/NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE
HALIFAX, Jan. 15 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSXV: HLR.UN, HLR.DB, HLR.DB.A) ("Holloway" or the "REIT") is pleased to
announce that, effective February 1, 2008, Pacrim Hospitality Services Inc.
("Pacrim") will assume management of ten of the REIT's hotel properties
located in northern Alberta and British Columbia from Pomeroy Hospitality Ltd.
("Pomeroy"). The REIT acquired the hotels (the "Pomeroy Hotels") from
affiliates of Pomeroy in June 2007 and Pomeroy has managed them on the REIT's
behalf since then. Pacrim currently manages 50 hotel properties across Canada
and the United States, including all of the REIT's other hotel properties.
Under the terms of an agreement among the REIT, Pacrim and Pomeroy,
Pomeroy will assign its interest in the hotel management agreement between
Pomeroy and the REIT to Pacrim on February 1, 2008 in return for a $6,350,000
one-time payment from Pacrim. At the same time, the existing hotel management
agreement between the REIT and Pacrim will be amended to include the Pomeroy
Hotels. Among other things, the amended hotel management agreement between the
REIT and Pacrim will provide that Pacrim will receive a base management fee
for the Pomeroy Hotels that is significantly lower than the base management
fee currently payable under the existing hotel management agreement until the
REIT generates adjusted funds from operations that exceed certain targets.
"We are pleased to have this opportunity to consolidate management of the
Pomeroy Hotels under Pacrim and the transaction is immediately accretive to
distributable income on a per unit basis to our unitholders," commented Glenn
Squires, Chairman and Chief Executive Officer of the REIT. "Beyond the
immediate and meaningful reduction in the management fees we will be paying
for these hotels - even before giving effect to the discounted fee that Pacrim
has agreed to accept until we achieve our AFFO targets - the terms of our
amended hotel management agreement with Pacrim are more favourable to the REIT
than the current agreement with Pomeroy in a number of other ways. We also
expect that this change in management will result in operational synergies and
additional reduced costs for the Pomeroy Hotels given Pacrim's extensive
industry experience and the scale of its management operations."
In order to facilitate the assignment, the REIT has agreed to lend Pacrim
the funds that will be paid to Pomeroy in consideration of the assignment.
This loan will have a ten year term, will be prepayable at any time without
penalty and will bear interest at 13% per annum during the first six months of
the term and at the lesser of 13% and the trailing three-month yield plus 1%
on Holloway's units thereafter.
Glenn Squires (Chairman and Chief Executive Officer of the REIT), Edward
Good (a trustee of the REIT), Mike Jackson (President of the REIT) and Tracy
Sherren (Chief Financial Officer of the REIT) are officers, directors and/or
shareholders of Pacrim. The transactions described above were considered and
unanimously approved as being in the best interests of the REIT by all of the
trustees of the REIT other than Messrs. Squires and Good, each of whom
declared their interest in the transactions and refrained from voting in
accordance with the provisions of the REIT's Amended and Restated Declaration
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 and providing investors with stable distributions. Holloway
currently owns 22 hotels with 2,424 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 assignment
of the Pomeroy management agreement and the expected benefits to the REIT
associated with such asisgnement 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 prospectus dated June 13, 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.
For further information:
For further information: Mr. Glenn Squires, Chief Executive Officer, Mr.
Michael Jackson, Chief Operating Officer or Ms. Tracy Sherren, Chief Financial
Officer, (902) 457-1907