Professional Documents
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Table of Contents
of a Libor plus 3.5% senior secured delayed draw term loan of Texas Competitive Electric Holdings ("TXU")
due 2014 through a non-recourse total return swap with an unaffiliated third party expiring on October 1 0,
2013 and pursuant to which Apollo TXU pays interest at Libor plus 1.5% and generally receives all proceeds
due under the delayed draw term loan of TXU (the "TXU Reference Obligation"). Like Apollo FDC, Apollo
TXU is entitled to 100% of any realized appreciation in the TXU Reference Obligation and, since the total
return swap is a non-recourse obligation, Apollo TXU is exposed up to the amount of equity used by AIC
Holdco to fund the investment in the total return swap, plus any additional margin we decide to post, if any,
during the term of the financing.
Through AIC Holdco, effective in September 2008, we invested $10,022 equivalent, in a special purpose
entity wholly owned by AIC Holdco, AIC (Boots) Holdings, LLC ("Apollo Boots"), which acquired 23,383 and
12,465 principal amount of senior term loans of AB Acquisitions Topco 2 Limited, a holding company for
the Alliance Boots group of companies (the "Boots Reference Obligations"), out of the proceeds of our
investment and a multicurrency $40,876 equivalent non-recourse loan to Apollo Boots (the "Acquisition
Loan") by an unaffiliated third party that matures in September 2013 and pays interest at LIBOR plus 1.25%
or, in certain cases, the higher of the Federal Funds Rate plus 0.50% or the lender's prime-rate. The Boots
Reference Obligations pay interest at the rate of LIBOR plus 3% per year and mature in June 2015.
We do not consolidate AIC Holdco or its wholly owned subsidiaries and accordingly only the value of our
investment in AIC Holdco is included on our statement of assets and liabilities. The Senior Note, total return
swap and Acquisition Loan are non-recourse to AIC Holdco, its subsidiaries and us and have standard
events of default including failure to pay contractual amounts when due and failure by each of the underlying
Apollo special purpose entities to provide additional credit support, sell assets or prepay a portion of its
obligations if the value of the FDC Reference Obligation, the TXU Reference Obligation or the Boots
Reference Obligation, as applicable, declines below specified levels. We may unwind any of these
transactions at any time without penalty. From time to time Apollo Investment may provide additional capital
to AIC Holdco for purposes of funding margin calls under one or more of the transactions described above
among other reasons. During the fiscal year ended March 31, 2009, we provided $18,480 in additional
capital to AIC Holdco. During the fiscal year ended March 31, 2010, $9,336 of net capital was returned to us
from AIC Holdco. During the three months ended June 30, 2010, $1,700 of net capital was provided to AIC
Holdco.
Dividends
Dividends paid to stockholders for the three months ended June 30, 2010 and June 30, 2009 totaled $54.3
million or $0.28 per share, and $37.0 million or $0.26 per share, respectively. Tax characteristics of all
dividends will be reported to shareholders on Form 1099 after the end of the calendar year. Our quarterly
dividends, if any, will be determined by our Board of Directors.
We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC status, we
must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of
realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition,
although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess
of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions,
we may in the future decide to retain such capital gains for investment.
We maintain an "opt out" dividend reinvestment plan for our common stockholders. As a result, if we declare
a dividend, then stockholders' cash dividends will be automatically reinvested in additional shares of our
common stock, unless they specifically "opt out" of the dividend reinvestment plan so as to receive cash
dividends.
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APP-00546
10-Q Page 77
We may not be able to achieve operating results that will allow us to make distributions at a specific level or
to increase the amount of these distributions from time to time. In addition, due to the asset coverage test
applicable to us as a business development company, we may in the future be limited in our ability to make
distributions.
51
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APP-00547
10-Q Page 78
Table of Contents
Also, our revolving credit facility may limit our ability to declare dividends if we default under certain
provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax
consequences, including possible loss of the tax benefits available to us as a regulated investment
company. In addition, in accordance with U.S. generally accepted accounting principles and tax regulations,
we include in income certain amounts that we have not yet received in cash, such as contractual payment-
in-kind interest, which represents contractual interest added to the loan balance that becomes due at the
end of the loan term, or the accrual of original issue or market discount. Since we may recognize income
before or without receiving cash representing such income, we may have difficulty meeting the requirement
to distribute at least 90% of our investment company taxable income to obtain tax benefits as a regulated
investment company.
With respect to the dividends to stockholders, income from origination, structuring, closing, commitment and
other upfront fees associated with investments in portfolio companies is treated as taxable income and
accordingly, distributed to stockholders.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in interest rates. During the three months ended
June 30, 2010, many of the loans in our portfolio had floating interest rates. These loans are usually based
on floating LIBOR and typically have durations of one to six months after which they reset to current market
interest rates. As the percentage of our U.S. mezzanine and other subordinated loans increase as a
percentage of our total investments, we expect that more of the loans in our portfolio will have fixed rates. At
June 30, 2010, our floating-rate assets and floating-rate liabilities were closely matched. As such, a change
in interest rates would not have a material effect on our net investment income. However, we may hedge
against interest rate fluctuations from time-to-time by using standard hedging instruments such as futures,
options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may
insulate us against adverse changes in interest rates, they may also limit our ability to participate in the
benefits of lower interest rates with respect to our portfolio of investments. During the three months ended
June 30, 2010, we did not engage in interest rate hedging activities.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As of June 30, 2010 (the end of the period covered by this report), we, including our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our
management, including the Chief Executive Officer and Chief Financial Officer, concluded that our
disclosure controls and procedures were effective and provided reasonable assurance that information
required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within
the time periods specified in the SEC.s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated can provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of
such possible controls and procedures.
