EX-99.2 3 sho-20210210xex99d2.htm EX-99.2

Exhibit 99.2

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Supplemental Financial Information
February 11, 2021

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Supplemental Financial Information

For the quarter and year ended December 31, 2020

February 11, 2021

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Supplemental Financial Information
February 11, 2021

Table of Contents

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR

3

About Sunstone

4

Forward-Looking Statement

5

Non-GAAP Financial Measures

6

CORPORATE FINANCIAL INFORMATION

9

Condensed Consolidated Balance Sheets Q4 2020 – Q4 2019

10

Consolidated Statements of Operations Q4 and FY 2020/2019

12

Reconciliation of Net (Loss) Income to EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest Q4 and FY 2020/2019

13

Reconciliation of Net (Loss) Income to FFO and Adjusted FFO Attributable to Common Stockholders Q4 and FY 2020/2019

14

Pro Forma Consolidated Statements of Operations FY 2020, Q4 2020 – Q1 2020

15

Pro Forma Consolidated Statements of Operations FY 2019, Q4 2019 – Q1 2019

16

Pro Forma Reconciliation of Net Loss to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders FY 2020

17

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders FY 2019

20

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders Q4 2019

23

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders Q3 2019

25

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders Q2 2019

27

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO and Adjusted FFO Attributable to Common Stockholders Q1 2019

29

CAPITALIZATION

32

Comparative Capitalization Q4 2020 – Q4 2019

33

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Supplemental Financial Information
February 11, 2021

Table of Contents

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February 11, 2021

CORPORATE PROFILE, FINANCIAL DISCLOSURES,
AND SAFE HARBOR

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR

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Supplemental Financial Information
February 11, 2021

About Sunstone

Sunstone Hotel Investors, Inc. (the “Company,” “we,” and “our”) (NYSE: SHO) is a lodging real estate investment trust (“REIT”) that as of February 11, 2021 has interests in 17 hotels comprised of 9,017 rooms. Sunstone is the premier steward of Long-Term Relevant Real Estate® (“LTRR®”) in the lodging industry. Sunstone’s business is to acquire, own, asset manage and renovate or reposition hotels that the Company considers to be LTRR® in the United States, specifically hotels in urban, resort and destination locations that benefit from significant barriers to entry by competitors and diverse economic drivers. The majority of Sunstone’s hotels are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt.

As demand for lodging generally fluctuates with the overall economy, the Company seeks to own Long-Term Relevant Real Estate® that will maintain a high appeal with lodging travelers over long periods of time and will generate superior economic earnings materially in excess of recurring capital requirements. Sunstone’s strategy is to maximize stockholder value through focused asset management and disciplined capital recycling, which is likely to include selective acquisitions and dispositions, while maintaining balance sheet flexibility and strength. Sunstone’s goal is to maintain appropriate leverage and financial flexibility to position the Company to create value throughout all phases of the operating and financial cycles.

Corporate Headquarters
200 Spectrum Center Drive, 21st Floor
Irvine, CA 92618
(949) 330-4000

Company Contacts
John Arabia
President and Chief Executive Officer
(949) 382-3008

Bryan Giglia
Executive Vice President and Chief Financial Officer
(949) 382-3036

Aaron Reyes
Senior Vice President, Corporate Finance and Treasurer
(949) 382-3018

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Supplemental Financial Information
February 11, 2021

