All amounts presented in this news release are in
2023 HIGHLIGHTS
- Diluted FFO per unit (1) and normalized diluted FFO per unit (1) were
$0.48 and$0.36 , respectively, for the year endedDecember 31, 2023 , compared to$0.47 and$0.38 for the year endedDecember 31, 2022 . - ADR (1) increased 5.6% to
$131 for the year endedDecember 31, 2023 , compared to$124 for the year endedDecember 31, 2022 . - Occupancy (1) was 68.7% for the year ended
December 31, 2023 , compared to 68.9% for the year endedDecember 31, 2022 . - RevPAR (1) increased 5.9% to
$90 for the year endedDecember 31, 2023 , compared to$85 for the year endedDecember 31, 2022 . - Revenue decreased 0.3% to
$280.5 million for the year endedDecember 31, 2023 , compared to$281.4 million for the year endedDecember 31, 2022 , as a result of asset sales and weather-related demand disruption in 2023. - NOI (1) and normalized NOI (1) were
$83.4 million and$86.9 million , respectively, for the year endedDecember 31, 2023 , decreases of 6.5% and 2.6%, respectively, compared to$89.2 million and$89.2 million for the year endedDecember 31, 2022 . - AHIP had
$27.8 million in available liquidity as atDecember 31, 2023 , compared to$24.1 million as atDecember 31, 2022 . The available liquidity of$27.8 million was comprised of an unrestricted cash balance of$17.8 million and borrowing availability of$10.0 million under the revolving credit facility. - 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 cash distributions effective
November 2023 to enhance liquidity.
“AHIP’s portfolio of premium branded select service hotel properties continued to demonstrate strong demand metrics in 2023.” said
Q4 2023 HIGHLIGHTS
- Diluted FFO per unit and normalized diluted FFO per unit were
$0.004 and$0.03 , respectively, for the fourth quarter of 2023, compared to$0.11 and$0.07 for the same period of 2022. - ADR increased 0.8% to
$126 for the fourth quarter of 2023, compared to$125 for the same period of 2022. - Occupancy was 66.5% for the fourth quarter of 2023, an increase of 20 bps compared to 66.3% for the same period of 2022.
- RevPAR increased 1.2% to
$84 for the fourth quarter of 2023, compared to$83 for the same period of 2022. - Revenue decreased 2.9% to
$65.8 million for the fourth quarter of 2023, compared to$67.8 million for the same period of 2022. - NOI was
$16.8 million for the fourth quarter of 2023, a decrease of 17.5%, compared to$20.3 million for the same period of 2022.
2023 REVIEW
GROWTH IN ADR AND REVPAR, DECLINE IN OCCUPANCY
For the year 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 in 2023, partially mitigating the effects of escalated labor costs and general inflationary pressures impacting the portfolio.
NOI,
NOI and normalized NOI (1) were
Diluted FFO per unit and normalized diluted FFO per unit for the year ended
LEVERAGE AND LIQUIDITY
KPIs (unaudited) | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 |
Debt-to-GBV (1) | 51.9% | 51.1% | 51.6% | 52.0% | 52.6% |
Debt-to-EBITDA (1) | 10.6x | 10.1x | 9.8x | 9.6x | 9.8x |
Debt to gross book value as at
As at
AHIP has 71.3% of its debt at fixed interest rates following the expiry of the interest rate swaps on its senior credit facility on
NON-CASH IMPAIRMENT CHARGES
During the fourth quarter of 2023, the Company recognized non-cash impairment charges of approximately
CAPITAL RECYCLING
In 2022, AHIP completed the strategic dispositions of seven non-core hotel properties for total gross proceeds of
In
In the fourth quarter of 2023, AHIP entered into agreements to dispose of a hotel property in
In 2024, AHIP will continue to execute its strategy to divest assets to recycle proceeds into higher return assets in more attractive markets and reduce debt. AHIP is currently marketing selected properties.
