"Portfolio and profit growth
continues"
All amounts expressed in U.S. dollars unless
otherwise indicated.
VANCOUVER, Nov. 13, 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 nine months ended September 30,
2014.
AHIP's current property portfolio is comprised of 55 hotels
located in 22 states, representing 4,741 available guestrooms.
Since its IPO in February 2013, AHIP
has increased its total asset base by 89% from approximately
$170 million to approximately
$322 million.
Q3 2014 FINANCIAL HIGHLIGHTS
- Funds from operations ("FFO") and adjusted funds from
operations ("AFFO") were $5.4 million
and $4.9 million, respectively, in
the current quarter compared to $2.7
million and $2.5 million,
respectively, for the same period last year reflecting the addition
of 14 new hotels or almost 1,400 guestrooms
- For the current quarter, FFO per unit – As Reported was
$0.28 compared to $0.26 for the same period last year. Core
FFO per unit (which adjusts for the dilutive impact of partial cash
proceeds from the June 2014 unit
offering and the initial public offering that were not deployed
until after September 30, 2014 and
September 30, 2013, respectively) was
$0.32 compared to $0.29 for the same period last year
- For the current quarter, AFFO per unit – As Reported was
$0.25 compared to $0.24 for the same period last year. Core
AFFO per unit (which adjusts for the dilutive impact of cash
proceeds from the June 2014 unit
offering and the initial public offering that were not deployed
until after September 30, 2014 and
September 30, 2013, respectively) was
$0.29 compared to $0.26 for the same period last year
- For the current quarter, the AFFO payout ratio was 81.8%
compared to 89.9% for the same period last year
- Operating results were boosted by the acquisition of four
Pittsburgh hotels in November 2013 (471 rooms), four Virginia hotels in March 2014 (403 rooms), four North Carolina/Georgia hotels in July 2014 (387 rooms) and new Oak Tree Inn
properties in New Mexico in
May 2014 (56 rooms) and Missouri in February
2014 (77 rooms)
- Occupancy was 85.1% for the current quarter compared to 84.7%
for the same period last year. Average daily rates ("ADR") for the
quarter were up 28.3% to $72.04
compared to $56.13 in 2013. This
resulted in revenue per available room ("RevPAR") gains of 28.9% to
$61.31 compared to $47.55 for the same period last year. The
Branded Hotels contributed to the higher ADR as these properties
benefited from the growth in the U.S. lodging industry. The
Rail Hotels contributed to the increased occupancy as rail traffic
volumes continued to improve reflecting the broader strength of the
U.S. economy
- Both operating segments saw year-over-year RevPAR increases for
the most recent quarter with the Branded Hotels up by 7.5% in line
with the broader U.S. hotel industry growth in RevPAR, and the Rail
Hotels were up by 3.9%
- Total revenues for the quarter increased to $25.5 million compared to $14.3 million for the same period last year
reflecting gains of 78.3%
- Net operating income ("NOI") for the quarter was up 93.3% to
$9.4 million compared to $4.9 million in the same period last year
- Total distributions of Cdn$0.225
per unit were declared during the three months ended September 30, 2014, representing Cdn$0.90 per unit on an annualized basis
- As at September 30, 2014, AHIP
had a cash balance of $33.0 million,
excluding restricted cash of $14.9
million for brand mandated property improvement plans and
funds held in escrow of $2.1 million
for acquisitions that were completed during the fourth quarter
- Debt to gross book value was 47.9% as at September 30, 2014, below AHIP's targeted debt to
gross book value ratio of between 50-55%
U.S. lodging fundamentals continued to exhibit strength through
the first nine months of 2014 and according to Smith Travel
Research Inc. ("STR"), year-to-date room demand, ADR, RevPAR, and
total room revenue hit all-time highs. During the seasonally strong
third quarter 2014 period, U.S. hotel occupancy increased by 3.8%
to 70.3%, ADR increased by 5.2% to $117.91, and RevPAR increased by 9.2% to
$82.93. Demand increased by
4.8% during the third quarter, while supply increased by a marginal
0.9%. The expectation is that this trend will continue for
the balance of the year and continue into 2015 with ADR growth
leading the way.
