WINNIPEG, Nov. 8, 2013 /CNW/ - Temple Hotels Inc. ("Temple") (TSX: TPH) today reported its financial results for the quarter ended September 30, 2013. The following comments in regard to the financial position and operating results of Temple should be read in conjunction with Management's Discussion & Analysis and the financial statements for the quarter ended September 30, 2013, which may be obtained from the Temple website at www.templehotels.ca or the SEDAR website at www.sedar.com.
Monetary data in the tables of this press release, unless otherwise indicated, are in thousands of Canadian dollars, except for per share, average daily rate ("ADR"), and revenue per available room ("RevPAR") amounts.
HIGHLIGHTS
- Hotel operating income increased by $5.8 million (58%) in Q3-2013, compared to Q3-2012, comprised of a $1.3 million (17%) increase for same properties and $4.5 million increase attributable to new acquisitions. For the nine months ended September 30, 2013, hotel operating income increased by $14.4 million (54%), compared to the nine months ended September 30, 2012, comprised of $2.4 million (10%) increase for same properties and $12 million increase attributable to new acquisitions.
- Same property occupancy increased to 79% in Q3-2013 from 71% in Q3-2012. Overall, occupancy increased to 79% in Q3-2013 from 72% in Q2-2012.
- Same property ADR increased by 4.3% to $167.43 in Q3-2013 from $160.59 in Q3-2012.
- Same property RevPar increased by 16.5% from $113.51 in Q3-2012 to $132.27 in Q3-2013. Overall, RevPar increased by 7.1% from $116.80 to $125.15 during the same period.
- The weighted average interest rate of mortgage debt declined from 5.26% as at December 31, 2012 to 5.17% as at September 30, 2013. The weighted average interest rate for total debt declined from 6.07% to 5.65% during the same period.
- FFO increased by $7.2 million or 465% compared to Q3-2012 and by $11.5 million or 162% compared to nine months ended September 30, 2012.
- AFFO increased by $4.3 million or 138% compared to Q3-2012 and by $7.1 million or 77% compared to nine months ended September 30, 2012.
- Dividends declared for Q3-2013 and nine months ended September 30, 2013 represented a payout ratio of 47% and 63% of FFO, respectively, and 55% and 72% of AFFO, respectively.
Asset and Revenue Growth
Incremental revenue from new hotel acquisitions and increasing revenues from the Fort McMurray hotel portfolio, due to expanded production in the oilsands industry, were the main factors driving revenue growth in Q3-2013. During Q3-2013, total revenue increased by $16.8 million or 66% compared to Q3-2012, comprised of a $14.4 million increase in revenue from "newly acquired properties" and a $2.4 million increase from the "same property" portfolio. In Q3-2013, the Fort McMurray hotel portfolio achieved near record high average occupancy levels of 83% and a continued increase in average daily room rate to $189.21.
For the nine month period ended September 30, 2013, the total revenue increased by $44.2 million or 63%, compared to the same period in 2012, notwithstanding that several of the newly acquired properties do not reflect stabilized earnings levels due to the timing of the acquisitions and/or the impact of 2013 hotel renovations.
Financial and Operating Results
| Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Total revenue | $42,005 | $25,254 | $114,200 | $69,984 | ||||||||||||
| Operating income | $15,793 | $10,025 | $41,347 | $26,909 | ||||||||||||
| Net income (loss) | $3,386 | $(2,163) | $4,292 | $42,133 | ||||||||||||
| Occupancy | 79% | 72% | 73% | 71% | ||||||||||||
| ADR | $158.28 | $161.88 | $158.20 | $158.34 | ||||||||||||
| RevPar | $125.15 | $116.80 | $116.15 | $112.91 | ||||||||||||
| Dividends/distributions | $4,092 | $3,208 | $11,729 | $8,780 | ||||||||||||
| Funds from operations (FFO) | $8,792 | $1,557 | $18,615 | $7,100 | ||||||||||||
| Adjusted funds from operations (AFFO) | $7,433 | $3,124 | $16,279 | $9,189 | ||||||||||||
| Per share/unit | ||||||||||||||||
| Dividends/distributions | $0.135 | $0.125 | $0.405 | $0.365 | ||||||||||||
| FFO | $0.29 | $0.06 | $0.64 | $0.30 | ||||||||||||
| AFFO | $0.25 | $0.12 | $0.56 | $0.38 | ||||||||||||
| Payout ratio | ||||||||||||||||
| FFO | 47% | 206% | 63% | 124% | ||||||||||||
| AFFO | 55% | 110% | 72% | 96% | ||||||||||||
Financing Activities
During Q3-2013, financing activities resulted in a net cash outflow of $15.4 million, consisting primarily of debt repayments in the net amount of $11.3 million, dividend payments of $3.4 million and a cash outflow of $0.7 million in regard to the repurchase of convertible debentures pursuant to normal course issuer bids. The debt repayments included a $4 million lump-sum principal payment and the prepayment of the convertible mortgage loan debt of $4.5 million.
