- Q1 2020 diluted FFO per Unit of
$0.06 ; Q1 2020 diluted AFFO per Unit of$0.05 - Net operating income (NOI) during first two months of Q1 2020 grew 3.6% compared to the same period last year; Same-Property NOI grew 9.8% in first two months of Q1 2020
- Significant impact of COVID-19 experienced in last half of March
- Aggressive cost cutting and credit initiatives taken by management to provide liquidity
- 63 of AHIP's 79 hotels open and accepting reservations; 16 hotels have temporarily
suspended reservations or consolidated with nearby properties - Occupancy levels across AHIP's hotels have stabilized and are now rising
- Well positioned for the expected economic recovery: hotels near major interstate freeways are expected to benefit from a shift towards vehicle travel
- AHIP's 24 extended stay hotel properties continue to be the best performing in the portfolio
(All numbers are in
"These are clearly unique and unprecedented times, for the world, and for the hotel industry. AHIP has taken prompt action and all necessary steps to protect our valuable hotel business and assets, at the same time with a maximum focus on ensuring the health and safety of our guests and employees. We are successfully navigating our business through this period of disruption and reduced travel, while working to ensure we are well prepared for the expected economic recovery once the pandemic subsides, and travel patterns start to return to normal," said
THREE MONTHS ENDED
- Revenues for the quarter decreased 23.2% to
$61.9 million (Q1 2019 –$80.5 million ) due to COVID-19 impacts inMarch 2020 . - Average Daily Rate ("ADR") increased 17.0% compared to Q1 2019, to
$113.88 , due mostly to the higher quality hotels in AHIP's portfolio in Q1 2020 compared to the same quarter last year. - Revenue per
Available Room ("RevPAR") increased 0.5% compared to the same quarter last year, to$70.83 . The STR RevPAR index, which compares the performance of AHIP owned hotels to their competitive set in each region, indicated AHIP's 79 Premium Branded hotels generally outperformed their identified direct competition with AHIP having an average index rating of 122.4 during the quarter (Q1 2019 – 121.4) – with 100.0 representing a 'fair share' of the market. AHIP's recently acquired 12 Premium Branded hotels achieved an STR RevPAR index of 131.5, demonstrating their strong market position during the quarter. - The occupancy rate during the first quarter decreased 10.2 percentage points to 62.2% (Q1 2019 – 72.4%). There was a marked difference in occupancy during January and
February 2020 , compared toMarch 2020 , when COVID-19 impacts had a significant and immediate effect in the second half of that month. Average occupancy in January and February was 69.7% – in line with the same period last year, while average occupancy in March was 47.6%. - Net Operating Income ("NOI") decreased by 30.8% to
$17.9 million (Q1 2019 –$25.8 million ) due to lower revenues. Net operating income for January andFebruary 2020 grew 3.6% compared to the same period last year. - NOI Margins decreased by 320 basis points to 28.9% (Q1 2019 – 32.1%) as a result of lower revenue.
- Loss and comprehensive loss for the seasonally slow first quarter was
$12.6 million , compared to loss and comprehensive loss of$0.5 million in Q1 2019, as a result of lower revenues, a$5.8 million loss on the fair value of interest rate swaps due to falling interest rates, and a$1.9 million impairment charge on four hotels. - Diluted loss per Unit for the quarter was
$0.16 compared to a diluted loss per Unit of$0.01 in Q1 2019. - Funds from operations ("FFO") decreased 59.0% from Q1 2019 to
$4.7 million and adjusted funds from operations ("AFFO") decreased 63.9% to$3.6 million , primarily as a result of the impact of COVID-19. - Q1 2020 Diluted FFO per Unit was
$0.06 (Q1 2019 –$0.15 ) and Diluted AFFO per Unit was$0.05 (Q1 2019 –$0.13 ).
Same-Property Results
Same-property metrics represent the performance of the 67 Premium Branded hotels owned in both the current and comparative period, or 85% of AHIP's total current hotel portfolio based on number of hotels.
