MISSISSAUGA, ON, Nov. 9, 2017 /CNW/ - Temple Hotels Inc. ("Temple"
or the "Company") (TSX: TPH) today reported its financial results
for the three months ended September 30,
2017 ("third quarter"). 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 three and nine months ended
September 30, 2017, 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 common share, average daily rate ("ADR"), and revenue per
available room ("RevPar") amounts.
Q3 2017 KEY POINTS/HIGHLIGHTS
- Revenue increased by $0.8 million
or 2% during the three months ended September 30, 2017 compared to 2016, primarily
due to an increase in revenue within the Other Canada portfolio of
$1.8 million, partially offset by a
decrease in revenue within the Fort
McMurray and Other Alberta portfolios of $0.8 million and $0.2
million, respectively.
- Hotel operating income decreased by $0.9
million or 5% during the three months ended September 30, 2017 compared to 2016, primarily
due to a decrease in hotel operating income within the Fort McMurray and Other Alberta portfolios of
$1.6 million and $0.1 million, respectively, partially offset by
an increase in hotel operating income within the Other Canada
portfolio of $0.8 million.
- FFO increased by $0.3 million
during the three months ended September 30,
2017, compared to 2016. On a basic per common share basis,
FFO decreased by $0.29 per common
share, compared to the third quarter of 2016, primarily as a result
of an increase in the weighted average number of common shares
outstanding.
- Temple completed the sale of Holiday Inn Express, Sherwood Park, Alberta, on September 15, 2017 for gross proceeds of
$9.7 million.
- Subsequent to September 30, 2017,
holders of the Series E convertible debentures agreed to extend the
maturity date from September 30, 2017
to September 30, 2020, while
decreasing the conversion price from $40.08
to $9.75 per common share of Temple. On October 2, 2017, Temple redeemed $2,258 of the principal amount of the Series E
debentures outstanding, which represents approximately 5% of the
issued and outstanding Series E debentures.
OPERATING RESULTS
|
Three Months
Ended
September 30
|
|
Nine Months Ended
September 30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Total
revenue
|
$46,106
|
|
$45,280
|
|
$125,734
|
|
$123,001
|
Hotel operating
income
|
$15,190
|
|
$16,052
|
|
$35,306
|
|
$36,133
|
Provision for
impairment
|
($235)
|
|
-
|
|
($235)
|
|
($43,574)
|
Net income
(loss)
|
$3,355
|
|
$1,390
|
|
$495
|
|
($67,968)
|
Net income (loss) per
common share - basic and diluted
|
$0.13
|
|
$0.11
|
|
$0.02
|
|
($5.23)
|
|
|
|
|
|
|
|
|
Cash flow provided by
operating activities
|
$8,585
|
|
$6,572
|
|
$10,933
|
|
$11,142
|
Funds from
operations
|
$8,170
|
|
$7,863
|
|
$14,628
|
|
$11,268
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
|
‑ Funds from
operations
|
$0.32
|
|
$0.61
|
|
$0.57
|
|
$0.87
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
25,351,516
|
|
13,007,808
|
|
25,344,724
|
|
12,996,435
|
|
|
|
|
|
|
|
|
Occupancy
|
70%
|
|
69%
|
|
63%
|
|
61%
|
ADR
|
$145.52
|
|
$143.94
|
|
$139.65
|
|
$140.98
|
RevPar
|
$101.65
|
|
$99.32
|
|
$88.33
|
|
$85.50
|
Operating Activities
- Net Income – Temple completed the third quarter of 2017
with net income of $3.4 million,
compared to net income of $1.4
million during the same period in 2016. The increase in net
income is mainly due to a decrease in depreciation and amortization
of $1.7 million and a decrease in
interest expense of $1.3 million,
partially offset by a decrease in hotel operating income of
$0.9 million. On a per common share
basis, net income was $0.13 for the
third quarter of 2017, compared to a net income of $0.11 during the third quarter of 2016.
