Morgan Stanley Investment Banking Pitch Book
Project Roosevelt
Price per Share, $(1)
Methodology
Market Reference:
Broker Price Target
• Single broker with current
estimates
Valuation Analysis:
SOTP (2)(3)
• Owned asset valuations based on
DCF and private market bids
• Management Co. based on comps
2016E EBITDA Multiples
Trading Comps (2)(3)
• 2016E EBITDA Multiples
3(a) DCF (Unlevered)
3(b) DCF (Levered)
MONROE VALUATION
Preliminary Illustrative Summary Valuation
Monroe Equity Value Per Share (Standalone Case)
• 4-year projected unlevered cash flows $0.00
Standalone Asset Sales
• Selling one or both hotel assets
$0.00
Morgan Stanley
$0.00
• 4-year projected levered cash flows $0.00
Excludes Unidentified Contracts
$0.00
1
$0.72
0.50
0.00
Notes
1. Negative per share values curtailed at $0.00
2. Based on Tier 1 peers which include BEL, H, HLT, IHG, MAR and HOT
$1.30
1.00
I Current Price
I (3/12/16)
$1.63
$1.38
1
I
1
1.50
1
2.00
I Trousdale
Offer
$2.25
1
$2.37
2.50
3.00
Strictly Confidential
One research analyst covers Monroe;
$1.30 price target released the day
after Company's 4Q15 earnings call
Consensus 2016E EBITDA estimate of
$44.5MM compared to management
projected $36.2MM (23% delta)
Owned asset valued at range of bids,
DCF valuations, and BOVS
Discount Rate: 7.0%-9.0%
- Exit Cap Rate: 7.0%, 7.25% for Clift
- EBITDA multiple for Management
Business, F&B, and public company
costs: 9.4x-12.6x (tier one comps)
$23MM of NOL value at the mid-point
• Tier one comps 2016E EBITDA range
of 9.4x to 12.6x
$36.2MM Proj. 2016 EBITDA
• $23MM of NOL Value at the mid-point
Discount Rate: 7.2% -8.5% (4)
Exit EBITDA Multiple for Owned Hotels
and Mgmt Business: 11.5x-13.5x
Cost of Equity: 11.8%-15.0%
Exit Total EBITDA Multiple: 11.5x-
13.5x
3. EBITDA used to determine going concem value does not include lost contracts or termination payments, instead the present value of these cash flows were included in the analysis to obtain a
company per share value
4. Terminal value assumes going concem achieves more typical capital structure. Utilizes tier 1 lodging long term beta of 1.3, risk free rate of 2.1%, market risk premium of 6%, and weighting of 30%
debt and 10% pref to total capitalization based on tier 1 lodging comps to calculate WACC
26View entire presentation