-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SfUaeBW3wYG6F3Gs4pgH1JIL8StXonvUVtwTx/WGGTaim3Pm7WkmCq9B/Y6XHpwh BBG73wSc6hTOVOdtjw3AyA== 0000950148-96-000353.txt : 19960314 0000950148-96-000353.hdr.sgml : 19960314 ACCESSION NUMBER: 0000950148-96-000353 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960312 SROS: AMEX SROS: BSE SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARWOOD LODGING TRUST CENTRAL INDEX KEY: 0000048595 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 520901263 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06828 FILM NUMBER: 96533715 BUSINESS ADDRESS: STREET 1: 11845 W OLYMPIC BLVD STREET 2: SUITE 550 CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3105753900 MAIL ADDRESS: STREET 1: 11845 W OLYMPIC BLVD STREET 2: SUITE 550 CITY: LOS ANGELES STATE: CA ZIP: 90064 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS TRUST /MD/ DATE OF NAME CHANGE: 19930506 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS DATE OF NAME CHANGE: 19800720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARWOOD LODGING CORP CENTRAL INDEX KEY: 0000316206 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 521193298 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07959 FILM NUMBER: 96533716 BUSINESS ADDRESS: STREET 1: 11845 W OLYMPIC BLVD STREET 2: SUITE 560 CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3105753900 MAIL ADDRESS: STREET 1: 11845 W OLYMPIC BLVD STREET 2: SUITE 560 CITY: LOS ANGELES STATE: CA ZIP: 90064 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL INVESTORS CORP DATE OF NAME CHANGE: 19920703 8-K/A 1 DATE OF EARLIEST EVENT REPORT OCTOBER 31, 1995 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 31, 1995 Commission File Number: 1-6828 STARWOOD LODGING TRUST (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization) 52-0901263 (I.R.S. employer identification no.) 11835 W. Olympic Blvd., Suite 695 Los Angeles, California 90064 (Address of principal executive offices, including zip code) (310) 575-3900 (Registrant's telephone number, including area code) 11845 W. Olympic Blvd., Suite 550 Los Angeles, California 90064 (Former name or former address, if changed since last report) Commission File Number: 1-7959 STARWOOD LODGING CORPORATION (Exact name of registrant as specified in its charter) Maryland (State or other jurisdiction of incorporation or organization) 52-1193298 (I.R.S. employer identification no.) 11835 W. Olympic Blvd., Suite 675 Los Angeles, California 90064 (Address of principal executive offices, including zip code) (310) 575-3900 (Registrant's telephone number, including area code) 11845 W. Olympic Blvd., Suite 560 Los Angeles, California 90064 (Former name or former address, if changed since last report) ================================================================================ 2 The undersigned Registrants hereby amend the following items, the Financial Statements, Pro Forma Financial Information and Exhibits of their Form 8-K dated January 4, 1996 as set forth in the pages attached hereto: ================================================================================ Item 7 of the Joint Current Report on Form 8-K/A dated March 8, 1996 filed by Starwood Lodging Trust and Starwood Lodging Corporation is hereby amended to read in its entirety as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. See Index to Financial Statements (page F -1). (b) Pro Forma Financial Information. See Index to Financial Statements (page F -1). 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION By: /s/ RONALD C. BROWN By: /s/ ALAN M. SCHNAID ____________________________ ___________________________________ Ronald C. Brown Alan M. Schnaid Vice President and Director of Accounting Chief Financial Officer Principal Accounting Officer Date: March 12, 1996 4 INDEX TO FINANCIAL STATEMENTS STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION -- PRO FORMA Combined and Separate Balance Sheets at December 31, 1995............................................... F-2 Notes to the Pro Forma Balance Sheets................................................................... F-5 Combined and Separate Statements of Operations for the year ended December 31, 1995..................... F-8 Notes to Pro Forma Statements of Operations ............................................................ F-11 THE TERRACE GARDEN INN AND LENOX INN Report of Independent Public Accountants................................................................ F-15 Statement of Operations for the year ended December 31, 1995............................................ F-16 Notes to Statement of Operations........................................................................ F-17
