HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUST REPORTS 2011 FIRST QUARTER RESULTS

/Not for distribution on U.S. newswire services or for dissemination in the United States/

HALIFAX, June 6 2011 /CNW/ - Halifax, Nova Scotia - Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN HLR.DB HLR.DB.A) ("Holloway" or the "REIT") today announced its financial results for the three months ended March 31, 2011. All amounts are in Canadian dollars unless otherwise indicated.

    <<
    OVERVIEW
    The key events that have occurred since December 31, 2010 are as follows:

    - Occupancy increased 21% to 65.15% from 53.81% for the three months
      ended March 31, 2011 and 2010, respectively;
    - Revenue for the first quarter of 2011 increased 13% compared to the
      first quarter of 2010;
    - RevPAR increased $7.91 from $67.67 to $75.58, representing a 12%
      increase for the first quarter of 2011 compared to the first quarter of
      2010; and
    - The distributable loss decreased from $1.7 million from the first
      quarter of 2010 to $0.4 million for the first quarter of 2010.
    >>

"We are very pleased to see the improvement in revenues, RevPAR and AFFO for the first quarter as compared to the same quarter last year. The increases in Western Canada are very strong and are indicative of the resurgence in drill rig deployments and overall activity in markets where Holloway Lodging REIT has the majority of its hotels. Our on-going efforts to diversify our business base in these markets has also been a contributing factor to our year over year growth," stated Glenn Squires, CEO.

Holloway owns The Northwest Inn and the Super 8 in Slave Lake, AB, the community that sustained significant damage from the recent forest fires. The hotels received little or no damage and are open and our staff are making significant efforts assisting and housing the many workers and residents working on the clean-up and re-building efforts.

Operating Results

The following table provides a summary of the operating results for the three months ended March 31, 2011 and 2010.

    <<
    -------------------------------------------------------------------------
    (in $000's except number of                         Three         Three
     units and per unit results)                 months ended  months ended
                                                     March 31,     March 31,
                                                         2011          2010
    -------------------------------------------------------------------------
    Hotel revenues                                     18,785        16,581
    Hotel expenses                                     14,107        12,587
    -------------------------------------------------------------------------
    Hotel operating income before depreciation          4,678         3,994
    -------------------------------------------------------------------------
    Other expenses                                      7,918         8,647
    Provision for (recovery of) deferred
     income taxes                                           -        (1,340)
    -------------------------------------------------------------------------
    Loss for the periods                               (3,240)       (3,313)
    -------------------------------------------------------------------------
    Weighted average basic units outstanding       39,031,716    38,804,172
    Weighted average diluted units outstanding     39,031,716    38,804,172
    Basic income (loss) per unit                        (0.08)        (0.08)
    Diluted income (loss) per unit                      (0.08)        (0.08)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Reconciliation to funds from operations (FFO)
    ---------------------------------------------
    Add/(deduct):
    Depreciation and amortization on real property      2,521         2,486
    Provision for (recovery of) deferred
     income taxes                                           -        (1,340)
    -------------------------------------------------------------------------
    Funds from operations - basic and diluted            (719)       (2,167)
    -------------------------------------------------------------------------
    Basic FFO per unit                                  (0.02)        (0.05)
    Diluted FFO per unit                                (0.02)        (0.05)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Reconciliation to distributable income
    --------------------------------------
    Add/(deduct):
    Depreciation and amortization - trust and
     other assets                                          46            50
    Accretion of mortgages, convertible debentures
     and deferred financing fees                          842           679
    Unit-based compensation                                 -            15
    Fair value adjustment on Class B LP units and
     derivative liability                                 (32)          177
    FF&E reserve                                         (564)         (497)
    -------------------------------------------------------------------------
    Distributable income - basic and diluted             (427)       (1,743)
    -------------------------------------------------------------------------
    Basic distributable income per unit                 (0.01)        (0.04)
    Diluted distributable income per unit               (0.01)        (0.04)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Reconciliation of cash flow from operating
    ------------------------------------------
     activities to distributable income
     ----------------------------------
    Net cash generated from operating activities          179           697
    Changes in items of working capital                    58        (1,943)
    Write off of deferred financing fee                  (100)            -
    FF&E reserve                                         (564)         (497)
    -------------------------------------------------------------------------
    Distributable income                                 (427)       (1,743)
    -------------------------------------------------------------------------
    >>
    <<
    Three Months ended March 31, 2011 and 2010