(b) Changes in Internal Controls Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during
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APP-00548
10-Q Page 79
the first quarter of fiscal 2011 that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
52
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APP-00549
Table of Contents
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
10-Q Page 80
On April 13, 2010, InnKeepers USA Trust ("InnKeepers"), a subsidiary of Grand Prix Holdings, LLC, a
portfolio company of the Company, disclosed that it had not made certain scheduled monthly interest
payments on certain of its debt obligations, and had retained financial and legal advisors to assist it in an
evaluation of financial alternatives, including a potential restructuring of its balance sheet.
On May 21, 2010, the special servicer with respect to certain of InnKeepers' indebtedness, Midland Loan
Services, Inc., filed a complaint against the Company in New York State Supreme Court, New York County
(the "New York Court"). The Complaint alleges that the Company guaranteed certain property improvement
projects which InnKeepers has failed to timely complete. The Complaint asserts a single claim for specific
performance of the Company's guaranty. On June 30, 2010, the Company filed a motion to dismiss with the
New York Court. As of August 4, 2010, the New York Court had not ruled on the Company's motion to
dismiss. The Company intends to vigorously defend the lawsuit, to which it believes it has meritorious
defenses.
On July 19, 2010, Innkeepers disclosed that it had filed a voluntary petition in the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") under Chapter 11 of the United States
Bankruptcy Code in order to effectuate a pre-arranged plan of reorganization (the "Plan").
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed
in Part I "Item 1 A. Risk Factors" in our Annual Report on Form 1 0-K for the fiscal year ended March 31,
2010, which could materially affect our business, financial condition and/or operating results. The risks
described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks
and uncertainties not currently known to us or that we currently deem to be immaterial also may materially
and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 5. Other Information
None.
53
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APP-00550
Table of Contents
Item 6. Exhibits
(a) Exhibits
10-Q Page 81
Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in
Item 601 of Regulation S-K):
*
3.1 Articles of Amendment and Restatement, as amended ( 1)
3.2 Third Amended and Restated Bylaws (2)
4.1 Form of Stock Certificate (3)
10.1 Amended and Restated Investment Advisory Management Agreement between Registrant and
Apollo Investment Management, L.P. (4)
10.2 Amended and Restated Administration Agreement between Registrant and Apollo Investment
Administration, LLC (4)
10.3 Dividend Reinvestment Plan (3)
10.4 Custodian Agreement (3)
10.5 License Agreement between the Registrant and Apollo Management, L.P. (4)
10.6 Form of Transfer Agency and Service Agreement (4)
10.7 Amended and Restated Senior Secured Revolving Credit Agreement (5)
22.1 Proxy Statement (6)
31.1 * Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
31.2* Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
32.1 * Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
(18 U.S.C. 1350).
32.2* Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
(18 U.S.C. 1350).
Filed herewith.
(1) Incorporated by reference from the Registrant's post-effective Amendment No. 1 to the Registration
Statement under the Securities Act of 1933, as amended, on Form N-2, filed on August 14, 2006.
(2) Incorporated by reference from the Registrant's Form 8-K filed on November 6, 2009.
(3) Incorporated by reference from the Registrant's pre-effective Amendment No. 1 to the Registration
Statement under the Securities Act of 1933, as amended, on Form N-2, filed on March 12, 2004.
(4) Incorporated by reference from the Registrant's Form 10-K, filed on May 26, 2010.
(5) Incorporated by reference from the Registrant's Form 8-K filed on December 23, 2009.
(6) Incorporated by reference from the Registrant's 14A filed on June 18, 2010.
54
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APP-00551
10-Q Page 82
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
August 4, 2010.
55
APOLLO INVESTMENT CORPORATION
By: /s/ JAMES C. ZEL TER
James C. Zeiter
Chief Executive Officer
By: /s/ RICHARD L. PETEKA
Richard L. Peteka
Chief Financial Officer and Treasurer
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APP-00552
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MOELIS
Moelis & Company prepared this presentation based on information received from third parties. Moelis
has not and does not intend to verify independently any of such information, all of which Moelis
assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of
its date and Moelis assumes no duty to update it or to advise any person that its conclusions or advice
has changed.
This presentation is solely for your information purposes only. Consider it along with all other facts,
advice and its own insights before making your own independent decisions. Do not provide a copy of
this presentation to any person without Moelis' prior consent. No other person should rely on it for any
purpose. Moelis does not offer tax, accounting or legal advice.
Moelis & Company provides mergers and acquisitions, restructuring and other advisory services to
clients and its affiliates manage private investment partnerships. Its personnel may make statements or
provide advice that is contrary to information contained in this material. Our proprietary interests may
conflict with your interests. Moelis may from time to time have positions in or effect transactions in
securities described in this presentation. Moelis & Company may have advised, may seek to advise and
may in the future advise or invest in companies mentioned in this presentation.
