All amounts presented in this news release are in
AHIP announced today a number of initiatives focused on strengthening the Company’s financial position and preserving unitholder value against the backdrop of a challenging operating and macroeconomic environment. AHIP’s operating challenges are primarily attributable to higher operating expenses and a decline in year-over-year occupancy. The macroeconomic conditions remain difficult, with elevated inflation, higher interest rates and increasing risks of business and consumer demand. The Company is addressing these issues, and the strategic initiatives summarized below are intended to improve liquidity, address near-term debt maturities, and provide the Company with financial stability.
“Conditions across the industry are challenging, with cost and operating margin pressures increasing over recent quarters. More recently, overall demand has also decreased, which is expected to continue in the medium term.” said
2023 THIRD QUARTER HIGHLIGHTS
- Diluted FFO per unit(1) and normalized diluted FFO per unit(1) were
$0.17 and$0.11 , respectively, for the third quarter of 2023, compared to diluted FFO per unit of$0.13 for the same period of 2022. - Occupancy(1) was 71.5% for the third quarter of 2023, a decrease of 60 basis points (“bps”) compared to 72.1% for the same period of 2022.
- ADR(1) increased 4.7% to
$133 for the third quarter of 2023, compared to$127 for the same period of 2022. - RevPAR(1) increased 3.3% to
$95 for the third quarter of 2023, compared to$92 for the same period of 2022. - Revenue decreased 3.3% to
$73.7 million for the third quarter of 2023, compared to$76.2 million for the same period in 2022. - NOI(1) and normalized NOI(1) were
$22.6 million and$23.1 million , respectively, for the third quarter of 2023, decreases of 8.5% and 6.5%, respectively, compared to NOI of$24.7 million for the same period in 2022. - Amendment and extension of AHIP’s revolving credit facility and certain term loans.
- Amendment of the master hotel management agreement with reduced and deferred fees.
- Temporary suspension of monthly cash distribution effective
November 2023 to enhance liquidity; the previously announcedOctober 2023 distribution of$0.015 per unit will be paid onNovember 15, 2023 .
(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.
2023 THIRD QUARTER REVIEW
GROWTH IN ADR AND REVPAR, DECLINE IN OCCUPANCY
For the three months ended
This result is attributable to improvements in the corporate and group traveler segments, sustained demand from leisure travelers, as well as the disposition of properties with lower than portfolio average RevPAR. The ability to control and manage daily rates is a key advantage of the lodging sector, which has enabled AHIP to achieve strong growth in ADR, partially mitigating the effects of rising labor costs and general inflationary pressures impacting the portfolio.
NOI(1),
NOI and normalized NOI were
Diluted FFO per unit and normalized diluted FFO per unit were
(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.
INSURANCE AND WEATHER-RELATED ISSUES
During the final week of
Of the hotel properties damaged, two had a significant number of rooms out of order. At the
At the Courtyard Wall in
As a result of the weather-related damage, the total write-down of the costs of these hotel properties is
For the nine months ended
As a result of the claims noted above, higher replacement costs and generally higher market premiums, AHIP completed its property insurance renewal effective
LEVERAGE AND LIQUIDITY
Leverage Ratio
KPIs | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | |||||
Debt to gross book value | 51.1% | 51.6% | 52.0% | 52.6% | 52.6% | |||||
Debt to EBITDA (trailing twelve months) | 10.1x | 9.8x | 9.6x | 9.8x | 10.2x | |||||
Debt to gross book value as at
Cash and Borrowing Base
As at
CAPITAL RECYCLING
AHIP is reviewing strategies for divesting assets to recycle proceeds into higher return assets in more attractive markets and reduce debt.
In 2022, AHIP completed the strategic dispositions of seven non-core hotel properties for total gross proceeds of
In
SAME PROPERTY KPI
The following table summarizes key performance indicators (“KPIs”) for the portfolio for the five most recent quarters with a comparison to the same period in the prior year.
