(ORLANDO, Fla.) Aug. 15, 2013 – CNL Lifestyle Properties, Inc., a real estate investment trust (the “Company,” “we,” “our” or “us”), today announced our operating results for the quarter ended June 30, 2013. As of Aug. 6, 2013, we owned a portfolio of 136 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, 54 of which are managed by independent operators, eight of which are owned through unconsolidated joint venture arrangements and one consolidated unimproved land asset. Diversification by asset class based on initial purchase price is 25 percent ski and mountain lifestyle, 20 percent golf, 19 percent additional lifestyle properties (including lodging), 18 percent attractions, 11 percent senior housing and 7 percent marinas.
Financial Highlights
The following table presents selected comparable financial data through June 30, 2013 (in millions except ratios and per share data):
|
|
Quarter ended |
|
Six Months Ended | ||
|
|
June 30, |
|
June 30, | ||
|
|
2013 | 2012 | 2013 | 2012 | |
| Total revenues |
$ 133.3 |
$ 120.1 |
|
$ 239.8 |
$ 209.3 |
| Total expenses |
(178.5) |
(126.1) |
|
(289.1) |
(224.5) |
| Net loss |
(55.2) |
(19.9) |
|
(78.5) |
(44.7) |
| Net loss per share |
(0.17) |
(0.06) |
|
(0.25) |
(0.14) |
| FFO |
26.1 |
16.9 |
|
45.0 |
32.8 |
| FFO per share |
0.08 |
0.05 |
|
0.14 |
0.11 |
| MFFO |
25.8 |
21.5 |
|
44.9 |
31.3 |
| MFFO per share |
0.08 |
0.07 |
|
0.14 |
0.10 |
| Adjusted EBITDA |
41.6 |
37.1 |
|
84.5 |
64.9 |
| Cash flows from operating activities |
|
|
82.2 |
36.2 |
|
|
|
|
|
|
|
|
| As of June 30, 2013: |
|
|
|
|
|
| Total assets |
|
|
|
$ 2,891.9 |
|
| Total debt |
|
|
|
1,167.0 |
|
| Leverage ratio |
|
|
|
40.4% |
|
|
|
|
|
|
|
|
| * 46.6% 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.
Total revenues increased $13.2 million or 11 percent and expenses increased $52.4 million or 41.6 percent for the quarter ended June 30, 2013, as compared to the same period in 2012. Excluding non-cash impairment charges, total expenses increased $10 million or 7.9 percent during the quarter ended June 30, 2013. Total revenues increased $30.5 million or 14.6 percent and expenses increased $64.6 million or 28.8 percent for the six months ended June 30, 2013, as compared to the same period in 2012. Excluding non-cash impairment charges, total expenses increased $22.1 million or 9.8 percent during the six months ended June 30, 2013. Net loss was $55.2 million and $78.5 million ($0.17 and $0.25 per share, respectively) for the quarter and six months ended June 30, 2013 as compared to $19.9 million and $44.7 million ($0.06 and $0.14 per share, respectively) for the quarter and six months ended June 30, 2012. FFO per share was $0.08 and $0.14 for the quarter and six months ended June 30, 2013, respectively, as compared to $0.05 and $0.11 for the quarter and six months ended June 30, 2012, respectively. MFFO per share was $0.08 and $0.14 for the quarter and six months ended June 30, 2013, respectively, as compared to $0.07 and $0.10 for the quarter and six months ended June 30, 2012, respectively.
The increase in net loss of $35.3 million and $33.8 million for the quarter and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 was primarily attributable to an impairment provision of $42.5 million and an increase in interest expense and loan cost amortization, bad debt expense and ground lease and permit fees, partially offset by (i) an increase in rental income from leased properties and net operating income from managed properties related to properties acquired during and after the second quarter of 2012, (ii) an increase in “same-store” rental income from leased properties and net operating income from managed properties primarily relating to our ski and mountain lifestyle properties and additional lifestyle properties which includes the Omni Mount Washington Resort as a result of a strong 2012/2013 winter season, (iii) an increase in equity in earnings from unconsolidated entities, and (iv) a reduction in acquisition fees and costs. The impairment charge relates to an unimproved land parcel where we have decided that we are no longer actively pursuing development and have begun exploring different options, including the sale or some of all of the land.
