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/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
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HALIFAX, le 11 mars /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSX: HLR.UN, HLR.DB and HLR.DB.A) ("Holloway" or the "REIT") today announced
highlights of its financial results for the year ended December 31, 2008. All
amounts are in Canadian dollars unless otherwise indicated.
Highlights of 2008
The following summarizes the key highlights that occurred during the
three months and year ended December 31, 2008:
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- Investment in hotel properties - during the fourth quarter, the REIT
acquired a beneficial ownership interest in nine hotel properties from
Winport Developments Limited Partnership;
- Hotel revenues increased by 34% to $93.5 million from $69.8 million for
the years ended December 31, 2008 and 2007, respectively;
- Distributable income was $0.32 per unit for the years ended December
31, 2008 and 2007, respectively;
- Hotel operating income margin increased to 33.5% from 32.4% for the
year ended December 31, 2008 and 2007, respectively;
- Hotel EBITDA increased 39% to $31.3 million from $22.6 million for the
year ended December 31, 2008 and 2007, respectively;
- Recognized a $3.0 million non-cash provision for impairment on
mezzanine loans receivable;
- Reduced distributions to $0.21 per unit annually effective with the
November 2008 distributions (paid to unitholders on December 15, 2008);
and
- Consolidation of management agreement - management of all of Holloway's
hotels was consolidated under a single management company, Pacrim
Hospitality Services Inc. ("PHSI").
"We will retain our focus on operating fundamentals and we will continue
to move share from our competition. In a tough economy, our tough decisions
were well founded. Indeed, in many cases, we led the way in our sector,"
commented Glenn Squires, CEO of Holloway Lodging REIT.
RESULTS OF OPERATIONS
The following table provides a summary of the operating results for the
three months and years ended December 31, 2008 and 2007.
Three Three
months months Year Year
(in 000's except number ended ended ended ended
of units and per unit December December December December
results) 31, 2008 31, 2007 31, 2008 31, 2007
-------------------------------------------------------------------------
Hotel revenues $ 21,370 $ 22,258 $ 93,495 $ 69,751
Hotel expenses 15,295 15,520 62,178 47,184
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Hotel operating income 6,075 6,738 31,317 22,567
-------------------------------------------------------------------------
Other (income) expenses 11,671 8,022 36,106 21,634
Provision for (recovery of)
future income taxes (693) (1,138) 291 (587)
-------------------------------------------------------------------------
Net income (loss) for the
period - basic and diluted ($ 4,903) ($ 146) ($5,080) $ 1,520
-------------------------------------------------------------------------
Weighted average basic
units outstanding 39,136,183 39,153,317 39,132,025 28,643,005
Weighted average diluted
units outstanding 39,136,183 39,153,317 39,132,025 28,760,887
Basic income (loss) per
unit ($ 0.13) $ 0.00 ($ 0.13) $ 0.05
Diluted income (loss)
per unit ($ 0.13) $ 0.00 ($ 0.13) $ 0.05
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Reconciliation to funds
from operations (FFO)
Add/(deduct):
Depreciation and
amortization on
real property $ 3,302 $ 3,149 $ 13,032 $ 8,348
Provision for impairment of
mezzanine loan 3,000 - 3,000 -
Provision for (recovery of)
future income taxes (693) (1,138) 291 (587)
-------------------------------------------------------------------------
Funds from operations -
basic and diluted $ 706 $ 1,865 $ 11,243 $ 9,281
-------------------------------------------------------------------------
Basic FFO per unit $ 0.02 $ 0.05 $ 0.29 $ 0.32
Diluted FFO per unit $ 0.02 $ 0.05 $ 0.29 $ 0.32
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Reconciliation to
distributable income
Add/(deduct):
Depreciation and
amortization - trust and
other assets $ 58 $ 60 $ 241 $ 154
Accretion on mortgages and
convertible debentures(1) 569 456 2,170 1,337
Unit-based compensation 9 198 471 484
Unit-based compensation
accrued - (107) - (107)
Unrealized foreign exchange
loss 691 187 1,020 187
FF&E reserve (641) (668) (2,805) (2,093)
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Distributable income -
basic and diluted $ 1,392 $ 1,991 $ 12,340 $ 9,243
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Basic distributable income
per unit $ 0.04 $ 0.05 $ 0.32 $ 0.32
Diluted distributable
income per unit $ 0.04 $ 0.05 $ 0.32 $ 0.32
Distributions declared $ 0.08 $ 0.135 $ 0.485 $ 0.495
-------------------------------------------------------------------------
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Reconciliation of cash flow
from operating activities
to distributable income
Cash flow from operating
activities $ 2,708 $ 3,645 $ 16,332 $ 11,910
Changes in non-cash working
capital balances (675) (986) (1,187) (574)
FF&E reserve (641) (668) (2,805) (2,093)
Distributable income $ 1,392 $ 1,991 $ 12,340 $ 9,243
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(1) Includes the amortization of deferred financing fees which is
included in interest expense in the financial statements.
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THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007
Results of Operations
The results of operations for the three months ended December 31, 2008
include the operation of twenty-two hotels for the full quarter. For the
comparative three months of 2007, the REIT owned 21 hotels for the full
quarter and acquired the Holiday Inn Express in Myrtle Beach, South Carolina
on November 2, 2007.