- Same-property revenues for the first quarter decreased 15.9% to
$53.5 million (Q1 2019 –$63.5 million ) due to COVID-19 impacts inMarch 2020 . During January andFebruary 2020 , total same-property revenues increased by$1.3 million (or 3.4%). - Same-property ADR decreased 1.0% to
$113.08 (Q1 2019 –$114.21 ). - Same-property RevPAR decreased 17.1% from Q1 last year to
$70.34 (Q1 2019 –$84.86 ). - Same-property occupancy decreased 12.1 percentage points to 62.2% (Q1 2019 – 74.3%). Average occupancy in January and February was 69.6%, while occupancy in March declined to 47.7% due to the impact of COVID-19.
- Same-property NOI was
$15.2 million (Q1 2019 –$21.0 million ) and the NOI margin was 28.5% (Q1 2019 – 33.0%). NOI declines were due to COVID-19 impacts inMarch 2020 . Same-property NOI for January andFebruary 2020 increased by$1.1 million (or 9.8%) to$12.3 million as a result of higher revenues and lower operating expenses with NOI margins increasing by 180 basis points to 30.9%.
Capital Metrics and Liquidity
- As at
March 31, 2020 , AHIP had an unrestricted cash balance of$19.8 million ($29.9 million as atApril 30, 2020 ) and a restricted cash balance of$29.9 million , consisting of$19.0 million in FF&E and PIP reserves and$10.9 million in property tax and insurance reserves. - Based on current hotel occupancy levels, AHIP estimates the net monthly cash burn rate (covering all expenses including all monthly debt service payments) to be approximately
$3.8 million per month after taking into account the initiatives in place to limit costs. If overall occupancy returns to a 50% level, AHIP anticipates that its current cost containment measures would enable it to operate at an overall breakeven level with no net monthly cash burn. - AHIP is currently in active discussions with its CMBS loan servicers about applying some of the CMBS reserves for upcoming debt service payments and temporary suspension of FF&E reserve contributions to further enhance AHIP's liquidity. AHIP has already received such approvals from certain CMBS loan servicers and discussions are ongoing with the remainder of its CMBS loan servicers.
- AHIP is in active discussions with its lending syndicate to obtain covenant waivers through Q1 2021 and access to additional revolver capacity.
- AHIP was compliant with all of its loan agreements at
March 31, 2020 and is current on all of its debt payments. - Through its various initiatives with its lenders, AHIP expects to generate approximately
$20 million of additional liquidity. - As at
March 31, 2020 , AHIP's debt had a weighted average remaining term of 5.3 years (Q1 2019 – 6.2 years) and a weighted average interest rate of 4.36% (Q1 2019 – 4.64%), with no significant debt maturities untilJune 2022 . - AHIP's debt-to-gross book value as at
March 31, 2020 was 58.5% (March 31, 2019 – 53.8%). - AHIP paid
U.S. dollar monthly distributions in January and February, and deferred the March distribution originally payable in April to a later date to be determined by AHIP's board of directors. AHIP has temporarily suspended its monthly distribution to preserve liquidity.
FIRST QUARTER DEVELOPMENTS
- On
March 10, 2020 , AHIP's board of directors approved a 29.6% reduction of the Company'sU.S. dollar monthly cash distribution. As a result, unitholders of record as of the close of business onMarch 31, 2020 will receive a distribution ofUS$0.038 cents per Unit forMarch 2020 , the payment of which has been deferred to a later date to be determined by AHIP's board of directors. - On
March 20, 2020 , AHIP announced that its board of directors temporarily suspended AHIP's monthly distributions beginning inApril 2020 , until economic conditions and the performance of AHIP's hotels improve sufficiently. While economic uncertainty continues due to COVID-19, AHIP's board and management believe cash preservation is of upmost importance and the suspension of the monthly distribution is a prudent measure to ensure the long-term health of the business. AHIP's board of directors will continue to regularly review the Company's financial performance and position in order to determine an appropriate time for reinstatement of monthly distributions.