KPIs | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 |
ADR | $133 | ||||
Change compared to same period in prior year – % | 3.1% | 5.6% | 10.9% | 9.6% | 7.5% |
Occupancy | 71.5% | 73.8% | 65.5% | 67.3% | 73.7% |
Change compared to same period in prior year – bps increase/(decrease) | (220) | (70) | (20) | 40 | 290 |
RevPAR | $95 | ||||
Change compared to same period in prior year – % | - | 4.3% | 10.3% | 10.4% | 11.8% |
NOI Margin | 30.6% | 33.3% | 28.6% | 30.8% | 33.3% |
Change compared to same period in prior year – bps increase/(decrease) | (270) | (210) | (90) | (410) | (660) |
Same property ADR increased by 3.1% to
Same property NOI margin decreased by 270 bps to 30.6% for the third quarter of 2023, compared to the same period of 2022. Same property NOI margin decreased due to higher operating expenses as a result of inflation and labor shortages. General inflation resulted in higher costs of operating supplies and higher utilities expenses. Shortages in the overall
In Q3 2023, Q3 and Q4 2022, the same property ADR, occupancy and RevPAR calculations excluded the seven hotels sold in 2022 and the one hotel sold in 2023. The same property NOI margin calculation for the five most recent quarters excluded the seven hotels sold in 2022 and the one hotel sold in 2023.
In Q1 and Q2 2023, the same property ADR, occupancy and RevPAR calculations excluded the seven hotels sold in 2022, the one hotel sold in 2023, and
SELECTED INFORMATION
Three months ended | Nine months ended | |||||||||||
(thousands of dollars, except per Unit amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||
Revenue | 73,743 | 76,171 | 214,684 | 213,596 | ||||||||
Income from operating activities | 13,322 | 15,936 | 40,659 | 40,537 | ||||||||
Income (loss) and comprehensive income (loss) | (1,345 | ) | 315 | 7,713 | 10,125 | |||||||
NOI (1) | 22,578 | 24,675 | 66,603 | 68,830 | ||||||||
NOI Margin (1) | 30.6% | 32.4% | 31.0% | 32.2% | ||||||||
20,362 | 22,194 | 59,830 | 61,741 | |||||||||
27.6% | 29.1% | 27.9% | 28.9% | |||||||||
EBITDA (1) | 17,824 | 20,539 | 52,101 | 55,589 | ||||||||
EBITDA Margin (1) | 24.2% | 27.0% | 24.3% | 26.0% | ||||||||
Cashflow from operating activities | 7,668 | 14,165 | 33,165 | 36,524 | ||||||||
Distributions declared per unit - basic and diluted | 0.045 | 0.045 | 0.14 | 0.12 | ||||||||
Distributions declared to unitholders - basic | 3,550 | 3,544 | 10,643 | 9,450 | ||||||||
Distributions declared to unitholders - diluted | 4,044 | 4,027 | 12,103 | 10,426 | ||||||||
Dividends declared to Series C holders | 1,022 | 1,022 | 3,033 | 3,033 | ||||||||
FFO diluted (1) | 15,578 | 11,433 | 42,032 | 32,370 | ||||||||
FFO per unit - diluted (1) | 0.17 | 0.13 | 0.47 | 0.36 | ||||||||
FFO payout ratio - diluted, trailing twelve months (1) | 31.2% | 27.6% | 31.2% | 27.6% | ||||||||
Normalized FFO per unit - diluted (1) | 0.11 | 0.13 | 0.33 | 0.31 | ||||||||
AFFO diluted (1) | 12,776 | 8,443 | 33,371 | 24,541 | ||||||||
AFFO per unit - diluted (1) | 0.14 | 0.09 | 0.37 | 0.27 | ||||||||
AFFO payout ratio - diluted, trailing twelve months (1) | 40.0% | 31.3% | 40.0% | 31.3% | ||||||||
(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.
SELECTED INFORMATION
(thousands of dollars) | 2023 | 2022 | ||||||||
Total assets | 1,044,962 | 1,052,795 | ||||||||
Total liabilities | 728,446 | 730,689 | ||||||||
Total non-current liabilities | 639,479 | 667,807 | ||||||||
Term loans and revolving credit facility | 636,282 | 643,929 | ||||||||
Debt to gross book value (1) | 51.10% | 52.60% | ||||||||
Debt to EBITDA (times) (1) | 10.1 | 9.8 | ||||||||
Interest coverage ratio (times) (1) | 2 | 2.1 | ||||||||
Term loans and revolving credit facility: | ||||||||||
Weighted average interest rate | 4.56% | 4.46% | ||||||||
Weighted average term to maturity (years) | 2.3 | 3 | ||||||||
Number of rooms | 7,917 | 8,024 | ||||||||
Number of properties | 70 | 71 | ||||||||
Number of restaurants | 14 | 14 | ||||||||
(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.
