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/NOT FOR DISSEMINATION TO THE UNITED STATES/
TORONTO, Nov. 27 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSXV: HLR.UN) ("Holloway" or the "REIT") today announced its unaudited
financial results for the three and nine months ended September 30, 2006. All
amounts are in Canadian dollars unless otherwise indicated. Copies of the
unaudited financial statements, together with management's discussion and
analysis, are available at www.sedar.com.
<<
Highlights - Third Quarter
- Completed $72 Million Private Placement - On August 1, 2006, the REIT
completed a private placement of approximately $72 million worth of
units and convertible debentures.
- Acquired Seven Hotel/Lodging Properties - During the third quarter,
the REIT acquired seven hotel/lodging properties for an aggregate
purchase price of $85.7 million.
- Commenced Monthly Distributions - The REIT commenced monthly
distributions in August. Monthly distributions of $0.0375 per unit
were declared for the months of August and September.
Results of Operations
The following table provides the REIT's operating results for the three
and nine months ended September 30, 2006.
Three months ended Nine months ended
September 30, 2006 September 30, 2006
------------------------------------------------------------------------
Hotel revenues $ 6,692,945 $ 6,781,864
Hotel expenses 5,190,396 5,259,041
Hotel operating income 1,502,549 1,522,823
Trust expenses and reorganization expenses 730,368 1,458,918
Net income for the period 772,181 63,905
Basic earnings per unit 0.080 0.015
Fully diluted earnings per unit 0.063 0.012
>>
Holloway owned eight hotel properties for varying lengths of time during
the quarter ended September 30, 2006 depending upon when they were acquired.
These properties generated revenue of approximately $6.7 million and
$6.8 million for the three and nine months ended September 30, 2006. The
income from hotel operations was $1.5 million for both the three months and
nine months ended September 30, 2006. The REIT's current hotel operations are
subject to seasonal fluctuations. Revenues are typically higher in the second
and third quarters.
The REIT incurred general and administrative expenses of $249,677 and
$478,787 for the three and nine months ended September 30, 2006, respectively.
These expenses include salaries and benefits of employees of the REIT,
professional fees, travel and other expenses. For the three months and nine
months ended September 30, 2006, the REIT also accrued $269,840 in debenture
interest expense, $29,877 in non-cash amortization of deferred financing fees
and $176,667 in non-cash accretion of the discount on the convertible
debentures. The REIT incurred stock-based compensation expense of $0 and
$80,000 for the three and nine months ended September 30, 2006, respectively.
In addition, the REIT incurred legal, accounting and other fees of $0 and
$419,440 related to the reorganization of Holloway Capital Corporation into
the REIT for the three and nine months ended September 30, 2006, respectively.
Private Placement
On August 1, 2006, Holloway completed a private placement of trust units
and subordinated convertible debentures. The REIT issued $52.3 million worth
of units at a price of $4.50 per unit and $20.2 million in subordinated
convertible debentures. The debentures will mature August 1, 2011 and bear
interest at 8% per annum. The debentures are convertible into units of the
REIT at the holders' option at any time after August 1, 2008 at a conversion
price of $5.40 per unit. The proceeds of the issuance were used to partially
satisfy the cash portion of the purchase price of hotel/lodging properties
described below, invest in mezzanine loans and for general trust purposes.
Included in the $52.3 million worth of units issued by the REIT were
approximately $5.5 million worth of units issued to the vendor of the 5
Calgary Downtown Suites and Spa Hotel and approximately $2.0 million worth of
units issued to the vendor of the Wingate Inn.
Acquisitions
Holloway acquired its initial property, the Super 8 Motel in Truro, Nova
Scotia on June 7, 2006. During the three months ended September 30, 2006, the
REIT acquired the following hotel/lodging properties:
<<
- Radisson Suite Hotel, Halifax, Nova Scotia on August 4, 2006;
- Holiday Inn Express, Halifax, Nova Scotia on August 4, 2006;
- Holiday Inn Express Hotel and Suites, Moncton, New Brunswick on
August 4, 2006;
- Super 8 Motel, Drayton Valley, Alberta on August 4, 2006;
- 5 Calgary Downtown Suites and Spa Hotel, Calgary, Alberta on
August 23, 2006;
- Wingate Inn, Calgary, Alberta on September 1, 2006; and
- Super 8 Motel, Yellowknife, Northwest Territories on September 29,
2006.
>>
The aggregate purchase price for these properties was $85.7 million,
which was satisfied through a combination of cash, mortgage financing and the
issuance of units.
Distributions
The REIT generated over $1.2 million in distributable income for the
three months ended September 30, 2006. The REIT commenced monthly
distributions in August. Monthly distributions of $0.0375 per unit were
declared for the months of August and September.
Distributable income is a non-GAAP financial measure commonly used by
real estate investment trusts as an indication of financial performance. It
should not be seen as a measurement of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP. Distributable income may
differ from similar calculations reported by other entities and accordingly
may not be comparable to similar measures presented by other issuers. Please
refer to the REIT's management's discussion and analysis for the three and
nine months ended September 30, 2006 for a description of how the REIT
calculates distributable income and a reconciliation of distributable income
to net income and cash flow from operating activities.
Holloway Lodging Real Estate Investment Trust
Holloway is a real estate investment trust listed as a Tier 2 issuer on
the TSX Venture Exchange with the objective of acquiring and maintaining a
growing portfolio of lodging properties with stable cash distributions.
This press release contains forward-looking information within the
meaning of applicable securities laws. Forward-looking information may relate
to the Trust'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 Trust. Particularly, statements regarding the
Trust'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 Trust 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 the management information circular of Holloway Capital
Corporation dated May 4, 2006. Other risks and uncertainties include the risk
that the Trust may not be able to complete the proposed acquisition of
properties on the terms described herein or at all.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this press release.
%SEDAR: 00023845E
For further information: Mr. Glenn Squires, Chief Executive Officer of
the REIT, at (902) 457-1907
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