PR Newswire
VANCOUVER, May 13, 2020
(All numbers are in U.S. dollars unless otherwise indicated)
VANCOUVER, May 13, 2020 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP", or the "Company") (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.U) announced today its financial results for the three months ended March 31, 2020.
"These are clearly unique and unprecedented times, for the world, and for the hotel industry. AHIP has taken prompt action and all necessary steps to protect our valuable hotel business and assets, at the same time with a maximum focus on ensuring the health and safety of our guests and employees. We are successfully navigating our business through this period of disruption and reduced travel, while working to ensure we are well prepared for the expected economic recovery once the pandemic subsides, and travel patterns start to return to normal," said John O'Neill, CEO. "Our first quarter was marked by two distinct periods – January and February, when our higher-quality hotel portfolio generated strong performance and 3.6% net operating income growth, and March – when we saw an abrupt impact from COVID-19 measures starting mid-month. The measures taken by governments, businesses and customers to limit travel had a significant and immediate impact on the U.S. hotel industry. We took quick actions to counteract some of the impacts of COVID-19 on our hotel operations and business levels, including significant hotel and corporate staff reductions, the deferment of planned capital projects, the suspension of our monthly distribution, and discussions with our lenders to enhance liquidity. These initiatives are expected to preserve more than $8 million of monthly cashflow (more than $100 million annualized), and combined with other measures, have provided us with the ability to weather this period of uncertainty."
Mr. O'Neill continued: "We are already seeing some early signs that occupancy rates have stabilized and are starting to improve. The 63 hotels we currently have open for reservations recorded 38% average occupancy so far this month, up 16 percentage points or 73% from the occupancy lows experienced in mid-April, and continue to achieve higher occupancy rates than many other hotels have recently reported. In fact, our 24 extended-stay oriented properties are currently achieving above 50% average occupancy. We believe this is an indication that our hotels are benefitting from both their locations near major interstate freeways and in secondary markets (rather than in large gateway cities), and our brand mix, with our extended stay and suite-oriented properties continuing to be our best performing. While we expect that significant impacts of COVID-19 on our sector and the U.S. economy will continue for at least several more months, we are cautiously optimistic that as the United States gradually re-opens, the business levels at our hotels will continue to improve overall."
THREE MONTHS ENDED MARCH 31, 2020 FINANCIAL HIGHLIGHTS
Same-Property Results
Same-property metrics represent the performance of the 67 Premium Branded hotels owned in both the current and comparative period, or 85% of AHIP's total current hotel portfolio based on number of hotels.
Capital Metrics and Liquidity
FIRST QUARTER DEVELOPMENTS
SUBSEQUENT EVENTS
The information in this news release should be read in conjunction with AHIP's unaudited condensed consolidated interim financial statements and management's discussion and analysis ("MD&A") for the three months ended March 31, 2020, which are available on AHIP's website at www.ahipreit.com and on SEDAR at www.sedar.com.
Q1 2020 FINANCIAL RESULTS CONFERENCE CALL
Management will host a conference call at 5:30 p.m. Eastern time / 2:30 p.m. Pacific time on Wednesday, May 13, 2020 to review the financial results for the three months ended March 31, 2020.
To participate in this conference call, please dial one of the following numbers at least five minutes prior to the commencement of the call and ask to join the American Hotel Income Properties' Q1 2020 Analyst Call.
Dial in numbers: | North America Toll free: | 1-877-291-4570 |
International or local Toronto: | 1-647-788-4919 |
The conference call will also be webcast live (in listen-only mode). The link to the webcast can be found on the Events tab of the following webpage: https://www.ahipreit.com/news-and-events/
CONFERENCE CALL REPLAY
A replay of the conference call will be available by dialing one of the following replay numbers. The replay will be available after 8:30 p.m. Eastern time / 5:30 p.m. Pacific time on May 13, 2020 until June 3, 2020. The webcast recording of this conference call will also be available at www.ahipreit.com on the Events and Presentation page.
