(ORLANDO, Fla.) March 31, 2014 — 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, 2013. As of March 14, 2014, we owned a portfolio of 145 lifestyle properties, 73 of which are wholly-owned and run by operators under long-term, triple-net leases with a weighted average, straight-line lease rate of 8.6 percent, 63 of which are managed by independent operators, one of which is an unimproved land parcel and eight of which are owned through unconsolidated joint ventures. All of the properties owned through joint ventures are leased. Diversification by asset class based on initial purchase price is 25 percent ski and mountain lifestyle, 22 percent attractions, 19 percent golf, 16 percent senior housing, 12 percent additional lifestyle properties and 6 percent marinas.
Financial Highlights
The following table presents selected comparable financial data through Dec. 31, 2013, (in millions except ratios and per share data):
|
|
Quarter ended |
|
Year ended | ||
|
|
Dec. 31, |
|
Dec. 31, | ||
|
|
2013 | 2012 | 2013 | 2012 | |
| Total revenues |
$ 101.1 |
$ 94.4 |
|
$ 512.8 |
$ 472.5 |
| Total expenses |
318.5 |
131.8 |
|
742.6 |
485.6 |
| Impairment provision |
205.8 |
0.0 |
|
248.3 |
0.0 |
| Net loss |
(252.3) |
(55.0) |
|
(252.5) |
(76.1) |
| Net loss per share |
(0.79) |
(0.17) |
|
(0.79) |
(0.24) |
| FFO |
(43.3) |
(10.1) |
|
67.2 |
97.7 |
| FFO per share |
(0.13) |
(0.03) |
|
0.21 |
0.31 |
| MFFO |
13.1 |
9.5 |
|
122.9 |
114.3 |
| MFFO per share |
0.04 |
0.03 |
|
0.39 |
0.37 |
| Adjusted EBITDA |
28.0 |
27.9 |
|
186.6 |
168.1 |
| Cash flows from operating activities |
|
|
135.5 |
87.9 |
|
|
|
|
|
|
|
|
| As of Dec. 31, 2013: |
|
|
|
|
|
| Total assets |
|
|
|
$ 2,700.7 |
|
| Total debt |
|
|
|
1,204.6 |
|
| Leverage ratio |
|
|
|
44.6% |
* |
|
|
|
|
|
|
|
| * 48.1% 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 Principles (“GAAP”) measures, below.
Fourth Quarter 2013 Highlights
Total Revenues: Total revenues increased $6.7 million or 7.1 percent as compared to the fourth quarter of 2012.
Total Expenses: Total expenses increased $186.7 million or 141.7 percent as compared to the fourth quarter of 2012, which includes an impairment provision of $205.8 million recorded in 2013 on certain properties primarily due to our decision to market and sell our golf portfolio. Excluding impairment charges, total expenses decreased $19.1 million or 14.5 percent as compared to the fourth quarter of 2012.
Net Loss: Net loss increased $197.3 million or 358.8 percent as compared to the fourth quarter of 2012. Excluding impairment charges, net loss improved $26.6 million or 48.7 percent as compared to the fourth quarter of 2012.
FFO and FFO Per Share: FFO and FFO per share decreased $33.2 million and $0.10 per share, respectively, as compared to the fourth quarter of 2012 primarily as a result of certain impairment provisions related to our golf portfolio that were not added back for purposes of deriving FFO. Excluding those impairment provisions, FFO increased $24.9 million or $0.08 per share.
MFFO and MFFO Per Share: MFFO and MFFO per share increased $3.6 million and $0.01 per share, respectively, as compared to the fourth quarter of 2012.
Adjusted EBITDA: Adjusted EBITDA was unchanged at $28.0 million in the fourth quarter as compared to $27.9 million in 2012.
Full Year 2013 Highlights
Total Revenues: Total revenues increased $40.3 million or 8.5 percent as compared to 2012.
Total Expenses: Total expenses increased $257.1 million or 52.9 percent as compared to 2012, which includes an impairment provision of $248.3 million recorded in 2013 as compared to $10,000 recorded in 2012. Excluding the impairment charges, total expenses increased $8.8 million or 1.8 percent as compared to 2012.
Net Loss: Net loss increased $176.5 million or 232.0 percent as compared to 2012. The increase in loss was primarily attributable to the impairment provisions recorded on our golf properties, as discussed above, and our decision to no longer pursue the development of and market for sale an unimproved parcel of land. Excluding these impairment charges, net loss improved $92.4 million or 122.5 percent as compared to 2012 as a result of (i) the recording of a gain of $55.4 million in connection with the sale of our interests in 42 senior housing properties that were held through three unconsolidated joint ventures; (ii) an increase in rental income from leased properties and net operating income from managed properties related to properties acquired during 2012 and 2013; (iii) an increase in “same-store” rental income from leased properties and net operating income from managed properties primarily relating to our senior housing properties and ski and mountain lifestyle properties as a result of a strong 2012/2013 ski season; and (iv) a decrease in asset management fees, acquisition fees and expenses, other operating expenses and loss on lease terminations offset by an increase interest expense and loan cost amortization.