2023 THIRD QUARTER OPERATING RESULTS
(thousands of dollars) | Three months ended | Nine months ended | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
ADR (1) | 133 | 127 | 133 | 123 | |||||
Occupancy (1) | 71.5% | 72.1% | 69.5% | 69.5% | |||||
RevPAR (1) | 95 | 92 | 92 | 86 | |||||
Revenue | 73,743 | 76,171 | 214,684 | 213,596 | |||||
Operating expenses | 38,980 | 39,496 | 113,238 | 109,858 | |||||
Energy | 3,272 | 3,542 | 9,515 | 9,756 | |||||
Property maintenance | 3,956 | 3,699 | 11,248 | 10,567 | |||||
Property taxes, insurance and ground lease before IFRIC 21 | 4,957 | 4,759 | 14,080 | 14,585 | |||||
Total expenses | 51,165 | 51,496 | 148,081 | 144,766 | |||||
NOI | 22,578 | 24,675 | 66,603 | 68,830 | |||||
NOI Margin % | 30.6% | 32.4% | 31.0% | 32.2% | |||||
IFRIC 21 property taxes adjustment | 308 | (193 | ) | (272 | ) | (937 | ) | ||
Depreciation and amortization | 8,948 | 8,932 | 26,216 | 29,230 | |||||
Income from operating activities | 13,322 | 15,936 | 40,659 | 40,537 | |||||
Other expenses | 15,043 | 14,827 | 34,231 | 29,652 | |||||
Current income tax expense | 32 | 14 | 563 | 145 | |||||
Deferred income tax expense (recovery) | (408 | ) | 780 | (1,848 | ) | 615 | |||
Income (loss) and comprehensive income (loss) | (1,345 | ) | 315 | 7,713 | 10,125 | ||||
(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.
INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PRESERVE UNITHOLDER VALUE
The Board of Directors (the “Board”) and management are implementing a plan to strengthen AHIP’s financial position and to preserve unitholder value. Initiatives, both planned and underway, are outlined below.
Amendment and Extension of Revolving Credit Facility and Term Loans
On
The total facility size under the Sixth Amendment is
Pursuant to the Sixth Amendment, the RCF availability is primarily limited by revised calculations based on the lesser of an implied debt service coverage ratio and a loan to value (“LTV”) test. As a condition to the initial extension to
Under the Sixth Amendment, the covenants governing distribution payments have been revised and are now subject to the satisfaction of a more restrictive FFO payout ratio threshold, calculated on a trailing twelve-months basis on a sliding scale based on the fixed charge coverage ratio.
For further details, see a copy of the Sixth Amendment, which has been filed under AHIP’s profile on SEDAR+ at www.sedarplus.com.
Plan to Address Near Term Loan Maturities
AHIP intends to proceed with a number of transactions that will collectively address all of the Company’s near-term debt maturities, while also creating modest improvements in ADR, RevPAR and leverage metrics.
AHIP’s has 91.7% of its debt at fixed interest rates or effectively fixed by interest rate swaps until
The commercial mortgage-backed securities (“CMBS”) debt maturities in the fourth quarter of 2023 are
To address the Q4 2023 CMBS loan maturities of
- The sale of one
Pennsylvania hotel by the end of the first quarter of 2024, which will be used to satisfy the$7.0 million non-recourse mortgage; and - A managed foreclosure process for one
Pennsylvania hotel, which will result in a discharge of$9.3 million in non-recourse mortgage debt.
To address the Q2 2024 CMBS loan maturity of
- Sell one hotel in the
Virginia portfolio by the end of the first quarter of 2024, which will be used to partially satisfy the non-recourse mortgage; and - Refinance the balance of the loan with the remaining three hotels in the
Virginia portfolio.
Amendment of the
On
In accordance with the Amendment, the management fee on certain hotel properties has been reduced or deferred. The reduction of management fees is estimated to provide approximately
The amendment to the master hotel management agreement also includes waivers of all or a portion of termination fees for certain hotels, as well as a limited exception to the exclusivity of the master hotel manager in respect of the acquisition of owner operated hotels, subject to certain conditions. For further details, see a copy of the amendment to the master hotel management agreement, which has been filed under AHIP’s profile on SEDAR+ at www.sedarplus.com.