F-1 5 STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION UNAUDITED COMBINED PRO FORMA BALANCE SHEETS DECEMBER 31, 1995
Historical Starwood Starwood Lodging The Pro Forma Lodging Combined Grand Hotel Adjustments Combined ------------- ------------- ------------- ------------- (A) (B) ASSETS Hotel assets held for sale - net ............... $ 21,063,000 $ $ 21,063,000 Hotel assets - net 315,895,000 33,000,000 348,895,000 ------------- ------------- ------------- ------------- 336,958,000 33,000,000 369,958,000 Mortgage notes receivable, net ................. 79,261,000 (19,500,000) 59,761,000 Investments in joint ventures .................. 2,858,000 2,858,000 ------------- ------------- ------------- ------------- Total real estate investments .............. 419,077,000 13,500,000 432,577,000 Cash and cash equivalents ...................... 9,332,000 9,332,000 Accounts and interest receivable ............... 9,595,000 9,595,000 Notes receivable, net .......................... 1,796,000 1,796,000 Inventories, prepaid expenses and other assets . 20,194,000 20,194,000 ------------- ------------- ------------- ------------- $ 459,994,000 $ 13,500,000 $ 473,494,000 ============= ============= ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Secured notes payable and revolving line of credit ......................................... $ 119,100,000 $ 13,500,000 $ 132,600,000 Mortgage and other notes payable ............... 4,385,000 4,385,000 Accounts payable and other liabilities ......... 19,022,000 19,022,000 Dividends and distributions payable ............ 9,284,000 9,284,000 ------------- ------------- ------------- ------------- 151,791,000 13,500,000 165,291,000 ------------- ------------- ------------- ------------- Commitments and contingencies MINORITY INTEREST .............................. 92,735,000 92,735,000 ------------- ------------- ------------- ------------- SHAREHOLDERS' EQUITY Trust shares of beneficial interest, $0.01 par value; authorized 30,000,000 shares; outstanding 13,825,000 shares ............................ 138,000 138,000 Corporation common stock, $0.01 par value; authorized 30,000,000 shares; outstanding 13,825,000 shares ................ 138,000 138,000 Additional paid-in capital ..................... 434,107,000 434,107,000 Accumulated deficit ............................ (218,915,000) (218,915,000) ------------- ------------- ------------- ------------- 215,468,000 215,468,000 ------------- ------------- ------------- ------------- $ 459,994,000 $ 13,500,000 $ 473,494,000 ============= ============= ============= =============
F-2 6 STARWOOD LODGING TRUST UNAUDITED COMBINED PRO FORMA BALANCE SHEETS DECEMBER 31, 1995
Historical Pro Forma Starwood Starwood Lodging The Pro Forma Lodging Trust Grand Hotel Adjustments Trust ------------- -------------- ----------- ------------- (A) (B) ASSETS Hotel assets held for sale - net .......... $ 20,547,000 $ $ $ 20,547,000 Hotel assets - net ........................ 221,063,000 33,000,000 (5,700,000)(C) 248,363,000 ------------- ------------- ---------- ------------- 241,610,000 33,000,000 (5,700,000) 268,910,000 Mortgage notes receivable, net ............ 79,261,000 (19,500,000) 59,761,000 Mortgage Notes Receivable - Corporation ... 68,486,000 68,486,000 Investments in joint ventures ............. 2,841,000 2,841,000 ------------- ------------- ---------- ------------- Total real estate investments ............. 392,198,000 13,500,000 (5,700,000) 399,998,000 Cash and cash equivalents ................. 710,000 710,000 Rent and interest receivable .............. 1,841,000 1,841,000 Notes receivable, net ..................... 1,232,000 1,232,000 Notes receivable - Corporation ............ 17,978,000 5,700,000(C) 23,678,000 Prepaid expenses and other assets ......... 11,778,000 11,778,000 ------------- ------------- ---------- ------------- $ 425,737,000 $ 13,500,000 $ $ 439,237,000 ============= ============= ========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Secured notes payable and revolving line of credit .................................... $ 119,100,000 $ 13,500,000 $ $ 132,600,000 Mortgage and other notes payable .......... 