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HALIFAX, Feb. 28, 2008 (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 audited financial results for the year ended December 31, 2007. All amounts are in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the REIT's audited financial statements and management's discussion and analysis, copies of which are available on the REIT's website at www.hlreit.com and on the Sedar website at www.sedar.com.
Highlights of 2007
The following summarizes the key highlights for the year ended December 31, 2007:
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- Distributable income increased over 780% - distributable income
increased by $8.2 million to $9.2 million ($0.32 per unit) from
$1.0 million ($0.15 per unit) for the years ended December 31, 2007 and
2006, respectively;
- Hotel revenues increased over 350% - hotel revenues increased to
$69.8 million from $15.4 million for the years ended December 31, 2007
and 2006, respectively;
- Purchased 14 hotel properties - during the year, the REIT purchased
14 hotels and other related assets for a total purchase price of
$270.6 million. The REIT purchased 10 hotels in Alberta, 3 hotels in
British Columbia and 1 hotel in Myrtle Beach, South Carolina;
- Raised $150 million in the capital markets - in June and July, the REIT
issued 18,338,000 units at $5.35 per unit and $51.8 million of
6.5% convertible debentures in a "bought deal" public offering for
total gross proceeds of $150.0 million;
- Graduated to the TSX - on July 17, 2007, the REIT graduated from the
TSX Venture Exchange to the TSX;
- Increased distributions by 20% - the REIT instituted a 20% distribution
increase from $0.0375 to $0.045 per unit per month (from $0.45 per unit
per year to $0.54 per unit per year) effective with the August
distribution to unitholders of record as of July 31, 2007; and
- Executive appointment - on September 15, 2007, Michael Jackson joined
Holloway as President and Chief Operating Officer.
As a result of the acquisition activity in 2007, total assets have
increased over 200% and unitholders' equity has increased approximately 164%.
"2007 was a year of growth for Holloway Lodging REIT. We are very pleased to
have achieved such significant growth in our results this year, demonstrating
significant progress in realization of our overall strategy", said Glenn
Squires, CEO of Holloway Lodging REIT.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31,
2007 AND 2006
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The following table provides a summary of the operating results for the
three months and years ended December 31, 2007 and 2006.
(in 000's except Three months Three months
number of units ended ended Year ended Year ended
and per unit December 31, December 31, December 31, December 31,
results) 2007 2006 2007 2006
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Hotel revenues 22,258 8,610 69,751 15,392
Hotel expenses 21,764 8,213 63,796 13,472
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Income from
hotel operations 494 397 5,955 1,920
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Net trust expenses 1,778 1,669 5,022 3,128
Future income tax
(expense) recovery 1,138 - 587 -
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Net income (loss)
for the period -
basic and diluted (146) (1,272) 1,520 (1,208)
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Reconciliation to
-----------------
distributable income
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Add/(deduct):
Depreciation and
amortization 3,209 881 8,502 1,374
Future
income tax
expense (recovery) (1,138) - (587) -
Reorganization
expenses -
one time item - - - 419
Accretion on
mortgages and
convertible
debentures(1) 456 204 1,337 360
Unit-based
compensation 199 471 485 551
FF&E reserve (668) (258) (2,093) (462)
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Distributable income
- basic and diluted 1,912 26 9,164 1,034
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Weighted average
basic units
outstanding 39,153,317 14,203,943 28,643,005 6,732,826
Weighted average
diluted units
outstanding 39,153,317 14,203,943 28,760,887 6,732,826
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Basic income
per unit 0.00 (0.09) 0.05 (0.18)
Diluted income
per unit 0.00 (0.09) 0.05 (0.18)
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Basic distributable
income per unit 0.05 0.00 0.32 0.15
Diluted distri-
butable income
per unit 0.05 0.00 0.32 0.15
Distributions
declared 0.135 0.1125 0.495 0.1875
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(1) Includes the amortization of deferred finance fees which is included
in interest expense in the financial statements in 2007 and in
depreciation and amortization in 2006.
>>
THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
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Results of Operations
The results of operations for the three months ended December 31, 2007 include the operation of twenty-one hotels for the full quarter and the Holiday Inn Express in Myrtle Beach, South Carolina since November 2, 2007. The dollar value of revenues and expenses has increased substantially when comparing the fourth quarter results for 2007 to 2006 due to the number of acquisitions made during the year.