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MOELIS
In this presentation we are running a scenario where projections have been developed on a hotel-by-hotel
basis for the portfolio
Management estimates financial performance will not return to 2007levels for at least four to six years
2010 reflects management budget, with actual data for January and February
Management anticipates 5-10 properties to be deflagged by 2015, regardless of PIPs
FISCAL YEAR 2010 - SCENARIO ASSUMPTIONS
ADR level assumptions range $107-$113
Slightly down from FY2009
Downward estimates mainly due to price
pressure as a result of continued effects of
economic environment
Occupancy levels 63%-67%, slightly down from
FY2009
RevPAR $70-$75, down approximately 2%-4%
from FY2009 levels
Expenses in line with FY2007-FY2009 average
margins
Estimates take into consideration adjustments due
to cycle renovations
FISCAL YEAR 2011 - SCENARIO ASSUMPTIONS
ADR levels $110-$116
Occupancy levels 65%-70%, up from FY2010
and back at FY2009 levels
RevPAR $74-$79, up approximately 4%-7%
from FY2010 levels
Expenses in line with FY2007-FY2009 average
margins
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Growth -- 2.3% (11.8%) (0.8%) 2.6%
Occupancy (%) 74.2% 72.8% 67.2% 65.5% 67.4%
Growth (bps) -- (141) bps (565) bps (168) bps 195 bps
RevPAR ($) $92 $92 $75 $72 $76
Growth -- 0.4% (18.6%) (3.3%) 5.7%
Revenue $337 $352 $290 $282 $288
Growth -- 4.3% (17.5%) (2.8%) 2.1%
Department Expenses 83 84 74 74 75
Gross Operating Income $254 $268 $216 $209 $213
Margin 75.4% 76.2% 74.6% 73.9% 73.8%
Operating Expenses 110 112 101 100 106
House Profit $145 $156 $115 $109 $107
Margin 42.9% 44.3% 39.6% 38.5% 37.1%
Other Expenses 17 20 19 17 17
Hotel EBITDA $127 $136 $96 $91 $90
Growth -- 6.9% (29.5%) (5.0%) (1.7%)
Margin 37.7% 38.7% 33.1% 32.3% 31.1%
Corporate Expenses 11 12 12 9 9
Corporate EBITDA $116 $125 $84 $82 $80
Growth -- 7.0% (32.2%) (2.7%) (2.1 %)
Margin 34.5% 35.4% 29.1% 29.1% 27.9%
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ADR ($) $120 $124 $109 $109 $111
Growth -- 3.1% (12.0%) (0.7%) 2.2%
Occupancy (%) 76.0% 74.1% 69.2% 68.2% 69.5%
Growth (bps) -- (191) bps (491) bps (101) bps 129 bps
RevPAR ($) $92 $92 $76 $74 $77
Growth -- 0.6% (17.8%) (2.2%) 4.1%
Revenue $195 $197 $161 $158 $164
Growth -- 0.8% (18.1 %) (2.1%) 4.1%
Department Expenses 41 40 35 35 36
Gross Operating Income $154 $157 $126 $123 $128
Margin 45.7% 44.6% 43.4% 43.6% 44.3%
Operating Expenses 63 63 56 56 61
House Profit $91 $94 $70 $67 $67
Margin 26.9% 26.7% 24.0% 23.8% 23.1%
Other Expenses 10 11 10 10 9
Hotel EBITDA $81 $83 $60 $58 $57
Growth -- 2.3% (28.1%) (3.4%) (1.2%)
Margin 24.1% 23.6% 20.6% 20.5% 19.8%
Cap Ex
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Growth -- 2.5% (10.1%) (1.0%) 4.5%
Occupancy (%) 66.7% 67.7% 61.2% 57.9% 60.0%
Growth (bps) -- 95 bps (650) bps (331) bps 211 bps
RevPAR ($) $78 $82 $66 $62 $67
Growth -- 3.9% (18.7%) (6.4%) 8.3%
Revenue $79 $93 $80 $76 $73
Growth -- 18.3% (14.1 %) (4.9%) (3.8%)
Department Expenses 25 28 26 26 25
Gross Operating Income $54 $65 $54 $50 $48
Margin 16.0% 18.5% 18.7% 17.7% 16.8%
Operating Expenses 27 31 29 28 28
House Profit $26 $34 $25 $22 $21
Margin 7.8% 9.7% 8.7% 7.8% 7.2%
Other Expenses 4 5 5 5 4
Hotel EBITDA $22 $29 $20 $17 $16
Growth -- 30.3% (31.1%) (13.2%) (5.4%)
Margin 6.6% 8.3% 6.9% 6.2% 5.7%
Cap Ex
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ADR ($) $144 $145 $125 $124 $126
Growth -- 0.5% (13.3%) (1.0%) 1.0%
Occupancy (%) 79.7% 77.6% 71.2% 69.8% 72.5%
Growth (bps) -- (209) bps (646) bps (137) bps 274 bps
RevPAR ($) $115 $112 $89 $87 $91
Growth -- (2.1 %) (20.5%) (2.9%) 5.0%
Revenue $64 $62 $49 $49 $51
Growth -- (2.6%) (20.3%) (1.4%) 5.1%
Department Expenses 17 16 13 13 14
Gross Operating Income $46 $46 $36 $35 $37
Margin 13.7% 13.1% 12.4% 12.6% 12.8%
Operating Expenses 19 18 16 16 17
House Profit $27 $28 $20 $19 $20
Margin 8.1% 7.9% 6.9% 6.8% 6.8%
Other Expenses 4 4 4 3 4
Hotel EBITDA $24 $24 $16 $16 $16
Growth -- 0.4% (32.3%) (0.5%) 0.7%
Margin 7.0% 6.8% 5.6% 5.7% 5.6%
Cap Ex
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-I Altamonte Springs Marriott Residence Inn 128 1 25 Yes 0.0
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r Atlanta Downtown Marriott Residence Inn 160 Custom 14 0.0
Atlanta Peachtree Marriott Residence Inn 120 6 12 0.0
Bellevue Marriott Residence Inn 120 1 26 0.0
Belmont Summerfield Suites 132 14 0.0
Binghamton Marriott Residence Inn 72 1 22 Yes 1.3
Bothell Marriott Residence Inn 120 4 19 0.0
Cherry Hill Marriott Residence Inn 96 1 21 Yes 0.0
Columbia Hampton Inn 83 9 0.0
Denver Downtown Marriott Residence Inn 159 1 28 Yes 2.5
Denver Tech Marriott Residence Inn 128 1 29 Yes 2.1
ElSegundo Summerfield Suites 122 15 0.0
F art Lauderdale Marriott Courtyard 136 11 0.0
Fremont Marriott Residence Inn 80 1 25 Yes 1.4
Gaithersburg Marriott Residence Inn 132 6 12 0.0
Germantown Hampton Inn 178 14 0.0
Horsham Marriott Towneplace Suites 95 11 0.0
Islandia Hampton Inn 120 22 0.0
Las Colinas Summerfield Suites 148 14 0.0
Lexington KY Marriott Residence Inn 80 1 24 Yes 1.1