100,000 100,000 Accounts payable and other liabilities .... 4,412,000 4,412,000 Dividends and distributions payable ....... 9,284,000 9,284,000 ------------- ------------- ----------- ------------- 132,896,000 13,500,000 146,396,000 ------------- ------------- ----------- ------------- Commitments and contingencies MINORITY INTEREST ......................... 88,113,000 88,113,000 ------------- ------------- ----------- ------------- SHAREHOLDERS' EQUITY Trust shares of beneficial interest, $0.01 par value; authorized 3000,000 shares; outstanding 13,825,000 shares ......................... 138,000 138,000 Additional paid-in capital ................ 354,619,000 354,619,000 Accumulated deficit ....................... (150,029,000) (150,029,000) ------------- ------------- ----------- ------------- 204,728,000 204,728,000 ------------- ------------- ----------- ------------- $ 425,737,000 $ 13,500,000 $ $ 439,237,000 ============= ============= =========== =============
F-3 7 STARWOOD LODGING CORPORATION UNAUDITED COMBINED PRO FORMA BALANCE SHEETS DECEMBER 31, 1995
Historical Pro Forma Starwood Starwood Lodging The Pro Forma Lodging Corporation Grand Hotel Adjustments Corporation ------------- ------------- ------------- ------------- (A) (B) ASSETS Hotel assets held for sale - net ............. $ 516,000 $ $ 516,000 Hotel assets - net ........................... 94,832,000 5,700,000(C) 100,532,000 ------------- ------------- ------------- ------------- 95,348,000 5,700,000 101,048,000 Investments in joint ventures ................ 17,000 17,000 ------------- ------------- ------------- ------------- Total real estate investments ................ 95,365,000 5,700,000 101,065,000 Cash and cash equivalents .................... 8,622,000 8,622,000 Accounts and interest receivable ............. 7,754,000 7,754,000 Notes receivable, net ........................ 564,000 564,000 Inventories, prepaid expenses and other assets 8,416,000 8,416,000 ------------- ------------- ------------- ------------- $ 120,721,000 $ 5,700,000 $ 126,421,000 ============= ============= ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Mortgage and other notes payable ............. $ 4,285,000 $ $ 4,285,000 Mortgage notes payable - Trust ............... 68,486,000 68,486,000 Notes payable - Trust ........................ 17,978,000 5,700,000(C) 23,678,000 Accounts payable and other liabilities ....... 14,610,000 14,610,000 ------------- ------------- ------------- ------------- 105,359,000 5,700,000 111,059,000 ------------- ------------- ------------- ------------- Commitments and contingencies MINORITY INTEREST ............................ 4,622,000 4,622,000 ------------- ------------- ------------- ------------- SHAREHOLDERS' EQUITY Corporation common stock, $0.01 par value; authorized 30,000,000 shares; outstanding 13,825,000 shares ................ 138,000 138,000 Additional paid-in capital ................... 79,488,000 79,488,000 Accumulated deficit .......................... (68,886,000) (68,886,000) ------------- ------------- ------------- ------------- 10,740,000 10,740,000 ------------- ------------- ------------- ------------- $ 120,721,000 $ 5,700,000 $ 126,421,000 ============= ============= ============= =============
F-4 8 STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION NOTES TO THE UNAUDITED COMBINED AND SEPARATE PRO FORMA BALANCE SHEETS AT DECEMBER 31, 1995 NOTE 1. BASIS OF PRESENTATION (A) The Trust and the Corporation have unilateral control of SLT Realty Limited Partnership ("Realty") and SLC Operating Limited Partnership ("Operating" and, together with Realty the "Partnerships"), respectively, and therefore, the historical financial statements of Realty and Operating are consolidated with those of the Trust and the Corporation. Unless the context otherwise requires, all references herein to the "Companies" refer to the Trust and the Corporation, and all references to the "Trust" and the "Corporation" include the Trust and the Corporation and those entities respectively owned or controlled by the Trust or the Corporation, including Realty and Operating. NOTE 2. ACQUIRED PROPERTY (B) On January 4, 1996, the Companies completed the purchase of the Grand Hotel (the "Grand"), a 236-room luxury hotel, located in Washington, D.C., for an additional $13.5 million. The Trust had purchased the mortgage interest in September 1995 for $19.5 million. NOTE 3. PRO