Forward-Looking Statement

This presentation contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will” and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the impact on the Company’s business of the COVID-19 pandemic and the response of governments and the Company to the outbreak; increased risks related to employee matters, including increased employment litigation and claims for severance or other benefits tied to termination or furloughs as a result of temporary hotel suspensions or reduced hotel operations due to COVID-19; the impact on our business of potential defaults by us on our debt agreements or leases; general economic and business conditions, including a U.S. recession; trade conflicts and tariffs between the U.S. and its trading partners; changes impacting global travel; regional or global economic slowdowns, which may diminish the desire for leisure travel or the need for business travel; any type of flu or disease-related pandemic that impacts travel or the ability to travel, including COVID-19; the adverse effects of climate change affecting the lodging and travel industry, internationally, nationally and locally; the Company’s need to operate as a REIT and comply with other applicable laws and regulations, including new laws, interpretations or court decisions that may change the federal or state tax laws or the federal or state income tax consequences of the Company’s qualification as a REIT; rising hotel operating costs due to labor costs, workers’ compensation and health-care related costs, utility costs, insurance and unanticipated costs such as acts of nature and their consequences and other factors that may not be offset by increased room rates; relationships with, and the requirements and reputation of, the Company’s franchisors and hotel brands; relationships with, and the requirements, performance and reputation of, the managers of the Company’s hotels; the ground, building or airspace leases for three of the 17 Hotels the Company has interests in as of the date of this presentation; competition for the acquisition of hotels, and the Company’s ability to complete acquisitions and dispositions; performance of hotels after they are acquired; new hotel supply, or alternative lodging options such as timeshare, vacation rentals or sharing services such as Airbnb, in the Company’s markets, which could harm its occupancy levels and revenue at its hotels; competition from hotels not owned by the Company; the need for renovations, repositionings and other capital expenditures for the Company’s hotels; the impact, including any delays, of renovations and repositionings on hotel operations; changes in the Company’s business strategy or acquisition or disposition plans; the Company’s level of debt, including secured, unsecured, fixed and variable rate debt; financial and other covenants in the Company’s debt and preferred stock; the Company’s hotels may become impaired, or its hotels which have previously become impaired may become further impaired in the future, which may adversely affect its financial condition and results of operations; volatility in the capital markets and the effect on lodging demand or the Company’s ability to obtain capital on favorable terms or at all; potential adverse tax consequences in the event that the Company’s operating leases with its taxable REIT subsidiaries are not held to have been made on an arm’s-length basis; system security risks, data protection breaches, cyber-attacks, including those impacting the Company’s hotel managers or other third parties, and systems integration issues; other events beyond the Company’s control, including natural disasters, terrorist attacks or civil unrest; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information provided herein is as of the date of this presentation, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

This presentation contains unaudited information, and should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

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Supplemental Financial Information
February 11, 2021

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre, excluding noncontrolling interest (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“NAREIT”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, excluding noncontrolling interest, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre, excluding noncontrolling interest as measures in determining the value of hotel acquisitions and dispositions.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to NAREIT’s definition of “FFO applicable to common shares.” Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently that we do.

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We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre, excluding noncontrolling interest or Adjusted FFO attributable to common stockholders:

Amortization of favorable and unfavorable contracts: we exclude the noncash amortization of the favorable management contract asset recorded in conjunction with our acquisition of the Hilton Garden Inn Chicago Downtown/Magnificent Mile, along with the favorable and unfavorable tenant lease contracts, as applicable, recorded in conjunction with our acquisitions of the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hyatt Regency San Francisco and the Wailea Beach Resort. We exclude the noncash amortization of favorable and unfavorable contracts because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.
Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.
Acquisition costs: under GAAP, costs associated with acquisitions that meet the definition of a business are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.
Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.
Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; prior year property tax assessments or credits; the write-off of development costs associated with abandoned projects; property-level restructuring, severance and management transition costs; debt resolution costs; lease terminations; and property insurance proceeds or uninsured losses.

In addition, to derive Adjusted EBITDAre, excluding noncontrolling interest we exclude the noncontrolling partner’s pro rata share of the net (income) loss allocated to the Hilton San Diego Bayfront partnership, as well as the noncontrolling partner’s pro rata share of any EBITDAre and Adjusted EBITDAre components. We also exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels. In addition, we exclude the amortization of our right-of-use assets and liabilities as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. Additionally, we include an adjustment for the cash

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Supplemental Financial Information
February 11, 2021

finance lease expenses recorded on the ground lease at the Courtyard by Marriott Los Angeles (prior to the hotel’s sale in October 2019) and the building lease at the Hyatt Centric Chicago Magnificent Mile. We determined that both of these leases are finance leases, and, therefore, we include a portion of the lease payments each month in interest expense. We adjust EBITDAre for these two finance leases in order to more accurately reflect the actual rent due to both hotels’ lessors in the current period, as well as the operating performance of both hotels. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre, excluding noncontrolling interest is not consistent with reflecting the ongoing performance of our assets.

To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives and finance lease obligations as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the noncontrolling partner’s pro rata share of any FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership. We also exclude the real estate amortization of our right-of-use assets and liabilities, which includes the amortization of both our finance and operating lease intangibles (with the exception of our corporate operating lease), as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. In addition, we exclude changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments.

In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.

Reconciliations of net (loss) income to EBITDAre, Adjusted EBITDAre, excluding noncontrolling interest, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this supplemental package.

The 17 Hotel Portfolio includes all hotels owned by the Company as of December 31, 2020.