SUBSEQUENT EVENTS
- On
April 8, 2020 , AHIP announced that it had undertaken significant cost reduction and cash preservation measures, which are expected to provide the Company with more than$8 million of monthly cash flow savings (more than$100 million annualized) to help offset the negative impacts of COVID-19 on hotel business levels. These measures included: - Reducing hotel staffing levels by 70% (reducing staffing levels from 2,500 to 750 employees),
- Deferring capital expenditures to future years, with agreement by AHIP's hotel brands,
- Suspending funding of FF&E reserves, subject to lender approvals,
- Reducing corporate staffing levels by 27%,
- Senior management at AHIP agreeing to a 15% salary reduction, effective from
April 1, 2020 for the remainder of 2020, John O'Neill , CEO, agreeing to a 50% salary reduction, effective fromApril 1, 2020 , while continuing to receive 100% of his compensation in equity,- AHIP's board of directors agreeing to receive 100% of their remaining 2020 retainer fees in units, rather than cash,
- AHIP's hotel manager, Aimbridge, reducing some direct and third party service fees until at least
June 30, 2020 , and - Temporarily suspending the monthly cash distribution.
- In mid-April, AHIP applied for, and subsequently received,
U.S. government-guaranteed loans intended to mitigate the impact of COVID-19 and support hotel operations.
The information in this news release should be read in conjunction with AHIP's unaudited condensed consolidated interim financial statements and management's discussion and analysis ("MD&A") for the three months ended
Q1 2020 FINANCIAL RESULTS CONFERENCE CALL
Management will host a conference call at
To participate in this conference call, please dial one of the following numbers at least five minutes prior to the commencement of the call and ask to join the
Dial in numbers: | North America Toll free: | 1-877-291-4570 |
International or local | 1-647-788-4919 |
The conference call will also be webcast live (in listen-only mode). The link to the webcast can be found on the Events tab of the following webpage: https://www.ahipreit.com/news-and-events/
CONFERENCE CALL REPLAY
A replay of the conference call will be available by dialing one of the following replay numbers. The replay will be available after
Please enter replay PIN number 4476906 followed by the # key.
Replay dial in numbers: | North America Toll free: | 1-800-585-8367 |
International or local | 1-416-621-4642 |
NON-IFRS MEASURES
Certain non-IFRS financial measures are included in this news release, which include NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, and debt-to-gross book value. These terms are not measures recognized under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. Real estate issuers often refer to NOI, FFO, Diluted FFO per Unit, AFFO, and Diluted AFFO per Unit as supplemental measures of performance and debt-to-gross book value as a supplemental measure of financial condition.
Debt-to-gross book value, NOI, FFO, Diluted FFO per Unit, AFFO, and Diluted AFFO per Unit, should not be construed as alternatives to measurements determined in accordance with IFRS as indicators of AHIP's performance or financial condition. AHIP's method of calculating NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, and debt-to-gross book value may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers. For further information, including reconciliations of certain of these non-IFRS financial measures to the closest comparable IFRS measure, please refer to AHIP's MD&A dated
FORWARD-LOOKING INFORMATION
Certain statements in this news release may constitute "forward-looking information" or "financial outlook" within the meaning of applicable securities laws (also known as forward-looking statements). Forward looking information and financial outlook involve known and unknown risks, uncertainties and other factors, and may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook. Forward-looking information and financial outlook generally can be identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "feel", "intend", "may", "plan", "predict", "project", "subject to", "will", "would", and similar terms and phrases, including references to assumptions. Some of the specific forward-looking information and financial outlook in this news release includes, but are not limited to, statements with respect to: AHIP's belief that its portfolio is well positioned for the expected economic recovery, with hotels near major interstate freeways expected to benefit from a shift towards vehicle travel; AHIP's expectation that significant impacts of COVID-19 on the
Forward-looking information and "financial outlook" are based on a number of key expectations and assumptions made by AHIP, including, without limitation: the COVID-19 pandemic will continue to negatively impact the
Forward-looking information and financial outlook are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. 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. Those risks and uncertainties include, among other things, risks related to: the impacts of the COVID-19 pandemic on the
To the extent any forward-looking information or statements in this news release constitute a "financial outlook" within the meaning of applicable securities laws, such information is being provided to assist investors in better understanding the potential financial impact of AHIP's cost reduction, cash preservation and liquidity strategies and measures.