Investing Activities
During Q3-2013, investing activities resulted in a net cash inflow of $2.2 million, consisting primarily of $3.8 million from the sale of marketable securities offset by approximately $1.2 million in regard to capital expenditures. Temple completed Q3-2013 with an unrestricted cash balance of $29.5 million and working capital of $40.6 million.
Recent and Upcoming Hotel Acquisitions
Subsequent to September 30, 2013, Temple completed the acquisition of two hotels.
Effective October 1, 2013, Temple acquired the Holiday Inn Express Hotel & Suites Ottawa West - Nepean. The six-story hotel opened in 2010 and is comprised of 115 guestrooms, including 58 suites. The $19.5 million purchase price was financed by a first mortgage loan in the amount of $14.5 million and the balance in cash.
On November 1, 2013, Temple completed the acquisition of the Acclaim Hotel Calgary Airport North. The four-storey hotel opened in 2009 and consists of 225 guestrooms, including 102 guestrooms which were completed under a hotel expansion project in August 2013. The $42 million purchase price was financed by a first mortgage loan in the amount of $27.3 million and the balance in cash. A portion of the cash component ($2.8 million) was previously funded by a cash advance secured by a 12% second mortgage loan.
On October 28, 2013, Temple announced that it had entered into an agreement to acquire the 106 suite Nova Court extended-stay project in Yellowknife, NWT for $21.68 million. The acquisition is expected to close by December 31, 2013.
The recent hotel acquisitions in Ottawa, Calgary and Yellowknife continue to enhance the geographic diversification of the overall hotel portfolio.
Outlook
Temple's hotels in Edmonton and Fort McMurray continue to experience record rates of occupancy due to the expanding level of activity in the energy industry. After considering the two hotels which were acquired by Temple subsequent to September 30, 2013, the commitment to acquire the Nova Court Hotel and additional targeted acquisitions, management expects continued operating income growth in Q4 and 2014.
Q3-2013 COMPARED TO Q3-2012
| Analysis of Net income | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30 | September 30 | |||||||||||||||||
| Increase/ | Increase/ | |||||||||||||||||
| 2013 | 2012 | (Decrease) | 2013 | 2012 | (Decrease) | |||||||||||||
| Revenue | ||||||||||||||||||
| Room revenue | $ | 32,304 | $ | 18,954 | $ | 13,350 | $ | 83,673 | $ | 49,838 | $ | 33,835 | ||||||
| Other hotel revenue | 9,701 | 6,300 | 3,401 | 30,527 | 20,146 | 10,381 | ||||||||||||
| Total revenue | 42,005 | 25,254 | 16,751 | 114,200 | 69,984 | 44,216 | ||||||||||||
| Hotel operating costs | 26,212 | 15,229 | 10,983 | 72,853 | 43,075 | 29,778 | ||||||||||||
| Operating income | 15,793 | 10,025 | 5,768 | 41,347 | 26,909 | 14,438 | ||||||||||||
| Interest expense, net | 6,868 | 7,399 | (531) | 20,583 | 17,618 | 2,965 | ||||||||||||
| General and administrative expenses |
303 | 884 | (581) | 2,409 | 1,781 | 628 | ||||||||||||
| Depreciation and amortization | 4,293 | 2,726 | 1,567 | 11,965 | 7,209 | 4,756 | ||||||||||||
| 4,329 | (984) | 5,313 | 6,390 | 301 | 6,089 | |||||||||||||
| Equity income on investment in hotel properties |
215 | - | 215 | 517 | - | 517 | ||||||||||||
| Change in fair value of financial instruments: gain (loss) |
104 | (1,621) | 1,725 | (1,096) | 2,009 | (3,105) | ||||||||||||
| Income tax recovery (expense) | (1,262) | 442 | (1,704) | (1,519) | (177) | (1,342) | ||||||||||||
| Net income | $ | 3,386 | $ | (2,163) | $ | 5,549 | $ | 4,292 | $ | 2,133 | $ | 2,159 | ||||||
| Per Share Results: | ||||||||||||||||||
| Basic | $ | 0.11 | $ | (0.08) | $ | 0.15 | $ | 0.09 | ||||||||||
| Diluted | $ | 0.11 | $ | (0.08) | $ | 0.15 | $ | 0.09 | ||||||||||
Overall Results
Income, before equity income, change in fair value of financial instruments and income taxes, increased by $5.3 million during Q3-2013 compared to Q3-2012. The increase reflects an increase in operating income of $5.8 million, a decrease in interest expense (net) of $0.5 million and a decrease in general and administrative expenses of $0.6 million, partially offset by an increase in depreciation and amortization of $1.6 million.