FFO and FFO Per Share: FFO and FFO per share decreased $30.5 million and $0.10 per share, respectively, as compared to 2012. The decrease in FFO and FFO per share is primarily attributable to (i) certain impairment provisions related to our golf portfolio that were not added back for purposes of deriving FFO; (ii) a reduction in FFO contribution from unconsolidated entities relating to the sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures; and (iii) an increase in interest expense and loan cost amortization. These factors decreasing FFO were partially offset by (i) an increase in rental income from leased properties and net operating income from managed properties related to properties acquired during 2013, (ii) an increase in “same-store” rental income from leased properties and net operating income from managed properties primarily relating to our senior housing properties and ski and mountain lifestyle properties as a result of a strong 2012/2013 ski season; and (iii) a decrease in asset management fees, acquisition fees and expenses, other operating expenses and loss on lease terminations. Excluding impairment changes, FFO increased $27.5 million or $0.08 per share.
MFFO and MFFO Per Share: MFFO and MFFO per share increased $8.6 million and $0.02 per share, respectively, as compared to 2012. The increase in MFFO and MFFO per share is primarily attributable to (i) an increase in rent payments from leased properties (rental revenue excluding straight-line adjustments for GAAP) and net operating income from managed properties acquired during 2013; (ii) an increase in “same-store” rent payments from leased properties and net operating income from managed properties primarily relating to our senior housing properties and ski and mountain lifestyle properties as a result of a strong 2012/2013 ski season; and (iii) a decrease in asset management fees and other operating expenses. The increases were partially offset by a reduction in MFFO contribution from unconsolidated entities relating to the sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures and an increase in interest expense and loan cost amortization.
Adjusted EBITDA: Adjusted EBITDA increased $18.5 million or 11.0 percent as compared to 2012. Similar to the increases in MFFO and MFFO per share, the increase in Adjusted EBITDA was primarily attributable to an increase in rent payments from leased properties (rental revenue excluding straight-line adjustments for GAAP) and net operating income from managed properties acquired during 2013 and increases from our “same-store” ski and mountain lifestyle and senior housing properties as well as decrease in asset management fees and other operating expenses. The increases were partially offset by a decrease in cash distributions from unconsolidated entities due to the sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures and an increase in interest expense and loan cost amortization.
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 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 includes 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 to receive 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 thousands except coverage ratio):
| Quarter Ended Dec. 31, | ||||||||||||||
| Number | 2013 | 2012 | Increase/(Decrease) | |||||||||||
| of Properties | Revenue | EBITDA | Revenue | EBITDA | Revenue | EBITDA | ||||||||
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|
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|
|
|
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|
|
|
|
|
| Ski and mountain lifestyle | 17 |
$ 103,838 |
|
$ 14,293 |
|
$ 114,500 |
|
$ 25,518 |
|
-9.3% |
|
-44.0% |
|
|
| Golf | 48 |
34,900 |
|
6,855 |
|
35,840 |
|
6,834 |
|
-2.6% |
|
0.3% |
|
|
| Attractions | 21 |
23,831 |
|
(5,372) |
|
20,713 |
|
(7,748) |
|
15.1% |
|
30.7% |
|
|
| Senior housing | 10 |
9,344 |
|
2,796 |
|
8,863 |
|
2,759 |
|
5.4% |
|
1.3% |
|
|
| Marinas | 17 |
6,124 |
|
1,310 |
|
6,920 |
|
2,423 |
|
-11.5% |
|
-45.9% |
|
|
| Additional lifestyle | 1 |
1,372 |
|
440 |
|
1,271 |
|
524 |
|
7.9% |
|
-16.0% |
|
|
|
|
|
|
|
|
||||||||||
|
|
114 |
$ 179,409 |
|
$ 20,322 |
|
$ 188,107 |
|
$ 30,310 |
|
-4.6% |
|
-33.0% |
|
|
|
|
|
|
|
|
|
|
||||||||
| Year Ended Dec. 31, | TTM | ||||||||||||||
| Number | 2013 | 2012 | Increase/(Decrease) | Rent | |||||||||||
| of Properties | Revenue | EBITDA * | Revenue | EBITDA * | Revenue | EBITDA | Coverage * | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ski and mountain lifestyle | 17 |
$ 444,174 |
|
$ 114,679 |
|
$ 409,568 |
|
$ 94,418 |
|
8.4% |
|
21.5% |
|
1.51x | |
| Golf | 48 |
157,964 |
|
38,815 |
|
160,305 |
|
37,049 |
|
-1.5% |
|
4.8% |
|
1.44x | |
| Attractions | 21 |
226,813 |
|
51,273 |
|
222,928 |
|
48,392 |
|
1.7% |
|
6.0% |
|
1.74x | |
| Senior housing | 10 |
36,530 |
|
11,557 |
|
34,632 |
|
11,043 |
|
5.5% |
|
4.7% |
|
n/a | |
| Marinas | 17 |
33,905 |
|
11,652 |
|
34,416 |
|
12,436 |
|
-1.5% |
|
-6.3% |
|
0.59x | |
| Additional lifestyle | 1 |
5,033 |
|
2,081 |
|
5,549 |
|
2,753 |
|
-9.3% |
|
-24.4% |
|
n/a | |
|
|
|
|
|
|
|
||||||||||
|
|
114 |
$ 904,419 |
|
$ 230,057 |
|
$ 867,398 |
|
$ 206,091 |
|
4.3% |
|
11.6% |
|
1.48x | |
*As of Dec. 31, 2013, on trailing 12-month (“TTM”) basis for properties subject to lease calculated as property-level EBITDA before recurring capital expenditures divided by base rent.
