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HALIFAX, Aug. 20, 2007 (Canada NewsWire via COMTEX News Network) -- /NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES/
Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN, HLR.DB and HLR.DB.A) ("Holloway" or the "REIT") today announced its unaudited financial results for the three and six months ended June 30, 2007. All amounts are in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the REIT's unaudited financial statements and management's discussion and analysis, copies of which are available at www.sedar.com.
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Highlights - Second Quarter
The second quarter of 2007 has been one of unprecedented growth for
Holloway. Total assets have increased by over $273.5 million since
December 31, 2006. The key highlights included:
- Raised $140.0 million in the capital markets - on June 21, 2007, the
REIT issued 17,758,000 units at a price of $5.35 per unit and
45.0 million aggregate principal amount of 6.5% convertible debentures
in a "bought deal" public offering for total gross proceeds of
$140.0 million;
- Acquired 11 hotel properties -
- on April 13, 2007, the REIT purchased the Super 8 Motel in
Three Hills, AB for $10.0 million and obtained mortgage financing
of $5.0 million on this hotel; and
- on June 22, 2007, the REIT purchased ten hotels (the
"Pomeroy hotels") located in northern Alberta and British Columbia
from the Pomeroy Group for $215.3 million and in addition,
purchased parking lots located adjacent to two of the hotels and a
restaurant for $2.9 million. The REIT obtained mortgage financing
of $100.0 million on these hotels;
- Announced a 20% increase in distributions - the REIT announced a
20% increase in distributions ($0.54 annually from $0.45 annually)
starting with its July, 2007 distributions (payable August 15th).
Subsequent to the end of the quarter, the REIT graduated from the TSX
Venture Exchange to the TSX.
Results of Operations
The following table provides a summary of the operating results for the
three and six months ended June 30, 2007 and 2006.
Three months Three months Six months Six months
ended ended ended ended
(in 000's except June 30, June 30, June 30, June 30,
per unit results) 2007 2006 2007 2006
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Hotel revenues $ 12,987 $ 89 $ 22,634 $ 89
Hotel expenses 11,672 69 20,832 69
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Income from hotel
operations 1,315 20 1,802 20
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Net trust expenses 910 638 1,796 728
Future income tax
recovery 2,288 - 2,288 -
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Net income (loss)
for the period
- basic 2,693 (618) 2,294 (708)
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Add: interest on
convertible debentures
(that are dilutive) 94 - Not dilutive -
Net income (loss) for
the period - diluted 2,787 (618) 2,294 (708)
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Weighted average basic
units outstanding 19,432 1,835 18,013 1,458
Weighted average
diluted units
outstanding 20,299 1,835 18,168 1,458
Basic income (loss)
per unit 0.14 (0.34) 0.13 (0.49)
Diluted income (loss)
per unit 0.14 (0.34) 0.13 (0.49)
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Reconciliation to funds
-----------------------
from operations
---------------
Add/(deduct):
Depreciation and
amortization on
real property 1,272 13 2,217 13
Future income tax
recovery (2,288) - (2,288) -
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Funds from operations -
basic and diluted 1,677 (605) 2,223 (695)
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Basic FFO per unit 0.09 (0.33) 0.12 (0.48)
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Diluted FFO per unit 0.08 (0.33) 0.12 (0.48)
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Reconciliation to
-----------------
distributable income
--------------------
Add/(deduct):
Depreciation and
amortization - trust
and other assets 18 - 33 -
Reorganization expenses -
one time item - 419 - 419
Accretion on mortgages
and convertible
debentures(1) 174 - 319 -
Unit-based compensation 107 - 195 80
FF&E reserve (390) (3) (679) (3)
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Distributable
income (loss)
- basic and
diluted 1,586 (189) 2,091 (199)
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Basic and diluted
distributable
income (loss)
per unit 0.08 (0.10) 0.12 (0.14)
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-------------------------------------------------------------------------
Reconciliation of cash
----------------------
flow from operating
-------------------
activities to
-------------
distributable income
---------------------
Cash flow from
operating activities 1,993 (401) 2,446 (473)
Changes in non-cash
working capital
balances (17) (204) 324 (142)
FF&E reserve (390) (3) (679) (3)
Reorganization
expenses
- one-time item - 419 - 419
-------------------------------------------------------------------------
Distributable
income (loss) 1,586 (189) 2,091 (199)
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(1) Includes the amortization of deferred finance fees which is included
in interest expense in the financial statements.
Three Months and Six Months ended June 30, 2007
Holloway owned twenty hotel properties for varying lengths of time during
the three and six months ended June 30, 2007. The results include the
operations of the hotel properties during the quarter or from the date of
acquisition during the quarter. The ten hotels purchased from the Pomeroy
Group were acquired on June 22, 2007 so the results for the quarter only
include their operations for nine days. The properties generated revenue of
approximately $13.0 and $22.6 million and income from hotel operations of
approximately $1.3 and $1.8 million for the three and six months ended
June 30, 2007, respectively.
The major trust revenues and expenses for the three and six months ended
June 30, 2007 included the following:
- interest income of $0.4 and $0.9 million from mezzanine loans on
development properties and short-term investing of excess cash;
- general and administrative expenses of approximately $0.5 and
$0.9 million, which include salaries and benefits of employees of the
REIT, professional fees, travel and other expenses;
- interest expense of approximately $0.5 and $1.0 million on the
convertible debentures;
- non-cash accretion of the discount on the convertible debentures of
$0.2 and $0.3 million; and
- non-cash unit-based compensation expense of $0.1 and $0.2 million for
options granted in 2006 and 2007 which will vest in 2007, 2008 and 2009
and are being expensed on a straight-line basis.
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Holloway Lodging Real Estate Investment Trust
Holloway is a real estate investment trust listed on the Toronto Stock Exchange. Our goal is to be one of the top-performing lodging REITs and to grow our distributions to our unitholders. We will continuously seek to improve our operating results by focusing on dominating the market segments in which we operate and maximizing product quality through a prudent capital reinvestment program.
This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the future financial position, property acquisition strategies and opportunities, business strategy, financial results and plans and objectives of the REIT. Particularly, statements regarding the REIT's future operating results, property acquisition strategies and opportunities and economic performance are forward-looking statements. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward looking-information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what the REIT currently expects and there can be no assurance that such statements will prove to be accurate. Some of these risks and uncertainties are described under "Risk Factors" in Holloway's Annual Information Form ("AIF"), dated May 1, 2007 which is available at www.sedar.com. The REIT does not intend to update or revise any such forward-looking information should its assumptions and estimates change.
%SEDAR: 00023845E
SOURCE: HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUST
Mr. Glenn Squires, Chief Executive Officer of the REIT, (902) 457-1907; Tracy
Sherren, Chief Financial Officer of the REIT, (902) 457-1907
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