Diluted FFO per Unit increased by 12.5% and
Diluted AFFO per Unit increased by 15.4%
VANCOUVER, May 13, 2015 /PRNewswire/ - American Hotel Income
Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF)
announced today its financial results for the three months ended
March 31, 2015. All amounts are
expressed in U.S. Dollars unless otherwise noted.
FIRST QUARTER 2015 HIGHLIGHTS
- Funds from operations ("FFO") for the current quarter
were $4.4 million compared to
$2.0 million last year, and adjusted
funds from operations ("AFFO") were $3.5 million compared to $1.9 million for the same period last year
reflecting the addition of 19 hotels comprising over 1,700
guestrooms in both the Oak Tree Inn and Branded hotel segments.
- For the current quarter, Diluted FFO per Unit – As Reported was
up 28.6% to $0.18 (2014 -
$0.14). Diluted Core FFO per Unit
(which adjusted for securities-based compensation expense) was up
12.5% to $0.18 (2014 - $0.16).
- For the current quarter, Diluted AFFO per Unit – As Reported
was up 15.4% to $0.15 (2014 -
$0.13).
- The portfolio generated RevPAR gains of 9.0% to $55.85 (2014 - $51.23) driven by higher average daily rates
("ADR") for the quarter, which were up 13.8% to $74.99 (2014 - $65.88). This was offset by lower occupancy for
the current quarter of 74.5% (2014 – 77.8%), reflecting the change
in the portfolio mix between the two reporting periods. In 2015,
the stability and high occupancy of the Oak Tree Inn Hotels was
offset by the seasonally weak first quarter for the Branded Hotels.
However, the Branded Hotels contributed to the higher ADR as these
properties benefited from the continued growth in the U.S. lodging
industry.
- Pro-forma RevPAR for the Branded Hotels acquired during 2014,
which includes operating results for periods prior to their
ownership by AHIP, was up 6.0% in line with 2015 estimates by STR,
Inc. ("STR") of forecasted national RevPAR increases of
6.4%. Double-digit increases were achieved in the North Carolina/Florida Portfolio (up 15.2%)
and the Virginia Portfolio (up 13.5%). Increases of 5-6% were also
achieved in the Texas and
North Carolina/Georgia Portfolios.
These increases offset temporary decreases in the Pittsburgh and Oklahoma Portfolios due to
planned renovations that took rooms out of service and the impacts
of new supply and lower oil prices.
- Same-property occupancy for the Oak Tree Inn Hotels was 80.1%
compared to 78.2% in the prior year reflecting the continued
strength of the railway industry.
- EBITDA margin for the quarter increased to 23.1% compared to
19.5% for the prior period.
- AHIP's debt-to-gross book value at March
31, 2015 was 52.1% compared to 52.6% at March 31, 2014 and the interest coverage ratio
for the current quarter was 2.5x compared to 2.4x last year.
- AHIP continued to pay its regular monthly distribution of
Cdn$0.075. With the first quarter
typically being the seasonally weakest quarter, AHIP's payout ratio
was 125%. The payout ratio will improve as AHIP heads into its
seasonally stronger second and third quarters.
- AHIP acquired one new railway hotel totaling 110 guestrooms in
Wellington, Kansas. This hotel is
secured by a long term railway contract that guarantees the
majority of the available room nights. The hotel was acquired for
$7.4 million and was financed using
cash on hand, a new variable rate, 10-year mortgage and the
issuance of 66,927 Units at Cdn$11.20
per Unit.
- AHIP embarked on an organic growth strategy to capture
additional occupancy at existing high occupancy Oak Tree Inn Hotels
by constructing additional hotel rooms. The first expansion will
occur in Dexter, Missouri where
AHIP's development partner, SunOne Developments Inc., is in the
process of constructing a 24-room addition to the existing 109-room
hotel that has current occupancy levels over 100%. The expansion is
expected to be completed in late 2015 and will be acquired by AHIP
for $2.7 million.
- On April 28, 2015, AHIP completed
a Cdn$66.1 million bought deal Unit
issuance and is currently evaluating two high quality, nationally
branded hotel portfolios and expect to utilize the proceeds over
the coming months. AHIP's current market capitalization is
approximately Cdn$320 million.
Rob O'Neill, CEO of AHIP,
commented "AHIP continues to see exceptional year-over-year growth
in its portfolio and earnings in an environment where the U.S.
hotel industry is in its 61st consecutive month of
record growth. The strong U.S. dollar continues to provide
strong tailwinds for our Canadian dollar denominated distributions
and our net asset values. We continue to implement our
strategy of building a solid and reliable income stream for
investors by acquiring accretive properties below replacement costs
with modest leverage. We are pleased to report that the
average debt of our portfolio is under $45,000 per room and our debt-to-gross book value
at quarter end was 52.1%".
The U.S. hotel industry reported positive results for the first
quarter of 2015. STR reported that occupancy was up 3.1% to a
first quarter highwater mark of 61.1%, ADR increased by 4.7% to
$117.09 and RevPAR rose 8.0% to
$71.56. In addition, demand was
up 4.2% in the first quarter, while supply growth was limited to
1.0%. With the strong start to 2015, STR expects that
positive lodging fundamentals will continue during 2015 with
annualized occupancy expected to hit record levels of 65% and ADR
expected to grow by 5.2% resulting in expected RevPAR growth of
6.4%. STR further expects 2016 RevPAR to grow by 5.9% led by
ADR growth of 5.0%.
Railway companies continue to increase their 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. 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.
