— Total revenues decreased 0.5 percent year-over-year to $72.0 million —
(ORLANDO, Fla.) May 15, 2015 — CNL Lifestyle Properties, Inc., a real estate investment trust (“we,” “our” or “us”), today announced its operating results for the first quarter ended March 31, 2015.
First Quarter 2015
- Total revenues decreased $0.4 million, or 0.5 percent, as compared to the first quarter of 2014.
- Total expenses increased $4.5 million, or 6.1 percent, as compared to the first quarter of 2014.
- Net loss decreased $12.8 million, or 62.9 percent, as compared to the first quarter of 2014. Excluding impairment charges and loan loss provisions, net loss improved $13.4 million, or 78.8 percent, as compared to the first quarter of 2014.
- Funds from Operations (“FFO”) and FFO per share decreased $4.1 million and $0.02 per share, respectively, as compared to the first quarter of 2014.
- Modified Funds from Operations (“MFFO”) decreased $0.8 million as compared to the first quarter of 2014, and there was no change to MFFO per share.
- Adjusted Earnings from Continuing Operations before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA from Continuing Operations”) decreased $0.1 million, or 0.5 percent, as compared to the first quarter of 2014.
The decrease in FFO and FFO per share is primarily attributable to (i) the loan loss provision recorded on one of our mortgage notes receivables to adjust the carrying value to net realizable value, (ii) bad debt expense recorded related to two ski properties, (iii) a decrease in rental income and net operating income from leased and managed properties due to the sale of our golf portfolio and our multifamily residential property and (iv) a decrease in interest income on mortgage notes receivable due to the collection of $83.5 million of principal outstanding that matured in 2014. The decreases were partially offset by (i) a decrease in interest expense primarily due to a decrease in weighted average debt outstanding, (ii) an increase in rental income from leased properties acquired after the first quarter of 2014 and an increase in “same-store” net operating income from managed properties primarily related to our attractions properties, and (iii) a decrease in asset management fees.
The decrease in MFFO and MFFO per share is primarily attributable to (i) bad debt expense recorded related to two ski properties, (ii) a decrease in rental income and net operating income from leased and managed properties due to the sale of our golf portfolio and our multifamily residential property and (iii) a decrease in interest income on mortgage notes receivable due to the collection of principal that matured in 2014. The decreases were partially offset by (i) a decrease in interest expense primarily due to a decrease in weighted average debt outstanding, (ii) an increase in rental payments from leased properties (rental revenue excluding straight-line adjustments for GAAP) acquired after the first quarter of 2014 as well as in “same-store” net operating income from managed properties primarily related to our attractions properties, and (iii) a decrease in asset management fees.
The decrease in Adjusted EBITDA from Continuing Operations is primarily attributable to (i) bad debt expense recorded related to two ski properties and (ii) a decrease in interest income on mortgage notes receivable due to the collection of $83.5 million of principal outstanding that matured in 2014. The decreases were partially offset by (i) an increase in “same-store” net operating income from managed properties primarily related to our attractions properties, (ii) an increase in distributions from unconsolidated entities and (iii) a reduction in asset management fees.
The following table presents selected comparable financial data through March 31, 2015:
| SUMMARY FINANCIAL RESULTS | ||||
| (Millions except ratios and per share data) | ||||
| Quarter ended | ||||
| March 31, | ||||
| 2015 | 2014 | |||
| Total revenues | $ |
72.0 |
$ |
72.4 |
| Total expenses |
79.1 |
74.6 |
||
| Operating loss |
(7.1) |
(2.2) |
||
| Net loss |
(7.6) |
(20.4) |
||
| Net loss per share |
(0.02) |
(0.06) |
||
| FFO |
17.5 |
21.6 |
||
| FFO per share |
0.05 |
0.07 |
||
| MFFO |
18.5 |
19.3 |
||
| MFFO per share |
0.06 |
0.06 |
||
| Adjusted EBITDA from Continuing Operations |
22.5 |
22.6 |
||
| Cash flows from operating activities |
36.1 |
37.6 |
||
|
|
|
|||
| As of March 31, 2015: |
|
|
||
| Total assets | $ |
2,223.1 |
|
|
| Total debt |
973.4 |
|
||
| Leverage ratio* |
43.8% |
|
||
|
|
|
|||
|
* 47.3% including our share of unconsolidated assets and debts |
||||
See detailed financial information and full reconciliation of FFO, MFFO and Adjusted EBITDA from Continuing Operations, which are Non-Generally Accepted Accounting Principles (“Non-GAAP”) measures, on the following pages.
Portfolio Highlights
The following tables summarize our “same-store” 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):
First Quarter 2015
FOOTNOTE:
- Property operating results for tenants under leased arrangements are not included in the company’s operating results. Property-level EBITDA above is disclosed before rent and capital reserve payments to us, as applicable.
- In May 2015, we sold all of the properties presented.
- As of May 13, 2015, we owned a portfolio of 67 lifestyle properties of which 24 properties are held for sale.
- Revenue and property-level EBITDA declined 5.8 percent and 12.8 percent, respectively, as compared to the first-quarter of 2014.