Livonia Marriott Residence Inn 112 6 11 0.0
Lombard Hampton Inn 128 22 Yes 0.0
Louisville RI Marriott Residence Inn 96 1 26 Yes 1.7
Lynnwood Marriott R<>sidence Inn 120 1 23 0.0
Mount Laurel Summerfield Suites 116 14 0.0
Mountain View Marriott Residence Inn 112 1 24 1.9
Naples Hampton Inn 107 19 0.0
Portland ME Marriott Residence Inn 78 5 14 1.3
Richmond Marriott Residence Inn 80 1 24 Yes 1.1
RichmondNW Marriott Residence Inn 104 6 12 0.0
Rosemont Marriott Residence Inn 192 6 12 0.0
Saddle River Marriott Residence Inn 174 6 7 0.0
San Jose Marriott Residence Inn 80 1 24 Yes 0.0
San Jose South Marriott Residence Inn 150 6 12 0.0
San Mateo Marriott Residence Inn 160 1 25 2.9
Schaumburg Hampton Inn 128 23 Yes 0.0
z
Shelton Marriott Residence Inn 96 1 22 Yes 1.7
z
Silicon Valley I Marriott Residence Inn 231 1 26 4.1
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Silicon Valley II Marriott Residence Inn 247 1 25 4.4
-
Tukwila Marriott Residence Inn 144 1 25 0.0
0 Westchester Hampton Inn 112 22 0.0
0
Willow Grove Hampton Inn 150 19 0.0
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Windsor Marriott Residence Inn 96 1 24 Yes 1.7
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Altamonte Springs Marriott Residence Inn
Binghamton Marriott Residence Inn
Cherry Hill Marriott Residence Inn
Denver Downtown Marriott Residence Inn
Denver Tech Marriott Residence Inn
Fremont Marriott Residence Inn
Lexington KY Marriott Residence Inn
Lombard Hampton Inn
Louisville RI Marriott Residence Inn
Richmond Marriott Residence Inn
San Jose Marriott Residence Inn
Schaumburg Hampton Inn
Shelton Marriott Residence Inn
Windsor Marriott Residence Inn
Total
128 1 12/31/2021
72 1 12/31/2021
96 1 12/31/2021
159 1 12/31/2021
128 1 12/31/2021
80 1 12/31/2021
80 1 12/31/2021
128 6/30/2013
96 1 12/31/2021
80 1 12/31/2021
80 1 12/31/2021
128 6/30/2013
96 1 12/31/2021
96 1 12/31/2021
1,447
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS
$0.7 $0.8
0.9 0.8
1.1 1.0
1.7 1.8
1.0 1.0
0.4 0.4
1.0 1.0
0.6 0.5
0.8 0.6
0.4 0.3
1.0 1.0
0.4 0.3
0.8 0.7
0.5 0.4
$11.4 $10.4
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MOELIS
z
($in millions)
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z
2007A 2008A 2009A 2010E 2011E
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Revenue $150 $151 $125 $123 $128
Growth 0.5% (17.3%) (1.7%) 4.7%
Hotel EBITDA $64 $65 $48 $47 $47
Growth 1.1% (25.6%) (2.4%) (0.6%)
Margin 19.1% 18.5% 16.7% 16.8% 16.3%
Cap Ex
FF&E $8 $8 $7 $9 $13
PIPs 0 0 0 3 11
Total CapEx $8 $8 $7 $12 $25
% ofRevenue 2.4% 2.4% 2.4% 4.4% 8.7%
Yearly
2007A 2008A 2009A 2010E 2011E
Revenue $45 $46 $36 $35 $36
Growth 1.9% (21.0%) (3.6%) 2.1%
Hotel EBITDA $17 $18 $11 $10 $10
Growth 7.1% (36.9%) (8.0%) (3.8%)
Margin 5.0% 5.1% 3.9% 3.7% 3.5%
Cap Ex
FF&E $2 $3 $2 $3 $4
z
PIPs 0 0 0 3 10
z Total CapEx $2 $3 $2 $5 $14
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% ofRevenue 0.7% 0.7% 0.7% 1.9% 5.0%
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Lehman Hotels (lJ
($ in millions)
Illustrative Value [$150- $190]
Multiples
2010E EBITDA 8.6x -10.9x
2011E EBITDA 9.1x -11.5x
Cap Rates
2010E NOI 6.2%- 7.8%
2011E NOI 4.8%-6.1%
(1) Lehman hotels consists of all core and terminal hotels in the floating pool
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS
Fixed Pool Hotels
Other
Hotels
Core Terminal
[$400 - $525] [$25- $50] [$125 - $175]
8.5x -11.1x 2.4x- 4.8x 8.0x -11.1x
8.5x -11.2x 2.5x- 5.0x 7.7x -10.8x
7.3%-9.5% 15.7%-31.4% 6.9%-9.6%
6.4%- 8.4% 11.5%-23.1% 6.7%-9.4%
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Debt Amount [$400- $575]
Maturity
Coupon
Hotels
2017-2019
0-10 Hotels
to CMBS Pool
[6%]
35-45
Lehman/ Investor
Others
Debt Amount
Maturity
Coupon
Hotels
[95%]
[5%]
[$0- $50]
2017
[6%]
20
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS
Key Statistics
2010E EBITDA
Debt Amount [$125 - $175]
Maturity 2016-2018
Coupon [6%]
Hotels 6-7
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Fixed Pool
Floating Pool
Other Pools
Total
Equity Value
Fixed Pool
Floating Pool
Other Pools
Total
$825
351
238
$1,414
[144%- 206%]
[185% - 234%]
[136% -190%]
[155%- 209%]
[$250 - $425] [$400 - $575]
[301- 351] [0- 50]
[63- 113] [125- 175]
[$689 - $889] [$525 - $725]
[$150- $190]
[100%]
[0%- 26%]
[100%]
[73%- 83%]
[6%]
[6%]
[6%]
[6%]
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS
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HIGHLY CONFIDENTIAL DRAFT
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r
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SUBJECT TO FRE 408
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z
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Fixed Pool 2009A 2010E 2011E
z
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NOI $51 $46 $39
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Interest [24- 35] [24- 35] [24- 35]
DSCR [1.5x- 2.1x] [1.3x- 1.9x] [1.1x- 1.6x]
Floating Pool 2009A 2010E 2011E
NOI $16 $12 $9
Interest [0- 3] [0- 3] [0- 3]
DSCR [5.2x- NM] [3.9x- NM] [3.1x- NM]
Other Pools 2009A 2010E 2011E
NOI $13 $12 $12
Interest [8- 11] [8- 11] [8- 11]
