Holloway Lodging Corporation Reports 2013 Second Quarter Results and Declares Quarterly Dividend

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HALIFAX, Aug. 12, 2013 /CNW/ - Holloway Lodging Corporation (TSX: HLC) ("Holloway") today announced financial results for the three months ended June 30, 2013.  All amounts are in Canadian dollars unless otherwise indicated.  Readers should refer to Holloway's unaudited interim consolidated condensed financial statements as at June 30, 2013 and its management discussion and analysis which are available on Holloway's website at www.hlreit.com and on SEDAR at www.sedar.com.

Key Events - Q2, 2013

• Recorded increased same-store revenue, revenue per available room, operating income per available room, operating income margin, funds from operations and adjusted funds from operations for the three months ended June 30, 2013 compared to the three months ended June 30, 2012:

(in millions where indicated except percentages and per room measures)	2013		2012		$ INCREASE		% INCREASE
Hotel revenues - same store	$ 13.4 M		$ 13.1 M		$0.3 M		2.3%
Revenue per available room - same store	$81.64		$78.08		$3.56		4.6%
Hotel operating income per available room before depreciation - same store	$30.34		$27.84		$2.50		9.0%
Hotel operating income margin - same store	34.4%		32.3%		-		2.1 ppt
Funds from operations	$2.2 M		$1.5 M		$0.7 M		46.7%
Adjusted funds from operations	$1.9  M		$1.3 M		$0.6 M		46.2%

• Internalized hotel accounting functions previously performed by Holloway's external hotel manager, Pacrim Hospitality Services Inc. Holloway anticipates annual cost savings as a result of the internalization and greater control and operational flexibility over its business.
• Repurchased 681,600 shares under its normal course issuer bid at an average price of $3.55 per share.
• Extended the mortgage on the Holiday Inn Express® in Stellarton, NS for 5 years at a fixed rate of 4.80%.
• Sold its minority interest investment in the Super 8® Langley, BC for $0.1 million.

Subsequent to June 30, 2013 Holloway:

• Refinanced the mortgage on the Super 8® in Drayton Valley, AB at the lender's floating base interest rate, currently 4.35% for a 15 year term.

Dividend Declaration
On August 9, 2013, the Board of Directors declared a quarterly dividend of $0.035 per share, representing an annual dividend of $0.14 per share.  The dividend will be payable on September 13, 2013 to shareholders of record on August 30, 2013.

Outlook
While Holloway remains cautiously optimistic about the performance of its hotels in the coming quarters, revenue growth is expected to moderate given the high level of operating results currently being generated in several western Canadian markets. By continuing to focus on operational efficiencies through operating cost reductions and select capital projects, Holloway expects continued growth in net operating income.

Holloway also intends to further reduce its mortgage debt and repurchase shares as opportunities arise.

Operating Results
The following table provides a summary of the operating results for the three and six months ended June 30, 2013 and 2012.

	Three months ended		Six months ended
(in $000's except number of shares and per share results)	June 30, 2013	June 30, 2012	June 30, 2013	June 30, 2012
Hotel revenues*	14,283	13,293	28,981	29,798
Hotel expenses	9,396	9,162	18,959	20,079
Hotel operating income before depreciation and amortization	4,887	4,131	10,022	9,719
Hotel depreciation and amortization	2,261	1,976	4,481	3,962
Other expenses	2,532	1,486	5,007	366
Provision for income taxes	30	-	177	-
Income for the periods	64	669	357	5,391
Weighted average basic shares outstanding	18,046,031	18,840,410	18,342,851	16,682,147
Weighted average diluted shares outstanding	18,046,031	18,840,410	18,342,851	16,682,147
Basic and diluted income per share	0.00	0.04	0.02	0.32
Reconciliation to funds from operations (FFO)
Add / (deduct):
Depreciation and amortization on real property	2,235	1,931	4,436	3,875
Provision for income taxes	30	-	177	-
Gain  on disposal of hotel properties and equipment	-	(1,059)	(4)	(5,657)
Gain on disposal of minority interest investments in hotel properties	(106)	-	(96)	-
FFO - basic and diluted	2,223	1,541	4,870	3,609
Basic and diluted FFO per share	0.12	0.08	0.27	0.22
Reconciliation to adjusted funds from operations (AFFO) Add/(deduct):
Depreciation and amortization - corporate and other assets	26	45	45	87
Accretion of mortgages, loan due to a related party, convertible debentures and deferred financing fees	45	52	88	654
Fair value adjustment on Class B LP units and derivative liability	(10)	21	(14)	33
Share-based compensation	102	8	204	16
FF&E reserve	(437)	(406)	(885)	(908)
AFFO - basic and diluted	1,949	1,261	4,308	3,491
Basic and diluted AFFO per share	0.11	0.07	0.23	0.21
Dividends declared	$0.035	$0.03	$0.07	$0.03

*Hotel revenues have been restated to account for IFRIC 13-Customer Loyalty Programmes which resulted in a reduction in revenues and operating expenses of $0.2 million for the three months ended June 30, 2012 and $0.5 million for the six months ended June 30, 2012.  This reclassification has no impact on hotel operating income, net income, or other measures of hotel performance. IFRIC 13-Customer Loyalty Programmes requires the costs of loyalty points programs to be recorded as a reduction in hotel revenues.

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 currently owns 18 hotels with 1,798 rooms.  Holloway's shares trade on the Toronto Stock Exchange under the symbol HLC.

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 ("AIF"), dated March 11, 2013 which is available 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

Michael Rapps, Chairman, at [phone] or Jane Rafuse, Chief Financial Officer, at [phone]