FORMA ADJUSTMENTS (C) Immediately after receiving its interest in the property, the Trust sold its interest in the personal property to the Corporation for approximately $5.7 million for a note in such amount. F-5 9 STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION PRO FORMA COMBINED AND SEPARATE STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED) Effective January 1, 1995, Starwood Lodging Trust (the "Trust") and Starwood Lodging Corporation (the "Corporation" and collectively, "the Companies") consummated the previously announced reorganization (the "Reorganization") with Starwood Capital Group, L.P. and its affiliates (collectively "Starwood Capital"). On July 6, 1995, the Trust and the Corporation completed a public offering (the "Offering") of 11,787,500 paired shares. Net proceeds from the Offering of approximately $245.7 million together with proceeds from a financing facility and cash on hand were used as follows: approximately $206.5 million was used to repay existing indebtedness, including $10 million which was used by Realty to purchase the first trust deed on Operating's Milwaukee hotel, and approximately $53.8 million was used for the acquisition of the 462-room Sheraton Colony Square in Atlanta, Georgia and the 224-room Embassy Suites in Tempe, Arizona. On September 20, 1995, the Companies acquired the 652-room Doral Inn in New York, New York for $43.3 million. On October 31, 1995, the Companies acquired the 364-room Terrace Garden Inn and 180-room Lenox Inn for $27.9 million and $9 million, respectively. Both properties are located in Atlanta, Georgia. On November 30, 1995, the Companies acquired the 206-room Calverton Holiday Inn in Beltsville, Maryland, for $11.5 million. On January 4, 1996, the Companies completed the purchase of the 263-room Grand Hotel in Washington, D.C., for an additional $13.5 million. The Trust had purchased the mortgage interest in the Grand in September of 1995 for $19.5 million. Due to the impact of the Offering and the acquisitions of properties acquired, the historical results of operations and earnings per share are not indicative of future results of operations and earnings per share. The following Unaudited Combined and Separate Pro Forma Statement of Operations for the year ended December 31, 1995 gives effect to the Reorganization, the Offering and the related acquisitions of the Sheraton Colony Square in Atlanta, Georgia, the Embassy Suites in Tempe, Arizona, and the Omni Europa in Chapel Hill, North Carolina; and the subsequent acquisitions of the Doral Inn in New York, New York, the Terrace Garden and Lenox Inn in Atlanta, Georgia, the Holiday Inn in Beltsville, Maryland, and the Grand Hotel in Washington, D.C. as of the beginning of the year. The Pro Forma Statement of Operations excludes the effect of the Boston Park Plaza, a property in which the Companies acquired a 58.2% interest on January 24, 1996. For additional information relating to the acquisition of the Boston Park Plaza, see Item 7 (Financial Statements, Pro Forma Financial Information and Exhibits) of the Companies Form 8-K, as amended, dated January 24, 1996. The pro forma information is based F-6 10 upon historical information and does not purport to present what actual results would have been had such transactions, in fact, occurred at the beginning of each period presented, or to project results for any future period. F-7 11 STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
Historical Pro Forma Starwood Starwood Lodging Acquired Pro Forma Lodging Combined Properties Adjustments Combined ------------- ------------- ------------- ------------- (A) (B) REVENUE Hotel ................................. $ 121,250,000 $ 52,813,000 $ $ 174,063,000 Gaming ................................ 26,929,000 26,929,000 Interest from mortgage and other notes 10,905,000 (456,000)(E) 10,449,000 Management fees and other income ...... 1,966,000 1,966,000 Income from joint ventures and rents from leased hotel properties .... 791,000 791,000 Loss on sales of hotel assets ......... (125,000) (125,000) ------------- ------------- ------------- ------------- 161,716,000 52,813,000 (456,000) 214,073,000 ------------- ------------- ------------- ------------- EXPENSES Hotel operations ...................... 85,017,000 39,832,000 (1,932,000)(F) 122,917,000 Gaming operations ..................... 24,242,000 24,242,000 Interest .............................. 