Reducing Cash Portion of Board Compensation
Effective
Temporary Suspension of
Since
The amendment of the distribution policy is expected to provide an additional
The Board, with the assistance of management, will continue to review AHIP’s distribution policy on a quarterly basis. The previously announced
FINANCIAL INFORMATION
This news release should be read in conjunction with AHIP’s unaudited condensed consolidated interim financial statements, and management’s discussion and analysis for the three and nine months ended
Q3 2023 CONFERENCE CALL
Management will host a webcast and conference call at
To participate in the conference call, participants should register online via AHIP’s website. A dial-in and unique PIN will be provided to join the call. Participants are requested to register a minimum of 15 minutes before the start of the call. An audio webcast of the conference call is also available, both live and archived, on the Events & Presentations page of AHIP’s website: www.ahipreit.com.
ABOUT
NON-IFRS AND OTHER FINANCIAL MEASURES
Management believes the following non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures are relevant measures to monitor and evaluate AHIP’s financial and operating performance. These measures and ratios do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures and ratios are included to provide investors and management additional information and alternative methods for assessing AHIP’s financial and operating results and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS.
NON-IFRS FINANCIAL MEASURES:
FFO: FFO measures operating performance and is calculated in accordance with
AFFO: AFFO is defined as a recurring economic earnings measure and calculated in accordance with REALPAC’s definition. AFFO – basic is calculated as FFO – basic less maintenance capital expenditures. AFFO – diluted is calculated as FFO – diluted less maintenance capital expenditures. The most comparable IFRS measure to AFFO is net and comprehensive income (loss), for which a reconciliation is provided in this news release.
Normalized FFO: calculated as FFO excluding non-recurring items. For the three months ended
Net Operating Income (“NOI”): calculated by adjusting income from operating activities for depreciation and amortization, and IFRIC 21 property taxes. The most comparable IFRS measure to NOI is income from operating activities, for which a reconciliation is provided in this news release.
Normalized NOI: calculated as NOI adjusting for normalized items. For the three and nine months ended
EBITDA: calculated by adjusting income from operating activities for depreciation and amortization, IFRIC 21 property taxes, hotel management fees and general administrative expenses. The sum of management fees for hotel and general administrative expenses is equal to corporate and administrative expenses in the Financial Statements. The most comparable IFRS measure to EBITDA is income from operating activities, for which a reconciliation is provided in this news release.
Debt: calculated as the sum of term loans and revolving credit facility, the face value of convertible debentures, unamortized portion of debt financing costs, government guaranteed loan, lease liabilities and unamortized portion of mark-to-market adjustments. The most comparable IFRS measure to debt is total liabilities, for which a reconciliation is provided in this news release.
Gross book value: calculated as the sum of total assets, accumulated depreciation and impairment on property, buildings and equipment, and accumulated amortization on intangible assets. The most comparable IFRS measure to gross book value is total assets, for which a reconciliation is provided in this news release.
Interest expense: calculated by adjusting finance costs for gain or loss on debt settlement, amortization of debt financing costs, accretion of debenture liability, amortization of debenture costs, dividends on series B preferred shares of US REIT and amortization of mark-to-market adjustments because interest expense excludes certain non-cash accounting items and dividends on preferred shares. The most comparable IFRS measure to interest expense is finance costs, for which a reconciliation is provided in this news release.
NON-IFRS RATIOS:
FFO per unit – basic/diluted: calculated as FFO – basic/diluted divided by the weighted average number of units outstanding - basic/diluted respectively for the reporting periods.
Normalized FFO per unit – basic/diluted: calculated as normalized FFO – basic/diluted divided by the weighted average number of units outstanding - basic/diluted respectively for the reporting periods.
AFFO per unit – basic/diluted: calculated as AFFO – basic/diluted divided by the weighted average number of units outstanding - basic/diluted respectively for the reporting periods.
