"GROWTH AND MOMENTUM ACCELERATE"
All amounts expressed in U.S. dollars unless
otherwise indicated.
VANCOUVER, March 19, 2015 /CNW/ - American Hotel Income
Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF)
announced today the release of its financial results for the three
months and fiscal year ended December 31,
2014.
Rob O'Neill, CEO of AHIP,
commented "Portfolio and profit growth are accelerating.
AHIP has performed well since its IPO in February 2013. Our market capitalization has
almost tripled from Cdn$100 million
to over Cdn$270 million during the
past two years. We continue to see exceptional year-over-year
growth in the Branded Hotel portfolios, which are benefiting from
historically strong U.S. hotel lodging fundamentals. Our
hotel manager, ONE Hospitality Group, has made significant progress
in integrating the new hotels added during the last quarter and
implementing various strategies to improve net operating
income. The U.S. dollar continues to strengthen, which
provides a positive tailwind for our monthly Canadian Dollar
denominated distributions and our net asset values. Furthermore,
capital and debt markets continue to be receptive to AHIP's
strategy of building a solid and reliable income stream for
investors through contracted growth in its Oak Tree Inn Rail Hotels
segment and accretive, conservatively financed acquisitions, below
replacement cost, in the select-service Branded Hotels
segment."
FOURTH QUARTER 2014 HIGHLIGHTS
- Funds from operations ("FFO") and
adjusted funds from operations ("AFFO")
were $4.7 million and $4.2 million, respectively, for the current
quarter compared to $1.3 million and
$1.7 million, respectively, for the
same period last year reflecting the addition of 22 new hotels
comprising over 2,000 guestrooms
- For the current quarter, Diluted FFO per Unit – As Reported was
$0.21 (2013 - $0.10). Diluted Core FFO per Unit (which adjusts
for securities-based compensation expenses and a one-time recovery
of insurance proceeds) was $0.19
(2013 - $0.15)
- For the current quarter, Diluted AFFO per Unit – As Reported
was $0.18 (2013 - $0.13). Diluted Core AFFO per Unit (which adjusts
for a one-time recovery of insurance proceeds) was $0.16 (2013 - $0.13)
- The portfolio generated RevPAR gains of 20.0% to $56.19 (2013 - $46.66) resulting from occupancy for the current
quarter at 77.9% (2013 – 77.7%) reflecting the stability of the
Rail Hotels and average daily rates ("ADR") for the quarter rising by 20.1% to $72.15 (2013 - $60.07). The Branded Hotels contributed to the
higher ADR as these properties benefited from the growth in the
U.S. lodging industry
- Pro-forma RevPAR for the Branded Hotels acquired during the
year, which includes operating results for periods prior to their
ownership by AHIP, was up 6.4%
- Same-property occupancy, which includes the Rail Hotels only
for this quarter, was up to 84.0% compared to 79.4% in the prior
year
- Total revenues for the quarter increased to $27.8 million compared to $14.5 million for the prior period
- Net operating income ("NOI") for the
quarter was $9.1 million compared to
$4.4 million in the same period last
year
- Acquired 11 Branded Hotels in Florida, North
Carolina, Oklahoma and
Texas adding 1,086 guestrooms to
the Branded Hotel segment
- Acquired two new railway hotels (75 guestrooms) in Maryland and Montana from SunOne Developments Inc.
