Holloway Lodging Real Estate Investment Trust reports year-end results


    HALIFAX, March 21 /CNW/ - Holloway Lodging Real Estate Investment Trust
(TSXV: HLR.UN and HLR.DB) ("Holloway" or the "REIT") today announced its
audited financial results for the year ended December 31, 2006. 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 at


    2006 was a year of significant transformation and growth for Holloway
Lodging REIT. The key highlights included:

    - Transformation from a Capital Pool Company to a REIT - Early in
      June, 2006, Holloway Capital Corporation ("HCC") completed its
      qualifying transaction including reorganization into the REIT and
      acquisition of its first property.

    - Raised over $88 Million in the Capital Markets - The two largest equity
      raises occurred in August and December. On August 1, 2006, the REIT
      completed a private placement of approximately $52 million in units and
      $20 million of convertible debentures. On December 29, 2006, the REIT
      completed a bought deal private placement of $13 million in units.

    - Acquired Eight Hotel Properties - During the year, the REIT acquired
      eight hotel properties for an aggregate purchase price of
      $90.3 million. The asset base grew from $0.3 million to $137.8 million
      in 2006.

    - Commenced Monthly Distributions to Unitholders - The REIT commenced
      monthly distributions in August, 2006. Monthly distributions of $0.0375
      per unit were declared for the months of August through December, 2006.

    Results of Operations

    The following table provides a summary of the REIT's quarterly and annual
operating results. There were no active operations in 2005.

              Q1, 2006     Q2, 2006     Q3, 2006      Q4, 2006    Year Ended
                                                                 December 31,
     revenues        -   $    88,91  $ 6,692,945  $  8,609,839  $ 15,391,703
     expenses        -       68,645    5,190,396     8,212,515    13,471,556
     income          -       20,274    1,502,549       397,324     1,920,147
    Trust net
     expenses   90,221      638,329      730,368     1,668,837     3,127,755
     for the
     period  $ (90,221)  $ (618,055) $   772,181  $ (1,271,513) $ (1,207,608)
    Per Unit
     per unit        -            -         0.08             -             -
     per unit        -            -         0.06             -             -
    Basic and
     loss per
     unit        (0.02)       (0.34)           -         (0.15)        (0.18)

    Year Ended December 31, 2006

    Revenue for the year ended December 31, 2006 was approximately
$15.4 million and hotel operating income was $1.9 million for the period of
ownership to December 31, 2006. Operating income was strongest in the third
quarter, reflecting the peak tourist season in the markets in which the REIT
operates. In addition, September is a strong month for meeting and conference
business in both Calgary and Halifax.
    The major trust expenses for the year ended December 31, 2006 included the

    - general and administrative expenses of approximately $1.1 million,
      which include salaries and benefits of employees of the REIT,
      professional fees, travel and other expenses;
    - interest expense of $674,600 on the convertible debentures;
    - non-cash accretion of the discount on the convertible debentures of
    - non-cash unit-based compensation expense of $550,744; and
    - one-time legal, accounting and other fees of $419,440 related to the
      reorganization of HCC into the REIT.

    The 2006 trust expenses included some one-time start-up expenses related
to the initial year of operations.

    Distributable Income

    Distributable income is a non-GAAP financial measure commonly used by real
estate investment trusts as an indication of financial performance. It should
not be seen as a measurement of liquidity or a substitute for comparable
metrics prepared in accordance with GAAP. Distributable income may differ from
similar calculations reported by other entities and accordingly may not be
comparable to similar measures presented by other issuers. Please refer to the
REIT's management's discussion and analysis for the year ended December 31,
2006 for a description of how the REIT calculates distributable income.
    Reconciliation of the net loss to distributable income is presented in the
table below. There were no active operations in 2005.

                                                Year ended December 31, 2006
    Net loss                                                    $ (1,207,608)
    Add (deduct):
    Depreciation and amortization                                  1,373,984
    Accretion of discount on convertible
     debentures                                                      441,667
    Non-cash reduction in interest expense                           (81,996)
    Reorganization expenses - one-time item                          419,440
    Unit based compensation                                          550,744
    FF&E reserve                                                    (461,751)
    Distributable income - basic                                 $ 1,034,480
    Add: Interest on convertible debentures                          674,600
    Distributable income - diluted                               $ 1,709,080
    Weighted average basic units outstanding                       6,732,826
    Basic distributable income per unit                              $ 0.154
    Weighted average diluted units outstanding                     8,452,646
    Diluted distributable income per unit                            $ 0.202
    Per unit distributions declared                                 $ 0.1875

    The REIT generated over $1.0 million in distributable income for the year
ended December 31, 2006. The REIT commenced monthly distributions in August,
2006. Monthly distributions of $0.0375 per unit were declared and paid or
payable for each month from August to December, 2006. Due to seasonality in
the hospitality industry and our properties not being owned for the full year,
our declared distributions per unit exceeded our distributable income per

    Private Placements

    On August 1, 2006, Holloway completed a private placement of trust units
and subordinated convertible debentures. The REIT issued $52.3 million in
units at a price of $4.50 per unit and $20.2 million in subordinated
convertible debentures. The debentures will mature August 1, 2011 and bear
interest at 8% per annum. The debentures are convertible into units of the
REIT at the holders' option at any time after August 1, 2008 at a conversion
price of $5.40 per unit. The proceeds of the issuance were used to partially
satisfy the cash portion of the purchase price of the hotel properties
described below, invest in mezzanine loans and for general trust purposes.
Included in the $52.3 million in units issued by the REIT were approximately
$5.5 million in units issued to the vendor of the 5 Calgary Downtown Suites
and Spa Hotel and approximately $2.0 million in units issued to the vendor of
the Wingate Inn in Calgary.
    On December 29, 2006, by way of a bought deal private placement, the REIT
issued 2,524,300 units at a price of $5.15 per unit for gross proceeds of
$13.0 million. This capital raise will be used to acquire hotel properties in
the first quarter of 2007.


    During the year ended December 31, 2006, the REIT acquired the following
hotel properties:

    - Super 8 Motel, Truro, Nova Scotia on June 7, 2006;

    - Radisson Suite Hotel, Halifax, Nova Scotia on August 4, 2006;

    - Holiday Inn Express Hotel, Halifax, Nova Scotia on August 4, 2006;

    - Holiday Inn Express Hotel and Suites, Moncton, New Brunswick on
      August 4, 2006;

    - Super 8 Motel, Drayton Valley, Alberta on August 4, 2006;

    - 5 Calgary Downtown Suites and Spa Hotel, Calgary, Alberta on
      August 23, 2006;

    - Wingate Inn, Calgary, Alberta on September 1, 2006; and

    - Super 8 Motel, Yellowknife, Northwest Territories on
      September 29, 2006.

    The aggregate purchase price for these properties was $90.3 million,
which was satisfied through a combination of cash, mortgage financing and the
issuance of units.

    Holloway Lodging Real Estate Investment Trust

    Holloway is a real estate investment trust listed as a Tier 2 issuer on
the TSX Venture 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 Trust'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 Trust. Particularly, statements regarding the
Trust'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 Trust 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 the management information circular of Holloway Capital
Corporation dated May 4, 2006.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this press release.
    %SEDAR: 00023845E

For further information:

For further information: Mr. Glenn Squires, Chief Executive Officer of
the REIT, (902) 457-1907

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Holloway Lodging Real Estate Investment Trust

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