Including equity income, change in fair value of financial instruments and income taxes, Temple completed Q3-2013 with net income of $3.4 million, compared to a net loss of $2.2 million during Q3-2012, representing a total increase in net income of $5.5 million.
Income, before equity income, change in fair value of financial instruments and income taxes, increased by $6.1 million during the first nine months of 2013 compared to the first nine months of 2012. The increase reflects an increase in operating income of $14.4 million, partially offset by an increase in interest expense (net) general and administrative expenses and depreciation and amortization of $3.0 million, $0.6 million and $4.8 million, respectively. Including equity income, change in fair value of financial instruments and income taxes, Temple completed the first nine months of 2013 with net income of $4.3 million, compared to net income of $2.1 million during the first nine months of 2012, representing an increase in income of $2.2 million.
On a per share basis, net income increased to $0.11 from a net loss of $0.08 per share during Q3-2013 compared Q3-2012. For the first nine months of 2013, net income on a per share basis was $0.15, compared to $0.09 for the first nine months of 2012. As of September 30, 2013, the weighted average number of shares increased by 21% since September 30, 2012 and by 60% since January 1, 2012.
Revenue
| Analysis of Total Hotel Revenues | |||||||||||||||||||
| Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | ||||||||||||||||||
| Increase/ | Increase/ | ||||||||||||||||||
| 2013 | 2012 | (Decrease) | 2013 | 2012 | (Decrease) | ||||||||||||||
| Same Properties | |||||||||||||||||||
| Room revenue | $ | 16,312 | $ | 14,143 | $ | 2,169 | $ | 45,731 | $ | 41,780 | $ | 3,951 | |||||||
| Other hotel revenue | 5,909 | 5,698 | 211 | 19,435 | 19,286 | 149 | |||||||||||||
| Total Hotel Revenue | $ | 22,221 | $ | 19,841 | $ | 2,380 | 65,166 | 61,066 | 4,100 | ||||||||||
| Newly Acquired Properties | |||||||||||||||||||
| Room revenue | $ | 15,992 | $ | 4,811 | $ | 11,181 | $ | 37,942 | $ | 8,058 | $ | 29,884 | |||||||
| Other hotel revenue | 3,792 | 602 | 3,190 | 11,092 | 860 | 10,232 | |||||||||||||
| Total Hotel Revenue | $ | 19,784 | $ | 5,413 | $ | 14,371 | $ | 49,034 | $ | 8,918 | $ | 40,116 | |||||||
| Total | |||||||||||||||||||
| Room revenue | $ | 32,304 | $ | 18,954 | $ | 13,350 | $ | 83,673 | $ | 49,838 | $ | 33,835 | |||||||
| Other hotel revenue | 9,701 | 6,300 | 3,401 | 30,527 | 20,146 | 10,381 | |||||||||||||
| Total hotel revenue | $ | 42,005 | $ | 25,254 | 16,751 | $ | 114,200 | $ | 69,984 | $ | 44,216 | ||||||||
During Q3-2013, total room revenue increased by $13.35 million or 70%, compared to Q3-2012, comprised of an increase of $2.17 million or 15% in "same property" revenue and incremental revenue of $11.18 million from new hotel acquisitions. The increase in room revenue for the "same property" portfolio is comprised of an increase in room revenue of $1.41 million or 18% for the Fort McMurray same property portfolio, and an increase in room revenue of $0.76 million for the "Other" hotels in the same property portfolio.