The forward-looking information and financial outlook contained herein are expressly qualified in their entirety by this cautionary statement. Forward-looking information and financial outlook reflect management's current beliefs and is 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.
THIRD PARTY INFORMATION
This news release includes market information and industry data from independent industry publications, market research and analyst reports, surveys and other publicly available sources. Although AHIP management believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness of this data are not guaranteed. AHIP has not independently verified any of the data from third party sources referred to in this news release nor ascertained the underlying assumptions relied upon by such sources.
ADDITIONAL INFORMATION
Additional information relating to AHIP, including AHIP's unaudited condensed consolidated interim financial statements for the three months ended
ABOUT
FIRST QUARTER HIGHLIGHTS AND KEY PERFORMANCE INDICATORS
(US$000s unless noted and except Units and per Unit amounts) | Three months ended 2020 | Three months ended 2019 | Change | |||||
TOTAL PORTFOLIO INFORMATION (1) | ||||||||
Number of rooms (2) | 8,887 | 11,524 | (22.9%) | |||||
Number of properties (2) | 79 | 112 | (29.5%) | |||||
Number of restaurants (2) | 16 | 40 | (60.0%) | |||||
Occupancy rate | 62.2% | 72.4% | -10.2 pp | |||||
Average daily room rate | $ | 113.88 | $ | 97.32 | 17.0% | |||
Revenue per available room | $ | 70.83 | $ | 70.46 | 0.5% | |||
Revenues | $ | 61,855 | $ | 80,531 | (23.2%) | |||
Net operating income (3) | $ | 17,861 | $ | 25,821 | (30.8%) | |||
NOI Margin % | 28.9% | 32.1% | -3.2 pp | |||||
Loss and comprehensive loss | $ | (12,607) | $ | (456) | nm | |||
Diluted loss per Unit | $ | (0.16) | $ | (0.01) | nm | |||
EBITDA (3) | $ | 14,165 | $ | 20,889 | (32.2%) | |||
EBITDA Margin % | 22.9% | 25.9% | -3.0 pp | |||||
FUNDS FROM OPERATIONS (FFO) (1) | ||||||||
Funds from operations | $ | 4,674 | $ | 11,401 | (59.0%) | |||
Diluted FFO per Unit (4)(5) | $ | 0.06 | $ | 0.15 | (60.0%) | |||
FFO Payout Ratio - rolling four quarters | 101.7% | 90.7% | 11.0 pp | |||||
ADJUSTED FUNDS FROM OPERATIONS (AFFO) (1) | ||||||||
Adjusted funds from operations | $ | 3,587 | $ | 9,949 | (63.9%) | |||
Diluted AFFO per Unit (4)(5) | $ | 0.05 | $ | 0.13 | (61.5%) | |||
Distributions declared | $ | 11,405 | $ | 12,557 | (9.2%) | |||
Distributions declared per unit | $ | 0.146 | $ | 0.162 | (9.9%) | |||
CAPITALIZATION AND LEVERAGE | ||||||||
Debt-to-Gross Book Value (2) | 58.5% | 53.8% | 4.7 pp | |||||
Debt-to-EBITDA (trailing twelve-month basis) | 9.3x | 8.1x | 1.2x | |||||
Interest Coverage Ratio | 1.6x | 2.3x | -0.7x | |||||
Weighted average Debt face interest rate (2) | 4.36% | 4.64% | -0.28 pp | |||||
Weighted average Debt term to maturity (2) | 5.3 years | 6.2 years | -0.9 | years | ||||
Number of Units outstanding (2) | 78,133,171 | 78,119,336 | 13,835 | |||||
Diluted weighted average number of Units | ||||||||
outstanding (4) | 78,195,201 | 78,204,277 | (9,076) | |||||
(1) | Refers to combined continuing and discontinued operations |
(2) | At period end |
(3) | Not adjusted for IFRIC 21 property taxes |
(4) | Diluted weighted average number of Units calculated in accordance with IFRS included the 529,298 and 90,724 unvested Restricted Stock Units as at |
(5) | The Debentures were not dilutive for FFO and AFFO for the three months ended |
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