HALIFAX, Aug. 12, 2014 /CNW/ - Holloway Lodging Corporation (TSX: HLC,
HLC.DB, HLC.DB.A, HLC.DB.B) ("Holloway") today announced financial
results for the three months ended June 30, 2014. All amounts are in
Canadian dollars unless otherwise indicated. Readers should refer to
Holloway's unaudited interim consolidated condensed financial
statements as at June 30, 2014 and its management discussion and
analysis which are available on Holloway's website at www.hlcorp.ca and on SEDAR at www.sedar.com.
Second Quarter Overview and Outlook
Holloway had another strong quarter. The Company increased RevPar,
operating margins, profits and most importantly, cash flow. These
results are particularly good considering the Company operated two
thirds of the quarter with one fewer hotel than in the prior year
period. As usual, our Western Canadian hotels performed particularly
well during the quarter with strong demand coming from companies
involved in oil and gas, forestry and infrastructure projects. We
continue to focus on cost control and capital investments that enhance
the strength of our hotels. The following are select highlights for the
quarter with full details below:
|
|
|
|
|
(in millions where indicated except percentages and per room measures)
|
Q2, 2014
|
Q2, 2013
|
$ Increase
|
% Increase
|
|
|
|
|
|
Hotel revenues
|
$14.4 M
|
$14.3 M
|
$0.1 M
|
0.7%
|
Revenue per available room
|
$84.92
|
$81.16
|
$3.76
|
4.6%
|
Hotel operating income per available room before depreciation
|
$32.73
|
$29.90
|
$2.83
|
9.5%
|
Hotel operating income margin
|
36.0%
|
34.2%
|
-
|
1.8%
|
Funds from operations
|
$2.3M
|
$2.2 M
|
$0.1M
|
4.5%
|
Adjusted funds from operations
|
$2.0M
|
$1.9 M
|
$0.1M
|
5.3%
|
During the second quarter, Holloway completed a number of strategic
transactions that are expected to drive future cash flow growth. First,
we sold the Holiday Inn Express® in Kamloops, BC for $8.9 million, representing a 7.6% cap rate. Second,
we acquired the Days Inn® in Whitecourt, AB for $8.9 million, representing a cap rate in excess of
11.0%. For the same price, we will generate more NOI from the property
we acquired than the property we sold and we believe there is more
growth in the Whitecourt market than in Kamloops. Third, we acquired
the remaining 10% interest in the Holiday Inn Express® hotel in Stellarton, NS that we did not own for $0.4 million. Fourth,
we acquired an additional 35% interest in the Super 8® hotel located in St. John's, NL for $2.1 million bringing our ownership
interest to 53%. We may seek to acquire a larger interest in this hotel
in the future.
Finally, during the quarter we announced the acquisition of Royal Host
("Royal Host"). Royal Host owns 17 hotels across Canada, three
freestanding single tenant properties, various parcels of excess land
and the Canadian master franchise rights for the Travelodge® and Thriftlodge® brands. We completed the acquisition and assumed Royal Host's
debentures in July 2014.
Holloway's priorities for the remainder of 2014 will be to integrate
Royal Host and Holloway, continue the operational improvements that
Royal Host has been executing over the last year and sell certain
non-core assets (particularly excess land holdings that do not have
material development potential). The operational integration of Royal
Host and Holloway is well underway while the financial and
administrative integration of the two companies will take several
months to achieve as each company currently uses separate accounting
and data analytics systems. We believe there are many operational
improvements that can be made at our hotels, including supplier
consolidation, energy efficiencies, property tax reductions, labour
productivity improvements and general margin enhancement.
We expect continued positive results throughout the remainder of the
year. Economic activity in Western Canada remains robust, corporate
markets in Ontario are improving and our hotels in Eastern Canada are
anticipated to generate stable operating results.
Dividend Declaration
On August 11, 2014, the Board of Directors declared a quarterly dividend
of $0.035 per share, representing an annual dividend of $0.14 per
share. The dividend is payable on September 12, 2014 to shareholders
of record on August 29, 2014.
Summary of Operating Results
The following table provides a summary of the operating results for the
three and six months ended June 30, 2014 and 2013.
