"Portfolio and profit growth remain on
track"
All amounts expressed in U.S. dollars unless
otherwise indicated.
VANCOUVER, Aug. 14, 2014 /CNW/ - American Hotel Income
Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF)
today announced the release of its financial results for the three
months and six months ended June 30,
2014.
AHIP's current property portfolio is comprised of 47 hotels
located in 22 states, representing 3,958 available guest
rooms. Since its IPO in February
2013, AHIP has increased its asset base to over $300 million.
Q2 2014 FINANCIAL HIGHLIGHTS
- Funds from operations ("FFO") and adjusted funds from
operations ("AFFO") were $4.4 million
and $4.1 million, respectively, in
the current quarter compared to $2.6
million and $2.4 million,
respectively, for the same period last year, an increase of 69.2%
and 70.8%, respectively
- For the current quarter, FFO per unit – As Reported was
$0.28 and Core FFO per unit (which
adjusts for the dilutive impact of the June
2014 unit offering) was $0.31,
compared to FFO per unit of $0.25 in
the prior period
- For the current quarter, AFFO per unit – As Reported was
$0.26 and Core AFFO per unit (which
adjusts for the dilutive impact of the June
2014 unit offering) was $0.28,
compared to AFFO per unit of $0.23 in
the prior period
- Operating results were boosted by the acquisition of four
Pittsburgh hotels in November 2013 (471 rooms), four Virginia hotels in March 2014 (403 rooms) and new Oak Tree Inn
properties opened in New Mexico in
May 2014 (56 rooms) and Missouri in February
2014 (77 rooms)
- Occupancy was 84.9% for the current quarter compared to 83.6%
for the prior period. Average daily rates ("ADR") for the
quarter were up 25.7% to $71.10
compared to $56.55 in 2013.
This resulted in RevPAR gains of 27.7% to $60.36 compared to $47.27 for the same period last year
- Total revenues for the quarter increased to $22.5 million compared to $13.6 million for the prior period reflecting
gains of 65.4%
- Net operating income ("NOI") for the quarter was up 66.7% to
$8.0 million compared $4.8 million in the same period last year
- For the current quarter, the AFFO payout ratio was 81.4%
compared to 96.6% in the prior period
- Total distributions of Cdn$0.225
per unit were declared during the three months ended June 30, 2014, representing Cdn$0.90 per unit on an annualized basis
- As at June 30, 2014, AHIP had a
cash balance of $35.7 million,
excluding restricted cash of $12.5
million for brand mandated property improvement plans and
funds held in escrow of $15.7 million
for the Southeastern Portfolio acquisition that was completed in
early July 2014
- Debt to gross book value was 45.2% as at June 30, 2014, below AHIP's targeted debt to
gross book value ratio of between 50-55%
Fundamentals have remained strong in the U.S. lodging through
the first half of 2014. According to STR, second quarter
performance in the U.S. was very strong, propelling key lodging
metrics to their high watermarks with June
2014 hotel occupancy of 71.7%, which was higher than the
previous high watermark of 71.1% set in June 2007. As
of June 2014, the U.S. 12 month
moving average demand growth was 3.2% while supply growth remained
muted at 0.8%, resulting in the 12 month moving average ADR growing
by 3.9% to $112 and RevPAR growth of
6.4% to $71. AHIP continues to
expect strong performance in the U.S. lodging industry for the
balance of the year.
Overall, U.S. rail traffic continued at decade high levels as
intermodal transport continues to outpace all other
categories. The strong performance has resulted in railway
companies increasing short term requirements and guarantees at
selected hotels. For the Oak Tree Inn Hotels portfolio, the
number of railway rooms currently guaranteed is approximately
75%.
Hotel transactions continue at strong levels in the U.S., fueled
by debt availability for hotel transactions, particularly lower
leverage deals in the 50-55% loan-to-value range. AHIP was
successful in recently placing a 10 year fixed rate CMBS mortgage
at 4.72% with the first three years as interest only as part of the
recent Southeastern Portfolio transaction that was completed in
early July 2014. AHIP continues to review its existing debt
maturities in an effort to extend the term and reduce refinancing
risk during the current low interest rate environment.