FFO payout ratio – basic, trailing twelve months: calculated as total distributions declared to unitholders – basic, divided by total FFO – basic, for the twelve months ended
FFO payout ratio – diluted, trailing twelve months: calculated as total distributions declared to unitholders – diluted, divided by total FFO – diluted, for the twelve months ended
AFFO payout ratio – basic, trailing twelve months: calculated as total distributions declared to unitholders – basic, divided by total AFFO – basic, for the twelve months ended
AFFO payout ratio – diluted, trailing twelve months: calculated as total distributions declared to unitholders – diluted, divided by total AFFO – diluted, for the twelve months ended
NOI margin: calculated as NOI divided by total revenue.
EBITDA margin: calculated as EBITDA divided by total revenue.
CAPITAL MANAGEMENT MEASURES:
Debt to gross book value: calculated as debt divided by gross book value. Debt to gross book value is a primary measure of capital management and leverage.
Debt to EBITDA: calculated as debt divided by the trailing twelve months of EBITDA. Debt to EBITDA measures the amount of income generated and available to pay down debt before covering interest, taxes, depreciation, and amortization expenses.
Interest coverage ratio: calculated as EBITDA for the trailing twelve months divided by interest expense for the trailing twelve months period. The interest coverage ratio measures AHIP’s ability to meet required interest payments related to its outstanding debt and dividends on the series B preferred shares of US REIT.
SUPPLEMENTARY FINANCIAL MEASURES:
Occupancy is a major driver of room revenue as well as food and beverage revenues. Fluctuations in occupancy are accompanied by fluctuations in most categories of variable hotel operating expenses, including housekeeping and other labor costs. ADR also helps to drive room revenue with limited impact on other revenues. Fluctuations in ADR are accompanied by fluctuations in limited categories of hotel operating expenses, such as franchise fees and credit card commissions, since variable hotel operating expenses, such as labor costs, generally do not increase or decrease correspondingly. Thus, increases in RevPAR attributable to increases in occupancy typically reduce EBITDA and EBITDA Margins, while increases in RevPAR attributable to increases in ADR typically result in increases in EBITDA and EBITDA Margins.
Occupancy: calculated as total number of hotel rooms sold divided by total number of rooms available for the reporting periods. Occupancy is a metric commonly used in the hotel industry to measure the utilization of hotels’ available capacity. In Q1 and Q2 2023, the occupancy calculation excluded
Average daily rate (“ADR”): calculated as total room revenue divided by total number of rooms sold for the reporting periods. ADR is a metric commonly used in the hotel industry to indicate the average revenue earned per occupied room in a given time period. In Q1 and Q2 2023, the ADR calculation excluded
Revenue per available room (“RevPAR”): calculated as occupancy multiplied by ADR for the reporting periods. In Q1 and Q2 2023, the RevPAR calculation excluded
Same property occupancy, ADR, RevPAR, NOI and NOI margin: measured for properties owned by AHIP for both the current reporting periods and the same periods in 2022. In Q1 and Q2 2023, same property ADR, occupancy and RevPAR calculations excluded the seven hotels sold in 2022, the one hotel sold in 2023, and
NON-IFRS RECONCILIATION
The following table reconciles FFO to income (loss) and comprehensive income (loss), the most comparable IFRS measure as presented in the financial statements:
Three months ended | Nine months ended | |||||||||||
(thousands of dollars, except per unit amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||
Income (loss) and comprehensive income (loss) | (1,345) | 315 | 7,713 | 10,125 | ||||||||
Adjustments: | ||||||||||||
Income attributable to non-controlling interest | (1,022) | (1,022) | (3,033) | (3,033) | ||||||||
Depreciation and amortization | 8,948 | 8,932 | 26,216 | 29,230 | ||||||||
Gain on sale of properties | (540) | (9) | (2,941) | (1,058) | ||||||||
Write-off of property, building and equipment | 3,766 | 7,934 | ||||||||||
IFRIC 21 property taxes adjustment | 308 | (193) | (272) | (937) | ||||||||
Change in fair value of interest rate swap contracts | 1,263 | (1,249) | 3,188 | (5,878) | ||||||||
