ORLANDO-CNL Hotels & Resorts Inc. ended 2005 with positive numbers in all of its balance sheet columns, the company reports. The locally based company calls itself the second largest hotel real estate investment trust in the US with 94 properties and $6 billion in total assets.
Total revenue increased 11.1% to $349 million for the fourth quarter of 2005 and 27% to $1.3 billion for the company's fiscal year ended Dec. 31, 2005. Revenue per available room rose 8.3% to $137.65. Average occupancy was up 2.9% to 71%. Net income increased 107.9% to $6.9 million for the year. Adjusted EBITDA was up 28.1% to $345.6 million.
John A Griswold, president and chief operating officer for CNL Hotels & Resorts, attributes the "solid RevPAR and profit margin gains" in the fourth quarter to "a favorable room-rate environment, robust group travel and our ability to influence cost containment efforts by our third-party management companies."
However, the company's healthy balance sheet was largely the result of a series of financings and refinancings CNL Hotels & Resorts made during 2005, Griswold points out in a prepared statement.
"The company's financial flexibility was significantly enhanced in 2005 from the closing of the $200-million senior secured revolving credit facility, the retirement of approximately $541 million of long-term debt [including the remaining balance of a $353-million secured term loan] with proceeds from the asset dispositions and the refinancing of all outstanding debt at JW Marriott Desert Ridge with a $300-million CMBS loan," Griswold says.
In January 2006, the company closed on a nearly $1.53-billion, five-year CMBS loan that paid off the prior $1.5-billion CMBS loan. That transaction included $1 billion financed at a fixed rate of 5.57% and $525 million financed at a floating rate of 30-day Libor, plus 2.715%, Griswold says.
"The revolver and refinancing the prior $1.5-billion CMBS [loan] clearly demonstrate the implementation of our long-term capital plan," the CNL executive says. "After hedging the lodging sector's early recovery with floating rate debt, we fixed $1 billion of our debt structure at a favorable long-term rate."
C. Brian Strickland, CNL Hotels' executive vice president and chief financial officer, says the fixed-rate move "allowed us to enhance our fixed to floating rate mix and make a substantive reduction in interest costs."
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