Please enter replay PIN number 4476906 followed by the # key.
Replay dial in numbers: | North America Toll free: | 1-800-585-8367 |
International or local Toronto: | 1-416-621-4642 |
NON-IFRS MEASURES
Certain non-IFRS financial measures are included in this news release, which include NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, 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 issuers often refer to NOI, FFO, Diluted FFO per Unit, AFFO, and Diluted AFFO per Unit 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, Diluted FFO per Unit, AFFO, and Diluted AFFO per Unit, 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, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, and debt-to-gross book value may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers. For further information, including reconciliations of certain of these non-IFRS financial measures to the closest comparable IFRS measure, please refer to AHIP's MD&A dated May 12, 2020, which is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.
FORWARD-LOOKING INFORMATION
Certain statements in this news release may constitute "forward-looking information" or "financial outlook" within the meaning of applicable securities laws (also known as forward-looking statements). Forward looking information and financial outlook involve known and unknown risks, uncertainties and other factors, and 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 and financial outlook. Forward-looking information and financial outlook 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. Some of the specific forward-looking information and financial outlook in this news release includes, but are not limited to, statements with respect to: AHIP's belief that its portfolio is well positioned for the expected economic recovery, with hotels near major interstate freeways expected to benefit from a shift towards vehicle travel; AHIP's expectation that significant impacts of COVID-19 on the U.S. hotel sector and the U.S. economy will continue for at least several more months, AHIP is cautiously optimistic that as the United States gradually re-opens, the business levels at its hotels will continue to improve overall; AHIP's cost reduction, cash preservation and liquidity strategies, and the specific elements and intended outcomes thereof, including estimated monthly and annualized cash flow savings and estimated additional liquidity; AHIP's estimated net monthly cash burn rate and estimated occupancy level required to operate at an overall breakeven level with no net monthly cash burn; AHIP actively discussing covenant waivers through Q1 2021 and access to additional revolver capacity with its credit facility syndicate; AHIP's active discussions with its CMBS loan servicers about applying some of the CMBS reserves for upcoming debt service payments and temporary suspension of FF&E reserve contributions to further enhance AHIP's liquidity; AHIP's expectation that it will generate approximately $20 million of additional liquidity through its various initiatives with its lenders; the temporary suspension of AHIP's monthly distribution and the reasons for such suspension; AHIP's Board of Directors will continue to regularly review AHIP's financial performance and position in order to determine the appropriate time for reinstatement of monthly distributions; the deferral of the distribution in respect of the month of March 2020 to a later date; Aimbridge reducing some direct and third party service fees until at least June 30, 2020; and AHIP's stated long-term objectives.
Forward-looking information and "financial outlook" are based on a number of key expectations and assumptions made by AHIP, including, without limitation: the COVID-19 pandemic will continue to negatively impact the U.S. economy, U.S. hotel industry and AHIP's business, and the extent and duration of such impact; AHIP's occupancy levels will not materially deteriorate from current levels; AHIP will be able to continue to operate the majority its 63 hotels currently in operation during the COVID-19 pandemic; AHIP will not cease guest operations at a material number of additional properties as a result of government regulations, lack of sufficient guest bookings or other reasons; AHIP will be able to recommence guest operations on a timely basis at those properties where guest operations have temporarily been suspended or consolidated with adjacent AHIP properties; AHIP's cost reduction, cash conservation and liquidity strategies will achieve their stated objectives and AHIP will continue to have sufficient funds to meet its financial obligations; AHIP will receive all necessary covenant waivers from its syndicate of lenders under its credit facility; AHIP will receive all necessary approvals from its CMBS loan servicers to use certain reserves to fund upcoming debt payments and to temporarily cease funding certain reserve contributions; AHIP's portfolio is better positioned for the expected economic recovery due to the location of its hotels near major interstate freeways and in secondary markets; and there will be a meaningful economic recovery in the U.S. and within the U.S. hotel industry along with a shift towards vehicle travel. Although the forward-looking information and financial outlook contained in this news release is based on what AHIP's management believes to be reasonable assumptions, AHIP cannot assure investors that actual results will be consistent with such information.