- Occupancy and ADR – The increase in revenue primarily
reflects higher occupancy and ADR levels within the Other Canada
segment. In the third quarter of 2017, the ADR and occupancy levels
of the Other Canada segment increased by $6.88 and 1%, respectively, to $154.64 and 81%, in comparison to the third
quarter of 2016. In addition, reduced ADR levels within the Other
Alberta and Fort McMurray
segments, resulted in a lower operating margin as unfavourable
market conditions continue to affect oil-dependent markets in
Alberta.
- Cash Provided by Operating Activities – Cash provided by
operating activities increased by $2.0
million during the third quarter of 2017, compared to the
third quarter of 2016. Excluding working capital adjustments, cash
provided by operating activities increased by $0.1 million, compared to 2016.
- Funds from Operations ("FFO") – During the third
quarter of 2017, FFO increased by $0.3
million, compared to the third quarter of 2016. On a basic
per common share basis, FFO decreased by $0.29 per common share, compared to the third
quarter of 2016.
Liquidity and Financing Activities
As of September 30, 2017, the
unrestricted cash balance of Temple was $18.2 million and working capital was $12.1
million.
- On August 14, 2017, the Company
refinanced a five-loan mortgage portfolio with the incumbent
lender. The five loans are cross collateralized and three of the
loans were refinanced for a five year term at an interest rate of
5.20% and are not subject to any financial covenants during the
first 12 months of the term. As a condition of refinancing, the
Company paid down the maturing, aggregate balance by $7.5 million. The fourth mortgage loan of five in
the portfolio does not mature until November
2019, and the fifth was subsequently discharged on the
disposal of Holiday Inn Express, Sherwood
Park, Alberta.
- Temple completed the sale of Holiday Inn Express, Sherwood Park, Alberta, on September 15, 2017 for gross proceeds of
$9.7 million and net proceeds of
approximately $0.3 million, after
repayment of the first mortgage loan and sale costs.
- Subsequent to September 30, 2017,
holders of the Series E convertible debentures agreed to extend the
maturity date from September 30, 2017
to September 30, 2020, while
decreasing the conversion price from $40.08
to $9.75 per common share of Temple.
Investing Activities
As disclosed in the Statement of Cash Flows in the financial
statements, the investing activities of Temple resulted in a net
cash inflow of $9.3 million during
the third quarter of 2017. Investing activities primarily reflect
the proceeds from the sale of property and equipment and the cash
distribution on equity investments, partially offset by cash
outflows related to capital expenditures on hotel properties.
Debt Covenants
At September 30, 2017, the Company
was not in compliance with debt service covenants affecting six
mortgage loans (December 31, 2016 –
nine) in the aggregate amount of $93.9
million (December 31, 2016 –
$139.2 million). During the third
quarter the Company refinanced a five-loan mortgage portfolio which
included a $7.5 million pay down and
a condition that the properties are not subject to any financial
covenants during the first 12 months of the five year term.
Management has been working with lenders throughout the year and
the remaining loan covenant breaches are expected to be resolved by
debt refinancings, loan modification agreements and/or a waiver of
the covenant requirements.
