(ORLANDO, Fla.) Nov. 13, 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 Sept. 30, 2013. As of Nov. 5, 2013, we owned a portfolio of 138 lifestyle properties, 64 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, 65 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 26 percent ski and mountain lifestyle, 22 percent attractions, 20 percent golf, 13 percent additional lifestyle properties, 12 percent senior housing and 7 percent marinas.
Financial Highlights
The following table presents selected comparable financial data through Sept. 30, 2013 (in millions except ratios and per share data):
| Quarter Ended | Nine Months Ended | ||||
| Sept. 30, | Sept. 30, | ||||
| 2013 | 2012 | 2013 | 2012 | ||
| Total revenues |
$ 177.3 |
$ 174.5 |
$ 415.3 |
$ 382.4 |
|
| Total expenses |
(140.9) |
(134.8) |
(428.4) |
(357.9) |
|
| Net income (loss) |
78.3 |
23.6 |
(0.2) |
(21.1) |
|
| Net income (loss) per share |
0.24 |
0.08 |
0.0 |
(0.07) |
|
| FFO |
65.5 |
75.0 |
110.5 |
107.8 |
|
| FFO per share |
0.20 |
0.24 |
0.35 |
0.35 |
|
| MFFO |
64.9 |
73.5 |
109.8 |
104.8 |
|
| MFFO per share |
0.20 |
0.23 |
0.35 |
0.34 |
|
| Adjusted EBITDA |
76.0 |
77.8 |
160.0 |
142.3 |
|
| Cash flows from operating activities |
|
|
133.3 |
94.0 |
|
|
|
|
|
|
||
| As of Sept. 30, 2013: |
|
|
|
|
|
| Total assets |
|
|
$ 2,835.5 |
|
|
| Total debt |
|
|
1,058.6 |
|
|
| Leverage ratio |
|
|
37.3% * |
|
|
|
|
|
|
|
||
| * 40.8% 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 $2.8 million or 1.6 percent, and expenses increased $6.1 million or 4.5 percent for the quarter ended Sept. 30, 2013, as compared to the same period in 2012. Total revenues increased $32.9 million or 8.6 percent and expenses increased $70.5 million or 19.7 percent for the nine months ended Sept. 30, 2013, as compared to the same period in 2012. Excluding non-cash impairment charges, total expenses increased $28.1 million or 7.9 percent during the nine months ended Sept. 30, 2013. Net income was $78.3 million and there was a net loss of $0.2 million (income of $0.24 and $0.00 per share), respectively, for the quarter and nine months ended Sept. 30, 2013. This compares to net income of $23.6 million and net loss of $21.1 million (income of $0.08 and loss of $0.07 per share), respectively, for the quarter and nine months ended Sept. 30, 2012. FFO per share was $0.20 and $0.35 for the quarter and nine months ended Sept. 30, 2013, respectively, as compared to $0.24 and $0.35 for the quarter and nine months ended Sept. 30, 2012, respectively. MFFO per share was $0.20 and $0.35 for the quarter and nine months ended Sept. 30, 2013, respectively, as compared to $0.23 and $0.34 for the quarter and nine months ended Sept. 30, 2012, respectively.
The increase in net income of $54.7 million and $20.9 million for the quarter and nine months ended Sept. 30, 2013, respectively, as compared to the same periods in 2012 was primarily attributable to (i) the recording of a gain 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 (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. The increases were partially offset by an increase in other operating expenses. For the nine months ended Sept. 30, 2013, the increase is further attributable to a reduction in acquisition fees and expenses, loss on lease termination and loan loss provision, but is further offset by an impairment provision recorded on one of our unimproved land parcels as well as an increase in interest expense and loan cost amortization.
The decrease in FFO of $9.5 million and FFO per share of $0.04 for the quarter ended Sept. 30, 2013 as compared to the same period in 2012 is primarily attributable to a reduction in FFO contribution from unconsolidated entities primarily relating to the CNLSun I, CNLSun II, and CNLSun III ventures where we completed the sale of our interests in 42 senior housing properties held through three unconsolidated joint ventures. The increase in FFO of $2.7 million for the nine months ended Sept. 30, 2013, as compared to the same period in 2012, is primarily attributable to (i) an increase in rental income from leased properties and net operating income from managed properties related to properties acquired subsequent to Sept. 30, 2012, (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 general and administrative expenses, acquisition fees and expenses, loss on lease termination and loan loss provision. The increases for the nine months ended Sept. 30, 2013, were partially offset by a reduction in FFO contribution from unconsolidated entities primarily relating to the CNLSun I, CNLSun II, and CNLSun III ventures as discussed above and an increase in bad debt, other operating expenses and interest expense and loan cost amortization.
