Meristar Hospitality — JPMorgan Annual High Yield Conference 2006
21 slides from Meristar Hospitality's conference presentation, Feb 8, 2006
Slide 1: MeriStar Hospitality Corporation JPMorgan Annual High Yield Conference 2006
MeriStar Hospitality Corporation JPMorgan Annual High Yield Conference 2006 [Hotel Photos]
Slide 2: Company Overview
Company Overview 90 Shares outstanding Market Capitalization as of December 31, 2005 (in millions) : $ 2,384 Total Enterprise Value (45) Cash 1,585 Debt $ 844 Equity • One of nation’s largest hotel REITs 58 upscale and resort hotels 17,003 rooms • Geographic diversification 19 states and the Distric
Slide 3: MeriStar View of Industry
MeriStar View of Industry Source: PriceWaterhouseCoopers Hospitality Directions, Upper Upscale Segment Focus, September 2005 • Continued economic recovery at more moderate pace • Favorable supply/demand fundamentals • Lodging industry to outpace overall economic growth • Recovery uneven • Return to
Slide 4: 2005 Financial Highlights
2005 Financial Highlights* + 176 bps • EBITDA margin 2004 2005 $(2.76) $(242)M $0.71 $190M + 10.5% $(96)M • Net loss** $(1.18) $0.40 $164M • Net loss/diluted share • Adjusted FFO/diluted share • Adjusted EBITDA • RevPAR * See discussion regarding non- GAAP financial measures at end of presentation.
Slide 5: Current Update
Current Update • Significant improvement in financial flexibility and ability to deliver shareholder value through several key transactions in 2006 • Pending sale of 10 Florida assets to Blackstone for $367 million • Completed sale of 6 hotels for $115 million in January • Settled Hurricane Charley
Slide 6: Capital Structure
Capital Structure 7.8% 8.1% • Avg. rate (45) (45) • Cash 12/31/06* 12/31/05 In millions 4.5 years 1.6x 8.3x $ 1,540 $ 1,585 2.1x • Interest Coverage** 4.5 years 6.3x $ 1,015 $ 1,060 • Avg. maturity • Net debt/Pro forma Adj. EBITDA** • Net debt** • Debt * Projection based on guidance provided as of 2
Slide 7: Credit Ratings
Credit Ratings B- B2 • Senior unsecured S&P Moody’s Caa1 B2 CCC+ B/stable • Subordinated • Corporate credit rating • Upgraded by S&P following our announced portfolio sale to Blackstone
Slide 8: Company Strategy
Company Strategy • Maximize internal growth • Upgrade core portfolio • Improve capital structure • Position for growth [Hotel Photos]
Slide 9: Maximize Internal Growth
Maximize Internal Growth • Higher growth potential with core hotels • Upgraded product through extensive capex program • Aggressive ownership programs Active management oversight Revenue management function Cost control programs • Enhanced operating teams [Hotel Photos]
Slide 10: Maximize Internal Growth: Margin Expansion
Maximize Internal Growth Margin Expansion • Key strategic factor is RevPAR composition • Quality of RevPAR drives margins • In-room technology investments +176 bps 21.4% 23.1% EBITDA Margin 10.5% $72.51 $80.16 RevPAR 0.3% 68.4% 68.6% Occupancy 10.3% $106.03 $116.92 ADR Variance 2004 2005 Property Le
Slide 11: Upgrade Core Portfolio
Upgrade Core Portfolio Capital Program • Invested $220 million in 2004 and 2005 • Expect to invest $70 million in 2006 • Areas where we have been investing: Guest services (i.e., guest rooms, public facilities) 60 to 70% Plant improvements 10 to 20% Brand requirements 10 to 20% [Hotel Photos]
Slide 12: Improve Capital Structure
Improve Capital Structure • Significant progress made over past two years • Plan to accelerate return to over 2x interest coverage in 2006 Selling assets at premium prices Reducing debt levels • Continue to look for opportunities to: Reduce overall debt Lower borrowing costs Improve credit statistic
Slide 13: Improve Capital Structure: 2005 Capital Markets Activity
Improve Capital Structure 2005 Capital Markets Activity • Placed $82 million in long-term (10-yr) low interest- rate (5.7 – 5.8%) mortgages • Repurchased $50 million in senior notes • Called remaining $33 million senior subordinated notes at par • Expanded secured revolving credit facility by $100 m
Slide 14: Improve Capital Structure: 2006 Planned Capital Markets Activity
Improve Capital Structure 2006 Planned Capital Markets Activity • Call all $206 million of 10½ percent senior notes • Selectively repay other debt Plan to reduce senior notes to $350 million by year end Retire $44 million of mortgage debt • Continue to look for opportunities to lower borrowing costs
Slide 15: Position for Growth
• Focus on core hotels Strategic locations in large urban markets or destination resorts with high barriers to entry Branded, larger hotels with significant meeting space Strong current cash returns • Focus on operations • Right-size capital structure • Complete portfolio repositioning Position for
Slide 16: 2006 Financial Guidance
2006 Financial Guidance* FY06 1Q06 $(0.06) – $(0.09) $(5) – (8)M $0.13 – $0.16 $12 – 15M $45 – 48M 10 – 12% $7 – 11M • Net income $0.08 – $0.13 $0.88 – $0.92 $79 – 83M $177 – 181M 7 – 9% • Net income/diluted share • Adjusted FFO/diluted share • Adjusted FFO • Adjusted EBITDA • RevPAR * Guidance prov
Slide 17: Looking Forward
Looking Forward • Favorable fundamentals for 3 to 5 years • Smaller but stronger, more upscale asset base • Positioned in higher growth markets with upgraded product • Improving capital structure with more financial flexibility • Dividend visibility • Disciplined operating and growth strategies • Re
Slide 18: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Information both included and incorporated by reference in this presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forwar
Slide 19: Non-GAAP Financial Measures
SEC Regulation G requires any non- GAAP financial measure to be reconciled to the most directly comparable GAAP measure. Adjusted EBITDA, Adjusted FFO and derivative measures are discussed in our press release relating to the results of the quarter and year ended December 31, 2005. The press release
Slide 20: Reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA
(In millions) 2003 2004 2005 2006 F Reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA Adjusted EBITDA 164 164 190 179 less: Adjusted EBITDA from sold properties during the year (6) 1 (4) (17) add: Adjusted EBITDA from acquired properties during the year - 11 - - Pro Forma Adjusted EBITD
Slide 21: MeriStar Hospitality Corporation contact details
MeriStar Hospitality Corporation 6430 Rockledge Drive, Suite 200 Bethesda, MD 20817 (301) 581-5900 (301) 581-5985 fax www.meristar.com
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