Hotel Operations
The hotel properties generated revenue of approximately $22.3 million compared to $8.6 million for the three months ended December 31, 2007 and 2006, respectively. Hotel EBITDA has increased to $6.6 million from $1.8 million or 266%. Depreciation and amortization has increased substantially due to the growth in the asset base.
Corporate Operations
Corporate net trust expenses were $1.8 million for the three months ended December 31, 2007 and $1.7 million for the three months ended December 31, 2006. Debenture interest expense and the non-cash accretion of the discount on the debentures has increased from $0.7 million to $1.7 million. In the fourth quarter of 2006, the REIT had $20 million in debentures outstanding, whereas in the fourth quarter of 2007, the REIT had $72 million in debentures outstanding. During the three months ended December 31, 2007, the REIT generated interest income of $0.7 million from mezzanine loans and the investment of cash balances, compared to $0.2 million in the fourth quarter of 2006.
Distributable Income
The REIT generated approximately $1.9 million in distributable income ($0.05 basic and fully diluted per unit) for the three months ended December 31, 2007 compared to $0.03 million ($0.00 basic and fully diluted per unit) for the same period in 2006. Distributions of $0.045 per unit per month were declared and totalled $5.3 million for the three months ended December 31, 2007. Distributable income will fluctuate due to the seasonality in the hospitality industry and the timing of acquisitions.
YEAR ENDED DECEMBER 31, 2007 and 2006
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Results of Operations
The results of operations for the year ended December 31, 2007 include the operation of eight hotels for the full year and fourteen hotels for varying periods of time that were acquired during the year. The increase in the 2007 revenues, expenses and income compared to these same categories for 2006 is due to the significant growth in the number of hotel properties owned in 2007 compared to 2006.
Hotel Operations
The hotel properties generated revenue of approximately $69.8 million compared to $15.4 million for the year ended December 31, 2007 and 2006, respectively - an increase of over 350%. Income from hotel operations has increased from $1.9 million for the year ended December 31, 2006 to $6.0 million for the year ended December 31, 2007 - an increase of over 200%.
Corporate Operations
Corporate net trust expenses have increased from $3.1 million for the year ended December 31, 2006 to $5.0 million for the year ended December 31, 2007. Debenture interest expense and the non-cash accretion of the discount on the debentures has increased from $1.1 million in 2006 to $4.8 million in 2007. In 2006, Holloway had $20 million in debentures outstanding for five months. In 2007, these $20 million in debentures were outstanding for the full year and in addition the REIT issued a total of $52 million in debentures in June and July, 2007. For the year ended December 31, 2007, the REIT generated interest income of $2.4 million from mezzanine loans and investment of cash balances, compared to $0.2 million in 2006. The REIT issued an $8.0 million mezzanine loan in the fourth quarter of 2006 and issued an additional $4.9 million in mezzanine loans in January, 2007. General and administrative expenses have increased from $1.1 million to $2.0 million, primarily because the REIT commenced active operations late in the second quarter of 2006, whereas the 2007 expenses represent a full year of operations. The REIT hired Michael Jackson as President and Chief Operating Officer and Gerald Normandeau as Vice President of Operations in the third quarter of 2007.
Distributable Income
The REIT generated approximately $9.2 million in distributable income ($0.32 basic and fully diluted per unit) for the year ended December 31, 2007 compared to $1.0 million ($0.15 basic and fully diluted per unit) for the same period in 2006. Distributions of $0.0375 per unit per month for January to July, 2007 and $0.045 per unit per month for August to December, 2007 were declared and totalled $15.2 million for the year ended December 31, 2007. Distributable income will fluctuate due to the seasonality in the hospitality industry and the timing of acquisitions. The second and third quarters generally are the strongest in Holloway's portfolio. Hotels in northern Alberta and northern British Columbia, acquired in 2007 are expected to assist in balancing the REIT's cash flows as they generally have stronger cash flows in the first quarter of the year due to the oil and gas exploration that occurs during the winter months.
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; Mr. Michael
Jackson, President of the REIT, (902) 457-1907; Ms. Tracy Sherren, Chief Financial
Officer of the REIT, (902) 457-1907
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