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Supplemental Financial Information
February 11, 2021

CORPORATE FINANCIAL INFORMATION

CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
February 11, 2021

Condensed Consolidated Balance Sheets
Q4 2020 – Q4 2019

(In thousands)

December 31, 2020 (1)

September 30, 2020 (2)

June 30, 2020 (3)

March 31, 2020 (4)

December 31, 2019 (5)

Assets

    

    

    

    

    

Investment in hotel properties:

Land

$

571,212

$

581,426

$

581,426

$

600,649

$

601,181

Buildings & improvements

2,523,750

2,707,102

2,694,935

2,800,187

2,950,534

Furniture, fixtures, & equipment

431,918

464,588

460,526

496,312

506,754

Other

37,766

64,880

72,775

71,327

73,992

3,564,646

3,817,996

3,809,662

3,968,475

4,132,461

Less accumulated depreciation & amortization

(1,103,148)

(1,196,520)

(1,164,181)

(1,212,063)

(1,260,108)

2,461,498

2,621,476

2,645,481

2,756,412

2,872,353

Finance lease right-of-use asset, net

46,182

46,549

46,917

47,284

47,652

Operating lease right-of-use assets, net

26,093

39,489

40,351

41,198

60,629

Other noncurrent assets, net

16,799

16,510

15,415

16,390

24,608

Current assets:

Cash and cash equivalents

368,406

461,288

540,420

847,445

816,857

Restricted cash

47,733

42,346

45,960

53,485

48,116

Other current assets, net

19,006

19,124

12,474

37,326

48,759

Assets held for sale, net

76,683

Total assets

$

2,985,717

$

3,246,782

$

3,423,701

$

3,799,540

$

3,918,974

*Footnotes on following page

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Supplemental Financial Information
February 11, 2021

Condensed Consolidated Balance Sheets
Q4 2020– Q4 2019 (cont.)

(In thousands)

December 31, 2020 (1)

September 30, 2020 (2)

June 30, 2020 (3)

March 31, 2020 (4)

December 31, 2019 (5)

Liabilities

    

    

    

    

    

Current liabilities:

Current portion of notes payable, net

$

2,261

$

188,096

$

188,757

$

82,189

$

82,109

Other current liabilities

88,532

99,679

97,129

104,029

243,443

Total current liabilities

90,793

287,775

285,886

186,218

325,552

Notes payable, less current portion, net

742,528

743,545

829,673

1,187,468

888,954

Finance lease obligation, less current portion

15,569

15,569

15,570

15,570

15,570

Operating lease obligations, less current portion

29,954

45,939

47,206

48,460

49,691

Other liabilities

17,494

25,909

25,374

24,818

18,136

Total liabilities

896,338

1,118,737

1,203,709

1,462,534

1,297,903

Equity

Stockholders' equity:

6.95% Series E cumulative redeemable preferred stock

115,000

115,000

115,000

115,000

115,000

6.45% Series F cumulative redeemable preferred stock

75,000

75,000

75,000

75,000

75,000

Common stock, $0.01 par value, 500,000,000 shares authorized

2,156

2,156

2,156

2,155

2,249

Additional paid in capital

2,586,108

2,584,005

2,581,637

2,578,445

2,683,913

Retained earnings

913,766

951,765

1,041,056

1,156,394

1,318,455

Cumulative dividends and distributions

(1,643,386)

(1,640,178)

(1,636,970)

(1,633,763)

(1,619,779)

Total stockholders' equity

2,048,644

2,087,748

2,177,879

2,293,231

2,574,838

Noncontrolling interest in consolidated joint venture

40,735

40,297

42,113

43,775

46,233

Total equity

2,089,379

2,128,045

2,219,992

2,337,006

2,621,071

Total liabilities and equity

$

2,985,717

$

3,246,782

$

3,423,701

$

3,799,540

$

3,918,974

(1)As presented on Form 10-K to be filed in February 2021.
(2)As presented on Form 10-Q filed on November 6, 2020.
(3)As presented on Form 10-Q filed on August 5, 2020.
(4)As presented on Form 10-Q filed on May 11, 2020.
(5)As presented on Form 10-K filed on February 19, 2020.

