Holloway Lodging Corporation reports record 2012 year end results and declaration of quarterly dividend

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HALIFAX, March 11, 2013 /CNW/ - Holloway Lodging Corporation (TSX: HLC) ("Holloway") today announced financial results for the year ended December 31, 2012.  All amounts are in Canadian dollars unless otherwise indicated.  Readers should refer to Holloway's audited consolidated financial statements as at December 31, 2012 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 - Q4, 2012

• Increased adjusted funds from operations ("AFFO") by 19.6% compared to the prior year period.
• Increased quarterly dividend by 17% to $0.035 per share.
• Acquired a 90% interest in the Holiday Inn Express^® hotel in Stellarton, NS.
• Commenced the eight room expansion of the Super 8^® hotel in Fort St. John, BC.
• Substantially completed the guestroom refurbishment at the Super 8^® hotel in Yellowknife, NWT.
• Repurchased 100,000 shares under normal course issuer bid at an average price of $3.70 per share.
• Entered into a second hotel management agreement with Pacrim Hospitality Services Inc. ("Pacrim") which will apply to newly acquired hotels. This agreement will result in lower management fees and significant flexibility.
• Converted from an income trust structure to a corporate structure effective December 31, 2012.

Key Events - 2012

Holloway recorded increases in same-store revenue, RevPar, operating income per available room and operating income margin for the year ended December 31, 2012 compared to the year ended December 31, 2011, as summarized in the following table:

(in millions where indicated except percentages and per room measures)		2012		2011		$ INCREASE	% CHANGE
Hotel revenues - same store		$55.8M		$53.8M		$2.0M	3.7%
Revenue per available room - same store		$83.82		$80.11		$3.71	4.6%
Hotel operating income per available room before depreciation - same store		$32.72		$29.43		$3.29	11.2%
Hotel operating income margin- same store		35.7%		33.2%		-	2.5 ppt

• Increased AFFO by 146% to $8.2 million from $3.3 million.
• Reduced total indebtedness by 44% to $114 million from $205 million.
• Repurchased 191,850 units under normal course issuer bid at an average price of $3.64 per unit.
• Introduced and then increased quarterly dividend, which currently represents an annualized $0.14 per share.

Subsequent to December 31, 2012 Holloway:

• Completed the expansion of its Super 8^® hotel in Fort St. John, BC. The additional eight guestrooms entered service in February 2013 and several of these guestrooms have already been contracted for on a multi-month "take-or-pay" basis.
• Entered into an accounting internalization agreement with Pacrim. This agreement will result in all of Holloway's accounting functions being transitioned to Holloway during the second quarter of 2013. Holloway anticipates it will save approximately $0.1 million annually as a result of the internalization, save additional amounts as it expands its hotel portfolio and also gain greater control and operational flexibility over its business.

Conversion to a Corporation
Effective December 31, 2012, Holloway Lodging REIT converted from an income trust structure to a corporate structure pursuant to a Plan of Arrangement under the Ontario Business Corporations Act ("OBCA"). The arrangement involved the exchange of units of the REIT for common shares of the Company on a one-for-one basis and the dissolution of the REIT and HL Trust in accordance with their respective Declarations of Trust.

Holloway Lodging Corporation and its subsidiaries will continue to carry on the business formerly carried on by the REIT and its subsidiaries. The board of directors and senior management of the Company are comprised of the former trustees and senior management of the REIT.  Effective December 31, 2012, the common shares of the Company began trading on the Toronto Stock Exchange under the symbol HLC.

Dividend Declaration
On March 13, 2012, 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 April 15, 2013 to shareholders of record on March 29, 2013.  In August 2012, the Board of Directors reinstated Holloway's dividends at a quarterly rate of $0.03 per share and increased it to $0.035 per share on November 13, 2012, due to the material improvement in Holloway's business and capital structure.

Michael Rapps, Chairman of Holloway, stated:  "2012 has been a year of significant accomplishments for Holloway.  Our hotel results have improved, our debt has been substantially reduced and we reinstated dividends to our shareholders."

Outlook
Holloway remains cautiously optimistic about the performance of its hotels in the coming quarters but expects revenue growth to moderate in several of its markets given the high level of operating results currently being generated in such markets. Holloway intends to generate revenue growth on a portfolio basis by pursuing select hotel expansions and upgrades and select hotel acquisitions. By continuing to focus on operational efficiencies through operating cost reductions and select capital projects, Holloway expects continued growth in net operating income.

While Holloway does not expect material improvement at its four Atlantic Canadian hotels, we expect further positive developments at our Western Canadian hotels should a number of the large-scale infrastructure projects proposed in Northern Alberta and British Columbia receive approval.

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

Operating Results

The following table provides a summary of the operating results for the three months and years ended December 31, 2012 and 2011.

	Three months ended		Years ended
(in $000's except number of shares/units and per share/unit results)	December 31, 2012	December 31, 2011	December 31, 2012	December 31, 2011
Hotel revenues	13,276	18,492	58,373	77,392
Hotel expenses	8,882	12,734	38,328	54,213
Hotel operating income before depreciation and amortization	4,394	5,758	20,045	23,179
Other expenses	(8,723)	6,610	309	31,582
Provision for income taxes	-	-	-	-
Income (loss) for the periods	13,117	(852)	19,736	(8,403)
Weighted average basic units outstanding	18,709,258	987,360	17,727,238	981,738
Weighted average diluted units outstanding	18,709,258	987,360	17,727,238	981,738
Basic and diluted income (loss) per share/unit*	0.70	(0.86)	1.11	(8.56)
Reconciliation to funds from operations (FFO)
Add / (deduct):
Depreciation and amortization on real property	1,962	2,376	7,745	9,725
Provision for impairment of loan receivable	-	1,235	-	1,235
(Gain) loss on disposal of hotel properties	6	(421)	(5,588)	1,528
Provision for (reversal of) impairment of hotel properties	(12,993)	3,265	(12,993)	3,265
Reversal of impairment of assets held-for-sale	-	(2,567)	-	(2,567)
Loss on disposal of minority interest investment in hotel properties	-	187	101	187
Gain on acquisition of subsidiary	(433)	-	(433)	-
Funds from operations - basic and diluted	1,659	3,223	8,568	4,970
Basic and diluted FFO per share/unit*	0.09	3.26	0.48	5.06
Reconciliation to adjusted funds from operations Add/(deduct):
Depreciation and amortization - corporate and other assets	1	45	105	182
Accretion of mortgages, loan due to a related party, convertible debentures and deferred financing fees	40	672	739	3,274
Fair value adjustment on Class B LP units and derivative liability	(5)	(148)	21	(252)
Gain on repurchase of convertible debentures and settlement of promissory notes	-	(2,192)	-	(2,698)
Unit-based compensation	102	126	503	188
FF&E reserve	(406)	(563)	(1,780)	(2,352)
Adjusted funds from operations  - basic and diluted	1,391	1,163	8,156	3,312
Basic and diluted AFFO per share/unit*	0.07	1.18	0.46	3.37
Distributions declared	$0.035	-	$0.065	-
Reconciliation of cash generated from operating activities to AFFO
Net cash generated from operating activities	2,700	3,877	6,937	6,261
Changes in items of working capital	(903)	(1,730)	2,999	(597)
FF&E reserve	(406)	(563)	(1,780)	(2,352)
Mortgage penalty refund	-	(421)	-	-
AFFO	1,391	1,163	8,156	3,312
*Periods prior to Q1 2012 are not directly comparable due to the conversion of the 2012 convertible debentures.

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].