ANALYSIS OF OPERATING RESULTS
Analysis of Net
Income (Loss) and Comprehensive Net Income (Loss)
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30
|
|
September
30
|
|
2017
|
|
2016
|
|
Increase/
(Decrease)
in Income
|
|
2017
|
|
2016
|
|
Increase/
(Decrease)
in Income
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$36,119
|
|
$35,426
|
|
$693
|
|
$93,614
|
|
$91,005
|
|
$2,609
|
|
Other hotel
revenue
|
9,987
|
|
9,854
|
|
133
|
|
32,120
|
|
31,996
|
|
124
|
|
Total
revenue
|
46,106
|
|
45,280
|
|
826
|
|
125,734
|
|
123,001
|
|
2,733
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating
costs
|
30,916
|
|
29,228
|
|
(1,688)
|
|
90,428
|
|
86,868
|
|
(3,560)
|
Hotel operating
income
|
15,190
|
|
16,052
|
|
(862)
|
|
35,306
|
|
36,133
|
|
(827)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
6,753
|
|
8,017
|
|
1,264
|
|
21,431
|
|
23,915
|
|
2,484
|
Other expense
(income)
|
(71)
|
|
(73)
|
|
(2)
|
|
(1,847)
|
|
(256)
|
|
1,591
|
Share based
compensation
|
37
|
|
70
|
|
33
|
|
103
|
|
243
|
|
140
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
905
|
|
812
|
|
(93)
|
|
2,511
|
|
2,485
|
|
(26)
|
Depreciation and
amortization
|
4,415
|
|
6,136
|
|
1,721
|
|
13,383
|
|
18,639
|
|
5,256
|
|
3,151
|
|
1,090
|
|
2,061
|
|
(275)
|
|
(8,893)
|
|
8,618
|
Equity income on
investment in
|
|
|
|
|
|
|
|
|
|
|
|
|
hotel
properties
|
439
|
|
435
|
|
4
|
|
981
|
|
913
|
|
68
|
Provision for
impairment
|
(235)
|
|
-
|
|
(235)
|
|
(235)
|
|
(43,574)
|
|
43,339
|
Change in fair value
of financial
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments:
gain
|
-
|
|
-
|
|
-
|
|
-
|
|
90
|
|
(90)
|
Income tax recovery
(expense)
|
-
|
|
(135)
|
|
135
|
|
24
|
|
(16,504)
|
|
16,528
|
Net income (loss)
and
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
(loss)
|
$3,355
|
|
$1,390
|
|
$1,965
|
|
$495
|
|
($67,968)
|
|
$68,463
|
Per Common Share
Results:
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$0.13
|
|
$0.11
|
|
|
|
$0.02
|
|
($5.23)
|
|
|
Hotel Revenue
Analysis of Total
Hotel Revenues
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
|
|
|
Increase/
|
|
|
|
|
Increase/
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
2017
|
|
2016
|
|
(Decrease)
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
6,239
|
|
$
|
6,811
|
|
$
|
(572)
|
|
$
|
17,290
|
|
$
|
15,701
|
|
$
|
1,589
|
|
Other hotel
revenue
|
|
277
|
|
|
455
|
|
|
(178)
|
|
|
962
|
|
|
1,681
|
|
|
(719)
|
|
$
|
6,516
|
|
$
|
7,266
|
|
$
|
(750)
|
|
$
|
18,252
|
|
$
|
17,382
|
|
$
|
870
|
Other
Alberta
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
4,702
|
|
$
|
4,780
|
|
$
|
(78)
|
|
$
|
13,109
|
|
$
|
13,922
|
|
$
|
(813)
|
|
Other hotel
revenue
|
|
3,503
|
|
|
3,501
|
|
|
2
|
|
|
12,812
|
|
|
12,991
|
|
|
(179)
|
|
$
|
8,205
|
|
$
|
8,281
|
|
$
|
(76)
|
|
$
|
25,921
|
|
$
|
26,913
|
|
$
|
(992)
|
Other
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
24,691
|
|
$
|
23,228
|
|
$
|
1,463
|
|
$
|
61,387
|
|
$
|
59,417
|
|
$
|
1,970
|
|
Other hotel
revenue
|
|
6,202
|
|
|
5,890
|
|
|
312
|
|
|
18,317
|
|
|
17,294
|
|
|
1,023
|
|
$
|
30,893
|
|
$
|
29,118
|
|
$
|
1,775
|
|
$
|
79,704
|
|
$
|
76,711
|
|
$
|
2,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ‑ Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
35,632
|
|
$
|
34,819
|
|
$
|
813
|
|
$
|
91,786
|
|
$
|
89,040
|
|
$
|
2,746
|
|
Other hotel
revenue
|
|
9,982
|
|
|
9,846
|
|
|
