Holloway Lodging Real Estate Investment Trust reports 2007 year-end results



    /NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES/

    HALIFAX, Feb. 28 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSX: HLR.UN, HLR.DB and HLR.DB.A) ("Holloway" or the "REIT") today announced
its audited financial results for the year ended December 31, 2007. All
amounts are in Canadian dollars unless otherwise indicated. This press release
should be read in conjunction with the REIT's audited financial statements and
management's discussion and analysis, copies of which are available on the
REIT's website at www.hlreit.com and on the Sedar website at www.sedar.com.

    Highlights of 2007

    The following summarizes the key highlights for the year ended December
31, 2007:

    
    - Distributable income increased over 780% - distributable income
      increased by $8.2 million to $9.2 million ($0.32 per unit) from
      $1.0 million ($0.15 per unit) for the years ended December 31, 2007 and
      2006, respectively;

    - Hotel revenues increased over 350% - hotel revenues increased to
      $69.8 million from $15.4 million for the years ended December 31, 2007
      and 2006, respectively;

    - Purchased 14 hotel properties - during the year, the REIT purchased
      14 hotels and other related assets for a total purchase price of
      $270.6 million. The REIT purchased 10 hotels in Alberta, 3 hotels in
      British Columbia and 1 hotel in Myrtle Beach, South Carolina;

    - Raised $150 million in the capital markets - in June and July, the REIT
      issued 18,338,000 units at $5.35 per unit and $51.8 million of
      6.5% convertible debentures in a "bought deal" public offering for
      total gross proceeds of $150.0 million;

    - Graduated to the TSX - on July 17, 2007, the REIT graduated from the
      TSX Venture Exchange to the TSX;

    - Increased distributions by 20% - the REIT instituted a 20% distribution
      increase from $0.0375 to $0.045 per unit per month (from $0.45 per unit
      per year to $0.54 per unit per year) effective with the August
      distribution to unitholders of record as of July 31, 2007; and

    - Executive appointment - on September 15, 2007, Michael Jackson joined
      Holloway as President and Chief Operating Officer.

    As a result of the acquisition activity in 2007, total assets have
increased over 200% and unitholders' equity has increased approximately 164%.
"2007 was a year of growth for Holloway Lodging REIT. We are very pleased to
have achieved such significant growth in our results this year, demonstrating
significant progress in realization of our overall strategy", said Glenn
Squires, CEO of Holloway Lodging REIT.


    RESULTS OF OPERATIONS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31,
    2007 AND 2006
    -------------------------------------------------------------------------
    The following table provides a summary of the operating results for the 
three months and years ended December 31, 2007 and 2006.


    (in 000's except  Three months  Three months
     number of units         ended         ended    Year ended    Year ended
     and per unit      December 31,  December 31,  December 31,  December 31,
     results)                 2007          2006          2007          2006
    -------------------------------------------------------------------------
    Hotel revenues          22,258         8,610        69,751        15,392
    Hotel expenses          21,764         8,213        63,796        13,472
    -------------------------------------------------------------------------
    Income from
     hotel operations          494           397         5,955         1,920
    -------------------------------------------------------------------------
    Net trust expenses       1,778         1,669         5,022         3,128
    Future income tax
     (expense) recovery      1,138             -           587             -
    -------------------------------------------------------------------------
    Net income (loss)
     for the period -
     basic and diluted        (146)       (1,272)        1,520        (1,208)
    -------------------------------------------------------------------------
    Reconciliation to
    -----------------
     distributable income
     --------------------
    Add/(deduct):
    Depreciation and
     amortization            3,209           881         8,502         1,374
    Future
     income tax
     expense (recovery)     (1,138)            -          (587)            -
    Reorganization
     expenses -
     one time item               -             -             -           419
    Accretion on
     mortgages and
     convertible
     debentures(1)             456           204         1,337           360
    Unit-based
     compensation              199           471           485           551
    FF&E reserve              (668)         (258)       (2,093)         (462)
    -------------------------------------------------------------------------
    Distributable income
     - basic and diluted     1,912            26         9,164         1,034
    -------------------------------------------------------------------------
    Weighted average
     basic units
     outstanding        39,153,317    14,203,943    28,643,005     6,732,826
    Weighted average
     diluted units
     outstanding        39,153,317    14,203,943    28,760,887     6,732,826
    -------------------------------------------------------------------------
    Basic income
     per unit                 0.00        (0.09)          0.05         (0.18)
    Diluted income
     per unit                 0.00        (0.09)          0.05         (0.18)
    -------------------------------------------------------------------------
    Basic distributable
     income per unit          0.05         0.00           0.32          0.15
    Diluted distri-
     butable income
     per unit                 0.05         0.00           0.32          0.15
    Distributions
     declared                0.135       0.1125          0.495        0.1875
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes the amortization of deferred finance fees which is included
        in interest expense in the financial statements in 2007 and in
        depreciation and amortization in 2006.
    

    THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
    -------------------------------------------------------------------------

    Results of Operations

    The results of operations for the three months ended December 31, 2007
include the operation of twenty-one hotels for the full quarter and the
Holiday Inn Express in Myrtle Beach, South Carolina since November 2, 2007.
The dollar value of revenues and expenses has increased substantially when
comparing the fourth quarter results for 2007 to 2006 due to the number of
acquisitions made during the year.

    Hotel Operations

    The hotel properties generated revenue of approximately $22.3 million
compared to $8.6 million for the three months ended December 31, 2007 and
2006, respectively. Hotel EBITDA has increased to $6.6 million from
$1.8 million or 266%. Depreciation and amortization has increased
substantially due to the growth in the asset base.

    Corporate Operations

    Corporate net trust expenses were $1.8 million for the three months ended
December 31, 2007 and $1.7 million for the three months ended December 31,
2006. Debenture interest expense and the non-cash accretion of the discount on
the debentures has increased from $0.7 million to $1.7 million. In the fourth
quarter of 2006, the REIT had $20 million in debentures outstanding, whereas
in the fourth quarter of 2007, the REIT had $72 million in debentures
outstanding. During the three months ended December 31, 2007, the REIT
generated interest income of $0.7 million from mezzanine loans and the
investment of cash balances, compared to $0.2 million in the fourth quarter of
2006.

    Distributable Income

    The REIT generated approximately $1.9 million in distributable income
($0.05 basic and fully diluted per unit) for the three months ended
December 31, 2007 compared to $0.03 million ($0.00 basic and fully diluted per
unit) for the same period in 2006. Distributions of $0.045 per unit per month
were declared and totalled $5.3 million for the three months ended December
31, 2007. Distributable income will fluctuate due to the seasonality in the
hospitality industry and the timing of acquisitions.


    YEAR ENDED DECEMBER 31, 2007 and 2006
    -------------------------------------------------------------------------

    Results of Operations

    The results of operations for the year ended December 31, 2007 include
the operation of eight hotels for the full year and fourteen hotels for
varying periods of time that were acquired during the year. The increase in
the 2007 revenues, expenses and income compared to these same categories for
2006 is due to the significant growth in the number of hotel properties owned
in 2007 compared to 2006.

    Hotel Operations

    The hotel properties generated revenue of approximately $69.8 million
compared to $15.4 million for the year ended December 31, 2007 and 2006,
respectively - an increase of over 350%. Income from hotel operations has
increased from $1.9 million for the year ended December 31, 2006 to
$6.0 million for the year ended December 31, 2007 - an increase of over 200%.

    Corporate Operations

    Corporate net trust expenses have increased from $3.1 million for the
year ended December 31, 2006 to $5.0 million for the year ended December 31,
2007. Debenture interest expense and the non-cash accretion of the discount on
the debentures has increased from $1.1 million in 2006 to $4.8 million in
2007. In 2006, Holloway had $20 million in debentures outstanding for five
months. In 2007, these $20 million in debentures were outstanding for the full
year and in addition the REIT issued a total of $52 million in debentures in
June and July, 2007. For the year ended December 31, 2007, the REIT generated
interest income of $2.4 million from mezzanine loans and investment of cash
balances, compared to $0.2 million in 2006. The REIT issued an $8.0 million
mezzanine loan in the fourth quarter of 2006 and issued an additional
$4.9 million in mezzanine loans in January, 2007. General and administrative
expenses have increased from $1.1 million to $2.0 million, primarily because
the REIT commenced active operations late in the second quarter of 2006,
whereas the 2007 expenses represent a full year of operations. The REIT hired
Michael Jackson as President and Chief Operating Officer and Gerald Normandeau
as Vice President of Operations in the third quarter of 2007.

    Distributable Income

    The REIT generated approximately $9.2 million in distributable income
($0.32 basic and fully diluted per unit) for the year ended December 31, 2007
compared to $1.0 million ($0.15 basic and fully diluted per unit) for the same
period in 2006. Distributions of $0.0375 per unit per month for January to
July, 2007 and $0.045 per unit per month for August to December, 2007 were
declared and totalled $15.2 million for the year ended December 31, 2007.
Distributable income will fluctuate due to the seasonality in the hospitality
industry and the timing of acquisitions. The second and third quarters
generally are the strongest in Holloway's portfolio. Hotels in northern
Alberta and northern British Columbia, acquired in 2007 are expected to assist
in balancing the REIT's cash flows as they generally have stronger cash flows
in the first quarter of the year due to the oil and gas exploration that
occurs during the winter months.

    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 our 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 May 1, 2007 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:

For further information: Mr. Glenn Squires, Chief Executive Officer of
the REIT, (902) 457-1907; Mr. Michael Jackson, President of the REIT, (902)
457-1907; Ms. Tracy Sherren, Chief Financial Officer of the REIT, (902)
457-1907

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Holloway Lodging Real Estate Investment Trust

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