— Total revenues increased 0.6 percent quarter-over-quarter to $61.7 million —
(ORLANDO, Fla.) March 31, 2015 — CNL Lifestyle Properties, Inc., a real estate investment trust (“we,” “our” or “us”), today announced its operating results for the fourth quarter ended Dec. 31, 2014.
Fourth Quarter 2014
- Total revenues increased $0.4 million, or 0.6 percent, as compared to the fourth quarter of 2013.
- Total expenses increased $38.5 million, or 51.0 percent, as compared to the fourth quarter of 2013.
- Net loss decreased $158.4 million, or 62.8 percent, as compared to the fourth quarter of 2013, primarily due to the reduction in impairment provisions recorded on our properties. During the fourth quarter of 2014, impairment provisions were recorded on 19 properties (17 marinas, one attraction and one unimproved land) as compared to 51 properties (45 golf properties, three marinas, two attractions and one multi-family residential property) during the fourth quarter of 2013.
- Funds from Operations (“FFO”) and FFO per share increased $43.6 million, or 100.7 percent and $0.13 per share, respectively, as compared to the fourth quarter of 2013.
- Modified Funds from Operations (“MFFO”) and MFFO per share decreased $9.1 million, or 69.5 percent and $0.03 per share, respectively, as compared to the fourth quarter of 2013.
- Adjusted Earnings before Interest, Taxes, Depreciation and Amortization from Continuing Operations (“Adjusted EBITDA from Continuing Operations”) decreased $3.4 million, or 20.9 percent, as compared to the fourth quarter of 2013.
Year Ended Dec. 31, 2014
- Total revenues increased $10.8 million, or 3.0 percent, as compared to the year ended Dec. 31, 2013.
- Total expenses decreased $4.8 million, or 1.2 percent, as compared to the year ended Dec. 31, 2013.
- Net loss decreased $160.4 million, or 63.5 percent, as compared to the year ended Dec. 31, 2013. Similar to the fourth quarter of 2014, the decrease for the year ended Dec. 31, 2014, is primarily due to a reduction in impairment provisions recorded on our properties. During the year ended Dec. 31, 2014, impairment provisions were recorded on 21 properties (17 marinas, one attraction, one golf, one multi-family residential and one unimproved land) as compared to 53 properties (45 golf, three marinas, three attractions, one multi-family residential property and one unimproved land) for the year ended Dec. 31, 2013.
- FFO and FFO per share increased $49.3 million or 73.4 percent and $0.15 per share, respectively, as compared to the year ended Dec. 31, 2013.
- MFFO and MFFO per share increased $11.7 million or 9.5 percent and $0.02 per share, respectively, as compared to the year ended Dec. 31, 2013.
- Adjusted EBITDA from Continuing Operations increased $1.2 million or 0.9 percent as compared to the year ended Dec. 31, 2013.
The increase in FFO and FFO per share for the quarter and year ended Dec. 31, 2014, is primarily attributable to an increase in rental income from leased properties acquired in 2013 and 2014 as well as “same-store” growth in rental income from leased properties and net operating income from our managed properties. The increase was also due to a reduction in write-offs of deferred rents from straight-lining adjustments, lease incentives and asset management fees. The increases were partially offset by the net loss on extinguishment of debt as a result of prepayment penalties paid on several loans, higher interest expense and loan cost amortization, and a reduction in rental income and net operating income from leased and managed properties due to the sale of our golf portfolio and our multi-family residential property. In addition, for the year ended Dec. 31, 2014, the increases were also offset by a decrease in interest income on mortgage notes receivable due to the collection of $83.5 million of principal outstanding that matured in 2014 and a decrease in equity in earnings from unconsolidated entities due to the July 2013 sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures.