FIRST QUARTER 2015 FINANCIAL RESULTS CONFERENCE CALL
AHIP will host a conference call at 4:00
p.m. (Eastern), 1:00 p.m.
(Pacific) on Thursday, May 14, 2015,
to review the financial results and corporate developments for the
three months ended March 31,
2015.
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 Thursday,
May 14, 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
Thursday, May 21, 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 ID750852 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, EBITDA,
EBITDA margin, FFO, FFO per Unit, Core FFO per Unit, AFFO, 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, EBITDA, FFO, FFO per Unit, Core FFO per Unit, AFFO, 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, EBITDA, FFO, FFO per Unit, Core
FFO per Unit, AFFO, 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, EBITDA, FFO, FFO per
Unit, Core 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
May 13, 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 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. This item
includes the impact of securities-based compensation. Therefore, in
addition to FFO per Unit – As Reported, management uses Core FFO
per Unit to exclude this item. Management believes that Core FFO
per Unit is a useful supplemental measure; however, this may not be
comparable to the adjusted or modified FFOs per unit of other
issuers.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information within
the meaning of applicable securities laws (also known as
forward-looking statements). Forward-looking statements generally
can be identified by words such as "anticipate", "believe",
"continue", "expect", "estimates", "intend", "may", "outlook",
"objective", "plans", "should", "will" and similar expressions
suggesting future outcomes or events.
Forward-looking-statements include, but are not limited to,
statements made or implied relating to the objectives of American
Hotel Income Properties REIT LP ("AHIP"), AHIP's strategies
to achieve those objectives and AHIP's beliefs, plans, estimates,
projections and intentions and similar statements concerning
anticipated future events, results, circumstances, performance or
expectations that are not historical facts. Some specific
forward-looking statements in this news release include, but are
not limited to, statements with respect to: the use of the proceeds
from AHIP's bought deal offering of Units that closed on
April 28, 2015, including, without
limitation, to partially fund the potential acquisition of two high
quality national branded hotel portfolios, the expansion of the Oak
Tree Inn hotel in Dexter, Missouri
and the other potential expansion opportunities for Oak Tree Inn
railway lodging facilities; references to the cost of the expansion
of the Oak Tree Inn hotel in Dexter,
Missouri and the targeted date for the completion of the
expansion; the expectations of STR with respect to key performance
indicators in the U.S. hotel and lodging industry; AHIP
management's expectations and outlook with respect to RevPAR, ADR,
occupancy rates, cash flows from hotel operations, real estate
values and other key performance indicators over the next 24
months; expected impact of oil prices on the overall economy, the
U.S. hotel and lodging industry; expected terms of future debt
financings; AHIP's review of other potential portfolio acquisition
opportunities of branded hotels; the expected timing of the
completion of the renovation of certain hotels within the
Pittsburgh Portfolio; AHIP's intention to provide stable,
sustainable and growing cash flows through operation of its
properties and AHIP's other stated objectives; the AHIP's intention
to make regular monthly cash distributions and the expected timing
of the record and payment dates for monthly distributions.
Although AHIP believes that the expectations reflected in the
forward-looking information contained in this news release are
reasonable, AHIP can give no assurance that these expectations will
prove to have been correct, and since forward-looking information
inherently involves risks and uncertainties, undue reliance should
not be placed on such information. The estimates and assumptions,
which may prove to be incorrect, include, but are not limited to,
the various assumptions set forth in this news release as well as
the following: capital markets will provide AHIP with readily
available access to equity and/or debt financing on terms
acceptable to AHIP; AHIP's future level of indebtedness and AHIP's
future growth potential will remain consistent with AHIP's current
expectations; there will be no changes to tax laws adversely
affecting AHIP's financing capability, operations, activities,
structure or distributions; AHIP will retain and continue to
attract qualified and knowledgeable personnel as AHIP expands its
portfolio and business; the impact of the current economic climate
and the current global financial conditions on AHIP's operations,
including AHIP's financing capability and asset value, will remain
consistent with AHIP's current expectations; there will be no
material changes to government and environmental regulations
adversely affecting AHIP's operations; and conditions in the
international and, in particular, the U.S. hotel and lodging
industry, including competition for acquisitions, will be
consistent with the economic climate.
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. Certain
material factors or assumptions are applied in making
forward-looking statements and actual results may differ materially
from those expressed or implied in such forward-looking statements.
In addition, 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
and consumer confidence; the growth in the U.S. hotel and lodging
industry; Unit prices; liquidity; tax risks; ability to access debt
and capital markets; financing risks; changes in interest rates;
real property risks including environmental risks; the degree and
nature of competition; ability to acquire accretive hotel
investments; ability to integrate new hotels; construction of new
hotels; renewal of rail contracts; environmental matters; and
changes in legislation. Additional information about risks and
uncertainties is contained in AHIP's MD&A and in AHIP's annual
information form ("AIF") for the year ended December 31, 2014, a copy of which is available
on SEDAR at www.sedar.com.
The forward-looking information contained in this news release
is expressly qualified in its entirety by these cautionary
statements. All forward-looking statements in this news release are
made as of May 13, 2015. AHIP does
not undertake any obligation to update any such forward looking
information, whether as a result of new information, future events
or otherwise, except as required by applicable law.
ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP
AHIP's diversified and well-balanced property portfolio is
comprised of 61 hotels located in 24 states, representing 5,228
available guestrooms. The Oak Tree Inn Hotel segment, serving
the U.S. freight railway industry, consists of 38 hotels comprising
2,881 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
condensed consolidated interim financial statements for the three
months ended March 31, 2015 and 2014,
AHIP's MD&A dated May 13, 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