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HALIFAX, Dec. 23, 2008 (Canada NewsWire via COMTEX News Network) -- Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN, HLR.DB, HLR.DB.A) ("Holloway" or the "REIT") is pleased to announce that it has acquired a beneficial ownership interest in a portfolio of hotel and motel properties from Winport Developments Limited Partnership ("Winport").
The beneficial interests acquired by Holloway represent equity ownership positions varying in size from 2.52% to 19.06% in nine hotels and motels located in Newfoundland and Labrador, New Brunswick, Nova Scotia, Quebec, Ontario and British Columbia. All of the properties are currently managed by Holloway's external property manager, Pacrim Hospitality Services Inc. The purchase price under the agreement was, subject to certain adjustments, approximately $3.55 million. Holloway satisfied the purchase price by issuing promissory notes in that amount to Winport. The promissory notes are payable on December 22, 2011 with mandatory pre-payments required in certain specified circumstances.
As part of the transaction, Winport also assigned to Holloway its right to receive $680,000 in proceeds from the recently completed sale of Winport's interest in the Regina Wingate hotel located in Regina, Saskatchewan. In 2007, Holloway provided $3,000,000 in mezzanine financing to Winport for the development of this hotel. As a result of the sale of Winport's interest in the Regina Wingate, Holloway expects that the mezzanine loan will be repaid in full in early 2009.
"We are pleased to have acquired interests in these hotels on favourable terms," commented Glenn Squires, Chief Executive Officer of the REIT. "We believe that the interests provide significant upside potential to Holloway through increases in the value of the underlying properties and will also put us in good position to acquire 100% ownership of the hotels should we wish to do so in the future. Transactions like this continue to validate our view that Holloway's strong relationships with various development partners such as Pacrim Hospitality and Superior Lodging Corp. provide us with a proprietary pipeline of acquisition opportunities."
Glenn Squires and Marc Staniloff (a trustee of the REIT) own interests in Winport. The transactions described above were considered and unanimously approved as being in the best interests of the REIT by all of the trustees of the REIT other than Messrs. Squires and Staniloff, each of whom declared their interest in the transactions and refrained from voting in accordance with the provisions of the REIT's Amended and Restated Declaration of Trust.
The REIT also announced today that its board of trustees has approved a temporary partial waiver of its blackout policy that applies to trustees, directors, officers and employees of the REIT and its subsidiaries. Under the temporary partial waiver trustees, directors, officers and employees of the REIT and its subsidiaries will be permitted to trade in trust units of the REIT provided that they are not in possession of material undisclosed information relating to Holloway. The waiver applies to the blackout period relating to the preparation and release of the REIT's 2008 annual financial statements that will commence in January 2009. The board of trustees has taken this step in light of conditions in the financial and stock markets, which have resulted in what the REIT believes is a significant and unwarranted drop in the trading price of its trust units. The blackout policy restricts the ability of trustees, directors, officers and employees of the REIT and its subsidiaries to purchase or sell trust units of the REIT during certain blackout periods, such as when the REIT is engaged in the preparation of its quarterly or annual financial statements. The trustees, directors, officers and employees of the REIT and its subsidiaries remain unable to trade in trust units of the REIT if they are in possession of material undisclosed information relating to the REIT.
About Holloway
Holloway is a real estate investment trust focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets and providing investors with stable distributions. Holloway currently owns 22 hotels with 2,423 rooms. Holloway's units and convertible debentures trade on the Toronto Stock Exchange under the symbols HLR.UN, HLR.DB and HLR.DB.A, respectively.
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 repayment of Holloway's mezzanine loan on the Regina Wingate hotel, the potential for growth in the value of the hotel ownership interests that Holloway acquired from Winport and the REIT's ability to generate proprietary acquisition opportunities 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 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, Mr. Michael Jackson, President and Chief
Operating Officer, or Ms. Tracy Sherren, Chief Financial Officer, (902) 404-3499
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