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Supplemental Financial Information
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Consolidated Statements of Operations
Q4 and FY 2020/2019

Quarter Ended December 31,

Year Ended December 31,

(In thousands, except per share data)

    

    2020

    

    2019

    2020

    2019

Revenues

Room

$

21,987

$

186,557

$

169,522

$

767,392

Food and beverage

4,588

66,686

54,900

272,869

Other operating

10,785

19,709

43,484

74,906

Total revenues

37,360

272,952

267,906

1,115,167

Operating expenses

Room

11,940

50,283

76,977

202,889

Food and beverage

8,607

46,287

63,140

186,436

Other operating

1,353

4,100

7,636

16,594

Advertising and promotion

3,294

13,371

23,741

54,369

Repairs and maintenance

5,585

10,512

27,084

41,619

Utilities

4,073

6,655

17,311

27,311

Franchise costs

723

8,241

7,060

32,265

Property tax, ground lease and insurance

16,873

20,423

76,848

83,265

Other property-level expenses

2,745

32,553

49,854

130,321

Corporate overhead

5,735

7,275

28,149

30,264

Depreciation and amortization

32,761

37,264

137,051

147,748

Impairment losses

13,478

24,713

146,944

24,713

Total operating expenses

107,167

261,677

661,795

977,794

Interest and other income

85

3,060

2,836

16,557

Interest expense

(10,108)

(10,822)

(53,307)

(54,223)

Gain on sale of assets

34,109

42,935

34,298

42,935

Gain on extinguishment of debt, net

6,356

6,146

(Loss) income before income taxes

(39,365)

46,448

(403,916)

142,642

Income tax (provision) benefit, net

(15)

(1,034)

(6,590)

151

Net (loss) income

(39,380)

45,414

(410,506)

142,793

Loss (income) from consolidated joint venture attributable to noncontrolling interest

1,381

(998)

5,817

(7,060)

Preferred stock dividends

(3,208)

(3,208)

(12,830)

(12,830)

(Loss) income attributable to common stockholders

$

(41,207)

$

41,208

$

(417,519)

$

122,903

Basic and diluted per share amounts:

Basic and diluted (loss) income attributable to common stockholders per common share

$

(0.19)

$

0.18

$

(1.93)

$

0.54

Basic and diluted weighted average common shares outstanding

214,257

223,638

215,934

225,681

Distributions declared per common share

$

$

0.59

$

0.05

$

0.74

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Supplemental Financial Information
February 11, 2021

Reconciliation of Net (Loss) Income to EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest
Q4 and FY 2020/2019

Quarter Ended December 31,

Year Ended December 31,

(In thousands)

    

2020

    

2019

2020

2019

Net (loss) income

$

(39,380)

$

45,414

$

(410,506)

$

142,793

Operations held for investment:

Depreciation and amortization

32,761

37,264

137,051

147,748

Interest expense

10,108

10,822

53,307

54,223

Income tax provision (benefit), net

15

1,034

6,590

(151)

Gain on sale of assets

(34,109)

(42,935)

(34,298)

(42,935)

Impairment losses - hotel properties

13,478

24,713

144,642

24,713

EBITDAre

(17,127)

76,312

(103,214)

326,391

Operations held for investment:

Amortization of deferred stock compensation

2,067

2,145

9,576

9,313

Amortization of right-of-use assets and liabilities

(337)

(259)

(1,260)

(782)

Finance lease obligation interest - cash ground rent

(351)

(407)

(1,404)

(2,175)

Gain on extinguishment of debt, net

(6,356)

(6,146)

Property-level severance

3,081

11,038

Prior year property tax adjustments, net

(490)

(121)

(276)

168

Prior owner contingency funding

(900)

Impairment loss - abandoned development costs

2,302

Noncontrolling interest:

Loss (income) from consolidated joint venture attributable to noncontrolling interest

1,381

(998)

5,817

(7,060)

Depreciation and amortization

(810)

(803)

(3,228)

(2,875)

Interest expense

(224)

(476)

(1,194)

(2,126)

Amortization of right-of-use asset and liability

73

73

290

290

Impairment loss - abandoned development costs

(449)

Adjustments to EBITDAre, net

(1,966)

(846)

15,066

(6,147)

Adjusted EBITDAre, excluding noncontrolling interest

$

(19,093)

$

75,466

$

(88,148)

$

320,244

CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
February 11, 2021

Reconciliation of Net (Loss) Income to FFO and Adjusted FFO Attributable to Common Stockholders
Q4 and FY 2020/2019

Quarter Ended December 31,

Year Ended December 31,

(In thousands, except per share data)

    

2020

    

2019

2020

2019

Net (loss) income

$

(39,380)

$

45,414

$

(410,506)

$

142,793

Preferred stock dividends

(3,208)

(3,208)

(12,830)

(12,830)

Operations held for investment:

Real estate depreciation and amortization

32,133

36,639

134,555

145,260

Gain on sale of assets

(34,109)

(42,935)

(34,298)

(42,935)

Impairment losses - hotel properties

13,478

24,713

144,642

24,713

Noncontrolling interest:

Loss (income) from consolidated joint venture attributable to noncontrolling interest

1,381

(998)

5,817

(7,060)

Real estate depreciation and amortization

(810)

(803)

(3,228)

(2,875)

FFO attributable to common stockholders

(30,515)

58,822

(175,848)

247,066

Operations held for investment:

Real estate amortization of right-of-use assets and liabilities

78

147

376

590

Noncash interest on derivatives and finance lease obligations, net

(794)

(857)

4,740

6,051

Gain on extinguishment of debt, net

(6,356)

(6,146)

Property-level severance

3,081

11,038

Prior year property tax adjustments, net

(490)

(121)

(276)

168

Prior owner contingency funding

(900)

Impairment loss - abandoned development costs

2,302

Noncash income tax provision, net

934

7,415

688

Noncontrolling interest:

Real estate amortization of right-of-use asset and liability

73

73

290

290

Noncash interest on derivatives, net

(27)

Impairment loss - abandoned development costs

(449)

Adjustments to FFO attributable to common stockholders, net

(4,408)

176

19,263

6,887

Adjusted FFO attributable to common stockholders

$

(34,923)

$

58,998

$

(156,585)

$

253,953

FFO attributable to common stockholders per diluted share

$

(0.14)

$

0.26

$

(0.81)

$

1.09

Adjusted FFO attributable to common stockholders per diluted share

$

(0.16)

$

0.26

$

(0.73)

$

1.12

Basic weighted average shares outstanding

214,257

223,638

215,934

225,681

Shares associated with unvested restricted stock awards

185

448

276

Diluted weighted average shares outstanding

214,442

224,086

215,934

225,957

CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
February 11, 2021

Pro Forma Consolidated Statements of Operations

FY 2020, Q4 2020 – Q1 2020

Year Ended (1)

Quarter Ended (1)

(Unaudited and in thousands)

December 31,

December 31,

September 30,

June 30,

March 31,

2020

    

2020

    

2020

    

2020

    

2020

Revenues

Room

$

151,641

$

21,026

$

14,745

$

2,395

$

113,475

Food and beverage

50,986

4,493

1,979

142

44,372

Other operating

41,183

10,592

10,252

6,144

14,195

Total revenues

243,810

36,111

26,976

8,681

172,042

Operating Expenses

Room

63,081

11,519

9,326

4,995

37,241

Food and beverage

55,961

8,392

5,719

4,379

37,471

Other expenses

179,949

30,293

39,741

35,607

74,308

Corporate overhead

28,149

5,735

6,582

8,438

7,394

Depreciation and amortization

125,865

31,505

31,121

31,363

31,876

Impairment losses

20,987

13,478

7,509

Total operating expenses

473,992

100,922

92,489

84,782

195,799

Interest and other income

2,836

85

139

306

2,306

Interest expense

(47,228)

(9,291)

(10,644)

(10,979)

(16,314)

Loss on extinguishment of debt

(243)

(33)

(210)

Loss before income taxes

(274,817)

(74,050)

(76,228)

(86,774)

(37,765)

Income tax (provision) benefit, net

(6,590)

(15)

83

12

(6,670)

Net loss

$

(281,407)

$

(74,065)

$

(76,145)

$

(86,762)

$

(44,435)

Adjusted EBITDAre, excluding noncontrolling interest (2)

$

(66,826)

$

(14,886)

$

(30,656)

$

(39,588)

$

18,304

(1)Includes the Company's ownership results for the 17 hotels owned by the Company as of December 31, 2020. Excludes the Company's ownership results for the Renaissance Harborplace and the Renaissance Los Angeles Airport due to their sales in July 2020 and December 2020, respectively. In addition, excludes the Company's ownership results for the Hilton Times Square due to the assignment-in-lieu agreement executed in December 2020 between the Company and the hotel's mortgage holder, which transferred the Company's leasehold interest in the hotel to the mortgage holder.
(2)Adjusted EBITDAre, excluding noncontrolling interest reconciliation for the year ended December 31, 2020 can be found on page 17 in this supplemental package.

CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
February 11, 2021

Pro Forma Consolidated Statements of Operation

FY 2019, Q4 2019 – Q1 2019

Year Ended (1)

Quarter Ended (1)

(Unaudited and in thousands)

December 31,

December 31,

September 30,

June 30,

March 31,

2019

    

2019

    

2019

    

2019

    

2019

Revenues

Room

$

662,486

$

160,370

$

171,544

$

179,838

$

150,734

Food and beverage

248,862

60,403

56,052