As disclosed in the following chart, RevPar for the same property portfolio was $132.27 during Q3-2013, compared to $113.51 during Q3-2012. Revenue for the Fort McMurray "same property" portfolio continued to improve during Q3-2013, with the portfolio achieving RevPar of $156.35, an increase of 19% compared to $131.65 during Q3-2012.
During the first nine months of 2013, room revenue increased by $33.84 million or 68%, compared to the first nine months of 2012, comprised of an increase of $3.95 million or 9% in "same property" revenue and incremental revenue of $29.88 million from new hotel acquisitions.
| Room Revenue Statistics | ||||||||||||||||||
| Three Months Ended September 30 | ||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||
| Occ | ADR | RevPar | Occ | ADR | RevPar | |||||||||||||
| Same Properties | ||||||||||||||||||
| Fort McMurray | 83% | $ | 189.21 | $ | 156.35 | 72% | $ | 182.44 | $ | 131.65 | ||||||||
| Other | 75% | $ | 143.56 | $ | 108.20 | 69% | $ | 137.80 | $ | 95.37 | ||||||||
| Total - Same Properties | 79% | $ | 167.43 | $ | 132.27 | 71% | $ | 160.59 | $ | 113.51 | ||||||||
| Newly Acquired Properties | 79% | $ | 149.14 | $ | 118.04 | 76% | $ | 164.90 | $ | 125.03 | ||||||||
| Overall Portfolio | 79% | $ | 158.28 | $ | 125.15 | 72% | $ | 161.88 | $ | 116.80 | ||||||||
| Room Revenue Statistics | ||||||||||||||||||
| Nine Months Ended September 30 | ||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||
| Occ | ADR | RevPar | Occ | ADR | RevPar | |||||||||||||
| Same Properties | ||||||||||||||||||
| Fort McMurray | 79% | $ | 186.20 | $ | 147.07 | 73% | $ | 175.80 | $ | 128.77 | ||||||||
| Other | 69% | $ | 145.42 | $ | 100.66 | 67% | $ | 139.23 | $ | 93.80 | ||||||||
| Total - Same Properties | 74% | $ | 167.15 | $ | 123.86 | 70% | $ | 158.28 | $ | 111.29 | ||||||||
| Newly Acquired Properties | 73% | $ | 149.08 | $ | 108.44 | 74% | 158.50 | 116.98 | ||||||||||
| Overall Portfolio | 73% | $ | 158.20 | $ | 116.15 | 71% | $ | 158.34 | $ | 112.91 | ||||||||
| Operating Income and Profit Margin | |||||||||||||||||||||
| Operating Income Amount | Operating Profit Margin | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||
| Sept 30 | Sept 30 | Sept 30 | Sept 30 | Sept 30 | Sept 30 | Sept 30 | Sept 30 | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Same Properties | |||||||||||||||||||||
| Fort McMurray | $ | 5,813 | $ | 4,704 | $ | 15,857 | $ | 13,384 | 61% | 58% | 59% | 56% | |||||||||
| Other | 3,215 | 3,023 | 9,683 | 9,777 | 25% | 26% | 25% | 26% | |||||||||||||
| Total - Same Properties |
$ | 9,028 | $ | 7,727 | $ | 25,540 | $ | 23,161 | 41% | 39% | 39% | 38% | |||||||||
| Newly Acquired Properties |
$ | 6,765 | $ | 2,298 | $ | 15,807 | $ | 3,748 | 34% | 42% | 32% | 42% | |||||||||
| Total portfolio | $ | 15,793 | $ | 10,025 | $ | 41,347 | $ | 26,909 | 38% | 40% | 36% | 38% | |||||||||
Total operating income increased by $5.77 million or 58% during Q3-2013, compared to Q3-2012, comprised of an increase of $1.30 million or 17% for the "same property" portfolio and $4.47 million which is attributable to new hotel acquisitions. The increase in "same property" operating income mainly reflects a $1.11 or 24% increase in operating income for the Fort McMurray "same property" portfolio.
