Holloway Lodging Corporation reports strong 2013 year end results and declares quarterly dividend

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HALIFAX, March 3, 2014 /CNW/ - Holloway Lodging Corporation (TSX: HLC) ("Holloway") today announced its financial results for the year ended December 31, 2013.

2013 Highlights

In 2013, Holloway increased its revenue, net operating income, operating margins and cash flow and recorded its best operating results since before the financial crisis:

• Increased revenue from $58.4mn to $60.0mn or 2.7%
• Increased hotel operating margins from 34.3% to 35.9%
• Increased funds from operations from $8.6mn to $11.6mn or 35.4%

The Company also completed several capital projects at our hotels, including the addition of eight rooms at the Super 8^® hotel in Fort St. John, BC and the branding of the Northwest Inn in Slave Lake, AB to a Travelodge^® hotel.

In addition, Holloway continued to return capital to shareholders. In 2013, Holloway paid $2.5mn in dividends, repurchased $2.6mn of its common shares and repaid $4.6mn in debt. In total, Holloway returned $9.7mn to shareholders in 2013, representing 14% of Holloway's market capitalization at year-end.

Dividend Declaration

On March 3, 2014, 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, 2014 to shareholders of record on March 31, 2014.

Outlook

Holloway expects to have another positive year in 2014. Western Canada remains very busy with oil, gas, forestry and infrastructure development and several of the markets the Company is involved in are evolving from smaller tertiary markets to larger secondary cities. This is a positive development for Northern Alberta and British Columbia as well as for Holloway. Holloway is targeting higher rates in these markets while maintaining or growing occupancy. In Eastern Canada and the U.S., stable operating results are expected.

A significant area of focus for Holloway in 2014 will be acquiring additional hotels. In the last few years we have been patient, waiting for the right property at the right price. We do not intend to change that approach. To that end, in February 2014, Holloway entered into a credit agreement for a $17.0 million term loan which can be used to fund hotel acquisitions.  As always, we will compare the returns we can generate on hotel acquisitions to other uses of our capital, including repurchasing our own shares. We will also look to opportunistically reduce our existing mortgage debt.

Operating Results

The following table provides a summary of the operating results for the three months and years ended December 31, 2013 and 2012.

	Three months ended		Years ended
(in $000's except number of shares and per share results)	Dec 31, 2013	Dec 31, 2012	Dec 31, 2013	Dec 31, 2012
Hotel revenues	14,338	13,276	59,957	58,373
Hotel expenses	9,458	8,882	38,447	38,328
Hotel operating income before depreciation and amortization	4,880	4,394	21,510	20,045
Hotel depreciation and amortization	2,229	1,961	8,993	7,845
Income from hotel operations	2,651	2,433	12,517	12,200
Other expenses	2,126	2,309	9,710	5,457
Reversal of impairment of hotel properties, net	(3,450)	(12,993)	(3,450)	(12,993)
Income before income taxes	3,975	13,117	6,257	19,736
Provision for income taxes	1,113	-	1,787	-
Net income for the periods	2,862	13,117	4,470	19,736
Weighted average basic and diluted shares outstanding	17,934,404	18,709,258	18,137,856	17,727,238
Basic and diluted income per share	0.16	0.70	0.25	1.11
Reconciliation to funds from operations (FFO)
Add / (deduct):
Depreciation and amortization on real property	2,218	1,962	8,913	7,745
Provision for income taxes	1,113	-	1,787	-
Loss (gain) on disposal of hotel properties and equipment	19	6	15	(5,588)
Reversal of impairment of hotel properties, net	(3,450)	(12,993)	(3,450)	(12,993)
(Gain) loss on disposal of minority interest investments in hotel properties	(33)	-	(129)	101
Gain on acquisition of subsidiary	-	(433)	-	(433)
FFO - basic and diluted	2,729	1,659	11,606	8,568
Basic and diluted FFO per share	0.15	0.09	0.64	0.48
Reconciliation to adjusted funds from operations (AFFO)
Add/(deduct):
Depreciation and amortization - corporate and other assets	37	1	123	105
Accretion of mortgages, loan due to a related party, convertible debentures and deferred financing fees	42	40	207	739
Fair value adjustment of Class B LP units and derivative liability	-	(5)	-	21
Share-based compensation	75	102	378	503
FF&E reserve	(438)	(406)	(1,831)	(1,780)
AFFO - basic and diluted	2,445	1,391	10,483	8,156
Basic and diluted AFFO per share	0.14	0.07	0.58	0.46
Dividends paid per share	0.035	0.035	0.14	0.065

All amounts are in Canadian dollars unless otherwise indicated.  Readers should refer to Holloway's audited consolidated financial statements as at December 31, 2013 and its management discussion and analysis which are available on Holloway's website at www.hlcorp.ca and on the SEDAR website at www.sedar.com.

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 3, 2014 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].