DSCR [1.3x- 1.8x] [1.1x- 1.6x] [1.1x- 1.6x]
Consolidated 2009A 2010E 2011E
NOI $68 $61 $51
Interest [32- 44] [32- 44] [32- 44]
DSCR [1.6x- 2.2x] [1.4x- 1.9x] [1.2x- 1.6x]
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Lehman and Investor to share control of the Trust
[2] board members selected by Lehman
[2] board members selected by Investor
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS
[3] independent board members mutually acceptable to Lehman and Investor
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Project Tavern
Midland Discussion Materials
April 28, 2010
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELTS&.._COMPANY
EXHIBIT 10
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Legal Disclaimer
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SFITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS "-.COMPANY
Moelis & Company prepared this presentation based on information received from third parties. Moelis
has not and does not intend to verify independently any of such information, all of which Moelis
assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of
its date and Moelis assumes no duty to update it or to advise any person that its conclusions or advice
has changed.
This presentation is solely for your information purposes only. Consider it along with all other facts,
advice and its own insights before making your own independent decisions. Do not provide a copy of
this presentation to any person without Moelis' prior consent. No other person should rely on it for any
purpose. Moelis does not offer tax, accounting or legal advice.
Moelis & Company provides mergers and acquisitions, restructuring and other advisory services to
clients and its affiliates manage private investment partnerships. Its personnel may make statements or
provide advice that is contrary to information contained in this material. Our proprietary interests may
conflict with your interests. Moelis may from time to time have positions in or effect transactions in
securities described in this presentation. Moelis & Company may have advised, may seek to advise and
may in the future advise or invest in companies mentioned in this presentation.
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Tavern Situation Overview
COMPANY COMMENTARY
2010 budgeted EBITDA of $82 million
-Total leverage of 17x
-Debt service requirements consume substantially all
the cash flow
On March 16, 2010, Tavern received a default notice
from Marriott on 23 hotels
-Franchise termination date of Jnne 14-15, 2010
-Implies capital need of $50 million
Retained Kirkland & Ellis and Moelis to assist in
evaluating recapitalization alternatives
Did not make April debt service payment on fixed rate
CMBSpool
Have engaged with Lehman and Marriott
Capital needs, given the current asset base, cannot be
solved within current capital structure
Total debt level nnsustainable in context of a
recapitalization
Source: Industry datil taken from: SNl Financial, CapitallQ and company filings
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS&.._COMPANY
INDUSTRY OPERATING STATISTICS
~
;;;
RevPAR
2007 2008 2009
ADR
2007 2008 2009
Industry Tavern
REIT SECTOR PRICE PERFORMANCE
140 .
6 100
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0
Oc..-cupaacy
rl
;:!:
2007 2008 2009
Nov-()6 Apr-{)7 Sep-07 Feb-oS Jul..OB Dec-08 May-{)9 Oct-o9 Mar-10
N o t ~ : REITSector includes Host Hotels & Resorts Inc, Hospitality Properties Trust, Ashford llospitality Trust Inc, LaSalle Hotel Propertie>, FdCor Lodging Trust Inc . Sunstone Hotel
Investors Inc., Strategic Hotels & Resorts, Inc., Diamondrock Hospitality Co., Hersha Hospitality Trust, Supertel I lospitality, Inc., MHJ Hospitality Corp.
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Current Capital Structure by Financing Pool
Parent
I
Holdings
Trast
$173aunAIC Common
$15mm AIC Preferftd
SI45mm Public Preferred
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SElTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
Maagement
S700k Common
and Prefened
MOELIS&,_COMPA'IY
JV(49%)
Genwuod
Raleigh(l
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II II II II
$825mm FJXecl Rate
CMBSPool
LB-UBS 2007-<:6
Securil:izatioo Ammmt $26 billion
Jnnlreepers Portion: $412.5 million
SeMaer: Wadlovia
Sp. Sei'Vicer. Midlmd
LB-UBS 'JlXfi-Cl
Securitization Amount $3.0 billion
lnnkeepenl Portioo: $l12.5 million
Servia!I'!.Wadwvia
Sp. Servicer: LNR
Pools 200'1-G l!lld M-c:/
45 Ho1eJs I 5.6116 Keys
2009 HoleJ EBITDA: $59.8mm
200IJ Leverage: 13.8x
Debt I Key: $145,(193
Maturity: 2.017
Coupoo:6.71%
Note: I. Borrowers under $33rnm CSE mortgage loan
2. Each hotel has a separate uncrossed loan
$359mm Floating Rate
CMBSPool
($238 Snr I $121 Mezz)
Maturity: 2m2
Snr. Coupon: L+205
Meu: 5% Callh /15%PIK
Servio!r: TriMont
Sp. ServiQer: "friMont
CoDatenl
20 1iae1s I 2.778 Keys
2009 Holl!l EBIIDA:
$10.lmm
2009 Leverage: 17.9x
0./ Key: $129,230
$3Smm Anaheim
CMBSIModpge
(SeniodMezz)
Securitizatioo Amount:
$2.9billmn
Snr. Couporl: 5.41%
Mezz:lO%
Sei'Vicer. Capuwk
Sp. Servicer: cw Cap.