Change in fair value of warrants | (1,239) | (1,627) | (2,958) | (4,477) | ||||||||
Impairment of cash-generating units | 4,737 | 4,417 | 4,737 | 4,674 | ||||||||
Deferred income tax expense(recovery) | (408) | 780 | (1,848) | 615 | ||||||||
FFO basic (1) | 14,468 | 10,344 | 38,736 | 29,261 | ||||||||
Interest, accretion and amortization on convertible debentures | 1,110 | 1,089 | 3,296 | 3,109 | ||||||||
FFO diluted (1) | 15,578 | 11,433 | 42,032 | 32,370 | ||||||||
FFO per unit – basic (1) | 0.18 | 0.13 | 0.49 | 0.37 | ||||||||
FFO per unit – diluted (1) | 0.17 | 0.13 | 0.47 | 0.36 | ||||||||
FFO payout ratio – basic – trailing twelve months (1) | 30.0% | 26.8% | 30.0% | 26.8% | ||||||||
FFO payout ratio – diluted – trailing twelve months (1) | 31.2% | 27.6% | 31.2% | 27.6% | ||||||||
Non-recurring items: | ||||||||||||
Gain on debt settlement | - | - | - | (2,344) | ||||||||
Other income | (5,421) | - | (12,889) | (2,192) | ||||||||
Measurements excluding non-recurring items: | ||||||||||||
Normalized FFO diluted (1) | 10,157 | 11,433 | 29,143 | 27,834 | ||||||||
Normalized FFO per unit – diluted (1) | 0.11 | 0.13 | 0.33 | 0.31 | ||||||||
Weighted average number of units outstanding: | ||||||||||||
Basic (000’s) | 78,877 | 78,766 | 78,837 | 78,747 | ||||||||
Diluted (000’s) (2) | 89,864 | 89,485 | 89,612 | 89,246 | ||||||||
(2) The calculation of weighted average number of units outstanding for FFO per unit – diluted, normalized FFO per unit – diluted included the convertible debentures for the three and nine months ended | ||||||||||||
RECONCILIATION OF FFO TO AFFO
Three months ended | Nine months ended | |||||||||||||||
(thousands of dollars, except per Unit amounts) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
FFO basic (1) | 14,468 | 10,344 | 38,736 | 29,261 | ||||||||||||
FFO diluted (1) | 15,578 | 11,433 | 42,032 | 32,370 | ||||||||||||
Maintenance capital expenditures | (2,802) | (2,990) | (8,661) | (7,829) | ||||||||||||
AFFO basic (1) | 11,666 | 7,354 | 30,075 | 21,432 | ||||||||||||
AFFO diluted (1) | 12,776 | 8,443 | 33,371 | 24,541 | ||||||||||||
AFFO per unit - basic (1) | 0.15 | 0.09 | 0.38 | 0.27 | ||||||||||||
AFFO per unit - diluted (1) | 0.14 | 0.09 | 0.37 | 0.27 | ||||||||||||
AFFO payout ratio – basic – trailing twelve months (1) | 39.5% | 30.6% | 39.5% | 30.6% | ||||||||||||
AFFO payout ratio – diluted – trailing twelve months (1) | 40.0% | 31.3% | 40.0% | 31.3% | ||||||||||||
Measurements excluding non-recurring items: | ||||||||||||||||
AFFO diluted (1) | 7,355 | 8,443 | 20,482 | 20,005 | ||||||||||||
AFFO per unit - diluted (1) | 0.08 | 0.09 | 0.23 | 0.22 | ||||||||||||
DEBT TO GROSS BOOK VALUE | ||||||||||||||||
(thousands of dollars) | ||||||||||||||||
Debt (1) | 690,556 | 699,881 | ||||||||||||||
Gross Book Value (1) | 1,350,174 | 1,329,865 | ||||||||||||||
Debt-to-Gross Book Value (1) | 51.1% | 52.6% | ||||||||||||||
(thousands of dollars) | | |||||||||||||||
Term loans and revolving credit facility | 636,282 | 643,929 | ||||||||||||||
2026 Debentures (at face value) | 50,000 | 50,000 | ||||||||||||||
Unamortized portion of debt financing costs | 3,003 | 4,437 | ||||||||||||||
Lease liabilities | 1,293 | 1,591 | ||||||||||||||
Unamortized portion of mark-to-market adjustments | (22) | (76) | ||||||||||||||
Debt (1) | 690,556 | 699,881 | ||||||||||||||
(thousands of dollars) | ||||||||||||||||
Total Assets | 1,044,962 | 1,052,795 | ||||||||||||||
Accumulated depreciation and impairment | 300,165 | 272,540 | ||||||||||||||
on property, buildings and equipment | ||||||||||||||||
Accumulated amortization on intangible assets | 5,047 | 4,530 | ||||||||||||||
Gross Book Value (1) | 1,350,174 | 1,329,865 | ||||||||||||||
DEBT TO EBITDA
(thousands of dollars) | |||||
Debt (1) | 690,556 | 699,881 | |||
EBITDA (trailing twelve months) (1) | 68,286 | 71,293 | |||
Debt-to-EBITDA (times) (1) | 10.1x | 9.8x | |||
The reconciliation of income from operating activities to NOI, hotel EBITDA and EBITDA is shown below:
Three months ended | Nine months ended | |||||||||||
(thousands of dollars) | 2023 | 2022 | 2023 | 2022 | ||||||||
Income from operating activities | 13,322 | 15,936 | 40,659 | 40,537 | ||||||||
Depreciation and amortization | 8,948 | 8,932 | 26,216 | 29,230 | ||||||||
IFRIC 21 property taxes adjustment | 308 | (193) | (272) | (937) | ||||||||
NOI (1) | 22,578 | 24,675 | 66,603 | 68,830 | ||||||||
Management fees | (2,216) | (2,481) | (6,773) | (7,089) | ||||||||
