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HALIFAX, May 12, 2008 (Canada NewsWire via COMTEX News Network) -- /NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
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 months ended March 31, 2008. 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 on the REIT's website at www.hlreit.com and on the Sedar website at www.sedar.com.
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Highlights - First Quarter
The following summarizes the key highlights that occurred during the three
months ended March 31, 2008:
- Distributable income per unit increased over 133% - distributable
income per unit increased by $0.04 per unit to $0.07 per unit
($2.7million) from $0.03 per unit ($0.5 million) for the three months
ended March 31, 2008 and 2007, respectively;
- Hotel revenues increased over 135% - hotel revenues increased to
$22.7 million from $9.6 million for the three months ended March 31,
2008 and 2007, respectively;
- Hotel EBITDA per available room increased 30% - hotel EBITDA per
available room increased to $34 from $26 per room for the three months
ended March 31, 2008 and 2007, respectively; and
- Management company change - management of the entire hotel portfolio
was consolidated under a single management company, Pacrim Hospitality
Services Inc. ("PHSI") with a substantially reduced base management fee
for ten of the hotels until the REIT generates distributable income
that exceeds certain targets.
"The very positive growth in distributable income is an important part of
our strategy to maximize unitholder value. Our focus in this soft market has
been to concentrate on operational activities, organic growth and maximizing
the value of our current assets", said Glenn Squires, Chief Executive Officer
of Holloway Lodging REIT.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
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The following table provides a summary of the operating results for the
three months ended March 31, 2008 and 2007.
(in 000's except number of units Three months Three months
and per unit results) ended March 31, ended March 31,
2008 2007
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Hotel revenues $ 22,708 $ 9,647
Hotel expenses 21,324 9,160
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Income from hotel operations 1,384 487
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Net trust expenses 1,976 886
Future income tax expense (39) -
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Net income (loss) for the period
- basic and diluted $ (631) $ (399)
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Reconciliation to distributable income
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Add/(deduct):
Depreciation and amortization 3,261 960
Future income tax expense 39 -
Accretion on mortgages and convertible
debentures 521 145
Unit-based compensation 224 88
FF&E reserve (681) (289)
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Distributable income - basic and diluted $ 2,733 $ 505
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Weighted average basic units
outstanding 39,152,750 16,668,809
Weighted average diluted units
outstanding 39,152,750 20,791,587
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Basic income (loss) per unit (0.02) (0.02)
Diluted income (loss) per unit (0.02) (0.02)
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Basic distributable income per unit 0.07 0.03
Diluted distributable income per unit 0.07 0.03
Distributions declared 0.135 0.1125
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THREE MONTHS ENDED MARCH 31, 2008 AND 2007
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Results of Operations
The results of operations for the three months ended March 31, 2008 include the operation of twenty-two hotels for the full quarter. The dollar value of revenues and expenses has increased substantially when comparing the first quarter results for 2008 to the first quarter of 2007 due to the number of acquisitions made during the last nine months of 2007. The REIT had nine hotels at the end of the first quarter of 2007.
Hotel Operations
The hotel properties generated revenue of approximately $22.7 million for the three months ended March 31, 2008 compared to $9.6 million for the three months ended March 31, 2007. Hotel EBITDA has increased to $7.5 million from $2.4 million, an increase of 213%. Depreciation and amortization has increased substantially due to the growth in the asset base.
Foreign exchange expense was $0.1 million for the three months ended March 31, 2008. This relates primarily to the loss due to the currency fluctuation of the debt on the Holiday Inn Express Myrtle Beach, South Carolina, USA, which was acquired on November 2, 2007. This debt is denominated in US dollars and is converted at the prevailing period-end exchange rate.
Corporate Operations
Corporate net trust expenses were $2.0 million for the three months ended March 31, 2008 and $0.9 million for the three months ended March 31, 2007. Debenture interest expense and the non-cash accretion of the discount on the debentures has increased to $1.8 million from $0.6 million because the REIT has $72.1 million in debentures outstanding compared to $20.4 million outstanding during the first quarter of 2007. During the three months ended March 31, 2008, the REIT generated interest income of $0.7 million from mezzanine loans and the investment of cash balances, compared to $0.4 million in the first quarter of 2007. General and administrative expenses were $0.6 million for the three months ended March 31, 2008 compared to $0.4 million for the three months ended March 31, 2007. These expenses include salaries and benefits of employees of the REIT, travel, fees related to legal, audit and annual filings, and other expenses. The increase is due to the growth of the REIT compared to the same quarter last year. Some of the corporate expenses tend to be higher in the first quarter due to the timing of annual fee payments.
Distributable Income
The REIT generated $2.7 million in distributable income ($0.07 basic and fully diluted per unit) for the three months ended March 31, 2008 compared to $0.5 million ($0.03 basic and fully diluted per unit) for the same period in 2007. Distributions of $0.045 per unit per month were declared and totalled $5.3 million for the three months ended March 31, 2008. Distributable income will fluctuate due to the seasonality in the hospitality industry and the timing of acquisitions.
The REIT's first quarter distributions exceeded the distributable income primarily as a result of the seasonality in the hospitality industry. Business levels were also affected by reduced natural gas exploration and the uncertainty surrounding changes in royalty arrangements by the Alberta government. Excess, un-deployed cash was used to fund the distribution shortfall. To help mitigate this shortfall, effective February 1, 2008, the management of 10 hotels purchased in June 2007 is now being performed by Pacrim Hospitality Services Inc. at a substantially reduced fee.
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 March 28, 2008 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; Mr. Michael Jackson,
President and Chief Operating, Officer of the REIT; Ms. Tracy Sherren, Chief
Financial Officer of the REIT, (902) 404-3499
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