/NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE
HALIFAX, July 18, 2012 /CNW/ - Holloway Lodging Real Estate Investment
Trust (TSX: HLR.UN) ("Holloway") announced on May 8, 2012 that it had
entered into a letter of intent with a third party for a potential
acquisition of all of Holloway's trust units (the "Units") and on June
12, 2012 that it had received expressions of interest from multiple
parties regarding potential strategic transactions involving Holloway
and/or its assets. Holloway has terminated discussions with such
parties regarding a strategic transaction after determining that the
proposals it received were not in the best interests of Holloway or its
unitholders. Holloway intends to continue executing on its current
business plan while remaining open to any proposals regarding strategic
transactions that would maximize unitholder value.
Recent Discussions with Third Parties
Since February 28, 2012, Holloway received three unsolicited acquisition
proposals. Party A proposed an all-cash acquisition of Holloway at a
moderate premium to the current market price of the Units. Party B
proposed an all-stock merger with Holloway that implied a moderate
premium to the current market price of the Units. Party C proposed to
acquire ten hotels owned by Holloway.
Holloway engaged in discussions with each of the parties that proposed a
strategic transaction involving Holloway. In each case, the Board of
Trustees of Holloway determined that the proposed transaction was not
in the best interests of Holloway or its unitholders and terminated
Holloway's recent discussions with third parties regarding a strategic
transaction confirmed the Board of Trustees' view that the trading
price of Holloway's units over the last several months was not
reflective of Holloway's intrinsic value. While the acquisition
proposals Holloway received offered a premium to Holloway's recent
trading price, the Board of Trustees is of the view that Holloway can
generate superior value for its unitholders by continuing to execute on
its current business plan.
Holloway's focus going forward will be to increase its per-Unit net
asset value. In doing so, Holloway will emphasize:
Further debt reduction. Since June 30, 2011, Holloway has reduced its net debt by $120.8
million or 53% (total debt less unrestricted cash). Over time, debt
reduction is expected to result in materially less interest expense,
greater financial flexibility and increased net asset value.
Hotel acquisitions. Holloway will seek to acquire additional hotels where doing so is
accretive to its cash flow and net asset value.
Unit repurchases. Holloway has not engaged in Unit repurchases since January 2012 due to
its discussions regarding a strategic transaction. Holloway intends to
repurchase Units where doing so represents an attractive use of
As previously disclosed, the Board of Trustees will also assess the
merits of reinstating its distribution in the second half of 2012.
Michael Rapps, Holloway's Chairman, stated "Over the last year, we have
meaningfully reduced our debt and currently have a solid balance sheet.
Our focus going forward will be increasing our per-unit net asset value
and our current financial position provides many avenues for us to do
that. While we are interested in growing our hotel portfolio, we will
only acquire additional hotels if such acquisitions represent good
value and are accretive to our unitholders."
While none of the discussions Holloway engaged in with third parties
resulted in a strategic transaction, Holloway will review and evaluate
any strategic proposal it may receive from time to time that the Board
of Trustees believes is in the best interests of Holloway and its
Holloway intends to release its second quarter results on or about
August 14, 2012. These results will show continued positive hotel
performance and the positive impact of our balance sheet initiatives.
ABOUT 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 owns 17 hotels with 1,665 rooms.
Holloway's trust units trade on the TSX under the symbol HLR.UN.
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 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 for the year ended December 31, 2011
which is available on the REIT's profile on the SEDAR website 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:
Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 443-5101.