20,362 | 22,194 | 59,830 | 61,741 | |||||||||
General administrative expenses | (2,538) | (1,655) | (7,729) | (6,152) | ||||||||
EBITDA (1) | 17,824 | 20,539 | 52,101 | 55,589 | ||||||||
The reconciliation of NOI to normalized NOI is shown below:
Three months ended | Nine months ended | |||||||
(thousands of dollars) | 2023 | 2022 | 2023 | 2022 | ||||
NOI (1) | 22,578 | 24,675 | 66,603 | 68,830 | ||||
Business interruption insurance proceeds | 516 | - | 3,446 | - | ||||
Normalized NOI (1) | 23,094 | 24,675 | 70,049 | 68,830 | ||||
The reconciliation of finance costs to interest expense is shown below:
Three months ended | Nine months ended | |||||||||||||||
(thousands of dollars) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| ||||||||||||||||
Finance costs | 8,335 | 9,187 | 26,260 | 25,428 | ||||||||||||
Gain on debt settlement | 1,155 | - | 1,155 | 2,344 | ||||||||||||
Amortization of debt financing costs | (536 | ) | (473) | (1,387) | (1,558) | |||||||||||
Accretion of Debenture liability | (254 | ) | (231) | (737) | (596 | |||||||||||
Amortization of Debenture costs | (105 | ) | (95) | (305) | (241) | |||||||||||
Dividends on Series B preferred shares | (4 | ) | (4) | (12) | (12) | |||||||||||
Debt defeasance and other costs | 5 | - | (14) | |||||||||||||
Interest Expense (1) | 8,596 | 8,384 | 24,960 | 25,365 | ||||||||||||
For information on the most directly comparable IFRS measures, composition of the measures, a description of how AHIP uses these measures, and an explanation of how these measures provide useful information to investors, please refer to AHIP’s management discussion and analysis for the three and nine months ended
FORWARD-LOOKING INFORMATION
Certain statements in this news release may constitute “forward-looking information” and “financial outlook” within the meaning of applicable securities laws. Forward-looking information and financial outlook generally can be identified by words such as “anticipate”, “believe”, “continue”, “expect”, “estimates”, “intend”, “may”, “outlook”, “objective”, “plans”, “should”, “will” and similar expressions suggesting future outcomes or events. Forward-looking information and financial outlook include, but are not limited to, statements made or implied relating to the objectives of AHIP, AHIP’s strategies to achieve those objectives and AHIP’s beliefs, plans, estimates, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Forward-looking information and financial outlook in this news release includes, but is not limited to, statements with respect to: AHIP’s expectations with respect to its future performance; AHIP’s strategic initiatives and the intended outcomes thereof, including improved liquidity, addressing near-term debt maturities and providing AHIP with financial stability and delivering value to unitholder over the long term; AHIP’s expectation overall decreases in demand will continue in the medium term, and certain specific expectations with respect to fourth quarter of 2023; AHIP’s expectation that most of the estimated amount of weather-related damage to buildings and equipment of certain hotel properties will be covered by insurance, and AHIP’s expectation with respect to the recovery of most of the lost income from these properties through business interruption insurance; AHIP’s expectations with respect to the timing of the receipt of such insurance proceeds; the expectation that increased insurance premiums will increase expenses and reduce earnings; AHIP’s review of strategies for divesting assets to recycle proceeds into higher return assets in more attractive markets and reduce debt; AHIP’s plans to use net proceeds from asset sales to reduce debt; AHIP’s evaluation of growth and divesture opportunities; AHIP’s expectations with respect to the effective timing of the results of the appraisals required by the Sixth Amendment, and AHIP’s expectation that any paydowns which may be required will be funded through a combination of cash on hand and/or net proceeds from asset sales; AHIP’s intended strategies for near-term debt maturities, including planned sales of assets and loan refinancing; AHIP’s expectations as to the financial impact of the expiry of interest rate swaps for certain term loans; the estimated savings as a result of reductions and deferrals of management fees under the master hotel management agreement as well as increased fees in certain future years when deferred fees become payable; payment of the majority of the Board’s compensation in RSUs; the estimated savings from the temporary suspension of cash distributions and expectation that such amendment to the distribution policy will strengthen AHIP’s balance sheet and liquidity and support long-term enhancement of unitholder value; the statement that the Board will continue to review AHIP’s distribution policy on a quarterly basis; the statement that the previously announced