Similarly, the increase in FFO and FFO per share of $9.2 million or $0.03 per share and $12.2 million or $0.03 per share for the quarter and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 was attributable to an increase in rental income from new investments and increases from our comparable ski and mountain lifestyle properties and the Omni Mount Washington Resort as well as a decrease in loss on lease terminations, loan loss provision and acquisition fees and costs. These increases were partially offset by an increase in interest expense and loan cost amortization, asset management fees, bad debt and ground lease and permit fees.
The increase in MFFO and MFFO per share of $4.3 million or $0.01 per share and $13.6 million or $0.04 per share for the quarter and six months ended June 30, 2013, respectively, and the increase in Adjusted EBITDA of $4.5 million and $19.6 million for the quarter and six months ended June 30, 2013, respectively, as compared to the same periods in 2012 were principally due to an increase in rental income from leased properties (excluding straight-line adjustments for rental income) and net operating income from managed properties related to investments made during and after the second quarter of 2012 and an increase in “same-store” rent payments from leased properties and net operating income from managed properties primarily relating to our ski and mountain lifestyle properties and additional lifestyle properties which includes the Omni Mount Washington Resort as a result of a strong 2012/2013 winter season. The increases were partially offset by an increase in interest expense and loan cost amortization, asset management fees, bad debt and ground lease and permit fees.
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 all 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 to 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 subsequent to Jan. 1, 2012, because we did not own those properties during the entirety of all periods (in millions except coverage ratio):
| Number | Quarter Ended June 30, | TTM | |||||||||||||
| of | 2013 | 2012 | Increase/(Decrease) | Rent | |||||||||||
| Properties | Revenue (1) | EBITDA (1) | Revenue (1) | EBITDA (1) | Revenue | EBITDA | Coverage(2) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ski and mountain lifestyle |
16 |
|
$ 27,931 |
|
$ (15,179) |
|
$ 28,510 |
|
$(11,958) |
|
-2.0% |
|
-26.9% |
|
1.75 |
| Golf |
48 |
|
46,383 |
|
13,084 |
|
47,227 |
|
12,699 |
|
-1.8% |
|
3.0% |
|
1.46 |
| Attractions |
18 |
|
58,276 |
|
12,044 |
|
57,134 |
|
10,848 |
|
2.0% |
|
11.0% |
|
1.67 |
| Marinas |
17 |
|
9,335 |
|
3,096 |
|
9,624 |
|
3,373 |
|
-3.0% |
|
-8.2% |
|
0.85 |
| Additional lifestyle |
5 |
|
20,157 |
|
884 |
|
19,261 |
|
806 |
|
4.7% |
|
9.7% |
|
n/a |
|
|
|
|
|
|
|
||||||||||
|
|
104 |
|
$162,082 |
|
$ 13,929 |
|
$161,756 |
|
$ 15,768 |
|
0.2% |
|
-11.7% |
|
1.57 |
| Number | Six Months Ended June 30, | ||||||||||||
| of | 2013 | 2012 | Increase/(Decrease) | ||||||||||
| Properties | Revenue (1) | EBITDA (1) | Revenue (1) | EBITDA (1) | Revenue | EBITDA | |||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ski and mountain lifestyle |
16 |
|
$ 267,347 |
|
$ 102,932 |
|
$ 228,444 |
|
$ 75,525 |
|
17.0% |
|
36.3% |
| Golf |
48 |
|
80,723 |
|
22,175 |
|
81,704 |
|
21,123 |
|
-1.2% |
|
5.0% |
| Attractions |
18 |
|
66,777 |
|
765 |
|
64,393 |
|
(815) |
|
3.7% |
|
193.9% |
| Marinas |
17 |
|
15,381 |
|
5,236 |
|
15,582 |
|
5,273 |
|
-1.3% |
|
-0.7% |
| Additional lifestyle |
5 |
|
50,897 |
|
7,893 |
|
46,202 |
|
6,212 |
|
10.2% |
|
27.1% |
|
|
|
|
|
|
|||||||||
|
|
104 |
|
$ 481,125 |
|
$ 139,001 |
|
$ 436,325 |
|
$ 107,318 |
|
10.3% |
|
29.5% |
________________
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 June 30, 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 June 30, 2013, our tenants and managers reported to us an increase in property-level revenue of 0.2 percent and a decrease of property-level EBITDA of 11.7 percent, respectively, as compared to the same periods in the prior year. The increase in property-level revenue was primarily attributable to our attractions and additional lifestyle properties. Our attractions and additional lifestyle properties, which include three water park hotels, have experienced an increase in revenue due to gains in pricing and in-park spending as compared to the same period in 2012. Our attractions properties are in their off-peak seasonal periods during first, second and fourth quarters due to the nature of their business and have improved in their EBITDA primarily due to cost containment. The increases were offset by our ski and mountain lifestyle properties, golf and marinas properties. During the second quarter of 2012, most of our ski and mountain lifestyle properties were closed due to low snowfall which reduced variable labor and operating expenses, however, during the same period in 2013, many of our ski and mountain lifestyle properties remained in operation through April. During April, the resorts typically report net operating losses, however, remain open as long as they reasonably can to maximize value for guests and season pass holders and actively begin selling season passes for the next season. Our golf properties have 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 3 percent increase in EBITDA due to cost controls. Our marinas properties have experienced minor declines in revenues, 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.
