Not for distribution on U.S. wire services or for dissemination in the United States
HALIFAX, Feb. 2, 2012 /CNW/ - Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN) ("Holloway" or the "REIT") announces that it has closed the previously announced sale of the Radisson Suites Hotel located in Fort McMurray, Alberta. Holloway expects to record a gain on the sale of approximately $4.1 million. Holloway received net proceeds from the sale (after mortgage repayment and estimated closing costs) of approximately $11.1 million and a vendor take-back mortgage in the amount of $3.0 million. The vendor take-back mortgage has a one-year term and an interest rate of 10%.
Under the terms of the REIT's secured credit facility, the REIT is required to apply at least 75% of the net proceeds resulting from this hotel sale to the repayment of amounts outstanding under the secured credit facility. The REIT expects to repay the remaining $9.3 million of debt outstanding under this facility using the net sale proceeds. The REIT also expects to use a portion of the net sale proceeds to reduce the amount outstanding under its revolving credit facility.
Michael Rapps, Chairman of Holloway, stated "Holloway has made significant progress over the last several months improving its balance sheet. We have reduced our debt by over $108 million since June 30, 2011. This has been accomplished through select asset sales, discounted debt repurchases and the recent conversion into equity of our convertible debentures."
Assuming repayment of the amounts referred to above, Holloway is expected to have approximately $118.6 million of debt outstanding as at February 3, 2012, consisting of approximately $115.3 million of mortgages and $3.3 million outstanding under Holloway's revolving credit facility.
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 18 hotels with 1,747 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 the REIT's future outlook and anticipated events or results and may include statements regarding the future financial position, business strategy, financial results and plans and objectives of the REIT, including, in particular, the amount and use of the proceeds from the sale of the Radisson Suites Hotel located in Fort McMurray, Alberta, the anticipated gain on such sale, the payment of amounts outstanding under the vendor take-back mortgage, the debt repayments referred to above and the expected debt outstanding. 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, 2010 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.
For further information:
Michael Rapps, Chairman and Interim Chief Financial Officer of the REIT at (416) 855-1925