Temple REIT reports 2010 first quarter results
WINNIPEG, May 26 /CNW/ - Temple Real Estate Investment Trust ("Temple REIT") (TSX Venture: TR.UN) today reported its financial results for the quarter ended March 31, 2010. The following comments in regard to the financial position and operating results of TREIT should be read in conjunction with the March 31, 2010 Management Discussion & Analysis and the financial statements for the year quarter March 31, 2010, which may be obtained from the TREIT website at www.treit.ca or the SEDAR website at www.sedar.com.
Recessionary influences affected the operating results of the Temple REIT hotel portfolio throughout 2009, with the impact of the decline in general economic conditions becoming more pronounced in the third and fourth quarter of 2009, particularly for the hotels in Fort McMurray and, to a lesser extent, for the other two hotels in Alberta. Quarterly operating income during 2009 decreased by approximately $1.3 million or 20% from the first quarter of the year to the fourth quarter of the year, with the Fort McMurray hotel portfolio accounting for approximately 88% of the decrease. The decrease in cash flow from operating activities, on a quarterly basis, was approximately $2.9 million, or 66% during 2009.
The operating results for the first quarter of 2010 reflect an unfavourable variance in income and operating cash flows in comparison to the first quarter of 2009, as a result of the gradual decline in hotel market conditions which occurred throughout 2009. In comparison to the fourth quarter of 2009, the operating results for the first quarter of 2010 reflect a degree of stabilization in market conditions, particularly for the hotel portfolio in Fort McMurray.
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March 31 March 31 Increase/ December 31 Increase/
2010 2009 (Decrease) 2009 (Decrease)
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Net income
(loss) $(986,251) $838,375 $(1,824,626) $(581,909) $(404,342)
Cash from
operating
activities $1,427,681 $4,431,694 $(3,004,013) $1,520,671 $(92,990)
Operating
income
Fort
McMurray $2,397,205 $3,494,451 $(1,097,246) $2,318,198 $79,007
Total $4,872,348 $6,778,428 $(1,906,080) $5,448,887 $(576,539)
RevPar
Fort
McMurray $87.77 $114.74 $(26.97) $84.70 $3.07
Overall
portfolio $81.46 $98.57 $(17.11) $81.42 $0.04
As reflected in the above chart, Temple REIT experienced a decrease in operating income of $1.91 million during the first quarter of 2010, compared to the first quarter of 2009, with the Fort McMurray hotel portfolio accounting for 58% of the decrease. In contrast, the decrease in operating income during the first quarter of 2010, compared to the fourth quarter of 2009, was $0.58 million. The decrease in operating income during the first quarter of 2010, compared to the fourth quarter of 2009, mainly reflects a decrease in operating income at the Capri and Best Western hotels, partially offset by an increase in operating income from the Fort McMurray hotel portfolio. The net income and operating cash flow results for the first quarter of 2010 reflect a favourable trend as operating income in regard to the extent of the variance between 2009 first quarter results and 2009 fourth quarter results.
