Holloway Lodging Real Estate Investment Trust reports second quarter results



    /NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE
    UNITED STATES/

    HALIFAX, Aug. 11 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSX: HLR.UN, HLR.DB and HLR.DB.A) ("Holloway" or the "REIT") today announced
its unaudited financial results for the three and six months ended June 30,
2008. All amounts are in Canadian dollars unless otherwise indicated. This
press release should be read in conjunction with the REIT's unaudited interim
consolidated 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 - Second Quarter

    The following summarizes the key highlights that occurred during the three
months ended June 30, 2008:

    - Distributable income increased over 104% - distributable income
      increased by 104% to $3.2 million ($0.08 per unit) from $1.6 million
      ($0.08 per unit) for the three months ended June 30, 2008 and 2007,
      respectively;

    - Hotel revenues increased over 82% - hotel revenues increased to
      $23.7 million from $13.0 million for the three months ended June 30,
      2008 and 2007, respectively;

    - Hotel EBITDA per available room increased 7.2% - hotel EBITDA per
      available room increased to $36.61 from $34.16 per room for the three
      months ended June 30, 2008 and 2007, respectively; and

    - Hotel EBITDA margin increased by 4.5 percentage points - hotel EBITDA
      margin increased to 34.1% from 29.6% for the three months ended
      June 30, 2008 and 2007, respectively.

    "Our strong increases in same store occupancy, rate, RevPAR and EBITDA
margin for the quarter on a year over year basis is very encouraging and
positions Holloway nicely for the remainder of 2008," said Glenn Squires,
Chief Executive Officer of Holloway Lodging REIT.


    RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
    and 2007
    -------------------------------------------------------------------------

    The following table provides a summary of the operating results for the
three and six months ended June 30, 2008 and 2007.


    (in 000's except  Three months   Three months   Six months   Six months
    number of units          ended          ended        ended        ended
    and per unit           June 30,       June 30,     June 30,     June 30,
    results)                  2008           2007         2008         2007
    -------------------------------------------------------------------------
    Hotel revenues        $ 23,669       $ 12,987     $ 46,377     $ 22,634
    Hotel expenses          21,774         11,672       43,098       20,832
    -------------------------------------------------------------------------
    Income from hotel
     operations              1,895          1,315        3,279        1,802
    -------------------------------------------------------------------------
    Net trust expenses       1,870            910        3,845        1,796
    Future income tax
     expense (recovery)        203           (382)         242         (382)
    -------------------------------------------------------------------------
    Net income (loss)
     for the period -
     basic and diluted      ($ 178)         $ 787       ($ 808)       $ 388
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Reconciliation to
    -----------------
     distributable income
     --------------------
    Add/(deduct):
    Depreciation and
     amortization          $ 3,300        $ 1,290      $ 6,562      $ 2,250
    Future income tax
     expense (recovery)        203           (382)         242         (382)
    Accretion on mortgages
     and convertible
     debentures                538            174        1,058          319
    Unit-based
     compensation              118            107          342          195
    Unrealized foreign
     exchange (gain) loss      (31)             -          128            -
    FF&E reserve              (710)          (390)      (1,391)        (679)
    -------------------------------------------------------------------------
    Distributable income -
     basic and diluted     $ 3,240        $ 1,586      $ 6,133      $ 2,091
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     basic units
     outstanding        39,108,768     19,342,346   39,130,759   18,012,963
    Weighted average
     diluted units
     outstanding        39,108,768     19,494,780   39,130,759   18,168,228
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic income (loss)
     per unit              ($ 0.01)        $ 0.04      ($ 0.02)      $ 0.02
    Diluted income (loss)
     per unit              ($ 0.01)        $ 0.04      ($ 0.02)      $ 0.02
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic distributable     $ 0.08         $ 0.08       $ 0.16       $ 0.12
     income per unit
    Diluted distributable   $ 0.08         $ 0.08       $ 0.16       $ 0.12
     income per unit
    Distributions
     declared              $ 0.135       $ 0.1125       $ 0.27      $ 0.225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    THREE MONTHS ENDED JUNE 30, 2008 AND 2007
    -------------------------------------------------------------------------

    Results of Operations

    The results of operations for the three months ended June 30, 2008
include the operation of twenty-two hotels for the full quarter. The dollar
value of revenues and expenses has increased substantially when comparing the
second quarter results for 2008 to the second quarter of 2007 as the REIT
owned twenty hotels at the end of the second quarter of 2007, of which ten
hotels were acquired on June 22, 2007.

    Hotel Operations

    The hotel properties generated revenue of approximately $23.7 million for
the three months ended June 30, 2008 compared to $13.0 million for the three
months ended June 30, 2007. Hotel EBITDA has increased to $8.1 million from
$3.8 million, an increase of 110%. Depreciation and amortization has increased
substantially due to the growth in the asset base.

    Corporate Operations

    Corporate net trust expenses were $1.9 million for the three months ended
June 30, 2008 and $0.9 million for the three months ended June 30, 2007.
Debenture interest expense and the non-cash accretion of the discount on the
debentures has increased to $1.8 million from $0.7 million because the REIT
has $72.1 million in debentures outstanding compared to $20.4 million
outstanding for most of the second quarter of 2007. During the three months
ended June 30, 2008, the REIT generated interest income of $0.7 million from
loans receivable and the investment of cash balances, compared to $0.4 million
in the second quarter of 2007.
    General and administrative expenses were $0.6 million for the three
months ended June 30, 2008 compared to $0.5 million for the three months ended
June 30, 2007. These expenses include salaries and benefits of employees of
the REIT, travel, fees related to legal, audit and annual filings, and other
expenses.

    Distributable Income

    The REIT generated $3.2 million in distributable income ($0.08 basic and
diluted per unit) for the three months ended June 30, 2008 compared to
$1.6 million ($0.08 basic and diluted per unit) for the same period in 2007.
Distributions of $0.045 per unit per month were declared and totalled
$5.3 million for the three months ended June 30, 2008. Distributable income
will fluctuate due to the seasonality in the hospitality industry and the
timing of acquisitions.
    The REIT's second quarter distributions exceeded the distributable
income. Excess, un-deployed cash was used to fund the distribution shortfall.
To help mitigate 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.

    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 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.




For further information:

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

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Holloway Lodging Real Estate Investment Trust

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