The decrease in MFFO and MFFO per share for the quarter ended Dec. 31, 2014, is primarily due to a reduction in rental payments from leased properties (rental revenue excluding straight-line adjustments for GAAP) due to the sale of our golf portfolio and our multi-family residential property, a decrease in interest income on mortgage notes receivable due to the collection of principal outstanding that matured in 2014, and higher interest expense and loan cost amortization. The decrease was partially offset by an increase in rental payments from leased properties acquired in 2013 and 2014 as well as “same-store” growth in rental payments from leased properties and net operating income from our managed properties. In addition, the decrease was also partially offset by a reduction in asset management fees. The increase in MFFO and MFFO per share for the year ended Dec. 31, 2014, is primarily due to an increase in rental payments from leased properties (rental revenue excluding straight-line adjustments for GAAP) from recently acquired properties as well as growth in “same-store” net operating income from our managed properties and a reduction in asset management fees. The increases were partially offset by a reduction in rental payments from leased properties and net operating income from our managed properties due to the sale of our golf portfolio and our multi-family residential property, a decrease in interest income on mortgage notes receivable due to the collection of principal that matured in 2014, an increase in interest expense and loan cost amortization and a decrease in equity in earnings from unconsolidated entities due to the July 2013 sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures.
Adjusted EBITDA from Continuing Operations for the quarter and year ended Dec. 31, 2014, was negatively impacted due to a decrease in interest income on mortgage notes receivable due to the collection of principal that matured in 2014. Adjusted EBITDA from Continuing Operations for the year ended Dec. 31, 2014, was also negatively impacted by a decrease in cash distributions from unconsolidated entities due to the July 2013 sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures. Adjusted EBITDA from Continuing Operations for the quarter and year ended Dec. 31, 2014, was positively impacted by an increase in rental payments from leased properties acquired in 2013 and 2014, “same-store” growth in rental payments from leased properties and net operating income from our managed properties, and a reduction in asset management fees.
The following table presents selected comparable financial data through Dec. 31, 2014.
See detailed financial information and full reconciliation of FFO, MFFO and Adjusted EBITDA from Continuing Operations, which are not considered Generally Accepted Accounting Principles (“GAAP”) measures, to their nearest GAAP measures on the following pages.
Portfolio Highlights
The following tables summarize the Company’s “same-store” revenue and EBITDA for comparable consolidated properties that we have owned during the entirety of both periods presented, and includes information for both leased and managed properties (other than for rent coverage, which includes all leased properties)(in thousands):
| Quarter Ended Dec. 31, | ||||||||||||
| Number | 2014 | 2013 | Increase/(Decrease) | |||||||||
| of Properties | Revenue | EBITDA (1) | Revenue | EBITDA (1) | Revenue | EBITDA | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17 |
$ 105,930 |
|
$ 17,997 |
|
$ 103,398 |
|
$ 12,790 |
|
2.4% |
|
40.7% |
|
| 21 |
26,036 |
|
(8,476) |
|
24,322 |
|
(6,228) |
|
7.0% |
|
-36.1% |
|
| 20 |
18,116 |
|
5,403 |
|
17,672 |
|
5,501 |
|
2.5% |
|
-1.8% |
|
| 17 |
6,780 |
|
1,686 |
|
6,562 |
|
1,718 |
|
3.3% |
|
-1.9% |
|
|
|
|
|
||||||||||
| 75 |
$ 156,862 |
|
$ 16,610 |
|
$ 151,954 |
|
$ 13,781 |
|
3.2% |
|
20.5% |
|
FOOTNOTES:
- Property operating results for tenants under leased arrangements are not included in our operating results. Property-level EBITDA above is disclosed before rent and capital reserve payments to us, as applicable.
- As of Dec. 31, 2014, on trailing 12-month (“TTM”) basis for properties subject to lease calculated as property-level EBITDA before recurring capital expenditures divided by base rent.
Fourth Quarter and Year Ended Dec. 31, 2014T
- Property-level revenue increased 3.2 percent and 2.1 percent, respectively, and property-level EBITDA increased 20.5 percent and 2.1 percent, respectively, as compared to the quarter and year ended Dec. 31, 2013.