136
|
|
|
32,091
|
|
|
31,966
|
|
|
125
|
|
Total hotel
revenue
|
$
|
45,614
|
|
$
|
44,665
|
|
$
|
949
|
|
$
|
123,877
|
|
$
|
121,006
|
|
$
|
2,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ‑ Sold
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
487
|
|
$
|
607
|
|
$
|
(120)
|
|
$
|
1,828
|
|
$
|
1,965
|
|
$
|
(137)
|
|
Other hotel
revenue
|
|
5
|
|
|
8
|
|
|
(3)
|
|
|
29
|
|
|
30
|
|
|
(1)
|
|
Total hotel
revenue
|
$
|
492
|
|
$
|
615
|
|
$
|
(123)
|
|
$
|
1,857
|
|
$
|
1,995
|
|
$
|
(138)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
36,119
|
|
$
|
35,426
|
|
$
|
693
|
|
$
|
93,614
|
|
$
|
91,005
|
|
$
|
2,609
|
|
Other hotel
revenue
|
|
9,987
|
|
|
9,854
|
|
|
133
|
|
|
32,120
|
|
|
31,996
|
|
|
124
|
|
Total hotel
revenue
|
$
|
46,106
|
|
$
|
45,280
|
|
$
|
826
|
|
$
|
125,734
|
|
$
|
123,001
|
|
$
|
2,733
|
During the third quarter of 2017, Same Property room revenue
increased by $0.8 million or 2%,
compared to the third quarter of 2016. The increase is comprised of
a $1.5 million (6%) increase in the
Other Canada portfolio, partially offset by a $0.6 million (8%) decrease in the Fort McMurray portfolio and a $0.1 million (2%) decrease in the Other Alberta
portfolio.
The increase in Same Property room revenue during the third
quarter of 2017, compared to the third quarter of 2016, is largely
due to an increase in occupancy and RevPar for the Other Canada
segment, partially offset by the continued unfavourable market
conditions affecting oil‑dependent markets in the Fort McMurray and Other Alberta
segments.
Room Revenue Statistics
As disclosed in the following chart, for the third quarter ended
September 30, 2017, RevPar for the
Same Property portfolio was $102.26,
compared to $99.95 for the third
quarter ended September 30, 2016.
For the nine months ended September 30,
2017, RevPar for the Same Property portfolio was
$88.54, compared to $85.64 for the nine months ended 2016.
RevPar for the Same Property portfolio generally reflects
increased occupancy levels in the Fort
McMurray and Other Canada segments, offset by reduced ADR
levels in the Fort McMurray and
Other Alberta segments.
Occupancy at the Fort McMurray
properties increased during the third quarter of 2017 compared to
the third quarter of 2016, but is still impacted by the
unfavourable market conditions in Alberta.
Room Revenue
Statistics
|
|
|
Three Months Ended
September 30
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
2016
|
|
|
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
54%
|
|
$
|
138.20
|
|
$
|
73.98
|
|
53%
|
|
$
|
154.00
|
|
$
|
81.46
|
Other
Alberta
|
|
57%
|
|
$
|
117.90
|
|
$
|
67.78
|
|
58%
|
|
$
|
119.75
|
|
$
|
68.91
|
Other
Canada
|
|
81%
|
|
$
|
154.64
|
|
$
|
125.38
|
|
80%
|
|
$
|
147.76
|
|
$
|
118.09
|
Total – Same
Property
|
|
70%
|
|
$
|
145.75
|
|
$
|
102.26
|
|
69%
|
|
$
|
144.12
|
|
$
|
99.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
Property
|
|
55%
|
|
$
|
130.46
|
|
$
|
71.13
|
|
54%
|
|
$
|
135.60
|
|
$
|
73.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall
Portfolio
|
|
70%
|
|
$
|
145.52
|
|
$
|
101.65
|
|
69%
|
|
$
|
143.94
|
|
$
|
99.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room Revenue
Statistics
|
|
|
Nine Months Ended
September 30
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
2016
|
|
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
49%
|
|
$
|
138.65
|
|
$
|
68.50