Overall, for the quarter ended Dec. 31, 2013, our same-store tenants and managers reported to us a decrease in revenue and property-level EBITDA of 4.6 percent and 33.0 percent, respectively, as compared to the same period in the prior year. The decrease was in large part due to our ski and mountain lifestyle properties which experienced a decrease in the level of snow during the 2013/2014 season as compared to the 2012/2013 season, particularly in California and the Pacific Northwest, which experienced drought conditions along with unusually warm temperatures. Excluding our ski and mountain lifestyle properties, our comparable properties reported an increase in revenue and property-level EBITDA of 2.7 percent and 25.9 percent, respectively. Poor snow conditions have persisted into 2014, especially in California, where tenants at two of our properties are experiencing financial challenges. We will continue to monitor these properties and tenants very closely during the remainder of the season and into the summer. For the season to date through February 2014, our ski operators have reported a 8.8 percent decrease in property-level revenues as compared to the same period for the prior ski season. Excluding our five California and Pacific Northwest resorts, season to date revenues through February 2014 were up 2.3 percent for the balance of the portfolio.
Overall, for the year ended Dec. 31, 2013, our same-store tenants and managers reported to us an increase in revenue and property-level EBITDA of 4.3 percent and 11.6 percent, respectively, as compared to the same period in the prior year. The increases were primarily attributable to our ski and mountain lifestyle and attractions properties. Our ski and lifestyle properties finished the 2012/2013 ski season with skier visits totaling 6.05 million, up 10.4 percent over the prior year as a result of the return to normal levels of natural snowfall and favorable snowmaking conditions during the first quarter of 2013 as compared to low levels of natural snowfall for the same period in 2012. In addition, our ski and lifestyle properties experienced an increase in summer-based activities, which include scenic chairlift rides, mountain biking, zip lining and other attractions activities, due to favorable weather and the impact of new summer-based capital improvements. Our attractions properties experienced an increase in revenue due to increases in pricing and in-park spending as compared to the same period in 2012. Our senior housing properties experienced increases driven by increases in the average rate paid by our residents. These increases in revenue were offset by declines for our golf properties, marinas and our additional lifestyle property. Our golf properties experienced a decrease in rounds played during 2013 as a direct result of the unusually warm weather conditions experienced during 2012 as compared to colder and wetter conditions in 2013; however, operator-driven efficiencies resulted in a 4.8 percent increase in EBITDA for the year ended Dec. 31, 2013. Our marina properties experienced some minor declines, mostly driven by a reduction in slip rental revenues, concentrated in the California market where competition and price sensitivity were more pronounced and the economy has been slower to recover. They were also impacted by the lengthy transition process for 11 of our marinas when, in the middle of 2013, our tenant filed for bankruptcy protection in response to our effort to terminate their leases. In the fourth quarter, the tenant withdrew its bankruptcy petition and we were then able to work through orderly lease terminations and the transition of these properties to new operators. Our one additional lifestyle property, which is a multi-family rental complex, experienced decreases due to the renovation of 247 apartment units (out of 540 units) that commenced during early 2012 and was completed in August 2013.
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 number of occupied units, is a widely used performance metric within the healthcare sector. As of Dec. 31, 2013, the managers of our ten comparable, consolidated properties reported to us an increase in occupancy of 0.1 percent as compared to the same period in 2012 and an increase in average RevPOU of 6.1 percent, for the year ended Dec. 31, 2013, as compared to the same period in 2012. The increases in occupancy and RevPOU were primarily due to strong demand and resultant ability to drive rate increases at the properties. As of Dec. 31, 2013, occupancy for our 29 total senior housing properties was 91.3 percent.
The following table presents same-store unaudited property-level information of our senior housing properties as of and for the years ended Dec. 31, 2013, and 2012 (in thousands):
| Number of Properties | Occupancy | Increase/
(Decrease) |
|||||
| As of Dec. 31, | |||||||
| 2013 | 2012 | ||||||
| Senior housing | 10 |
|
98.4% |
|
98.3% |
|
.01% |
| Number of Properties | RevPOU | Increase/
(Decrease) |
|||||
| For the year ended | |||||||
| Dec. 31, | |||||||
| 2013 | 2012 | ||||||
| Senior housing | 10 |
|
$3,516 |
|
$3,314 |
|
6.1% |
Acquisitions
During the year ended Dec. 31, 2013, we acquired nine senior housing communities and two attractions properties located in various states for an aggregate purchase price of $244.9 million
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