    Hotel Revenues

    -------------------------------------------------------------------------
                                    Three months ended
                          March 31, 2011         March 31, 2010       RevPAR
    Region        Occ.       ADR   RevPAR     Occ.       ADR   RevPAR Change
    -------------------------------------------------------------------------
    Atlantic
     Canada
     ($Cdn)     51.60%   $112.47   $58.03   57.61%   $112.82   $65.00 (10.7%)

    Western
     Canada
     ($Cdn)     70.15%   $118.39   $83.05   53.94%   $131.41   $70.88  17.2%

    United
     States
     ($US)      41.67%    $70.07   $29.20   38.42%    $66.56   $25.57  14.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted
     Average
     Total
     ($Cdn)     65.15%   $116.01   $75.58   53.81%   $125.75   $67.67  11.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

The Atlantic Canada RevPAR decreased 10.7% for the three months ended March 31, 2011, compared to the three months ended March 31, 2010. The decrease is attributed to lower occupancy in both downtown Halifax and Truro and the inclusion of Super 8 Windsor which was acquired June 2010. The Windsor Super 8 had occupancy of 31.45% and a RevPAR of $33.64 for the first quarter of 2011. In downtown Halifax, there was a decrease in group and government business and less leisure traffic during the month of March. In Truro, there was a decrease in group business and a slight increase in ADR. Three of the REIT hotels in Atlantic Canada exceeded their fair market share in the first quarter.

The Western Canada RevPAR increased 17.2% compared to the first quarter of 2010. There was solid occupancy growth in most markets especially in Calgary, Drayton Valley, Grande Prairie, Fort Nelson, Slave Lake, and Whitecourt. There were lower rates in Grande Prairie and Slave Lake due to the business mix having been weighted towards crew contracts and in Slave Lake a high proportion of long-term stay business at a discounted rate. The magnitude of the occupancy increases resulted in significant year over year RevPAR gains despite the rate decline. Alberta and British Columbia benefitted from higher demand from a multitude of sources. In Slave Lake, there was continued demand growth due to pipeline and power line construction work. In Fort Nelson, Fort St. John, Whitecourt and Drayton Valley, the markets experienced increases from energy exploration and oil and gas well servicing along with growth from the forestry sector. In Grande Prairie, there has been increased demand across the local economy. Activity surrounding oil and gas well servicing has increased versus the prior year. There are also positive signs from the retail sector such as growth in sales levels and building expansions. In addition, preliminary work related to construction of a new hospital contributed to the higher demand levels. Several of the REIT's hotels in the Western region increased their market share and most achieved in excess of fair share.

RevPAR for the Holiday Inn Express in Myrtle Beach, South Carolina increased 14.2% compared to the prior year. There was growth in both demand and rate as a result of increased leisure and group business.

The REIT operates five full service hotels, which include food and beverage operations, in Calgary, Fort McMurray, Grande Prairie (2 hotels) and Slave Lake. The increase in food and beverage revenue was due to higher revenues in Fort McMurray and Slave Lake. During the quarter, one of the restaurants in Grande Prairie was closed for a month for repairs and refurbishment.