|
|
39%
|
|
$
|
157.97
|
|
$
|
61.53
|
Other
Alberta
|
|
53%
|
|
$
|
120.11
|
|
$
|
63.69
|
|
54%
|
|
$
|
125.26
|
|
$
|
67.41
|
Other
Canada
|
|
72%
|
|
$
|
145.23
|
|
$
|
105.08
|
|
71%
|
|
$
|
141.23
|
|
$
|
100.55
|
Total – Same
Property
|
|
63%
|
|
$
|
139.83
|
|
$
|
88.54
|
|
61%
|
|
$
|
141.18
|
|
$
|
85.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
Property
|
|
60%
|
|
$
|
131.42
|
|
$
|
79.01
|
|
60%
|
|
$
|
133.70
|
|
$
|
79.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall
Portfolio
|
|
63%
|
|
$
|
139.65
|
|
$
|
88.33
|
|
61%
|
|
$
|
140.98
|
|
$
|
85.50
|
The above chart does not reflect the operating results for the
Cortona Residence, which is 100% leased at an annual net rent of
$2.1 million.
Operating Income and Profit Margin
Operating Income
and Profit Margin
|
|
|
|
|
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
|
Operating
Income
|
|
Operating Profit
Margin
|
|
Operating
Income
|
|
Operating Profit
Margin
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
$2,605
|
|
$4,238
|
|
40%
|
|
58%
|
|
$6,982
|
|
$8,204
|
|
38%
|
|
47%
|
Other
Alberta
|
1,191
|
|
1,243
|
|
15%
|
|
15%
|
|
3,767
|
|
4,446
|
|
15%
|
|
17%
|
Other
Canada
|
11,298
|
|
10,444
|
|
37%
|
|
36%
|
|
24,061
|
|
22,937
|
|
30%
|
|
30%
|
Total ‑ Same
Property
|
$15,094
|
|
$15,925
|
|
33%
|
|
36%
|
|
$34,810
|
|
$35,587
|
|
28%
|
|
29%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold
Property
|
$96
|
|
$127
|
|
20%
|
|
21%
|
|
$496
|
|
$546
|
|
27%
|
|
27%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
portfolio
|
$15,190
|
|
$16,052
|
|
33%
|
|
35%
|
|
$35,306
|
|
$36,133
|
|
28%
|
|
29%
|
After accounting for the increase in total revenues and the
increase in hotel operating costs, operating income decreased by
$0.9 million or 5% during the third
quarter of 2017, compared to the third quarter of 2016. The
decrease is comprised of a decrease of $1.6
million or 39% for the Fort
McMurray segment and a decrease of $0.1 million or 4% for the Other Alberta segment,
partially offset by an increase of $0.8
million or 8% in operating income for the Fort McMurray segment.
For the first nine months of 2017, operating income decreased by
$0.8 million or 2% compared to the
first nine months of 2016, which was comprised of a decrease of
$1.2 million or 15% for the
Fort McMurray segment, a decrease
of $0.7 million or 15% for the Other
Alberta segment and a decrease of $0.1
million for the Sold Property segment, partially offset by
an increase of $1.1 million or 5% in
operating income for the Fort
McMurray segment.
As disclosed in the preceding chart, the overall profit margin
of the entire hotel portfolio was at 33% for the third quarter of
2017 compared to 35% for the third quarter of 2016. For the nine
months ended September 30, 2017, the
overall profit margin was 28%, compared to 29% for the nine months
ended September 30, 2016.
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.E and TPH.DB.F (convertible
debentures). The primary long‑term investment objectives of the
Company are to yield stable and growing cash flows and to maximize
the long‑term share value of the Company through the active
management of its assets, accretive acquisitions, and the
performance of value‑added capital improvement programs on selected
properties, as deemed appropriate. 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.
SOURCE Temple Hotels Inc.