- Drought and unusually warm temperatures, particularly in California and the Pacific Northwest, caused certain ski and mountain lifestyle properties to experience poor operating results during the 2014/2015 season as compared to the 2013/2014 season.
- Although the attractions assets generally experience low volume in the first quarter, we are encouraged by the early season momentum we have experienced to date. Revenue increases are driven by improved marketing penetration, season pass upgrades, and favorable weather.
- Revenue for our marinas portfolio is up 12 percent for the first quarter of 2015 as compared the same period of the prior year. This is due to the fact that revenues and EBITDA during 2014 reflected lower sales and higher expenses related to the transitioning of these properties to property managers during 2014 as a result of the former tenants defaulting on their leases.
Distributions
For the quarter ended March 31, 2015, we declared and paid distributions of approximately $16.3 million ($0.0500 per share). 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.
Assets Held for Sale
As of March 31, 2015, we classified 57 properties (38 senior housing, 17 marinas, one attractions and one additional lifestyle property) 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. In May 2015, we sold 37 of our 38 senior housing properties for $762.6 million and we anticipate the last senior housing property to be sold before the end of 2015, subject to various conditions that must be satisfied or waived; and accordingly, there can be no assurance that the closing of the last property will not be further delayed, or will be consummated on current terms, or at all.
In April 2015, we entered into a purchase and sale agreement for the sale of our unimproved land for $5.5 million. We also agreed to a plan to sell three attractions and a ski and mountain lifestyle property. In May 2015, we entered into a purchase and sale agreement for the sale of our marinas portfolio for approximately the carrying value of the assets.
Sale of Interest in Unconsolidated Entity
In April 2015, we sold our interest in the DMC Partnership for approximately $140 million, which exceeded our investment in the unconsolidated joint venture.
Retirement of Indebtedness
We used a portion of the net sales proceeds from the sale of our interest in the DMC Partnership and a portion of the net sales proceeds from the sale of 37 of our 38 senior housing properties to repay $304.1 million of indebtedness related to the senior housing assets sold, our revolving line of credit, and indebtedness collateralized by one of our attractions properties and one of our ski and mountain lifestyle properties.
Additionally, in May we initiated a process to call all of our senior unsecured notes with an outstanding principal amount of approximately $318.3 million at a premium of 103.625 percent. We expect to repay the bonds in June 2015. Upon the repayment of our senior unsecured notes we will no longer be obligated under the terms of the notes to conduct quarterly earnings calls. We will be communicating with our shareholders and the financial community by providing periodic updates and correspondence as we have done in the past, and we will continue to keep you abreast of our progress as we navigate the liquidation process.
Supplemental Information
See our quarterly report on Form 10-Q for the quarter ended March 31, 2015, on our website at CNLLifestyleREIT.com for additional information.
CNL LIFESTYLE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| March 31, | December 31, | ||||
| 2015 | 2014 | ||||
| ASSETS | |||||
| Real estate investment properties, net (including $153,515 and $158,589 related to consolidated variable interest entities, respectively) | $ | 1,005,962 | $ | 1,022,648 | |
| Assets held for sale, net (including $13,685 and $12,953 related to consolidated variable interest entities, respectively) | 823,588 | 821,681 | |||
| Investments in unconsolidated entities | 143,594 | 127,102 | |||
| Cash | 75,855 | 136,985 | |||
| Deferred rent and lease incentives | 49,189 | 47,303 | |||
| Restricted cash | 40,581 | 35,962 | |||
| Other assets | 34,213 | 34,541 | |||
| Intangibles, net | 17,822 | 18,026 | |||
| Accounts and other receivables, net | 16,917 | 20,603 | |||
| Mortgages and other notes receivable, net | 15,404 | 19,361 | |||
| Total Assets | $ | 2,223,125 | $ | 2,284,212 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Mortgages and other notes payable (including $30,175 and $30,412 related to non-recourse debt of consolidated variable interest entities, respectively) | $ | 392,124 | $ | 397,849 | |
| Senior notes, net of discount | 316,920 | 316,846 | |||
| Liabilities related to assets held for sale | 158,722 | 159,267 | |||
| Line of credit | 112,500 | 152,500 | |||
| Other liabilities | 64,746 | 53,866 | |||
| Accounts payable and accrued expenses | 46,411 | 46,005 | |||
| Due to affiliates | 574 | 489 | |||
| Total Liabilities | 1,091,997 | 1,126,822 | |||
| Commitments and contingencies | |||||
| Stockholders’ equity: | |||||
| Preferred stock, $.01 par value per share 200 million shares authorized and unissued | — | — | |||
| Excess shares, $.01 par value per share 120 million shares authorized and unissued | — | — | |||
| Common stock, $.01 par value per share | |||||
| One billion shares authorized; 349,084 shares issued and 325,184 shares outstanding as of March 31, 2015 and December 31, 2014, respectively | 3,252 | 3,252 | |||
| Capital in excess of par value | 2,863,839 | 2,863,839 | |||
| Accumulated deficit | (501,684) | (494,129) | |||
| Accumulated distributions | |||||