The decrease in MFFO of $8.6 million and MFFO per share of $0.03 for the quarter ended Sept. 30, 2013, as compared to same period in 2012, is primarily attributable to a reduction in MFFO contribution from unconsolidated entities due to the sale of our interests in three unconsolidated senior housing joint ventures and an increase in bad debt and other operating expenses. The increase in MFFO and MFFO per share of $5.0 million or $0.01 per share for the nine months ended Sept. 30, 2013, as compared to the same period in 2012, is primarily attributable to (i) an increase in rental income from leased properties (excluding straight-line adjustments for rental income) and net operating income from managed properties related to properties acquired subsequent to Sept. 30, 2012, (ii) an increase in “same-store” 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 general and administrative expenses. The increases for the nine months ended Sept. 30, 2013, were partially offset by a reduction in MFFO contribution from unconsolidated entities primarily relating to the CNLSun I, CNLSun II, and CNLSun III ventures as discussed above and an increase in bad debt, other operating expenses and interest expenses and loan cost amortization.
The decrease in Adjusted EBITDA of $1.8 million for the quarter ended Sept. 30, 2013, as compared to the same period in 2012, is primarily attributable to a reduction in cash distributions from unconsolidated entities due to the sale of our interests in three unconsolidated senior housing joint ventures and an increase in other operating expenses. The increase in Adjusted EBITDA of $17.7 million for the nine months ended Sept. 30, 2013, as compared to the same period in 2012, is primarily attributable to (i) an increase in rental income from leased properties (excluding straight-line adjustments for rental income) and net operating income from managed properties related to properties acquired subsequent to Sept. 30, 2012, (ii) an increase in “same-store” 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 general and administrative expenses. The increases for the nine months ended Sept. 30, 2013, were partially offset by an increase in other operating expenses and a reduction in cash distributions from unconsolidated entities due to the sale of our interests in three unconsolidated senior housing joint ventures.
On a trailing 12-month (“TTM”) basis, our Adjusted EBITDA was $193.2 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 relative 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 Sept. 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 |
17 |
|
$ 47,993 |
|
$ (6,690) |
|
$ 45,609 |
|
$ (7,809) |
|
5.2% |
|
14.3% |
|
1.75 |
| Golf |
48 |
|
42,341 |
|
9,779 |
|
42,760 |
|
9,092 |
|
-1.0% |
|
7.6% |
|
1.48 |
| Attractions |
21 |
|
113,084 |
|
52,078 |
|
115,485 |
|
53,386 |
|
-2.1% |
|
-2.5% |
|
1.75 |
| Senior housing |
10 |
|
9,260 |
|
2,958 |
|
8,713 |
|
2,911 |
|
6.3% |
|
1.6% |
|
– |
| Marinas |
17 |
|
12,305 |
|
5,015 |
|
11,914 |
|
4,741 |
|
3.3% |
|
5.8% |
|
0.86 |
| Additional lifestyle |
1 |
|
1,264 |
|
562 |
|
1,430 |
|
771 |
|
-11.6% |
|
-27.1% |
|
– |
|
|
|
|
|
|
|
||||||||||
|
|
114 |
|
$ 226,247 |
|
$ 63,702 |
|
$ 225,911 |
|
$ 63,092 |
|
0.1% |
|
1.0% |
|
1.58 |
|
|
|
|
|
|
|
||||||||||
| Number | Nine Months Ended Sept. 30, | ||||||||||||
| of | 2013 | 2012 | Increase/(Decrease) | ||||||||||
| Properties | Revenue (1) | EBITDA (1) | Revenue (1) | EBITDA (1) | Revenue | EBITDA | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ski and mountain lifestyle |
17 |
|
$ 340,334 |
|
$ 98,809 |
|
$ 295,069 |
|
$ 68,900 |
|
15.3% |
|
43.4% |
| Golf |
48 |
|
123,063 |
|
31,954 |
|
124,465 |
|
30,215 |
|
-1.1% |
|
5.8% |
| Attractions |
21 |
|
202,982 |
|
56,626 |
|
202,215 |
|
56,140 |
|
0.4% |
|
0.9% |
| Senior housing |
10 |
|
27,186 |
|
8,769 |
|
25,769 |
|
8,287 |
|
5.5% |
|
5.8% |
| Marinas |
17 |
|
27,780 |
|
10,342 |
|
27,496 |
|
10,014 |
|
1.0% |
|
3.3% |
| Additional lifestyle |
1 |
|
3,661 |
|
1,641 |
|
4,279 |
|
2,230 |
|
-14.4% |
|
-26.4% |
|
|
|
|
|
|
|||||||||
|
|
114 |
|
$ 725,006 |
|
$ 208,141 |
|
$ 679,293 |
|
$ 175,786 |
|
6.7% |
|
18.4% |
|
|
|
|
|
||||||||||
________________
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 Sept. 30, 2013, on TTM basis for properties subject to lease calculated as property-level EBITDA before recurring capital expenditures divided by base rent.