Forward-looking information and financial outlook 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 information and financial outlook involve significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information and financial outlook. Those risks and uncertainties include, among other things, risks related to: the impacts of the COVID-19 pandemic on the U.S. economy, the hotel industry, the willingness of the general public to travel, the level of consumer confidence in the safety of travel and AHIP's business, all of which have negatively impacted, and are expected to continue to negatively impact, AHIP and may materially adversely affect AHIP's investments, results of operations, financial condition and AHIP's ability to obtain additional equity or debt financing, or re-finance existing debt, or make interest and principal payments to its lenders and to holders of AHIP's debentures, and otherwise satisfy its financial obligations and may cause AHIP to be in non-compliance with one or more of the financial covenants under its existing credit facilities and cause a default thereunder; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; there is no guarantee as to the timing or manner of the payment of the deferred March 2020 distribution; the pace of recovery following the COVID-19 pandemic cannot be accurately predicated and may be slow; AHIP's cost reduction and cash conservation initiatives may not achieve their stated objectives, and cash savings may be less than anticipated; AHIP's liquidity initiatives may not achieve their stated objectives, and liquidity generated may be less than anticipated; AHIP may not receive covenant waivers from its lending syndicate and may not be granted access to additional revolver capacity, on terms acceptable to AHIP, or at all; AHIP may not receive necessary approvals from certain of its CMBS loan servicers to use certain reserves to fund upcoming debt payments and to temporarily cease funding certain reserves, and such approvals if received may not be on terms acceptable to AHIP; AHIP may require additional debt or equity capital in order to replenish any reserve funds drawn in accordance with the timing required by its CMBS loan servicers, and such funds may not be available to AHIP on reasonable terms, or at all; AHIP's portfolio may not benefit from the expected economic recovery to the extent anticipated; the expected shift towards vehicle travel may not be as significant as expected and be for a shorter duration than expected; the impacts of COVID-19 on AHIP's anticipated revenue levels and the recoverable amount of its hotel properties could lead to impairment charges on hotel properties in future periods; 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 information and financial outlook are based upon reasonable assumptions and information currently available; however, management can give no assurance that actual results will be consistent with this forward-looking information and financial outlook. Additional information about risks and uncertainties is contained in AHIP's MD&A dated May 12, 2020 and annual information form for the year ended December 31, 2019, copies of which are available on SEDAR at www.sedar.com.
To the extent any forward-looking information or statements in this news release constitute a "financial outlook" within the meaning of applicable securities laws, such information is being provided to assist investors in better understanding the potential financial impact of AHIP's cost reduction, cash preservation and liquidity strategies and measures.
The forward-looking information and financial outlook contained herein are expressly qualified in their entirety by this cautionary statement. Forward-looking information and financial outlook reflect management's current beliefs and is based on information currently available to AHIP. The forward-looking information and financial outlook are 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.
THIRD PARTY INFORMATION
This news release includes market information and industry data from independent industry publications, market research and analyst reports, surveys and other publicly available sources. Although AHIP management believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness of this data are not guaranteed. AHIP has not independently verified any of the data from third party sources referred to in this news release nor ascertained the underlying assumptions relied upon by such sources.
ADDITIONAL INFORMATION
Additional information relating to AHIP, including AHIP's unaudited condensed consolidated interim financial statements for the three months ended March 31, 2020, AHIP's MD&A dated May 12, 2020, and other public filings are available on SEDAR at www.sedar.com.
ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP
American Hotel Income Properties REIT LP (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.U), or AHIP, is a limited partnership formed to invest in hotel real estate properties across the United States. AHIP's 79 premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG, Wyndham and Choice Hotels through license agreements. The Company's long-term objectives are to build on its proven track record of successful investment, deliver monthly U.S. dollar denominated distributions to unitholders, and generate value through the continued growth of its diversified hotel portfolio. More information is available at www.ahipreit.com.