Overall, for the six months ended June 30, 2013, our tenants and managers reported to us an increase in revenue and property-level EBITDA of 10.3 percent and 29.5 percent, respectively, as compared to the same period in the prior year. The increases were primarily attributable to our ski and mountain lifestyle properties, attractions, and additional lifestyle properties. As noted above, our ski and mountain lifestyle properties and our additional lifestyle properties, which include the Omni Mount Washington Resort, experienced a strong 2012/2013 ski season as a result of the return to normal level of natural snowfall and favorable snowmaking conditions and 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. The increases were offset by our golf and marinas properties as noted above. During the six months ended June 30, 2013, our largest marina tenant filed for bankruptcy protection, which may impact the performance of the properties they operate. We are in the process of transitioning some or all of our marina properties to new tenants or operators and expect to complete the transition during the second half of 2013. This transition is expected to impact our cash flows from operating activities in the near term until it is completed and may negatively impact our net asset value per share. Over the long-term we expect our marinas to perform better with new operators and/or new tenants once we complete the anticipated transition periods.
During the month of July, certain of our attractions properties have been impacted by unusually wet and cool weather, particularly in the northeast United States, while those that have experienced favorable weather have performed well. While the season is not yet over, certain properties will likely fall short of their full potential as a result of challenging weather conditions and attendance.
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. This metric assists us in determining the ability of our operators to achieve market rental rates and to obtain revenues from providing healthcare related services. As of June 30, 2013, the managers for our 52 comparable, consolidated and unconsolidated, properties reported to us an increase in occupancy of 3.2 percent as compared to the same period in 2012 and an increase in RevPOU of 3.7 percent and 3.4 percent for the quarter and six months ended June 30, 2013, respectively, as compared to the same periods in 2012. The increases in occupancy and RevPOU were primarily due to strong unit demands and rate increases at the properties.
The following table presents same store unaudited property-level information of our senior housing properties as of and for the quarters and six months ended June 30, 2013 and 2012 (in thousands):
| Number |
|
Occupancy | |||||
| of |
|
As of June 30, |
|
Increase/ | |||
| Properties | 2013 | 2012 | (Decrease) | ||||
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| Senior housing | 52 |
|
92.2% |
|
89.3% |
|
3.2% |
| RevPOU | |||||||||||||
| Number | Quarter Ended | Six Months Ended | |||||||||||
| of | June 30, | Increase/ | June 30, | Increase/ | |||||||||
| Properties | 2013 | 2012 | (Decrease) | 2013 | 2012 | (Decrease) | |||||||
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| Senior housing | 52 |
|
$6,515 | $6,281 | 3.7% | $6,470 | $6,256 |
|
3.4% | ||||
Assets Held for Sale
As of June 30, 2013, we classified ten properties as held for sale, seven of which are held in unconsolidated joint ventures.
Dispositions
During the six months ended June 30, 2013, we completed the sale of three consolidated properties for an aggregate sales price of $11.6 million and recorded an aggregate gain of $2.1 million.
In July 2013, we completed the sale of our interest in 42 senior housing properties held in three unconsolidated joint ventures for an aggregate sales price of $195.4 million, including transaction costs, and recorded an aggregate gain of $55.4 million. The sales proceeds were used to pay down our revolving line of credit and will support investment in new and existing properties. During July and August, we acquired one water park and two senior housing communities for a combined purchase price of $62.4 million.
Distributions
For the six months ended June 30, 2013, we declared and paid distributions of approximately $67.4 million ($0.2126 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.
Redemptions
For the six months ended June 30, 2013, we redeemed approximately $6.0 million (0.8 million shares).
CNL LIFESTYLE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except per share data)