13,138,000 3,219,000 (16,357,000)(G) 9,747,000 9,747,000 (G) -- Depreciation and amortization ......... 15,469,000 10,933,000 26,402,000 Administrative and operating .......... 5,712,000 10,000 (F) 5,722,000 ------------- ------------- ------------- ------------- 143,578,000 53,984,000 (8,532,000) 189,030,000 ------------- ------------- ------------- ------------- Income (loss) from continuing operations before minority interest ... 18,138,000 $ (1,171,000) $ 8,076,000 25,043,000 ============= ============= Minority interest in Partnerships (H) . 7,013,000 7,536,000 ============= ============= Net income ............................ $ 11,125,000 $ 17,507,000 ============= ============= Net income per paired share (I) ....... $ 1.43 $ 1.27 ============= ============= Weighted average number of paired shares ................................ 7,771,000 13,825,000 ============= =============
See accompanying notes to the pro forma statements of operations. F-8 12 STARWOOD LODGING TRUST UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
Historical Pro Forma Starwood Starwood Lodging Acquired Pro Forma Lodging Trust Properties Adjustments Trust ------------ ------------ ----------- ------------ (A) (B) REVENUE Rents from Corporation ..................... $ 26,730,000 $ $12,624,000 (C) $ 39,354,000 Interest from Corporation .................. 4,761,000 4,082,000 (D) 8,843,000 Interest from mortgage and other notes ..... 10,792,000 (456,000)(E) 10,336,000 Income from joint ventures and rents from leased hotel properties ......... 791,000 791,000 Other income ............................... 1,074,000 1,074,000 Loss on sales of hotel assets .............. (125,000) (125,000) ------------ ------------ ----------- ------------ 44,023,000 16,250,000 60,273,000 ------------ ------------ ----------- ------------ EXPENSES Interest - other ........................... 12,429,000 (12,429,000)(G) 9,650,000 9,650,000 (G) Depreciation and amortization .............. 8,977,000 3,458,000 12,435,000 Administrative and operating ............... 2,439,000 2,439,000 ------------ ------------ ----------- ------------ 23,845,000 3,458,000 (2,779,000) 24,524,000 ------------ ------------ ----------- ------------ Income (loss) from continuing operations before minority interest ........ 20,178,000 $ (3,458,000) $ 19,029,000 35,749,000 ============ ============ Minority interest in Partnerships (H) ...... 7,314,000 10,757,000 ------------ ------------ Net income ................................. $ 12,864,000 $ 24,992,000 ============ ============ Net income per paired share (I) ............ $ 1.66 $ 1.81 ============ ============
See accompanying notes to the pro forma statements of operations. F-9 13 STARWOOD LODGING CORPORATION UNAUDITED COMBINED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
Historical Pro Forma Starwood Starwood Lodging Acquired Pro Forma Lodging Corporation Properties Adjustments Corporation ------------- ------------- --------------- --------------- (A) (B) REVENUE Hotel ................................ $ 121,250,000 $ 52,813,000 $ $ 174,063,000 Gaming ............................... 26,929,000 26,929,000 Interest from notes receivable ....... 113,000 113,000 Management fees and other income ..... 892,000 892,000 ------------- ------------- --------------- --------------- 149,184,000 52,813,000 201,997,000 ------------- ------------- --------------- --------------- EXPENSES Hotel operations ..................... 85,017,000 39,832,000 (1,932,000)(F) 122,917,000 Gaming operations .................... 24,242,000 24,242,000 Rent - Trust ......................... 26,730,000 12,624,000 (C) 39,354,000 Interest - Trust ..................... 4,761,000 4,082,000 (D) 8,843,000 Interest - other ..................... 709,000 3,219,000 (3,928,000)(G) 97,000 97,000 (G) Depreciation and amortization ........ 6,492,000 7,475,000 13,967,000 Administrative and operating ......... 3,273,000 10,000 (F) 3,283,000 ------------- ------------- --------------- --------------- 151,224,000 50,526,000 10,953,000 212,703,000 ------------- ------------- --------------- --------------- Loss before minority interest ........ (2,040,000) $ 2,287,000 $ (10,953,000) (10,706,000) ============= =============== Minority interest in Partnerships (H) (301,000) (3,221,000) ------------- ------------- --------------- --------------- Net loss ............................. $ (1,739,000) $ (7,485,000) ============= =============== Net loss per paired share (I) ....... $ (0.22) $ (0.54) ============= ===============