    <<
    Hotel Expenses

    -------------------------------------------------------------------------
                                          Three months ended
                                       March 31,     March 31,
    (in $000's)                            2011          2010      Variance
    -------------------------------------------------------------------------
    Operating expenses                   12,457        10,993         1,464
    Property taxes and insurance          1,202         1,191            11
    Management fees                         448           403            45
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                                14,107        12,587         1,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Operating expenses include wages, supplies and overhead expenses such as repairs and maintenance, sales and marketing and administrative expenses related to the operations of the hotels. These expenses have increased $1.5 million when comparing the three months ended March 31, 2011 to the same period in 2010. The increase is primarily due to the increased occupancy in the hotels as occupied rooms increased by more than 20% compared to the prior year. In addition, there were increases in utilities and repairs and maintenance. There was also one additional hotel in 2011 versus 2010, due to the acquisition of the Super 8 Windsor in June 2010. The additional hotel accounted for $0.2 million of the increase in operating expenses in the first quarter.

Property taxes and insurance expenses have increased marginally for the three months ended March 31, 2011 compared to the first quarter of 2010 due to having one additional hotel in the first quarter in 2011 versus 2010. Management fees are based on the hotel revenues which are higher for the first quarter of 2011 compared to the first quarter of 2010.

    <<
    Other Expenses

    -------------------------------------------------------------------------
                                          Three months ended
    (in $000's)                        March 31,     March 31,
                                           2011          2010      Variance
    -------------------------------------------------------------------------
    Interest on mortgages and
     other debt                           2,796         2,703            93
    Interest on convertible
     debentures                           1,247         1,247             -
    Accretion on convertible
     debentures, mortgages and
     deferred financing fees                842           679           163
    Corporate and administrative            519         1,345          (826)
    Investment income                       (21)          (40)           19
    Fair value adjustment on Class B
     LP units and derivative liability      (32)          177          (209)
    Depreciation and amortization         2,567         2,536            31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                                 7,918         8,647          (729)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Interest on mortgages and other debt has remained the same for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. The extra interest cost from having one additional hotel was offset by lower interest expense on the rest of the portfolio. In addition, the REIT expensed a $0.1 million deferred financing fee previously capitalized related to a term sheet which was cancelled during the quarter. The total interest on the convertible debentures was $1.2 million for the first quarter of 2011 and 2010 as the face value of the debentures payable remained the same. The total of the non-cash accretion of the discount on the convertible debentures, mortgages and deferred financing fees has increased $0.1 million to $0.8 million for the first quarter of 2011 compared to $0.7 million for the first quarter of 2010, as the non-cash accretion on the convertible debentures has increased. The accretion increases over the term to the maturity dates of the debentures.

Corporate administrative expenses decreased $0.8 million for the three months ended March 31, 2011 compared to the three months ended March 31, 2010, as 2010 included $0.7 million in severance expense related to the departure of its President and Chief Operating Officer and higher legal and consulting fees. During the three months ended March 31, 2011 and 2010, the REIT generated interest income of $0.02 million and $0.04 million respectively from loans receivable. The REIT records the fair value of the Class B LP units and the equity components of its convertible debentures as liabilities. Changes to the fair value of these liabilities are recorded on the income statement. Depreciation and amortization has increased marginally for the three months ended March 31, 2011 compared to the first quarter of 2010.

Distributable Income

Distributable income was ($0.4) million (-$0.01 basic and diluted distributable income per unit) for the three months ended March 31, 2011 compared to ($1.7) million (-$.04 basic and diluted distributable income per unit) for the same period in 2010. Distributable income has improved due to the increase in hotel revenues in 2011 compared to 2010, along with reduced corporate and administrative expenses in the first quarter of 2011. Distributable income will fluctuate due to market conditions, the seasonality in the hospitality industry and the timing of acquisitions and disposals.

Holloway Lodging Real Estate Investment Trust

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. Holloway currently owns 22 hotels with 2,386 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 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 24, 2011 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.

SOURCE HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUST

For further information: Mr. Glenn Squires, Chief Executive Officer of the REIT; Ms. Tracy Sherren, Chief Financial Officer of the REIT, (902) 404-3499

Profil de l'entreprise

HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUST

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.