DALLAS and TORONTO, Nov. 18, 2019 /CNW/ -- NexPoint Hospitality Trust ("NHT") (TSX-V: NHT.U) announced today that all 280 rooms at the Holiday Inn Express in Nashville, Tennessee ("HIX Nashville") are back in service following an unfortunate incident that caused material damage to 27 rooms and minor damage to an additional 31 rooms.
In early June, a guest hung a piece of dry cleaning on a sprinkler, which activated the sprinkler and resulted in extreme water damage in 27 rooms and lesser damage to 31 rooms. As a result of the damage, the rooms were removed from service and were slowly remediated through the beginning of November.
Removing the rooms from service is expected to reduce NHT's net operating income by approximately US$400,000 and US$600,000 for the three and nine months ended September 30, 2019, respectively. Management has been working closely with the hotel's insurance company and currently estimates approximately US$700,000 in business interruption insurance recoupment, representing full recovery of related losses. Under International Financial Reporting Standards ("IFRS"), income cannot be recognized until it is likely to be received and the amount is accurately estimated. As a result of IFRS rules, NHT cannot include the impact of the damage in formal results presented its financial statements.
As a result of all rooms being back online, management is extremely eager to refocus time, energy, and attention to one of the most exciting hotels in the portfolio. The hotel is located within walking distance of several of Nashville's numerous tourist destinations and demand generators, including the Country Music Hall of Fame & Museum, Bridgestone Arena and Music City Center. In addition, starting in 2019 Amazon will be opening a logistics hub adjacent to the hotel that is expected to create an estimated 5,000 new jobs in the city of Nashville.
The hotel is currently undergoing a rehabilitation to common areas to utilize currently unused space that management believes will help to fully realize a materially improved competitive position that leverages its central location and strong in-place cash-flow. Management believes that this rehabilitation will make the hotel an attractive destination for visitors, residents, and businesses driven by the city's distinct culture, tourist attractions, highly desirable tax incentives, and employment opportunities. The hotel is an upper midscale class, select-service hotel that recently completed renovations to upgrade décor, flooring, furniture, bathrooms and fixtures in all rooms and for general improvements to common areas.
About NHT NexPoint Hospitality Trust is a publicly traded real estate investment trust, with its Units listed on the TSX Venture Exchange under the ticker NHT.U. NHT is focused on acquiring, owning and operating well-located hospitality properties in the United States that offer a high current yield and in many cases are underperforming assets with the potential to increase in value through investments in capital improvements, a market-based recovery, brand repositioning, revenue enhancements, operational improvements, expense inefficiencies, and exploiting excess land or underutilized space. NHT owns 11 branded properties sponsored by Marriott, Hilton and Intercontinental Hotels Group, located across the U.S. NHT is externally advised by NexPoint Real Estate Advisors VI, L.P.
Forward-Looking Information This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects NHT's current expectations regarding future events and in some cases can be identified by terms such as "will", "may", "expected" and other similar expressions. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond NHT's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, risks related to the ability to recover amounts under HIX Nashville's business interruption insurance policy and the re-integration of the formerly damaged hotel rooms into the guestroom offerings at HIX Nashville. Information contained in forward-looking statements is based upon certain material assumptions, including that the occupancy rates at HIX Nashville will return to their former levels. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect. NHT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contact: Jackie Graham Investor Relations 972-419-6213