Collalml
1 Holl:l I 230 Keys
2009 Hole) EBI11>A:
$1.8nun
2009 Leverage: 18.7x
Debt I Key: $152,174
$120aun Capawk
CMBS Finanrin&
Securlti7.ation Amount:
$27 I $3.4 billion
Mablrity. 2D16
c:::oupore-5.98%
Semoer.Capmalk
Sp. Senia!r. Midland
,.. . .....,.
3 HoleJs /701 Keyls
2009 Hctl!l EBl1DA:
$7.4Dmt
2009 Leverage: 16.2x
Debt I IGey; $171,184
Jlo!cl!(2) IDebt ill le-t
Anaheim Rl ($38)
Mi8aion Valley ($47)
OnlarioHDtoo($35)
$75mm Menill
CMBS finaodns
Securitization Amount
$1.5billion
Maturity: 2.016
Coupon: 6.03%
Servicer: Well5 Fargo
Sp. ServitEr: LNR
CoD.....,.
3 Holel& I 372 Keys
2009 Hotel EBIIDA:
$6.8mm
2009 Leverage: tl.Ox
Debt I Key: $101.612
San Antonio ($2-4)
'IY-Corner ($25)
Waebingma DC ($26)
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Challenges
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IDGHL Y CONFJDENTIAL DRAFT
PROJECfiONS SUBJECT TO CHANGE
FOR SElTLEMENT PURPOSES ONLY
SUBJECT TO FRE ~
MOE LIS .'\..._COMPANY
As a result of the current situation, the Company has to address a number of challenges
Too much debt
- Leverage of -17x
- Debt service requirements unsustainable
- Industry metrics suggest blended leverage of:
60 - 75% debt I capitalization
l.Sx- 2.0x debt service coverage<
1
>
7x - 9x debt I EBITDA
Possible new money requirement to fund PIPs and provide liquidity
Nature of capital stack adds complexity
-Multiple CMBS pools with separate collateral
- Pool asset mix not homogenous
Differing new money requirements
Certain hotels will lose flags
- Based on experience, deflagging results in significant value erosion that is more pronounced in older assets
- Structure of vehicles may constrain creditor flexibility
Substantial timing constraints
- Marriott default letter dated March 16 requires cure or filing by mid June
- Drawn out restructuring process will not maximize value to constituents
Operating performance is not expected to materially improve until 2012
Note: 1. Debt Service Coverage Ratio calculated as Net Operating Income I (Interest Expense)
151
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Company Objectives
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECfTO CHANGE
FOR SElTLEMENT PURPOSES ONLY
SUBJECT TO FilE 408
MOE LIS '-.COMPAKY
Significant PIP requirements to maintain flag relationships and preserve asset value
Existing capital structure cannot be supported -new money investment is required
Leverage levels too high
Interest consuming all cash flow
Pro forma debt to capitalization under [75%] appears appropriate
Develop solutions that provide optimal form of consideration to each stakeholder
Minimize time of transaction to enable near-term PIP funding
Moving quickly is critical to minimizing friction, preserving value and maximizing risk-adjusted recoveries
161
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Portfolio Summary
HIGHLY CONFIDENTIAL DRAFT
PROJECfiONS SUBJECT TO CHANGE
FOR SE'ITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOE LIS ,'-.COMPANY
Fixed Pool Hotels
.. : ~ ~ : .... "'
Lehman Hotels
~ ~ ~
($ in millions) Core Terminal
Hotels 20 31 14 7
Total Keys 2,778 4,239 1,447 1,303
2009A Hotel EBITDA $20 $48 $11 $16
2010P Hotel EBTIDA 17 47 10 16
2011 E Hotel EBITDA 16 47 10 16
Debt Outstanding $362 $654 $172 $229
Debt I 2010P EBITDA 20.8x 13.8x 16.4x 14.6x
PIPs Required $17 $15 $15 $4
Notes: Terminal hotels are hotels that are expected to lose their flags over the next 12 years and primarily include Generation 1 Residence Inn facilities
Assumes PIPs arc fully funded on Non-Terminal hotels
Total
72
9,767
$96
91
90
$1,417
15.6x
$50
171
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HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
r
MOELIS,\._COMPANY
F--:-itnct'l:st' \.on-
Propert\ Flag fl Kcv... Generation L\g(' IOpln:ngl P:r ... (S:-rml
Addison RJ Marriott Residence Inn 150 6 14 $0.0
Altam<Jrtte Springs Marriott Residence Inn 128 1 2S Yes 0.0
Arlington Marriott Residence Inn 114 4 15 0.0
Atlanta Downtown Marriott Inn 160 Custom 14 0.0
Atlanta Peachtree Marriott Residence Inn 120 6 12 ().(]
Bellevue Marriott Residence Inn 120 1 26 0.0
Belmont Swnmerfield Suites 132 14 0.0
Binghamton Marriott Resickoce Inn 72 1 22 Yes 1.3
Botrell Marriott Residence Inn 120 4 19 0.0
OlenyHill Marriott Residence Inn 96 1 21 Yes 0.0
Columbia Hampton Inn 83 9 0.0
Denver Downtown Marriott Residence Inn 159 1 28 Yes 2.5
Denver Tech Marriott Residence Inn 128 1 ']9 Yes 2.1
EISegWldo Suounerfield Suiles 122 15 0.0
Fort Lauderdale Marriott Courtyard 136 11 0.0