RECENT EVENTS
- On May 1, 2014, SunOne
Developments Inc. ("SunOne") delivered to AHIP a new-build 56 room
Oak Tree Inn Hotel and Penny's Diner in Santa Teresa, New Mexico secured by a long
term railway contract. Partial consideration included the
issuance of 101,247 AHIP units further increasing the alignment
between SunOne and AHIP
- On June 4, 2014 AHIP completed
the issuance of 4.9 million units (including the partial exercise
of the over-allotment option) for total gross proceeds of
Cdn$50.7 million. Partial cash
proceeds were used to fund the acquisition of the Southeastern
Portfolio
- In July 2014, AHIP completed the
acquisition of the Southeastern Portfolio consisting of four hotels
totaling 387 rooms located in North
Carolina and Georgia for $30.5
million (or approximately $79,000 per room) before closing adjustments and
brand mandated property improvement plans of $1.5 million. Three of the hotels were
acquired on July 3, 2014 and the
fourth hotel was acquired on July 11,
2014. The hotels include three Marriott-branded hotels (a
107-room SpringHill Suites, an 87-room Fairfield Inn and Suites and
an 82-room Fairfield Inn and Suites) and one Hilton branded
property (a 111-room Hampton Inn). The properties are on
average 10 years old and were acquired at a cost significantly less
than management's estimate of replacement value
- Negotiations have concluded with the renewal of two railway
contracts and management continues to pursue several new rail hotel
projects and conversions
AHIP's pipeline of potential hotel acquisitions remains strong
and management continues to review multiple select service
portfolios that meet our acquisition criteria at prices well below
replacement cost. Furthermore, SunOne's railway hotel
development pipeline is scheduled to deliver three new Oak Tree Inn
Hotels (totaling 185 rooms) in late 2014, all secured by long-term
railway contracts with national rail companies which will guarantee
approximately 78.4% of their available room nights. Upon
completion of these previously announced development projects, AHIP
will own a total of 50 hotels in 24 states comprising 4,143 guest
rooms. This represents a 65% increase in AHIP's total guest rooms
in just over 12 months and a 15% increase in AHIP's Railway
Portfolio over the same period.
Robert O'Neill, CEO of AHIP,
commented "Portfolio and profit growth remain on track. AHIP
is performing strongly after its first 16 months of operations
since its IPO in February 2013. Strong cyclical revenue
during the second quarter was supported by solid railroad traffic
growth at the Oak Tree Inn Hotels and exceptional year over year
growth in the Branded Hotel portfolios. We feel well
positioned to take advantage of the typically seasonally strong
third quarter and the remainder of 2014. The U.S. dollar also
continues to strengthen which also supports our FFO. The U.S.
hotel industry continues to demonstrate strong fundamentals and the
outlook is exceptionally positive. Furthermore, capital and
debt markets remain receptive to AHIP, which should enable further
accretive growth."
Q2 2014 FINANCIAL RESULTS CONFERENCE CALL
Robert O'Neill, CEO, Azim Lalani, CFO and Robert Hibberd, Executive Vice President of AHIP
will host a conference call at 4:00 p.m.
(Eastern time)/1:00 p.m. (Pacific
time) on Friday August 15,
2014, to review the financial results and corporate
developments for the three month and six month periods ended
June 30, 2014.
To participate in this conference call, please dial one of the
following numbers approximately 10 minutes prior to the
commencement of the call, and ask to join the American Hotel Income
Properties conference call.
Dial in numbers
Toll free dial in
number (from Canada and
U.S.)
|
1-888-390-0546
|
International or
Local
Toronto
|
1-416-764-8688
|
Conference Call Replay
If you cannot participate on August
15, a replay of the conference call will be available by
dialing one of the following replay numbers. You will be able to
dial in and listen to the conference call 120 minutes after the
meeting end time, and the replay will be available until
August 22, 2014.
Please enter the Replay ID# 453060 followed by the # key.
Replay toll free dial
in number (from Canada and U.S.)
|
1-888-390-0541
|
International or
Local
Toronto
|
1-416-764-8677
|
NON-IFRS MEASURES
Certain non-IFRS financial measures are included in this news
release, which include ADR, RevPAR, NOI, FFO, FFO per unit, Core
FFO per unit, AFFO, AFFO per unit, Core AFFO per unit, payout ratio
and debt to gross book value. These terms are not measures
recognized under International Financial Reporting Standards
("IFRS") and do not have standardized meanings prescribed by
IFRS. Real estate investment trusts often refer to NOI, FFO,
FFO per unit, AFFO, AFFO per unit, payout ratio as supplemental
measures of performance and debt to gross book value as a
supplemental measure of financial condition.