Overall, for the quarter and nine months ended Sept. 30, 2013, our tenants and managers reported to us an increase in property-level revenue of 0.1 percent and 6.7 percent, respectively, and an increase of property-level EBITDA of 1.0 percent and 18.4 percent, respectively, as compared to the same periods in the prior year. The increases were primarily attributable to our ski and mountain lifestyle properties, senior housing and marinas 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 level of natural snowfall and favorable snowmaking conditions as compared to unprecedented low levels of natural snowfall for the same period in 2012. Our results are consistent with the National Ski Areas Association and the Kottke National End of Season Survey 2012/13, which reported that the U.S. ski industry recorded a total of 56.9 million visits, up 11.7 percent from a weather-challenged 2011/2012 ski season. Moreover, during the quarter ended Sept. 30, 2013, our ski and mountain lifestyle properties experienced an increase in summer-based activities which includes 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 senior living properties experienced increases driven by higher occupancy and increases in the average rate paid by our residents. Our marinas properties posted moderate increases in slip rental fees and occupancies as a result of generally improved boating activity. This is consistent with the industry data reported in August 2013 by Yachtworld, finding that boat sales in North America have increased by 4 percent year to date in 2013 as compared to 2012. The increases in revenue were offset by our golf and additional lifestyle properties. 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 and cost controls resulted in 7.6 percent and 5.8 percent increases in EBITDA for the quarter and nine months ended Sept. 30, 2013, respectively. Our results are consistent with an industry wide decrease of 6.0 percent in rounds played for the eight months ended Aug. 31, 2013, reported by Golf Datatech, one of the leading golf industry providers in the U.S. Our additional lifestyle property, which is a multi-family rental complex, experienced decreases due to renovation of 247 apartment units (out of 540 units) that commenced during early 2013. During the quarter ended Sept. 30, 2013, the increases were offset by lower revenues at our attractions properties, with certain of our large theme parks experiencing unprecedented poor weather. During the 2013 operating season, our largest theme park Darien Lake, had only 49 days with no rainfall as compared to 64 days during the same period in 2012.
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 Sept. 30, 2013, the managers of our ten comparable, consolidated properties reported to us an increase in occupancy of 0.7 percent as compared to the same period in 2012 and an increase in RevPOU of 4.6 percent and 3.5 percent for the quarter and nine months ended Sept. 30, 2013, respectively, as compared to the same periods in 2012. The increases in occupancy and RevPOU were primarily due to strong unit demand and the resultant ability to drive 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 nine months ended Sept. 30, 2013, and 2012 (in thousands):
| Number |
|
Occupancy | |||||
| of |
|
As of Sept. 30, |
|
Increase/ | |||
| Properties | 2013 | 2012 | (Decrease) | ||||
|
|
|
|
|
|
|
|
|
| Senior housing | 10 |
|
98.5% |
|
97.8% |
|
0.7% |
| RevPOU | |||||||||||||
| Number | Quarter Ended | Nine Months Ended | |||||||||||
| of | Sept. 30, | Increase/ | Sept. 30, | Increase/ | |||||||||
| Properties | 2013 | 2012 | (Decrease) | 2013 | 2012 | (Decrease) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior housing | 10 |
|
$ 3,570 | ||||||||||