Fremont Marriott Inn 80 1 25 Yes u
Gaithersburg Marriott Residence Inn 132 6 12 0.0
German laWn Hampton Inn 178 14 0.0
Horsham Marriott Towneplace Suites 95 11 0.0
Islandia Hampton Inn 120 22 0.0
LasColinas Summerfield Suites 148 14 0.0
Lexington ICY Marriott Residence Inn 80 1 24 Yes 1.1
Livonia Marriott Residence Inn 112 6 11 0.0
wmbard Hampton hut 128 22 Yes 0.0
Louisville RJ Marriott Residence Inn 96 1 26 Yes 1.7
Lyrmwood Marriott Residence Inn 120 1 23 0.0
Mount Laurel Summerfield Suiles 116 14 0.0
Mountain View Marriott Residence Inn 112 1 24 1.9
Naples Hampton hut 107 19 0.0
Portland ME Marriott Residence Inn 78 5 14 1.3
Richmond Marriott Residence Inn 80 I 24 Yes 1.1
RichmondNW Marriott Residence Inn 104 6 12 0.0
Rosemont Marriott Residence Inn 192 6 12 0.0
Saddle River Marriott Residence Inn 174 6 7 0.0
San jose Marriott ResidPnet> Jnn 80 1 24 Yes 0.0
San Jose South Marriott Residence Inn 150 6 12 0.0
San Mateo Marriott Residence Inn 160 1 25 2.9
Schaumburg Hampton hut 128 23 Yes 0.0
Shelton Marriott Residence Inn % I 22 Ye< 1.7
Silicon Valley I Marriott Residence Inn 231 1 26 4.1
Silicon Valley II Marriott Residence Inn 247 1 2S 4.4
Tulcwila Marriott Residence Inn 144 1 25 0.0
Westchester Hampton Inn 112 22 0.0
Willow Grove Hampton hut 150 19 0.0
Windsor Marriott ResidHtce Inn % 1 24 Yes 1.7
Tot.ol/Av.,nge 5,6116 19 $29.3
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HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETIT.EMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOE LIS ,,COMPANY
Proper!\ Fla1' #Keys Generation franchise l1fe 2009A EBITDA 2010[ [DJTDA
Altamonte Springs Marriott Residence Inn 128 1 12/31/2021 $0.7 $0.8
Binghamton Marriott Residence Inn 72 1 12/31/2021 0.9 0.8
ChenyHill Marriott Residence Inn 96 1 12/31/2021 1.1 1.0
Denver Downtown Marriott Residence Inn 159 1 12/31/2021 1.7 1.8
Denver Tech Marriott Residence Inn 128 1 12/31/2021 1.0 1.0
Premont Marriott Residence Inn 80 1 12/31/2021 0.4 0.4
Lexington KY Marriott Residence Inn 80 1 12/31/2021 1.0 1.0
Louisville Rl Marriott Residence Inn 96 1 12/31/2021 0.8 0.6
Richmond Marriott ResidencP Inn 80 1 12/31/2021 0.4 0.3
San Jose Marriott Residence Inn 80 1 12/31/2021 1.0 1.0
Shelton Marriott Residence Inn 96 1 12/31/2021 0.8 0.7
Windsor Marriott Residence Inn 96 1 12/31/2021 0.5 0.4
Lombard Hampton Inn 128 6/30/2013 0.6 0.5
Schaumburg Hampton Inn 128 6/30/2013 0.4 0.3
Total MilrrioH Residence Inn 1,191 $10.3 $9.7
Total Hampton Inn 256 1.1 0.8
Total 1,447 $11.4 $10.4
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Floating and Other Pools Properties Overview
Floatin& Pool
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HJGHL Y CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SEITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
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MOELIS,"'-.COMPANY
F r.:tnchi sc '\.on"
l'nptr1) Flag I> 1\Fys GenFration AgF !Opening) Lxten;ion Risk LnfundFd I'll'; ISmm)
Addison 55 Hyatt 132 14 ($0.8)
Albany Hampton Inn 126 19 Yes 0.0
Atlantic Gty Marriott Courtyard 206 2 0.0
Bulfinch Bulfinch 79 5 0.0
East lansing Gatehouse Inn 60 1 25 Yes 0.0
Fort Walton Beach Sheraton 216 24 0.2
Fort Wayne Marriott Residena! Inn 80 1 24 Yes 0.0
Grand Rapids Marriott Inn 96 I 26 Yes 0.0
Harrisburg Marriott Residena! Inn 122 I 15 0.3
hldianapolis Gatehouse Inn 88 1 26 Yes 0.0
Louisville HI Hampton Inn I73 5 0.0
Montvale Marriott Courtyard 184 3 0.0
Morristown Westin 224 6 1.4
Ontario Marriott Residence Inn 200 1 24 Yes 3.2
Rockville Sheraton 154 3 0.0
Troy Central Marriott Residence Inn I 52 1 24 Yes (0.5)
Troy Southeast Marriott Residence Inn 96 1 24 Yes (0.1)
Valencia Hilton Embassy Suites 156 2 0.0
West Palm Beach Best Western 135 24 0.0
Woburn HamEton Inn 99 13 (0.1)
Totilll/ Ave1age 2,778 15 $3.7
Other Pools
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Propoh rlag j; Kns GFneration Age (Opening> Lxtension Hisk CnfunJeJ l'lP> (SrnmJ
Anaheim Hilton Hilton Suites 230 21 $0.0
AnaheimRI Marriott Residence Inn 200 7 0.0
Mission Valley Marriott Residence Inn 192 7 0.0
Ontario Hilton Hilton 309 24 0.0
San Antonio Hilton Homewood Suites 146 14 0.0
Tysons Comer Marriott Residau:e Inn 121 Cust 9 2.2
Washington DC Doublt>trt>f' 105 40 0.0
Totilll/ Average 1,303 17 $2.2
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Scenario Projections
HIGHLY CONADENTIAL DRAFT
PROJECfiONS SUBJECf TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS&:.._COMPANY
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HIGHLY CONFIDENTIAL DRAFT