|
|
|
|
|
|
Three months ended
|
Six months ended
|
(in $000's except number of shares and per share results)
|
June 30, 2014
|
June 30, 2013
|
June 30, 2014
|
June 30, 2013
|
Hotel revenues
|
14,385
|
14,283
|
29,737
|
28,981
|
Hotel expenses
|
9,206
|
9,396
|
19,023
|
18,959
|
Hotel operating income before depreciation and amortization
|
5,179
|
4,887
|
10,714
|
10,022
|
Hotel depreciation and amortization
|
2,267
|
2,261
|
4,557
|
4,481
|
Income from hotel operations
|
2,912
|
2,626
|
6,157
|
5,541
|
Other expenses
|
2,076
|
2,532
|
4,409
|
5,007
|
Reversal of impairment of asset held-for-sale
|
-
|
-
|
(1,217)
|
-
|
Income before income taxes
|
836
|
94
|
2,965
|
534
|
Provision for income taxes
|
230
|
30
|
800
|
177
|
Net income for the periods
|
606
|
64
|
2,165
|
357
|
Weighted average basic and diluted shares outstanding
|
17,927,847
|
18,046,031
|
17,928,919
|
18,342,851
|
Basic and diluted income per share
|
0.03
|
0.00
|
0.12
|
0.02
|
Reconciliation to funds from operations (FFO)
|
|
|
|
|
Add / (deduct):
|
|
|
|
|
Depreciation and amortization on real property
|
2,251
|
2,235
|
4,531
|
4,436
|
Provision for income taxes
|
230
|
30
|
800
|
177
|
Reversal of impairment of asset held-for-sale
|
-
|
-
|
(1,217)
|
-
|
Gain on disposal of hotel properties and equipment
|
(45)
|
-
|
(7)
|
(4)
|
Fair value adjustment and amounts reclassified to profit and loss on
minority interest investments in hotel properties
|
(689)
|
-
|
(689)
|
-
|
Gain on disposal of minority interest investments in hotel properties
|
-
|
(106)
|
-
|
(96)
|
FFO - basic and diluted
|
2,353
|
2,223
|
5,583
|
4,870
|
Basic and diluted FFO per share
|
0.13
|
0.12
|
0.31
|
0.27
|
Reconciliation to adjusted funds from operations (AFFO)
Add/(deduct):
|
|
|
|
|
Depreciation and amortization - corporate and other assets
|
31
|
26
|
55
|
45
|
Accretion of mortgages, loan due to a related party, and deferred
financing fees
|
41
|
45
|
81
|
88
|
Fair value adjustment of derivative liability
|
-
|
(10)
|
-
|
(14)
|
Share-based compensation
|
75
|
102
|
151
|
204
|
FF&E reserve
|
(440)
|
(437)
|
(908)
|
(885)
|
AFFO - basic and diluted
|
2,060
|
1,949
|
4,962
|
4,308
|
Basic and diluted AFFO per share
|
0.11
|
0.11
|
0.28
|
0.23
|
Dividends declared
|
$0.035
|
$0.035
|
$0.07
|
$0.07
|
Holloway Announces Normal Course Issuer Bid
Holloway announced that the Toronto Stock Exchange (the "TSX") has
approved the Company's notice of intention to make a normal course
issuer bid for up to 978,628 of its common shares, representing 5% of
the issued and outstanding shares as of August 11, 2014. During the
period from August 15, 2013 to August 11, 2014, the Company purchased
13,400 shares under a previous normal course issuer bid. The weighted
average price paid was $4.07 per share.
Pursuant to the notice, the Company may, over the 12 month period
commencing on August 15, 2014 and ending on August 14, 2015 (or on such
earlier date as the Company completes its purchases pursuant to the bid
or provides notice of cancellation), purchase shares through the
facilities of the TSX or certain alternative exchanges at prevailing
market prices in accordance with the rules and policies of the TSX or
such other exchanges. All shares purchased by the Company under the
normal course issuer bid will be cancelled. As of August 12, 2014, the
Company had a total of 19,572,565 shares issued and outstanding. The
average daily trading volume of the shares during the six months ended
on July 31, 2014 was 17,637 shares and the daily repurchase limit for
the shares is 4,409 shares other than block purchase exceptions.
The Company believes that, on occasion, the shares become available at
prices that do not give full effect to their underlying value, based
solely on management's opinion of the Company's future prospects.
Accordingly, management believes that the purchase of shares pursuant
to the normal course issuer bid represents an investment opportunity
for Holloway and an appropriate use of its funds.
Holloway announces listing of former royal host debentures
On Thursday, August 7, 2014, the former Royal Host debentures were
listed and posted for trading on TSX under the following new trading
symbols. This change follows the assumption of the debentures by
Holloway, which was approved by debenture holders on July 29, 2014.
Security Name
|
Old Symbol
|
New Symbol
|
6.25% Series B Convertible Unsecured Subordinated Debentures due October
31, 2020
|
RYL.DB.B
|
HLC.DB
|
7.50% Series C Convertible Unsecured Subordinated Debentures due
September 30, 2018
|
RYL.DB.C
|
HLC.DB.A
|
6.25% Series D Convertible Unsecured Subordinated Debentures due June
30, 2019
|
RYL.DB.D
|
HLC.DB.B
|
Holloway Lodging Corporation
Holloway is a real estate corporation focused on acquiring, owning and
operating full service and select or limited service lodging properties
and a small complement of full service hotels primarily in secondary,
tertiary and suburban markets. Holloway currently owns 36 hotels with
4,260 rooms. Holloway's shares and debentures trade on the TSX under
the symbol HLC, HLC.DB, HLC.DB.A and HLC.DB.B.
This press release contains forward-looking information within the
meaning of applicable securities laws. Forward-looking information may
relate to Holloway's future outlook and anticipated events or results
and may include statements regarding Holloway's future financial
position, business strategy, financial results, plans and objectives 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 Holloway 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 3, 2014 which
is available at www.sedar.com. Holloway does not intend to update or revise any such forward-looking
information should its assumptions and estimates change.
SOURCE Holloway Lodging Corporation
please contact Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 404-3499