("SunOne"). Both hotels have long-term
railway agreements that guarantee the majority of the available
room nights
- Completed a successful bought deal equity offering in
October 2014 which raised
Cdn$50.3 million and was fully
deployed during the quarter
FULL YEAR 2014 FINANCIAL HIGHLIGHTS
- FFO and AFFO were $16.6 million
and $15.0 million, respectively, for
the current year compared to $7.4
million and $7.2 million,
respectively, for the same period last year reflecting the
portfolio acquisitions during the year
- For the current year, Diluted FFO per Unit – As Reported was
$0.91 (2013 - $0.74). Diluted Core FFO per Unit (which adjusts
for securities-based compensation expenses and a one-time recovery
of insurance proceeds) was $0.91
(2013 - $0.80)
- For the current year, Diluted AFFO per Unit – As Reported was
$0.82 (2013 - $0.72). Diluted Core AFFO per Unit (which adjusts
for a one-time recovery of insurance proceeds) was $0.80 (2013 - $0.72)
- RevPAR gains of 22% to $57.47
compared to $47.12 for the same
period last year reflecting the impact of the higher ADR
contribution from the Branded Hotels as these properties benefited
from the growth in the U.S. lodging industry
- Pro-forma RevPAR for the Branded Hotels acquired during the
year, which includes operating results for periods prior to their
ownership by AHIP, was up 6.7% in line with industry growth
rates
- Total revenues increased to $93.1
million compared to $48.1
million for the prior period reflecting gains of 93.8%
- NOI for the current year was up 99.4% to $32.0 million compared to $16.0 million in the same period last year
- AFFO payout ratio was 100.2% down from 114.9% in the prior
year. Management estimates that at current exchange rates the
run-rate AFFO payout ratio will be well below 100%
- A conservative debt-to-gross book value ratio of 51.5% as at
December 31, 2014
- Interest coverage ratio was 3.0x (2013 – 3.1x); weighted
average interest rate declined to 4.73% (2013 - 4.89%) and the
weighted average loan term to maturity increased to 7.5 years (2013
- 6.3 years)
- As at December 31, 2014, AHIP had
cash balances of $12.0 million,
excluding restricted cash of $17.6
million for brand mandated property improvement plans
- Acquired 19 Branded Hotels in Florida, Georgia, North Carolina, Oklahoma, Texas and Virginia adding 1,876 guestrooms to the
Branded Hotel segment
- Acquired four railway hotels, totaling 208 guestrooms, from
SunOne. These hotels have long-term railway contracts that
guarantee occupancy for a majority of the available room
nights
- Completed two successful bought deal equity offerings which
raised over Cdn$100 million and were
fully deployed during the year
- Total distributions of Cdn$0.90
per Unit were declared during the year
U.S. lodging fundamentals continued to exhibit strength through
2014 with RevPAR growth of 8.3%. Smith Travel Research
("STR") expects positive lodging fundamentals to continue in
2015 with annualized occupancy expected to hit record levels of 65%
and ADR is expected to grow by 5.2% resulting in expected RevPAR
growth of 6.4%.
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 room requirements 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.
FOURTH QUARTER 2014 AND FISCAL YEAR END 2014 FINANCIAL
RESULTS CONFERENCE CALL
AHIP will host a conference call at 4:00
p.m. (EST), 1:00 p.m. (PST) on
Friday March 20, 2015, to review the
financial results and corporate developments for the year ended
December 31, 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 March
20, 2015, 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 March 27, 2015. 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#319586 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, Pro-forma 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 March 19, 2015, 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 impact of securities-based
compensation and a one-time recovery of insurance proceeds.
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 modified AFFOs per unit of other issuers.
FORWARD-LOOKING INFORMATION
Certain statements in this news 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 generally
can be 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 information includes, but is not
limited, statements with respect to expectations, projections or
other characterizations of future events or circumstances, and
AHIP's objectives, goals, strategies, beliefs, intentions, plans,
estimates, projections and outlook, including statements relating
to the estimates or predictions of actions of customers,
competitors or regulatory authorities, and statements regarding
AHIP's future economic performance. Some of the specific
forward-looking statements in this news release include, but are
not limited to, statements with respect to: management's estimate
of the impact of the exchange rate of the U.S. dollar to Canadian
Dollar on the AFFO payout ratio; STR's expectations with respect to
annualized occupancy, ADR and RevPAR; AHIP's hosting of a
conference call to discuss financial results set out herein; and
AHIP's long-term objectives.
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;
future growth potential; Unit prices; liquidity; tax risk; tax laws
currently in effect remaining unchanged; ability to access capital
markets; competition for real property investments; environmental
matters; the value of the U.S. Dollar; and changes in legislation
or regulations. 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 MD&A and in its annual
information form for the year ended December
31, 2013, copies of which are 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 news
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's current property portfolio is comprised of 61 hotels
located in 24 states, representing 5,229 available
guestrooms. The Oak Tree Inn Hotel segment, serving the U.S.
freight railway industry, consists of 38 hotels comprising 2,882
guestrooms and 26 Penny's Diner restaurants. The Branded
Hotel segment consists of 23 hotels comprising 2,347 guestrooms and
is affiliated with leading hotel brands including Marriott and
Hilton.
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
financial statements for the three months and year ended
December 31, 2014, AHIP's MD&A
dated March 19, 2015, and other
public filings are available on SEDAR at www.sedar.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