PROJECilONS SUBJECf TO CHANGE
FOR SFITLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
M 0 E I. I S ,'\._ C 0 M PAN Y
In this presentation we are running a scenario where projections have been developed on a hotel-by-hotel
basis for the portfolio
- Management estimates financial performance will not return to 2007 levels for at least four to six years
- 2010 reflects management budget, with actual data for January and February
-Management anticipates 5-10 properties to be deflagged by 2015, regardless of PIPs
FISCAL YEAR 2010- SCENARIO ASSUMPTIONS
ADR level assumptions range of- $107-$113
- Slightly down from FY2009
- Downward estimates mainly due to price
pressure as a result of continued effects of
economic environment
Occupancy levels of - 63%-67%, slightly down from
FY2009
Rev PAR of- $70-$75, down approximately 2%-4%
from FY2009 levels
Expenses in line with FY2007-FY2009 average
margins
Estimates take into consideration revenue
displacements due to PIPs and cycle renovations
FISCAL YEAR 2011- SCENARIO ASSUMPTIONS
ADR levels of- $110-$116
Occupancy levels of- 65%-70%, up from FY2010
and back at FY2009 levels
RevPAR of- $74-$79, up approximately 4%-7%
from FY2010 levels
Expenses in line with FY2007-FY2009 average
margins
Assumes certain non-recurring expense savings are
not sustainable
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Consolidated Financial Overview
($in millions)
Consolidated
hnancial Overview
Key Operating Statistics:
ADR($)
Growth
Occupancy (%)
Growth (bps)
RevPAR($)
Growth
Revenue
Growth
Department Expenses
Gross Operating Income
Margin
Operating Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Corporate Expenses
Corporate EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
% ofRroenue
2007A
$123
74.2%
$92
$337
83
$254
75.4%
110
$145
42.9%
17
$127
37.7%
11
$116
34.5%
$19
0
$19
5.5%
2008A
$126
2.3%
72.8%
(141) bps
$92
0.4%
$352
43%
84
$268
76.2%
112
$156
44.3%
20
$136
6.9%
38.7%
12
$125
7.0%
35.4%
$19
0
$19
5.5%
Yearly
2009A
$111
(11.8%)
67.2%
(565) bps
$75
(18.6%)
$290
(17.5%)
74
$216
74.6%
101
$115
39.6%
19
$96
(29.5%)
33.1%
12
$84
(32.2%)
29.1%
$16
0
$16
5.5%
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
M 0 E I. I S "'--. C 0 M PAN Y
2010E 2011E
$110 $113
(0.8%) 2.6%
65.5% 67.4%
(168) bps 195 bps
$72 $76
(3.3%) 5.7%
$282 $288
(2.8%) 2.1%
74 75
$209 $213
73.9% 73.8%
100 106
$109 $107
38.5% 37.1%
17 17
$91 $90
(5.0%) (1.7%)
32.3% 31.1%
9 9
$82 $80
(2.7%) (2.1%)
29.1% 27.9%
$21 $29
24 21
$45 $51
15.9% 17.7%
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Fixed Pool Financial Overview
($in millions)
Fi.\ed Pool
Financial Overview
Key Operating Statistics:
ADR($)
Growth
Occupancy(%)
Growth (bps)
RevPAR ($)
Growth
Revenue
Growth
Deeartment
Gross Operating Income
Margin
Expenses
House Profit
Margin
Other Expenses
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total Cap Ex
%of Revenue
2007A 2008A
$120 $124
- 3.1%
76.0% 74.1%
- (191) bps
$92 $92
- 0.6%
$195 $197
- 0.8%
41 40
$154 $157
45.7% 44.6%
63 63
$91 $94
26.9% 26.7%
10 11
$81 $83
-- 2.3%
24.1% 23.6%
$11 $11
0 0
$11 $11
55% 5.5%
Yearly
2009A
$109
(12.0%)
69.2%
(491) bps
$76
(17.8%)
$161
(18.1%)
35
$126
43.4%
56
$70
24.0%
10
$60
(28.1%)
20.6%
$9
0
$9
5.5%
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELISoS..._COMPANY
2010E 2011E
$109 $111
(0.7%) 2.2%
68.2% 69.5%
(101)bps 129 bps
$74 $77
(2.2%) 4.1%
$158 $164
(2.1%) 4.1%
35 36
$123 $128
43.6% 44.3%
56 61
$67 $67
23.8% 23.1%
10 9
$58 $57
(3.4%) (1.2%)
20.5% 19.8%
$12 $18
6 21
$18 $39
11.3% 23.9%
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Fixed Pool Ongoing I Terminal Properties Financial Overview
($in millions)
F i ~ e d Pool Ongoing Properties
Financial Oveniew
Revenue
Growth
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
TotalCapEx
%of Revenue
Fi.\ed Pool Terminal l'ropE'rtil';
Financia: OvE'nipw
Revenue
Growth
Hotel EBITDA
Growth
Margin
Cap Ex
FF&E
PIPs
Total CapEx
%of Revenue
2007A
$150
$64
19.1%
$8
0
$8
5.5%
2007A
$45
$17
5.0%
$2
0
$2
5.5%
Yearly
2008A 2009A
$151 $125
0.5% (17.3%)
$65 $48
1.1% (25.6%)
18.5% 16.7%
$8 $7
0 0
$8 $7
5.5% 5.5%
Yearly
2008A 2009A
$46 $36
1.9% (21.0%)
$18 $11
7.1% (36.9%)
5.1% 3.9%
$3 $2
0 0
$3 $2
5.5% 5.5%
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
MOELIS,'\._COMPANY
2010E 2011E
$123 $128
(1.7%) 4.7%
$47 $47
(2.4%) (().6%)
16.8% 16.3%
$9 $13
3 11
$12 $25
10.1% 19.4%
2010E 2011E
$35 $36
(3.6%) 2.1%
$10 $10
(8.0%) (3.8%)
3.7% 3.5%
$3 $4
3 10
$5 $14
15.4% 40.2%
(15(
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