InnVest REIT Reports Second Quarter Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 08/10/12 -- InnVest Real Estate Investment Trust ("InnVest") (TSX: INN.UN) today announced financial results for the three and six months ended June 30, 2012. All dollars are in thousands of Canadian dollars unless otherwise specified.
"We continue to see improvement in the Canadian lodging industry's fundamentals. Our portfolio achieved rate growth across all regions this quarter led by strength in western Canada which is benefitting from a strong resource sector and targeted renovations undertaken," commented Kenneth Gibson, InnVest's President and Chief Executive Officer. "Recent proactive capital management initiatives have strengthened our balance sheet by extending our debt maturities and lowering our overall cost of debt."
Second Quarter Highlights
InnVest's Consolidated Condensed Financial Statements and Management's Discussion and Analysis for the three and six months ended June 30, 2012 and 2011 are available on InnVest's website at .
SELECTED FINANCIAL INFORMATION
The operating statistics relating to gross room revenues for the three and six months ended June 30, 2012 are on a same-hotel basis and exclude four hotels which were sold in 2012 and one hotel which was closed for a portion of the periods presented.
FINANCIAL REVIEW
Three months ended June 30, 2012
For the three months ended June 30, 2012, total revenues increased by 1.6% to $164.3 million.
Revenues generated by hotel operations increased 1.4% or $2.2 million to $160.3 million. Same-hotel RevPAR over this period increased 2.9% based on a 3.0% increase in ADR. RevPAR growth was driven by strength in Western Canada led by over 20% improvement at the Fairmont Palliser in Calgary. Modest growth through the balance of the portfolio was offset by pockets of softness in southwestern Ontario, Montreal (weak demand) and Prince Edward Island (special event held in the prior year).
InnVest generated gross operating profit from hotel operations ("Hotel GOP") of $41.2 million, up 0.9% as compared to the prior period. Growth of 1.8% in InnVest's same-hotel portfolio during the second quarter was offset by reduced Hotel GOP following asset sales ($83) and the closure of one hotel ($269) for 7 weeks during the quarter due to an electrical malfunction. This hotel reopened in late July 2012. InnVest expects to recover lost earnings at this hotel through a business interruption claim. No insurance proceeds were recognized during the second quarter of 2012. Hotel GOP margins declined 10 basis points to 25.7% during the second quarter.
During the second quarter, InnVest completed the sale of three hotels (405 rooms) for gross proceeds of $19.2 million resulting in a $1.3 million gain on sale. Net proceeds after closing costs and debt repayment totaled $9.4 million.
The second quarter of 2012 generated distributable income of $18.0 million ($0.178 per unit diluted) and FFO of $23.1 million ($0.228 per unit diluted) each showing modest year-over-year declines owing to the prior period benefit of $2.1 million in interest earned related to GST/HST tax credits.
Six months ended June 30, 2012
For the six months ended June 30, 2012, total revenues increased by 1.9% to $296.2 million.
Revenues generated by hotel operations increased 1.7% or $4.9 million to $289.3 million. Same-hotel RevPAR over this period increased 2.4% based on a 2.6% increase in ADR. The RevPAR growth was driven by strength in Western Canada.
InnVest generated Hotel GOP of $58.1 million, up 2.7% as compared to the prior period. Growth of 3.5% in InnVest's same-hotel portfolio was offset by reduced Hotel GOP following asset sales and the closure of one hotel during a portion of the second quarter. For the six months ended June 30, 2012, Hotel GOP margins increased 20 basis points to 20.1%.
For the six months ended June 30, 2012, InnVest generated distributable income of $12.1 million ($0.128 per unit diluted) and FFO of $21.0 million ($0.224 per unit diluted) each showing modest year-over-year declines owing to the second quarter shortfall.
BALANCE SHEET REVIEW
Year-to-date in 2012, InnVest executed a number of transactions to strengthen its balance sheet including:
As of June 30, 2012, InnVest had approximately $24.9 million of cash (including restricted cash) and $38.2 million drawn on its credit facility.
At June 30, 2012, InnVest's leverage including convertible debentures was 61.1% (43.9% excluding convertible debentures).
Capital expenditures during the six months ended June 30, 2012 totaled $19.5 million. These investments reflect a number of profit-improving projects designed to increase cash flow and improve profitability including room renovations at the Delta Centre-Ville and brand upgrades at a number of our Holiday Inn and Hilton hotels.
INCOME TAX DEFERRAL
For 2012, InnVest estimates that the non-taxable portion of the distributions made to unitholders during the year will approximate 40% (2011 - 60%).
CORPORATE REORGANIZATION
On July 3, 2012, InnVest completed an internal reorganization to unwind the stapled unit structure (the "2012 Reorganization"), which was approved by InnVest's unitholders at a special meeting on February 23, 2012.
InnVest pursued the 2012 Reorganization in response to announced changes to the federal income tax rules applicable to issuers of stapled securities, which were expected to apply to InnVest as of July 20, 2012. The 2012 Reorganization has resulted in, among other things, the transfer of substantially all of IOT's assets and liabilities to the REIT and the unwinding of the stapled structure of InnVest so that IOT became a wholly-owned subsidiary of the REIT.
OUTLOOK
Uncertainty in the world economy continues to impact our business. InnVest's broad, diversified portfolio remains a key advantage in the current environment.
Looking ahead, we are focused on driving internal growth within our existing portfolio. In 2011, we began an important multi-year capital program to enhance our product offering at a number of our hotels. These targeted investments are expected to improve our hotels' competitive positioning and operating performance through increased occupancies and rates. An enhanced product, coupled with improving demand and constrained new supply should enable InnVest to realize cash flow growth. The ultimate extent and timing of planned capital investments will be dependent on business levels and capital availability.
QUARTERLY CONFERENCE CALL
Management will host a conference call on Friday August 10, 2012 at 11:00 a.m. Eastern time to discuss the performance of InnVest. Investors are invited to access the call by dialing (416) 340-2216 or 1-866- 226-1792. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available August 10th beginning at 1:00 pm through to 11:59 p.m. on August 24th. To access the recording please call (905) 694-9451 or (800) 408-3053 and use the reservation number 7573534#.
FORWARD LOOKING STATEMENTS
Statements contained in this press release that are not historical facts are forward-looking statements which involve risk and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are real estate investment risks, hotel industry risks and competition. These and other factors are discussed in InnVest's 2012 annual information form which is available at or . InnVest disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable securities law.
INNVEST PROFILE
InnVest Real Estate Investment Trust is an unincorporated open-ended real estate investment trust which owns a portfolio of 140 hotels across Canada representing approximately 18,200 guest rooms operated under internationally recognized brands. InnVest also holds a 50% interest in Choice Hotels Canada Inc., one of the largest franchisors of hotels in Canada.
InnVest's units and convertible debentures trade on the Toronto Stock Exchange (the "TSX") under the symbols INN.UN, INN.DB.B, INN.DB.C, INN.DB.D, INN.DB.E and INN.DB.F.
Contacts:
InnVest Real Estate Investment Trust
Chantal Nappert
Executive Director, Investor Relations
(905) 624-7806
(905) 206-7114 (FAX)
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Datum: 10.08.2012 - 06:00 Uhr
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