Canadian Hotel Income Properties REIT -
Canadian Hotel Income Properties REIT has strong year-end results
Canadian Hotel Income Properties REIT HOT.UN
Shares issued 33,890,001 1999-03-01 close $8.25
Tuesday Mar 2 1999
Mr. Rhys Eyton reports
Canadian Hotel Income Properties Real Estate Investment Trust had strong financial results for 1998, its first full fiscal year of operation.
Distributable cash for 1998 was $39.6-million or $1.26 per unit. During the year, CHIP REIT distributed $37.3-million ($1.20 per unit) to unit holders, representing 90 per cent of distributable cash plus a capital gain of $1.7-million. Excluding the capital gain, 73 per cent of distributions to unit holders will be considered a return of capital and, therefore, tax deferred.
Revenue for the year was $229.9-million leading to net earnings of $20.1-million. Revenue per available room night (RevPAR) was $51.86, up 8.2 per cent over the performance of the hotels in the prior year. Year-over-year occupancy rates for the CHIP REIT portfolio were steady at 63.2 per cent, with average daily room rates (ADR) increasing 8.7 per cent in 1998 to $82.05.
In the fourth quarter, CHIP REIT exceeded last year's performance with distributable cash per unit up 41 per cent to 24 cents from 17 cents. Distributable cash was $8.2-million versus $4.0-million in 1997. Revenue for the period was $65.2-million, up from $38.8-million one year ago. Fourth quarter RevPAR increased 5.4 per cent versus last year to $45.34.
In December, CHIP REIT arranged a $55-million credit facility due in December 2006 and drew $40-million under the facility to repay a term loan due in July 2000. As a result of this prepayment, a loss of $628,000 was recorded and deferred financing fees of approximately $800,000 were written off. These charges had no impact on distributable cash and CHIP REIT now has no material debt repayments due until 2003.
Hotel Management Internalized
CHIP REIT also announced today that it has completed the internalization of its hotel management by acquiring the CHIP REIT hotel management division of its property manager. CHIP REIT is now an integrated lodging entity with all asset and property management functions internalized. This new structure means that all hotel operating profits accrue to the benefit of CHIP REIT unit holders. The new internal management operation, CHIP hospitality, will focus on maximizing the profitability of CHIP REIT's portfolio. With the acquisition complete, the search for a new president and chief executive officer of CHIP REIT has commenced.
1998 Achievements
Other accomplishments throughout the year included further diversifying the company's portfolio across Canada and into the United States; investing in existing properties to improve financial performance; outpacing industry RevPAR growth; and providing stable monthly cash distributions to unit holders.
During the year, value creation initiatives were launched across the portfolio, including repositioning, renovations and branding. Branding initiatives took place at seven hotels in the portfolio and there are now 17 properties that are franchised or in the process of being branded.
CHIP REIT's growth in 1998 included 14 hotel acquisitions: four in Ontario, four in Atlantic Canada, three in Alberta, and one each in Manitoba, Saskatchewan and Seattle, Wash., bringing the total portfolio to 36 hotels and 7,945 rooms. These acquisitions were completed at an average cost of $67,000 per room.
Outlook
With its new integrated management structure, CHIP REIT is well positioned to maximize the performance of its hotel portfolio in 1999. The company is using the traditionally quiet first quarter to accelerate several major renovation programs within the portfolio. Although this construction activity and the related reduction in available guest rooms will have a negative impact in the first quarter, the benefits of these initiatives will be evident later in the year.
STATEMENT OF EARNINGS
Three months ended Dec. 31
(thousands of dollars)
1998 1998
Revenue $65,164 $38,772
Cost of sales 32,675 20,121
------- -------
Gross profit 32,489 18,651
Operating expenses 20,638 12,135
------- -------
Gross operating income
from hotel properties 11,851 6,516
Depreciation and
amortization 6,610 2,748
Net interest expense 4,247 911
Other expenses (net) 1,459 815
------- -------
Income (loss) before
income taxes (465) 2,042
Income taxes (71) 49
------- -------
Net income (loss) (394) 1,993
Add (deduct):
Depreciation and
amortization 6,610 2,748
Amortization of
deferred financing
fees 1,044 184
Imputed interest
expense 197 421
Instalment receipt
interest income 120 (1,302)
Other losses (gains) 628 -
------- -------
Distributable cash $8,205 $4,044
------- -------
Distributable
cash per unit 24 cents 17 cents
Net income
per unit (1 cent) 9 cents
STATEMENT OF EARNINGS
Year ended Dec. 31
(thousands of dollars)
1998 1998
Revenue $229,902 $68,527
Cost of sales 107,396 33,069
------- -------
Gross profit 122,506 35,458
Operating expenses 69,806 20,443
------- -------
Gross operating income
from hotel properties 52,700 15,015
Depreciation and
amortization 19,638 4,518
Net interest expense 10,878 1,855
Other expenses (net) 1,651 1,284
------- -------
Income (loss) before
income taxes 20,533 7,358
Income taxes 394 89
------- -------
Net income (loss) 20,139 7,269
Add (deduct):
Depreciation and
amortization 19,638 4,518
Amortization of
deferred financing
fees 1,829 362
Imputed interest
expense 1,114 787
Instalment receipt
interest income (1,589) (2,242)
Other losses (gains) (1,531) -
------- -------
Distributable cash $39,600 $10,694
------- -------
Distributable
cash per unit $1.26 52 cents
Net income
per unit 64 cents 35 cents
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
old url (better for printing)
|