For the first nine months of 2013, operating income increased by $14.44 million or 54%, compared to the first nine months of 2012, comprised of an increase of $2.38 million or 10% for the "same property" portfolio and $12.06 million which is attributable to new hotel acquisitions.
As disclosed in the preceding chart, the overall profit margin of the entire hotel portfolio decreased from 40% during Q3-2012, to 38% during Q3-2013. For the nine months ended September 30, 2013, the overall profit margin was 36%, compared to 38% for the nine months ended September 30, 2012. The decline in overall profit margin is mainly attributable to a decrease in the proportionate contribution from hotels in Fort McMurray as the hotels in Fort McMurray have a substantially higher profit margin. As disclosed in the above chart, the Fort McMurray profit margin increased from 58% in Q3-2012 to 61% in Q3-2013 and from 56% for the nine months ended September 30, 2012 to 59% for the nine months ended September 30, 2013.
COMPARISON TO PRIOR QUARTER
| Analysis of Net Income - Q3-2013 vs. Q2-2013 | |||||||||
| Increase/ | |||||||||
| Q3 2013 | Q2 2013 | (Decrease) | |||||||
| Revenue | |||||||||
| Room | $ | 32,304 | $ | 28,722 | $ | 3,582 | |||
| Other | 9,701 | 11,294 | (1,593) | ||||||
| Total revenue | 42,005 | 40,016 | 1,989 | ||||||
| Hotel operating costs | 26,212 | 25,800 | 412 | ||||||
| Operating income | 15,793 | 14,216 | 1,577 | ||||||
| Interest expense, net | 6,868 | 7,267 | (399) | ||||||
| General and administrative expenses | 303 | 660 | (357) | ||||||
| Depreciation and amortization | 4,293 | 4,147 | 146 | ||||||
| 4,329 | 2,142 | 2,187 | |||||||
| Equity income on investment in hotel properties | 215 | 178 | 37 | ||||||
| Change in fair value of financial instruments: Gain (loss) | 104 | (1,021) | 1,125 | ||||||
| Income taxes recovery (expense) | (1,262) | (529) | (733) | ||||||
| Net income | $ | 3,386 | $ | 770 | $ | 2,616 | |||
Income, before equity income, change in fair value of financial instruments and income taxes, increased by $2.19 million during Q3- 2013, compared to Q2-2013. The increase in income mainly reflects an increase in operating income, a decrease in interest expense (net) and a decrease in general and administrative expenses, partially offset by an increase in depreciation and amortization.
Operating income increased by $1.58 million or 11% in Q3-2013, comprised of an increase of $0.54 million in "same property" operating income and $1.04 million of operating income which is attributable to new hotels. The increase in "same property" operating income reflects quarterly variations in operating income throughout the same property hotel portfolio
Interest expense (net) decreased by $0.40 in Q3-2013 compared to Q2-2013. The decrease in interest expense mainly reflects the repayment of the convertible mortgage loan debt on July 9, 2013 as well as a $4.0 million lump sum principal paydown in regard to Clearwater Timberlea, partially offset by an entire quarter of interest charges following the acquisition of the Holiday Inn Express, Sherwood Park and the upward refinancing of mortgage loan debt during Q2-2013.
Including equity income; the loss associated with the change in fair value of financial instruments and income taxes, total net income increased by $2.62 million during Q3-2013 compared to Q2-2013.
ABOUT TEMPLE
Temple is a growth oriented hotel investment company with hotel properties located across Canada. Temple is listed on the Toronto Stock Exchange under the symbols TPH (common shares), TPH.DB.C, TPH.DB.D, TPH.DB.E and TPH.DB.F (convertible debentures). The objective of Temple is to provide shareholders with stable dividends from investment in a diversified portfolio of hotel properties and related assets. For further information on Temple, please visit our website at www.templehotels.ca.
This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements.
The Toronto Stock Exchange has not reviewed or approved the contents of this press release and does not accept responsibility for the adequacy or accuracy of this press release.
SOURCE: Temple Hotels Inc.
Arni Thorsteinson, Chief Executive Officer, or Gino Romagnoli, Investor Relations
Tel: (204) 475-9090, Fax: (204) 452-5505, Email: [email protected]
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