Although the forward-looking information and financial outlook contained in this news release are based on what AHIP’s management believes to be reasonable assumptions, AHIP cannot assure investors that actual results will be consistent with such information. Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: inflation, labor shortages, and supply chain disruptions will negatively impact the
Forward-looking information and financial outlook involve significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information and financial outlook, accordingly undue reliance should not be placed on such forward-looking information and financial outlook. Those risks and uncertainties include, among other things, risks related to: AHIP may not achieve its expected performance levels in 2023 and beyond; inflation, labor shortages, supply chain disruptions; AHIP’s insurance claims with respect to its weather damaged properties may be denied in whole or in part; AHIP’s brand partners may impose revised service standards and capital requirements which are adverse to AHIP; property improvement plan renovations may not commence or complete in accordance with currently expected timing and may suffer from increased material and labor costs; AHIP’s strategic initiatives with respect to liquidity, addressing near-term debt maturities and providing AHIP with financial stability may not be successful and may not achieve their intended outcomes; AHIP’s strategies for divesting assets to recycle proceeds into higher return assets in more attractive markets and reduce debt may not be successful; savings from the amendments to the master hotel management agreement may be less than expected; AHIP may not be successful in reducing its leverage; the appraisals required under the Sixth Amendment may report lower than expected values which may trigger paydown requirements under the Sixth Amendment, and if such pay-downs are required, there is no guarantee that AHIP will have sufficient cash on hand or be able to generate sufficient net proceeds to meet those requirements, which, without relief from the lender, would put AHIP in default under the Sixth Amendment; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; the suspension of monthly distributions is expected to negatively impact the market price of AHIP’s units and debentures; AHIP may not be able to refinance debt obligations as they become due or may do so on terms less favorable to AHIP than under AHIP’s existing loan agreements; AHIP may not be able to renew or replacing its interest rate swaps on reasonable terms or at all, which may lead to increased interest expense; general economic conditions and consumer confidence; the growth in the
To the extent any forward-looking information constitutes a “financial outlook” within the meaning of applicable securities laws, such information is being provided to investors to assist in their understanding of AHIP’s expected costs of remediation and renovation and expected proceeds of insurance in respect of AHIP’s weather-damaged properties, potential cash savings from the amendment to the master hotel management agreement and temporary suspension of distributions; the financial impact on AHIP of increased insurance premiums and interest costs associated with the expiry of interest swaps for certain term loans and management’s expectations for certain aspects of AHIP’s financial performance for the remainder of 2023.
The forward-looking information and financial outlook contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information and financial outlook reflect management's current beliefs and are based on information currently available to AHIP. The forward-looking information and financial outlook are made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
For additional information, please contact:
Investor Relations
ir@ahipreit.com
Source: American Hotel Income Properties
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