See accompanying notes to the pro forma statements of operations. F-10 14 STARWOOD LODGING TRUST AND STARWOOD LODGING CORPORATION NOTES TO THE UNAUDITED COMBINED AND SEPARATE PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 NOTE 1. BASIS OF PRESENTATION The Trust and the Corporation have unilateral control of SLT Realty Limited Partnership ("Realty") and SLC Operating Limited Partnership ("Operating" and, together with Realty the "Partnerships"), respectively, and therefore, the historical financial statements of Realty and Operating are consolidated with those of the Trust and the Corporation. Unless the context otherwise requires, all references herein to the "Companies" refer to the Trust and the Corporation, and all references to the "Trust" and the "Corporation" include the Trust and the Corporation and those entities respectively owned or controlled by the Trust or the Corporation, including Realty and Operating. NOTE 2. PRO FORMA ADJUSTMENTS (A) Reflects the historical statements of operations of the Companies. Operations for properties sold or pending sale are not considered material to the pro forma presentation. (B) Reflects the pro forma statements of operations (reflecting the Companies' cost basis) of the Doral Inn and the properties acquired in connection with the Offering. For additional information, please see pages F-1 through F-140 (Financial Statements and Financial Statement Schedules) of the Companies' Form S-2 as amended dated June 29, 1995 and Item 7 (Financial Statements, Pro Forma Financial Information and Exhibits) of the Companies' Form 8-K as amended dated September 20, 1995. Reflects the pro forma statements of operations (reflecting the Companies' cost basis) of the Terrace Garden Inn, Lenox Inn, the Calverton Holiday Inn, and the Grand Hotel. Listed below are the effects each acquired hotel had on the Combined Pro Forma Statement of Operations for the year ended December 31, 1995 (in thousands): F-11 15
Omni Sheraton Embassy Holiday Chapel Colony Suites Doral Terrace Lenox Inn The Hill(1) Square(1) Tempe(1) Inn(2) Garden Inn Calverton Grand Total -------- -------- -------- -------- -------- -------- --------- -------- -------- REVENUE Hotel Revenues .............. $ 1,265 $ 9,557 $ 4,032 $ 13,312 $ 9,289 $ 3,415 $ 3,465 $ 8,478 $ 52,813 -------- -------- -------- -------- -------- -------- --------- -------- -------- EXPENSES Hotel Expenses .............. 887 7,127 2,271 11,362 6,007 2,079 2,117 7,982 39,832 Depreciation ................ 163 2,073 1,229 3,192 1,419 300 789 1,768 10,933 -------- -------- -------- -------- -------- -------- --------- -------- -------- 1,050 9,200 3,500 14,554 7,426 2,379 2,906 9,750 50,765 -------- -------- -------- -------- -------- -------- --------- -------- -------- Income (loss) before minority interest .................... $ 215 $ 357 $ 532 $ (1,242) $ 1,863 $ 1,036 $ 559 $ (1,272) $ 2,048 ======== ======== ======== ======== ======== ======== ========= ======== ========
(1) For additional information, please see pages F-1 through F-140 (Financial Statement Schedules) of the Companies' Form S-2 as amended dated June 29, 1995 (2) For additional information see Item 7 (Financial Statements, Pro Forma Financial Information and Exhibits) of the Companies' Form 8-K as amended dated September 20, 1995. ADDITIONAL INFORMATION RELATED TO THE PROPERTIES IS AS FOLLOWS:
For the Year Ended December 31, ------------------------------- ADR Occupancy % REVPAR ---------------------- ------------------- ---------------------- Hotel 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ----- ------ ------ ------ ----- ----- ----- ------ ------ ------ Terrace Garden Inn $93.51 $88.39 $82.62 65% 65% 63% $61.16 $57.73 $51.98 Lenox Inn $69.48 $63.57 $60.10 79% 77% 75% $55.00 $49.15 $45.10 Calverton Holiday Inn $67.49 $63.37 $56.92 63% 58% 58% $42.39 $36.43 $32.94 The Grand(1)
(1) ADR, Occupancy And REVPAR not available. (C) Reflects pro forma adjustment for rents on the following hotels contributed by Starwood Capital in the Reorganization and hotels and land acquired by the Companies in 1995 and 1996. The hotel leases between the Trust and the Corporation provide for annual base or minimum rents plus contingent or percentage rents based on the gross revenue of the properties and are accounted for as operating leases.