Hotel Operations
The hotel properties generated revenue of approximately $21.4 million for
the three months ended December 31, 2008 compared to $22.3 million for the
three months ended December 31, 2007. Hotel EBITDA has decreased to $6.1
million from $6.7 million.
There was one additional hotel in the portfolio for the full fourth
quarter in 2008 compared with the prior year as the Holiday Inn Express in
Myrtle Beach, SC was acquired on November 2, 2007. The food and beverage space
has been leased out at the Radisson Suite Hotel in Halifax, NS as of the first
quarter 2008 and the food and beverage operation at the Holiday Inn Express in
Moncton, NB was closed at the end of 2007 and is being converted to meeting
space. These changes have been implemented to improve the contribution from
the respective facilities.
Corporate Operations
During the three months ended December 31, 2008 and 2007, the REIT
generated interest income of $0.7 million from loans receivable and the
investment of cash balances.
Corporate administrative expenses were $0.5 million for the three months
ended December 31, 2008 and the three months ended December 31, 2007
respectively.
The total debenture interest expense and the non-cash accretion of the
discount on the debentures and deferred financing fees is consistent at $1.8
million for the fourth quarters in 2008 and 2007 as the debentures outstanding
of $72.1 million has not changed.
The REIT has recorded a $3.0 million provision for impairment on the
mezzanine loans receivable from Winport Developments Limited Partnership and
Pacrim North York Limited Partnership. The loans are in default and the REIT
issued a demand notice for payment.
Distributable Income
The REIT generated $1.4 million in distributable income ($0.04 basic and
diluted per unit) for the three months ended December 31, 2008 compared to
$2.0 million ($0.05 basic and diluted per unit) for the same period in 2007.
Distributable income will fluctuate due to the seasonality in the hospitality
industry and the timing of acquisitions. A distribution of $0.045 per unit per
was declared for October and distributions of $0.0175 per unit per month were
declared for November and December, 2008. Distributions declared totalled $3.1
million for the three months ended December 31, 2008.
The REIT's fourth quarter distributions exceeded the distributable
income. Excess, un-deployed cash was used to fund the distribution shortfall.
On November 13, 2008, the REIT announced a reduction in its monthly cash
distribution to $0.0175 per unit per month or $0.21 per unit on an annualized
basis. The reduction started with the November distributions which were
payable to unitholders on December 15, 2008.
YEAR ENDED DECEMBER 31, 2008 AND 2007
Results of Operations
The results of operations for the year ended December 31, 2008 include
the operation of twenty-two hotels for the full year. The dollar value of
revenues and expenses has increased substantially when comparing the results
for 2008 to the results for 2007 due to the number of acquisitions made during
2007. The REIT acquired fourteen hotels in 2007.
Hotel Operations
The hotel properties generated revenue of approximately $93.5 million for
the year ended December 31, 2008 compared to $69.8 million for the year ended
December 31, 2007. Hotel EBITDA has increased to $31.3 million from $22.6
million, an increase of 38.5%. Depreciation and amortization has increased
substantially due to the growth in the asset base.
Corporate Operations
During the year ended December 31, 2008, the REIT generated interest
income of $2.8 million from loans receivable and the investment of cash
balances, compared to $2.4 million in 2007.
Corporate administrative expenses have increased approximately $0.3
million in the year ended December 31, 2008 compared to the year ended
December 31, 2007. The expenses for 2007 include a one-time fee of $150k for
graduating to the TSX and higher legal expenses related thereto. Salaries and
wages were higher in 2008 compared to 2007 as the President and Chief
Operating Office Michael Jackson was hired in September, 2007. In addition,
there were two additional corporate employees during part of 2008 whose
positions have since been eliminated.
Debenture interest expense and the non-cash accretion of the discount on
the debentures has increased to $7.2 million from $4.8 million as the REIT
presently has $72.1 million in debentures outstanding. During the first six
months of 2007, the REIT had $20.4 million in debentures outstanding until
June 22, 2007, when $45.0 million in debentures were issued. The REIT issued
an additional $6.8 million in debentures on July 18, 2007.
The REIT has recorded a $3.0 million provision for impairment on the
mezzanine loans receivable from Winport Developments Limited Partnership and
Pacrim North York Limited Partnership. The loans are in default and the REIT
issued a demand notice for payment.
Distributable Income
The REIT generated $12.3 million in distributable income ($0.32 basic and
diluted per unit) for the year ended December 31, 2008 compared to $9.2
million ($0.32 basic and diluted per unit) for 2007. Distributions of $0.045
per unit per month were declared for the first ten months of 2008 and a
distribution of $0.0175 per unit was declared for each of November and
December 2008. Distributions declared totalled $19.0 million for the year
ended December 31, 2008. Distributable income will fluctuate due to the
seasonality in the hospitality industry and the timing of acquisitions.
The REIT's distributions exceeded the distributable income for 2008.
Distributions were reduced to $0.0175 per unit per month ($0.21 per unit
annually) effective with the November 2008 distribution declaration. Business
levels in Grande Prairie were 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 address 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 when compared
to the previous management agreement.
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 sustainable 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
For further information: Mr. Glenn Squires, Chief Executive Officer of
the REIT, (902) 404-3499; Mr. Michael Jackson, President and Chief Operating
Officer of the REIT, (902) 404-3499; Ms. Tracy Sherren, Chief Financial
Officer of the REIT, (902) 404-3499
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