AMERICAN HOTEL INCOME PROPERTIES REIT LP ANNOUNCES Q3 2014 FINANCIAL RESULTS
Transcription
AMERICAN HOTEL INCOME PROPERTIES REIT LP ANNOUNCES Q3 2014 FINANCIAL RESULTS
AMERICAN HOTEL INCOME PROPERTIES REIT LP ANNOUNCES Q3 2014 FINANCIAL RESULTS “Portfolio and profit growth continues” All amounts expressed in U.S. dollars unless otherwise indicated. VANCOUVER, B.C. (November 13, 2014) – 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% - PAGE 1 OF 5 AMERICAN HOTEL INCOME PROPERTIES REIT LP Suite 1660 • 401 West Georgia Street • Vancouver • British Columbia • Canada • V6B 5A1 • Telephone (604) 630-3134 • Fax (604) 629-0790 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 overallotment 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 - PAGE 2 OF 5 AMERICAN HOTEL INCOME PROPERTIES REIT LP Suite 1660 • 401 West Georgia Street • Vancouver • British Columbia • Canada • V6B 5A1 • Telephone (604) 630-3134 • Fax (604) 629-0790 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 - PAGE 3 OF 5 AMERICAN HOTEL INCOME PROPERTIES REIT LP Suite 1660 • 401 West Georgia Street • Vancouver • British Columbia • Canada • V6B 5A1 • Telephone (604) 630-3134 • Fax (604) 629-0790 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. - PAGE 4 OF 5 AMERICAN HOTEL INCOME PROPERTIES REIT LP Suite 1660 • 401 West Georgia Street • Vancouver • British Columbia • Canada • V6B 5A1 • Telephone (604) 630-3134 • Fax (604) 629-0790 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. For further information, please contact: Andrew Greig, Investor Relations American Hotel Income Properties REIT LP Suite 1660 – 401 West Georgia Street, Vancouver, B.C. V6B 5A1 Phone: 604-633-2857 Email: [email protected] THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS NEWS RELEASE. - PAGE 5 OF 5 AMERICAN HOTEL INCOME PROPERTIES REIT LP Suite 1660 • 401 West Georgia Street • Vancouver • British Columbia • Canada • V6B 5A1 • Telephone (604) 630-3134 • Fax (604) 629-0790