Hotel Date Contributed/Acquired - -------------------------------------- ------------------------- Capitol Hill - Washington, DC......... January 1, 1995 French Quarter - Lexington, KY........ January 1, 1995 Doubletree - Rancho Bernardo, CA...... January 1, 1995 Harvey - Wichita, KS.................. January 1, 1995 Omni - Chapel Hill, NC................ April 6, 1995 Colony Square - Atlanta, GA........... July 24, 1995 Embassy Suites - Tempe, AZ............ July 27, 1995 Doral Inn - New York, NY.............. September 20, 1995 Terrace Garden Inn - Atlanta, GA...... October 31, 1995
F-12 16 Lenox Inn - Atlanta, GA............... October 31, 1995 Calverton Holiday Inn - Beltsville, MD November 30, 1995 The Grand Hotel - Washington, DC...... January 4, 1996
(D) Reflects interest on the notes payable from the Corporation to the Trust at 9.5% for the note secured by the leasehold interest in the Doral property, prime plus 3% for notes secured by the Milwaukee property and prime plus 2% for unsecured notes. (E) Reflects the elimination of interest income, on a mortgage note receivable secured by the Grand note, recognized in 1995. The Trust had purchased the mortgage interest in September 1995 and, in January 1996, the Companies completed the purchase of Grand (see note 2 to the Separate Pro Forma Balance Sheets). (F) The Corporation intends to operate all of the Companies' hotels and terminate existing third party management contracts for all properties at the earliest practicable date. Accordingly, certain costs directly attributable to existing third party management contracts included in the pro forma statements of operations have been eliminated. Such cost savings are reflected in the pro forma statements of operations as if such contracts had been canceled as of the beginning of the periods presented. Listed below are the hotels on which third party management contracts have been or are anticipated to be terminated and the related management and other fees incurred in each period.
Fees Paid (1) ------------- Year Ended 12/31/95 Status ------------- ------------------ Hotel - ----- Holiday Inn - Albany, GA.............. $ 9,000 Terminated Best Western - Columbus, OH........... 33,000 Cancelable in 1995 Best Western - Savannah, GA........... 21,000 Cancelable in 1995 Radisson - Gainesville, FL............ 19,000 Cancelable in 1996 Park Central - Dallas, TX............. 34,000 Terminated Capital Hill - Washington, DC......... 43,000 Cancelable in 1995 French Quarter - Lexington, KY........ 21,000 Terminated Doubletree - Rancho Bernardo, CA...... 67,000 Terminated Colony Square - Atlanta, GA........... 139,000 Terminated Omni - Chapel Hill, NC................ 23,000 Terminated Embassy Suites - Tempe, AZ............ 406,000 Terminated Doral Inn - New York, NY.............. 433,000 Cancelable in 1995 Terrace Garden Inn - Atlanta, GA...... 247,000 Terminated Lenox Inn - Atlanta, GA............... 107,000 Terminated Holiday Inn Calverton - Beltsville, MD 330,000 Terminated ----------- 1,932,000 ===========
- ------------- (1) Fees include base and incentive management fees as well as accounting fee chargebacks and other corporate costs. F-13 17 Pro Forma administrative and operating expenses reflect (i) increases in operating expenses resulting principally from additional corporate office personnel and (ii) decreases in operating expenses resulting form a decrease in director's and officers' liability insurance. Such cost adjustments are reflected in the pro forma statements of operations as follows:
Administrative and Operating Expenses -------------- Year Ended 12/31/95 -------------- Additional personnel costs and corporate travel......... $ 97,000 Decrease in directors' and officers' liability insurance (87,000) -------- $ 10,000 ========
(G) Reflects the elimination of historical and pro forma interest expense related to the debt repaid from the proceeds of the Offering and the addition of interest expense on pro forma amounts outstanding calculated as follows:
Year Ended 12/31/95 -------------------------------------------- Trust Corp Combined --------- ------ --------- Interest on GSI note .................................................... 97,000 97,000 Interest expense on amount outstanding under line of credit (subsequent to offering) ................................................ 2,120,000 2,120,000 Interest expense relating to acquisition of the Doral Inn (1) ........... 2,083,000 2,083,000 Interest expense relating to acquisition of the Terrace Garden Inn (1) .. 1,686,000 1,686,000 Interest expense relating to acquisition of the Lenox Inn (1) ........... 544,000 544,000 Interest expense relating to acquisition of the Calverton Holiday Inn (1) 764,000 764,000 Interest expense relating to acquisition of the Grand (1) ............... 2,393,000 2,393,000 Interest expense relating to amount drawn to purchase Grand note ........ (471,000) (471,000) Interest expense relating to additional draw down line (2) .............. 531,000 531,000 --------- ------ --------- Total Interest Expense - pro forma ...................................... 9,650,000 97,000 9,747,000 ========= ====== =========