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 a brisk pace in the U.S., fueled
by demand for high quality products and availability of low cost
debt for hotel transactions, particularly deals with modest
leverage in the 50-55% range. 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 October 27, 2014 AHIP
completed the acquisition of the Texas Portfolio consisting of
three hotels totaling 293 rooms located in Amarillo, Texas for $31.4 million (or approximately $107,000 per room) before closing adjustments and
brand mandated property improvement plans of up to $0.4 million. The hotels include one
Intercontinental Hotels Group-branded hotel (a 151-room Holiday
Inn), a Marriott-branded hotel (a 79-room Fairfield Inn &
Suites) and one Choice branded hotel (a 63-room Sleep Inn &
Suites). The properties are all less than five years old and are in
very good physical condition. The acquisition was funded
using a combination of cash on hand and a new $16.0 million, 10 year, interest-only, CMBS
mortgage with a fixed interest rate of 4.20%
- On October 28, 2014 AHIP
completed the issuance of 4.8 million units (including the partial
exercise of the over-allotment option) for total gross proceeds of
Cdn$50.3 million. A portion of the
cash proceeds was used to fund the acquisition of the Oklahoma
Portfolio and the remaining cash proceeds may be utilized for
future acquisitions currently under review
- On October 28, 2014, AHIP
acquired from SunOne Developments Inc. ("SunOne") a new-build 50
room Oak Tree Inn hotel and Penny's Diner in Glendive, Montana for $4.9 million. The acquisition was funded by
a combination of cash on hand, advances from the construction
facility and the issuance of $400,000
in AHIP units further increasing the alignment between SunOne and
AHIP
- On November 3, 2014 AHIP
completed the acquisition of the Oklahoma Portfolio consisting of
four hotels totaling 440 rooms located in and around Oklahoma City, Oklahoma for $48.0 million (or approximately $109,000 per room) before closing adjustments and
brand mandated property improvement plans of $0.7 million. The hotels include three
Intercontinental Hotels Group-branded hotels (a 147-room Holiday
Inn, a 109-room Holiday Inn, and a 103-room Staybridge Suites) and
one Hilton-branded hotel (an 81-room Hampton Inn & Suites). The
properties are all less than four years old and are in very good
physical condition. The acquisition was funded using a
combination of cash on hand and a new $25.5
million, 10 year, interest-only, CMBS mortgage with a fixed
interest rate of 4.20%
AHIP's pipeline of potential accretive hotel acquisitions
remains strong and management continues to review multiple select
service portfolios that meet our acquisition criteria at prices
below replacement cost. SunOne's railway hotel development
pipeline is scheduled to deliver two new Oak Tree Inn Hotels
(totaling 135 guestrooms) within the next 90 days, each secured by
long-term railway contracts with national rail companies that will
guarantee approximately 78% of their available room nights. Upon
completion of these previously announced development projects, AHIP
will own a total of 57 hotels in 23 states comprising 4,876 guest
rooms.
Robert O'Neill, CEO of AHIP,
commented "Portfolio and profit growth are continuing.
AHIP is performing well after its first 19 months of
operations since its IPO in February
2013. We continue to see exceptional year over year growth
in the Branded Hotel portfolios, which benefitted from the
seasonally strong third quarter. The U.S. dollar has strengthened,
which provides a positive tailwind for our monthly Canadian Dollar
denominated distributions. The U.S. hotel industry continues to
demonstrate strong fundamentals and the outlook remains positive
for 2015. Furthermore, capital and debt markets continue to be
receptive to AHIP's strategy of building a solid and reliable
income stream for its investors through contracted growth in its
Oak Tree Inn Rail Hotels segment and accretive, conservatively
financed acquisitions in its select service Branded Hotels segment,
all at a buoyant time for the U.S. hotel industry."
Q3 2014 FINANCIAL RESULTS CONFERENCE CALL
AHIP will host a conference call at 4:00
p.m. (EST), 1:00 p.m. (PST) on
Friday November 14, 2014, to review
the financial results and corporate developments for the three and
nine months ended September 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 AHIP conference
call.
Dial in numbers
Toll free (Canada and
U.S.)
|
1-888-390-0546
|
International or
Local Toronto
|
1-416-764-8688
|
|
|
Conference Call Replay
If you cannot participate on Friday
November 14, 2014, 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 two hours
after the call end time, and the replay will be available until
Friday November 21, 2014. An
audio recording of this conference call will also be available at
www.ahipreit.com under the "Presentations and Calls" tab.
Please enter the Replay ID#347093 followed by the # key.
Replay dial–in toll
free (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, Core FFO per unit, AFFO, AFFO per unit, Core AFFO per unit
and 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, Core FFO per
unit, AFFO, AFFO per unit, Core AFFO per unit and 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, Core FFO per unit, AFFO, AFFO per unit, Core 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
November 13, 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 unused
cash proceeds from the June 2014 unit
offering and the initial public 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 issuers.
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; ability to
acquire additional 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
branded, select service 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 nine months
ended September 30, 2014, AHIP's
MD&A dated November 13, 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