Debt to gross book value, NOI, FFO, FFO per unit, AFFO, AFFO per
unit, payout ratio should not be construed as alternatives to
measurements determined in accordance with IFRS as indicators of
AHIP's performance or financial condition. AHIP's method of
calculating NOI, FFO, FFO per unit, AFFO, AFFO per unit, payout
ratio, debt and gross book value may differ from other issuers'
methods and accordingly may not be comparable to measures used by
other issuers. For further information, please refer to AHIP's
Management's Discussion and Analysis ("MD&A") dated
August 14, 2014, which is available
on SEDAR at www.sedar.com and on AHIP's website at
www.ahipreit.com.
Management believes that the computation of FFO per unit – As
Reported and AFFO per unit – As Reported includes certain items
that are not indicative of the results provided by AHIP's operating
portfolio and affect the comparability of AHIP's period-over-period
performance. These items include the dilutive impact of the
June 4, 2014 unit offering.
Therefore, in addition to FFO per unit – As Reported and AFFO per
unit – As Reported, management uses Core FFO per unit and Core AFFO
per unit to exclude such items. Management believes that Core
FFO per unit and Core AFFO per unit are useful supplemental
measures, however, these may not be comparable to the adjusted or
modified FFOs per unit or AFFOs per unit of other REITs.
FORWARD-LOOKING INFORMATION
Certain statements in this press release may constitute
"forward-looking" information that involves known and unknown
risks, uncertainties and other factors, and it may cause actual
results, performance or achievements or industry results, to be
materially different from any future results, performance or
achievements or industry results expressed or implied by such
forward-looking information. Forward-looking information is
identified by the use of terms and phrases such as "anticipate",
"believe", "could", "estimate", "expect", "feel", "intend", "may",
"plan", "predict", "project", "subject to", "will", "would", and
similar terms and phrases, including references to assumptions.
Forward-looking statements are provided for the purpose of
presenting information about management's current expectations and
plans relating to the future and readers are cautioned that such
statements may not be appropriate for other purposes.
Forward-looking statements involve significant risks and
uncertainties and should not be read as guarantees of future
performance or results. Those risks and uncertainties include,
among other things, risks related to: general economic conditions;
unit prices; liquidity; tax risk; ability to access capital
markets; competition for real property investments; environmental
matters and changes in legislation. Management believes that the
expectations reflected in forward-looking statements are based upon
reasonable assumptions and information currently available;
however, management can give no assurance that actual results will
be consistent with these forward-looking statements.
Additional information about risks and uncertainties is contained
in AHIP's annual information form for the year ended December 31, 2013 available on SEDAR at
www.sedar.com.
The forward-looking information contained herein is expressly
qualified in its entirety by this cautionary statement.
Forward-looking information reflects management's current beliefs
and is based on information currently available to AHIP. The
forward-looking information is made as of the date of this press
release and AHIP assumes no obligation to update or revise such
information to reflect new events or circumstances, except as may
be required by applicable law.
ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP
AHIP is a limited partnership formed under the Limited
Partnerships Act (Ontario) to
invest in hotel real estate properties located substantially in
the United States and engaged
primarily in the railway employee accommodation, transportation,
and contract-focused lodging sectors.
AHIP's long-term objectives are to:
(i)
|
generate stable and
growing cash distributions from hotel properties substantially in
the U.S.;
|
(ii)
|
enhance the value of
its assets and maximize the long-term value of the hotel properties
through active management; and
|
(iii)
|
expand its asset base
and increase its AFFO per unit through an accretive acquisition
program, participation in strategic development opportunities and
improvements to its properties through targeted value-added capital
expenditure programs.
|
ADDITIONAL INFORMATION
Additional information relating to AHIP, including AHIP's
interim financial statements for the three months and six months
ended June 30, 2014, AHIP's MD&A
dated August 14, 2014, and other
public filings are available on SEDAR at www.sedar.com and on
AHIP's website at www.ahipreit.com.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT
ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS NEWS
RELEASE.
SOURCE American Hotel Income Properties REIT LP