- Our ski and mountain lifestyle properties experienced an increase in revenue for the fourth quarter of 2014 due to favorable snow and snowmaking temperatures at many of our ski properties at the start of the 2014/2015 ski season. For the year ended Dec. 31, 2014, revenues at our ski and mountain lifestyle properties decreased primarily due to low snow levels in the Pacific West (specifically in California), where our properties were challenged with snow levels that were significantly below historic norms during the latter portion of the 2013/2014 ski season as a result of unseasonably warm temperatures and drought conditions. Unfortunately, poor weather conditions in the Pacific West have continued and expanded to impact the Pacific Northwest during the 2014/2015 ski season. Season to date through February 2015, our operators reported that property operating revenue was down 1.4 percent.
- Capital improvements and our manager’s efforts to promote and drive attendance at our attractions properties resulted in an increase in season pass and group sales and in-park spending as compared to prior year. In addition, visitation at our attractions properties increased by 11.0 percent year-over-year.
- Higher average rates paid by residents at our senior housing properties resulted in an increase in revenue, but EBITDA decreased due to higher resident care expenses, repair and maintenance expenses, and other operating expenses.
- Our marinas properties experienced a decrease in revenue due to our ongoing operator transitions. Additionally, in December 2013 and the winter of 2014, record-breaking cold temperatures and ice storms damaged several of our marinas, which has impacted operating results and required extensive repairs. EBITDA at our marinas was further impacted by the introduction of third-party management fees as we transitioned all of our marinas from leased to managed properties.
The following table presents “same-store” unaudited property-level information of our senior housing properties as of and for the quarters and years ended Dec. 31, 2014, and 2013 (in thousands):
| Number |
|
Occupancy | |||||
| of |
|
As of Dec. 31, |
|
Increase/ | |||
| Properties | 2014 | 2013 | (Decrease) | ||||
|
|
|
|
|
|
|
|
|
| Senior housing | 20 |
|
95.4% |
|
96.0% |
|
(0.6%) |
| RevPOU | ||||||||||||||
| Number | Quarter Ended | Year Ended | ||||||||||||
| of | Dec. 31, | Increase/ | Dec. 31, | Increase/ | ||||||||||
| Properties | 2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior housing | 20 |
|
$ 4,026 | $ 3,832 | 5.1% | $ 3,927 | $ 3,794 | 3.5% | ||||||
The increase in revenue per occupied unit (“RevPOU”) of 5.1 percent and 3.5 percent for the quarter and year ended Dec. 31, 2014, respectively, as compared to the same periods in 2013 is due to strong unit demand and our managers’ and tenants’ resultant ability to drive rate increases at the properties.
Acquisition Activity
During the year ended Dec. 31, 2014, we acquired nine senior housing properties, located in various states, and paid $128.4 million (net of debt assumed).
Dispositions and Repayments of Notes Receivable
During the year ended Dec. 31, 2014, we completed the sale of our entire golf portfolio, which consisted of 48 properties, and our sole multi-family residential property and received aggregate net sales proceeds of $384.3 million. In connection with the sales, we recorded an aggregate net gain of $4.1 million. Additionally, during the year we were repaid $83.5 million in the ordinary course of business from two third-party borrowers for notes receivable that had matured.
Assets Held for Sale
As of Dec. 31, 2014, we classified 55 properties (38 senior housing and 17 marinas properties) and one village retail property held in our unconsolidated joint ventures as assets held for sale. In late-December 2014, we entered into a definitive agreement to sell our entire senior housing portfolio, which consists of 38 properties, for $790.0 million and we anticipate the transaction will close late in the second quarter of 2015.
Distributions
For the year ended Dec. 31, 2014, we declared and paid distributions of approximately $137.9 million ($0.4252 per share). On March 6, 2015, our board of directors approved the reduction of the quarterly cash distributions for the first quarter of 2015 to $0.05 per share.
Net Asset Value (“NAV”) per Share
In accordance with our valuation policy and in order to assist brokers in providing information on customer account statements consistent with the requirements of NASD Notice 01-08 and Financial Industry Regulatory Authority (“FINRA”) Rule 2340, we evaluate the Company’s NAV on annual basis. On March 6, 2015, our board of directors approved an updated estimated NAV per share of $5.20.
CNL LIFESTYLE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except per share data)
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