Strategic Hotels & Resorts Q3 FFO Surges, Results Beat View; Lifts Outlook

(RTTNews) - Real estate investment trust Strategic Hotels & Resorts, Inc. (BEE) on Monday reported a 75 percent increase in funds from operations for the third quarter on strong revenue growth reflecting higher rates and occupancy. Both revenue and FFO per share for the quarter beat analysts' expectations. Looking ahead to fiscal 2013, the company raised its outlook for FFO and RevPAR.

Raymond Gellein, Chairman and Chief Executive Officer of Strategic Hotels & Resorts said, "With both increasing rates and occupancy, revenues grew 16.2%, same store RevPAR was up 10.8%, Comparable EBITDA grew 29.1%, and margins expanded an impressive 290 basis points. We are very encouraged by the trends we are seeing in group business and transient demand, and continue to see strong embedded growth in our portfolio. As a result, we have raised our full year guidance accordingly."

Strategic Hotels & Resorts' North American portfolio RevPAR for the quarter increased 10.4 percent, driven by a 7.4 percent increase in ADR and a 2.3 percentage point increase in occupancy compared to the third quarter of 2012. Total revenue per available room or RevPAR increased 9.0 percent between the two periods, with non-rooms revenue increasing by 8.3 percent.

Strategic Hotels & Resorts' average daily rate or ADR for the third quarter increased 7.4 percent to $298.87, while occupancy rose 2.3 points to 78.9 percent. Revenue per available room or RevPAR increased 10.7 percent to $235.79 and total RevPAR rose 9.0 percent to $404.76.

The Chicago, Illinois-based company's third-quarter funds from operations, or FFO, increased to $29.80 million or $0.14 per share from $16.99 million or $0.08 per share in the year-ago period. On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.13 per share for the quarter.

The company's net income for the third quarter was $3.76 million or breakeven per share, compared to loss of $8.56 million or $0.05 per share in the same period last year.

Consolidated revenues for the quarter grew 16 percent to $237.61 million from $204.57 million in the same period last year. Analysts had a consensus revenue estimate of $234.15 million.

Looking ahead to the fiscal year 2013, Strategic Hotel & Resorts raised its FFO outlook to a range of $0.38 to $0.43 per share from its previous guidance range of $0.35 to $0.40 per share. Analysts currently expect the company to report full-year earnings of $0.37 per share on revenues of $915.23 million.

The company also raised its full-year forecast for RevPAR to a range of 7.5 percent to 8.0 percent from the prior range of 6.0 percent to 7.0 percent and total RevPAR to a range of 6.5 percent to 7.0 percent from the previous range of 5.0 percent to 6.0 percent.

BEE closed Monday's regular trading session at $8.41, up $0.07 or 0.84 percent on a volume of 701,832 shares.