(1) Assumes draw down to property on January 1, 1995 (2) Assumes draw down of $9.8 million on January 1, 1995 to reflect actual draw down in 3rd quarter (H) Net income (loss) per paired share has been computed using the weighted average number of paired shares and equivalent paired shares outstanding. All paired share information has been adjusted to reflect a one-for-six reverse split effective June 12, 1995. (I) Reflects Starwood Capital's minority interest in the income of the Partnerships. F-14 18 REPORT OF INDEPENDENT ACCOUNTANTS To the Boards of Trustees and Directors and Shareholders of Starwood Lodging Trust and Starwood Lodging Corporation: We have audited the accompanying Historical Summary of Gross Revenues, and Direct Operating Expenses (the "Historical Summary") of the hotel properties (the "Terrace Garden Inn" and the "Lennox Inn") described in Note 1 for the year ended December 31, 1995. The Historical Summary is the responsibility of the management of the Terrace Garden Inn and the Lennox Inn. Our responsibility is to express an opinion on the Historical Summary based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audits provide a reasonable basis for our opinion. The accompanying Historical Summary is prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1, and are not intended to be a complete presentation of the Terrace Garden Inn's and Lennox Inn's expenses. In our opinion, the Historical Summary referred to above present fairly, in all material respects, the gross revenues and direct operating expenses described in Note 1 of the Terrace Garden and Lennox Inn properties for the year ended December 31, 1995, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Los Angeles, California February 9, 1996 F-15 19 TERRACE GARDEN INN AND LENNOX INN HISTORICAL SUMMARIES OF GROSS REVENUES AND DIRECT OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1995
Gross Revenues: Room Rental ....................................... $11,804,212 Food & Beverage ................................... 2,584,234 Telephone ......................................... 466,548 Other ............................................. 250,304 ----------- Total Gross Revenues ........................ $15,105,298 ----------- Direct Operating Expenses: Food & Beverage ................................... $ 1,967,322 Room .............................................. 2,586,414 Telephone .......................................... 198,681 General & Administrative .......................... 1,373,813 Depreciation ...................................... 116,364 Interest .......................................... 15,364 Repairs & Maintenance ............................. 819,815 Management Fees ................................... 360,701 Energy ............................................ 756,697 Marketing ......................................... 703,601 Lease ............................................. 924,379 Other ............................................. 850,470 ----------- Total Direct Operating Expenses ................... $10,673,621 ----------- Gross Revenues In Excess Of Direct Operating Expenses ......................... $ 4,431,677 ===========
The accompanying notes are an integral part of this financial statement. F-16 20 TERRACE GARDEN INN AND LENNOX INN NOTES TO HISTORICAL SUMMARY OF GROSS REVENUE AND DIRECT OPERATING EXPENSES 1. BASIS OF PRESENTATION The Historical Summary of Gross Revenue and Direst Operating Expenses (the "Historical Summary") relates to the operation of the 360-room Terrace Garden Inn and the 180-room Lennox Inn (the "Hotels") located in Atlanta, Georgia. These properties were acquired from the Citicorp Corporation ("Citicorp") by Starwood Lodging Trust on October 31, 1995. Citicorp acquired the property in mid 1994. The Historical Summary has been prepared to substantially comply with the rules and regulations of the Securities and Exchange Commission for business combinations accounted for as a purchase. The historical financial statement summary, rather than full audited financial statements, is presented for the Hotels because the Hotels were acquired from an unaffiliated third party in a negotiated transaction, and the seller of the Hotels would not allow the Company access to records supporting hotel historical costs, depreciation, indebtedness and equity of the Hotels. Because it was not practicable to obtain full audited financial statements of the Hotels, the historical summary of gross revenue and direct operating expenses does not include certain historical expenses of the Hotels, such as interest, depreciation and amortization and indirect costs. Therefore, the Historical Summary is not representative of the actual operations for the period presented. Revenue is recognized as earned. Management has provided for credit risks; and credit losses have been within management's expectations. Maintenance and repairs are charged to operations as incurred; major renewals and betterments are capitalized. 2. UNAUDITED FINANCIAL INFORMATION The Hotels incurred depreciation expense for furniture and fixtures of approximately $116,364 for the year ended December 31, 1995. The Company purchased the Hotels for approximately $37 million and estimates that the combined allocation of the purchase price will be approximately $10.3 million to land, $24.1 million to hotel properties and $2.6 million to furniture and fixtures. Expected lives for the hotel properties are 30 to 35 years and for furniture and fixtures are 3 to 10 years. The Company funded the purchase of the Hotels primarily from borrowings under an existing line of credit. F-17 -----END PRIVACY-ENHANCED MESSAGE-----