FINANCIAL AND OPERATING STATISTICS
Three Months Ended
March 31
---------------------------
2010 2009
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DISTRIBUTIONS
Amount - total $ 1,282,535 $ 2,562,404
- per unit $ 0.10 $ 0.20
BALANCE SHEET
Total Assets $267,913,067 $259,096,022
Total Long-Term Debt and
Convertible Debentures $197,818,633 $186,991,157
KEY PERFORMANCE INDICATORS
Operations:
Occupancy 51% 53%
ADR $ 158.97 $ 185.26
RevPar $ 81.46 $ 98.57
Operating profit margin 33% 39%
Operating results:
Total revenue $ 14,981,017 $ 17,268,422
Operating income $ 4,872,348 $ 6,778,428
Net income (loss) $ (986,251) $ 838,375
Cash flows:
Distributable income $ 550,131 $ 2,605,579
Funds from operations $ 494,935 $ 2,851,238
Financing:
Weighted average interest rate of
long-term debt 6.52% 6.34%
PER UNIT AMOUNTS Basic Diluted Basic Diluted
Net income (loss) $(0.08) $(0.08) $0.07 $0.07
Distributable income $0.04 $0.04 $0.20 $0.20
Funds from operations $0.04 $0.04 $0.22 $0.22
2010 COMPARED TO 2009
Analysis of Net Income (loss)
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Three Months Ended
March 31
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Increase/
2010 2009 (Decrease)
------------- ------------- -------------
Hotel revenue
Room $ 9,031,285 $ 10,583,067 $ (1,551,782)
Other 5,459,045 5,969,028 (509,983)
------------- ------------- -------------
Total hotel revenue 14,490,330 16,552,095 (2,061,765)
Interest and other income 490,687 716,327 (225,640)
------------- ------------- -------------
Total revenue 14,981,017 17,268,422 (2,287,405)
Hotel operating costs 10,108,669 10,489,994 (381,325)
------------- ------------- -------------
Net operating income 4,872,348 6,778,428 (1,906,080)
Finance expense 4,073,293 3,680,200 393,093
Trust expense 364,007 198,809 165,198
Amortization 1,744,598 1,594,538 150,060
------------- ------------- -------------
(1,309,550) 1,304,881 (2,614,431)
Change in marketable securities 94,575 (116,925) 211,500
Income taxes (recovery) (228,724) 349,581 (578,305)
------------- ------------- -------------
Net income (loss) $ (986,251) $ 838,375 $ (1,824,626)
------------- ------------- -------------
------------- ------------- -------------
Recessionary influences continued to have a negative impact on local market conditions for the Temple REIT hotels during the first quarter of 2010, affecting both room revenue and revenue generated from hotel amenities. During the first quarter of 2010, total hotel revenue decreased by $2.06 million compared to the first quarter of 2009, mainly due to a decrease in room revenue of $1.31 million for the Fort McMurray hotel portfolio and a decrease in both room revenue and other hotel revenue of $0.78 million at the Capri Centre and Best Western Wayside Inn. The decrease in hotel revenue resulted in a corresponding decrease in net operating income.
During the first quarter of 2010, Temple REIT incurred a net loss, before taxes, and the change in value of marketable securities of $1.31 million, compared to a net income of $1.30 million in the first quarter of 2009, representing a decrease in the net income of $2.61 million. The decrease mainly reflects the net impact of the following variables:
- a decrease in net operating income of $1.91 million;
- an increase in financing expense of $0.40 million; and
- Trust expense and amortization expense also increased by
$0.17 million and $0.50 million, respectively.
The decrease in operating income mainly reflects a decline in occupancy levels and a corresponding decline in room revenue and other hotel revenue.
The increase in financing expense mainly reflects incremental financing charges related to the $15 Million, 8.75% convertible debenture offering which closed in November 2009.
After providing for taxes and the change in value of marketable securities, Temple REIT completed the first quarter of 2010 with a loss of $0.99 million, representing a decrease of $1.82 million compared to the net income of $0.84 million in the first quarter of 2009.
Room Revenue Statistics
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Three Months Ended March 31
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2010 2009
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Occ ADR RevPar Occ ADR RevPar
------ ------- ------- ----- -------- --------
Fort McMurray 51% $172.55 $ 87.77 52% $218.70 $114.74
Temple Gardens
Mineral Spa 77% $160.15 $122.67 73% $159.26 $116.63
Chateau Nova 47% $143.89 $ 67.01 50% $146.07 $ 73.33
Best Western
Wayside Inn 42% $125.92 $ 52.42 49% $128.81 $ 62.99
Capri Centre 42% $124.07 $ 52.15 44% $136.86 $ 60.49
------ ------- ------- ----- -------- --------
Overall Portfolio 51% $158.97 $ 81.46 53% $185.26 $ 98.57
------ ------- ------- ----- -------- --------
------ ------- ------- ----- -------- --------
COMPARISON TO PRIOR QUARTER
Analysis of Net Income - Q1 2010 vs. Q4 2009
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Increase
Three Months Ended (Decrease)
------------------------------------------
Q1 2010 Q4 2009 Amount
------------- ------------- -------------
Hotel revenue
Room $ 9,031,285 $ 9,399,757 $ (368,472)
Other 5,459,045 6,161,698 (702,653)
------------- ------------- -------------
Total hotel revenue 14,490,330 15,561,455 (1,071,125)
Interest and other income 490,687 562,267 (71,580)
------------- ------------- -------------
Total revenue 14,981,017 16,123,722 (1,142,705)
Hotel operating expenses 10,108,669 10,674,835 (566,166)
------------- ------------- -------------
Operating income 4,872,348 5,448,887 (576,539)
Finance expense 4,073,293 4,207,372 (134,079)
Trust expense 364,007 220,109 143,898
Amortization 1,744,598 1,728,857 15,741
------------- ------------- -------------
(1,309,550) (707,451) (602,099)
Change in marketable securities 94,575 (1,350) 95,925
Income taxes (228,724) (126,892) (101,832)
------------- ------------- -------------
Net income (loss) $ (986,251) $ (581,909) $ (404,342)
------------- ------------- -------------
------------- ------------- -------------
Loss, before taxes and the change in value of marketable equity securities, increased by $0.60 million during the first quarter of 2010, compared to the fourth quarter of 2009. The increase in the loss mainly reflects a decrease in operating income and an increase in trust expense, partially offset by a decrease in finance expense.
