Not for distribution on U.S. wire services or for dissemination in the United States
HALIFAX, Feb, 5, 2015 /CNW/ - Holloway Lodging Corporation (TSX: HLC, HLC.DB, HLC.DB.A) ("Holloway") is pleased to announce that it has sold the Travelodge® hotel located in Toronto, ON.
The sale price for the hotel was $13.0 million representing a cap rate of approximately 2.6%. Holloway estimates that it will record a gain on sale of $2.0 million in the first quarter of 2015 and does not anticipate paying any tax on the sale of this property. Holloway intends to deploy the sale proceeds to debt reduction and new hotel acquisitions.
Michael Rapps, Chairman of Holloway, stated "We acquired the Toronto property through our acquisition of Royal Host and it generates a minimal amount of cash flow. Selling this property at a 2.6% cap rate and using the proceeds to repay higher-cost debt or acquire new hotel properties at higher cap rates (such as the Days Inn® Whitehorse announced earlier this week) is immediately accretive to shareholders on a cash flow basis." Mr. Rapps added "Since acquiring Royal Host we have sold two hotels that generated aggregate asset-level cash flow of approximately $315 thousand or 2% of Royal Host's total asset-level cash flow in 2014. We received gross sale proceeds of approximately $17 million from these asset sales representing approximately 11% of Royal Host's enterprise value at acquisition, so this has been a very good result to date."
ABOUT HOLLOWAY LODGING CORPORATION
Holloway is a real estate corporation 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 35 hotels with 3,967 rooms. Holloway's shares and debentures trade on the TSX under the symbols HLC, HLC.DB and HLC.DB.A.
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 for the year ended December 31, 2013 which is available on Holloway's profile on the SEDAR website 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
For further information: Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 443-5101