levels of natural snowfall for the 2011/2012 ski season. However, we expect them to perform better in the future during more typical snow years. The decrease in revenues and EBITDA from ski and mountain lifestyle properties and the Omni Mount Washington Resort was offset by year over year gains in our summer operating results as described above. Excluding our ski and mountain lifestyle properties and the Omni Mount Washington Resort, our tenants and managers reported an overall increase in revenues and EBITDA of 6.8% and 14.2%, respectively. The increase is primarily attributable to our golf, attractions and additional lifestyle properties as described in the preceding paragraph.
When evaluating our senior housing properties’ performance, management reviews operating statistics of the underlying properties, including revenue per occupied unit (“RevPOU”) and occupancy levels. RevPOU, which is defined as total revenue divided by average number of occupied units during a month, is a widely used performance metric within the healthcare sector. This metric assists us to determine the ability of our operators to achieve market rental rates and to obtain revenues from providing healthcare related services. For the quarter and nine months ended September 30, 2012, the managers for our 42 comparable properties reported to us an increase in average occupancy of 3.1% and 0.9%, respectively, and an increase in RevPOU of 3.9% and 4.2%, respectively, as compared to prior periods in 2011. The increase in average occupancy and RevPOU were driven primarily due to strong demands and rate increases at the properties.
Hurricane Impact
In October 2012, Hurricane Sandy caused some damage at two of our marina properties located in Point Pleasant and Brick Township, New Jersey, both of which are leased to a third-party tenant. Our tenant maintains insurance coverage on these properties and is currently in the process of filing an insurance claim. At this time, the total extent of the damages and the amount of the recovery under the tenant’s insurance claim are still being evaluated. As of the date of this filing, the marinas properties are open for limited business and we anticipate that the damage will be repaired prior to the 2013 boating season. All of our other properties have reported limited or no impact from Hurricane Sandy.
Acquisitions
During the nine months ended September 30, 2012, we acquired four senior housing communities located in Georgia, three senior housing communities located in Illinois, one senior housing community located in Nevada and one attractions property located in Florida for approximately $168.7 million.
Distributions
For the quarter and nine months ended September 30, 2012, we declared and paid distributions of approximately $33.3 million ($0.10625 per share) and $130.3 million ($0.41885 per share), respectively. Our Board of Directors will continue to evaluate the level of distributions going forward, which will be based on a variety of factors including current and expected future cash flows from our properties.
Redemptions
During the quarter and nine months ended September 30, 2012, we redeemed approximately $3.0 million and $6.5 million, respectively.
CNL LIFESTYLE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands except per share data)
|
|
|
September 30,
2012 |
December 31, 2011 | |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
| Real estate investment properties, net (including $209,144 and $210,866 |
$ 2,176,276 |
|
$ 2,059,288 |
|
| related to consolidated variable interest entities, respectively) |
|
|
||
| Investments in unconsolidated entities |
|
298,518 |
|
318,158 |
| Mortgages and other notes receivable, net |
|
124,652 |
|
124,352 |
| Deferred rent and lease incentives |
|
117,242 |
|
94,981 |
| Cash |
|
92,168 |
|
162,839 |
| Other assets |
|
66,416 |
|
43,453 |
| Restricted cash |
|
45,373 |
|
37,877 |
| Intangibles, net |
|
37,766 |
|
30,937 |
| Accounts and other receivables, net |
|
23,765 |
|
19,201 |
| Assets held for sale |
|
1,401 |
|
2,863 |
| Total Assets |
|
$ 2,983,577 |
|
$ 2,893,949 |
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
||
Mortgages and other notes payable (including $81,342 and $82,376 related to
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