During the first quarter of 2010, operating income decreased by $0.58 million or 11%. The decrease in operating income is comprised of a decrease in room revenue of $0.37 million, a decrease in other hotel revenue of $0.70 million and a decrease in interest and other income of $0.07 million, partially offset by a decrease in hotel operating expenses of $0.57 million.
The decrease in room revenue is mainly due to a decrease in room revenue at the Capri Centre, Best Western Wayside Inn, Nomad Inn and Suites and Clearwater Hotel, partially offset by an increase in room revenue at the Merit Hotel and Franklin Suites hotel. The decrease in other hotel revenue is mainly attributable to the Capri Centre and, to a lesser extent, the Temple Gardens Mineral Spa.
As disclosed in the following chart, RevPar was $81.46 during the first quarter of 2010, compared to $81.42 during the fourth quarter of 2009. The most notable variables in RevPar results for the first quarter of 2010 include the decrease in RevPar at the Capri Centre and Best Western Wayside Inn and the increase in RevPar for the Fort McMurray hotel portfolio.
Room Revenue Statistics
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Three Months Ended
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Q1 2010 Q4 2009
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Occ ADR RevPar Occ ADR RevPar
------ ------- ------- ----- -------- --------
Fort McMurray 51% $172.55 $ 87.77 46% $184.36 $ 84.70
Temple Gardens 77% $160.15 $122.67 78% $156.41 $121.69
Chateau Nova 47% $143.89 $ 67.01 48% $147.09 $ 70.41
Best Western Wayside Inn 42% $125.92 $ 52.42 49% $126.75 $ 62.07
Capri Centre 42% $124.07 $ 52.15 41% $133.64 $ 55.15
------ ------- ------- ----- -------- --------
Overall portfolio 51% $158.97 $ 81.46 50% $164.45 $ 81.42
------ ------- ------- ----- -------- --------
------ ------- ------- ----- -------- --------
In comparison to the fourth quarter of 2009, financing expense decreased by $0.13 million or 3% during the first quarter of 2010. The decrease mainly reflects the reduction in interest charges associated with lump-sum debt repayments during the fourth quarter 2009, partially offset by the incremental interest charges related to the 8.75% senior secured convertible debenture debt which closed in November 2009. Lump-sum debt repayments during the fourth quarter of 2009 include the repayment of the remaining balance of the second mortgage loan on Clearwater Suites of $3.8 Million and the repayment of $5.0 Million of principal on the 12% mortgage loan for the Merit Hotel.
OUTLOOK
With a cash balance of approximately $6 million as of March 31, 2010, Temple REIT has the financial resources to address its immediate funding commitments. The longer-term growth potential of Temple REIT is primarily dependent on the recovery of market conditions in Fort McMurray.
ABOUT TREIT
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TREIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbols TR.UN (trust units), TR.DB.A, TR.DB.B and TR.DB.S (convertible debentures). The objective of TREIT is to provide Unitholders with stable cash distributions from investment in a geographically diversified Canadian portfolio of hotel properties and related assets. For further information on TREIT, please visit our website at www.treit.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 TSX Venture 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.
For further information: 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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