FIRST QUARTER HIGHLIGHTS AND KEY PERFORMANCE INDICATORS
(US$000s unless noted and except Units and per Unit amounts) | Three months ended March 31, 2020 | Three months ended March 31, 2019 | Change | |||||
TOTAL PORTFOLIO INFORMATION (1) | ||||||||
Number of rooms (2) | 8,887 | 11,524 | (22.9%) | |||||
Number of properties (2) | 79 | 112 | (29.5%) | |||||
Number of restaurants (2) | 16 | 40 | (60.0%) | |||||
Occupancy rate | 62.2% | 72.4% | -10.2 pp | |||||
Average daily room rate | $ | 113.88 | $ | 97.32 | 17.0% | |||
Revenue per available room | $ | 70.83 | $ | 70.46 | 0.5% | |||
Revenues | $ | 61,855 | $ | 80,531 | (23.2%) | |||
Net operating income (3) | $ | 17,861 | $ | 25,821 | (30.8%) | |||
NOI Margin % | 28.9% | 32.1% | -3.2 pp | |||||
Loss and comprehensive loss | $ | (12,607) | $ | (456) | nm | |||
Diluted loss per Unit | $ | (0.16) | $ | (0.01) | nm | |||
EBITDA (3) | $ | 14,165 | $ | 20,889 | (32.2%) | |||
EBITDA Margin % | 22.9% | 25.9% | -3.0 pp | |||||
FUNDS FROM OPERATIONS (FFO) (1) | ||||||||
Funds from operations | $ | 4,674 | $ | 11,401 | (59.0%) | |||
Diluted FFO per Unit (4)(5) | $ | 0.06 | $ | 0.15 | (60.0%) | |||
FFO Payout Ratio - rolling four quarters | 101.7% | 90.7% | 11.0 pp | |||||
ADJUSTED FUNDS FROM OPERATIONS (AFFO) (1) | ||||||||
Adjusted funds from operations | $ | 3,587 | $ | 9,949 | (63.9%) | |||
Diluted AFFO per Unit (4)(5) | $ | 0.05 | $ | 0.13 | (61.5%) | |||
Distributions declared | $ | 11,405 | $ | 12,557 | (9.2%) | |||
Distributions declared per unit | $ | 0.146 | $ | 0.162 | (9.9%) | |||
CAPITALIZATION AND LEVERAGE | ||||||||
Debt-to-Gross Book Value (2) | 58.5% | 53.8% | 4.7 pp | |||||
Debt-to-EBITDA (trailing twelve-month basis) | 9.3x | 8.1x | 1.2x | |||||
Interest Coverage Ratio | 1.6x | 2.3x | -0.7x | |||||
Weighted average Debt face interest rate (2) | 4.36% | 4.64% | -0.28 pp | |||||
Weighted average Debt term to maturity (2) | 5.3 years | 6.2 years | -0.9 | years | ||||
Number of Units outstanding (2) | 78,133,171 | 78,119,336 | 13,835 | |||||
Diluted weighted average number of Units | ||||||||
outstanding (4) | 78,195,201 | 78,204,277 | (9,076) | |||||
(1) | Refers to combined continuing and discontinued operations |
(2) | At period end |
(3) | Not adjusted for IFRIC 21 property taxes |
(4) | Diluted weighted average number of Units calculated in accordance with IFRS included the 529,298 and 90,724 unvested Restricted Stock Units as at March 31, 2020 and March 31, 2019, respectively |
(5) | The Debentures were not dilutive for FFO and AFFO for the three months ended March 31, 2020 and not dilutive for FFO for the three months ended March 31, 2019. The Debentures were dilutive for AFFO for the three months ended March 31, 2019. Therefore, Debenture finance costs of $611 were added back to AFFO for the three months ended March 31, 2019. 5,283,783 Units issuable on conversion of the Debentures were added to the diluted weighted average number of Units outstanding for the applicable periods presented |
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SOURCE American Hotel Income Properties REIT LP