Holloway Lodging Corporation reports 2015 year end results and declares quarterly dividend

/Not for distribution on U.S. wire services or for dissemination in the United States/

HALIFAX, March 9, 2016 /CNW/ – Holloway Lodging Corporation (TSX: HLC, HLC.DB, HLC.DB.A) (“Holloway”) today announced financial results for the year ended December 31, 2015. All amounts are in Canadian dollars unless otherwise indicated.  Readers should refer to Holloway’s consolidated financial statements as at December 31, 2015 and its management discussion and analysis which are available on Holloway’s website at www.hlcorp.ca and on SEDAR at www.sedar.com.

An investor conference call will take place on Friday, March 11, 2016 at 2:00 p.m. EST, with Holloway’s senior management.  Investors and analysts are invited to access the call by dialing 1-416-764-8688 or 1-888-390-0546 depending on your area code. You will be required to identify yourself and indicate if you represent an organization or if you are a private investor. A recording of this call will be available from 4:00 p.m. EST on March 11, 2016 through March 18, 2016 at 11:59 p.m. EST. To access the recording, please dial 1-416-764-8677 or 1-888-390-0541 and enter the playback code 506223#.

 

 

Hotel Performance

Holloway’s fourth quarter results were below last year for two primary reasons. First, our two largest hotels (representing 14.7% of total rooms) were either partially or fully closed for renovations during the quarter. These renovations are now behind us as the new DoubleTree by Hilton® in London, ON and the new Holiday Inn® in Ottawa, ON opened in early January 2016 and we expect very positive results from these properties. Second, many of our hotels in Western Canada have been impacted by lower oil and natural gas prices; the negative impact is considerably worse in tertiary markets (such as Whitecourt, AB) than secondary markets (such as Grande Prairie, AB). It is unlikely that the impact from lower oil and natural gas prices abates in 2016. We continue to pursue every practicable action to mitigate the revenue declines we are experiencing.

Outside of Alberta and British Columbia, our hotels continue to perform well.

Balance Sheet

Holloway’s debt level was $261.5 million immediately following the acquisition of Royal Host on July 1, 2014. This was reduced to $250.8 million at December 31, 2014 and has been reduced further to $232.7 million at December 31, 2015.

Capital Allocation

Notwithstanding the weakness in Western Canada, we continue to generate meaningful cash flow, which has been used in part on the following initiatives:

The Company spent approximately $21.0 million on the renovation and rebranding of the DoubleTree by Hilton® in London, ON and the Holiday Inn® in Ottawa, ON. These renovations represent a significant capital outlay for Holloway, equivalent to acquiring multiple hotels and we believe the renovations will significantly improve the performance and value of the properties in the coming years.

In September, we completed foreclosure proceedings and obtained ownership of the Days Inn® in Sydney, NS. We closed the property in mid-October following the completion of the summer travel season and are in the process of renovating the property. The hotel will reopen early in the second quarter of 2016 as a Travelodge®. At present, we expect the total cost of the property (acquisition, foreclosure and renovation costs) to be approximately $3.4 million.

During the year, we repurchased 346,300 shares or 1.8% of our outstanding shares at an average cost of $4.95 per share. We also repurchased $327 thousand of our 6.25% convertible debentures at an average cost of $88.15 per $100 of face value and $10 thousand of our 7.50% convertible debentures at an average cost of $93.34 per $100 of face value.

We paid our fourth quarter dividend of $0.035 for a total annual dividend of $0.14 per share. While we are capable of increasing our dividend given our low payout ratio, we believe our capital is better deployed by reinvesting in our core business or in our own shares and debentures.

Outlook

We expect 2016 to be a mixed year for Holloway. Our results in Western Canada will be challenged by the ongoing oil and natural gas downturn. Our results in Northern Canada and Atlantic Canada should be better than 2015 due to the lower Canadian dollar, lower fuel prices, the larger contribution of tourism in such markets and the opening of our Sydney, NS hotel. Our results in Ontario should also be stronger than 2015 due to the reopening of the two hotels previously under renovation and the effect of the lower Canadian dollar.

As the majority of our NOI is generated outside of Alberta and British Columbia, we expect to continue to generate meaningful cash flow that can be deployed accretively. We currently do not anticipate any major renovation projects similar to those that have been completed in the last 18 months.

Dividend Declaration

On March 9, 2016, the Board of Directors declared a quarterly dividend of $0.035 per share, representing an annual dividend of $0.14 per share. The dividend is payable on April 15, 2016 to shareholders of record on March 31, 2016.

ABOUT HOLLOWAY LODGING CORPORATION

Holloway is a real estate corporation focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets. Holloway owns 35 hotels with 3,973 rooms. Holloway’s shares and debentures trade on the TSX under the symbols HLC, HLC.DB and HLC.DB.A.

This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to Holloway’s future outlook and anticipated events or results and may include statements regarding Holloway’s future financial position, business strategy, financial results, plans and objectives. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Forward-looking information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what Holloway currently expects and there can be no assurance that such statements will prove to be accurate. Some of these risks and uncertainties are described under “Risk Factors” in Holloway’s annual information form for the year ended December 31, 2015 which is available on Holloway’s profile on the SEDAR website at www.sedar.com. Holloway does not intend to update or revise any such forward-looking information should its assumptions and estimates change.

 

SOURCE Holloway Lodging Corporation