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 (unaudited) | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 |
ADR | $126 | 133 | |||
Change compared to same period in prior year - % increase/(decrease) | - | 2.9% | 6.0% | 11.2% | 9.5% |
Occupancy | 66.6% | 71.4% | 73.7% | 65.7% | 67.4% |
Change compared to same period in prior year - bps increase/(decrease) | (80) | (230) | (60) | - | 40 |
RevPAR | $84 | ||||
Change compared to same period in prior year - % increase/(decrease) | (1.2%) | (0.2%) | 5.2% | 11.1% | 10.3% |
NOI Margin | 26.1% | 30.6% | 33.5% | 29.1% | 30.9% |
Change compared to same period in prior year - bps increase/(decrease) | (480) | (270) | (140) | (60) | (400) |
In the fourth quarter of 2023, same property ADR was
Same property NOI margin decreased by 480 bps to 26.1% in the fourth quarter of 2023, compared to the same period of 2022. The decrease in same property NOI margin was mainly due to higher operating expenses as a result of cost inflation, escalated labor costs, and higher property insurance premiums. General inflation resulted in higher costs of operating supplies and higher utilities expenses. Shortages in the overall
In Q4 2023, Q3 2023 and Q4 2022, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded nine properties, which is comprised of seven hotels sold in 2022, one hotel sold in 2023, and one hotel in respect of which AHIP is in a managed foreclosure process for this property as of
In Q1 and Q2 2023, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded eleven properties, which is comprised of the nine properties mentioned in the immediately preceding paragraph, as well as
SELECTED INFORMATION
(thousands of dollars, except per Unit amounts, unaudited) | 2023 | 2022 | 2021 |
Revenue | 280,521 | 281,367 | 241,307 |
Income from operating activities | 48,424 | 51,202 | 45,830 |
Loss and comprehensive loss | (73,916) | (35,582) | (11,866) |
NOI (1) | 83,372 | 89,154 | 88,917 |
NOI Margin (1) | 29.7% | 31.7% | 36.8% |
75,269 | 79,941 | 81,635 | |
26.8% | 28.4% | 33.8% | |
EBITDA (1) | 64,732 | 71,293 | 70,803 |
EBITDA Margin (1) | 23.1% | 25.3% | 29.3% |
Cashflow from operating activities | 37,818 | 44,910 | 17,954 |
Distributions declared per unit – basic and diluted | 0.150 | 0.165 | - |
Distributions declared to unitholders – basic | 11,826 | 12,996 | - |
Distributions declared to unitholders – diluted | 15,676 | 14,453 | - |
Dividends declared to Series C holders | 4,055 | 4,055 | 3,744 |
FFO diluted (1) | 43,415 | 42,020 | 42,313 |
FFO per unit – diluted (1) | 0.48 | 0.47 | 0.48 |
FFO payout ratio – diluted, trailing twelve months (1) | 37.0% | 35.2% | - |
Normalized FFO per unit – diluted (1) | 0.36 | 0.38 | 0.32 |
AFFO diluted (1) | 31,060 | 31,471 | 37,064 |
AFFO per unit – diluted (1) | 0.35 | 0.35 | 0.42 |
AFFO payout ratio – diluted, trailing twelve months (1) | 52.3% | 47.4% | - |
(1) See “Non-IFRS and Other Financial Measures”. |
SELECTED INFORMATION
(thousands of dollars, unaudited) | 2023 | ||
Total assets | 954,887 | 1,052,795 | 1,152,388 |
Total liabilities | 721,937 | 730,689 | 777,784 |
Total non-current liabilities | 529,178 | 667,807 | 674,339 |
Term loans and revolving credit facility | 599,873 | 643,929 | 695,796 |
Debt to gross book value (1) | 51.9% | 52.6% | 54.0% |
Debt to EBITDA (times) (1) | 10.6 | 9.8 | 10.7 |
Interest coverage ratio (times) (1) | 1.9 | 2.1 | 1.9 |
Term loans and revolving credit facility: | |||
Weighted average interest rate | 4.95% | 4.46% | 4.52% |
Weighted average term to maturity (years) | 2.2 | 3.0 | 3.9 |
Number of rooms | 7,917 | 8,024 | 8,801 |
Number of properties | 70 | 71 | 78 |
Number of restaurants | 14 | 14 | 16 |
(1) See “Non-IFRS and Other Financial Measures”. |
2023 OPERATING RESULTS
Three months ended | Twelve months ended | |||
(thousands of dollars, unaudited) | 2023 | 2022 | 2023 | 2022 |
ADR (1) | 126 | 125 | 131 | 124 |
Occupancy (1) | 66.5% | 66.3% | 68.7% | 68.9% |
RevPAR (1) | 84 | 83 | 90 | 85 |
Revenue | 65,837 | 67,771 | 280,521 | 281,367 |
Operating expenses | 37,536 | 36,862 | 150,774 | 146,720 |
Energy | 2,923 | 2,878 | 12,438 | 12,634 |
Property maintenance | 3,900 | 3,738 | 15,148 | 14,305 |
Property taxes, insurance and ground lease before IFRIC 21 | 4,709 | 3,969 | 18,789 | 18,554 |
Total expenses | 49,068 | 47,447 | 197,149 | 192,213 |
NOI (1) | 16,769 | 20,324 | 83,372 | 89,154 |
NOI Margin % (1) | 25.5% | 30.0% | 29.7% | 31.7% |
IFRIC 21 property taxes adjustment | 272 | 937 | - | - |
Depreciation and amortization | 8,732 | 8,722 | 34,948 | 37,952 |
Income from operating activities | 7,765 | 10,665 | 48,424 | 51,202 |
Other expenses | 87,822 | 57,157 | 122,053 | 86,809 |
Current income tax (recovery) expense | (104) | (62) | 459 | 83 |
Deferred income tax expense (recovery) | 1,676 | (1,192) | (172) | (577) |
Loss on disposal of discontinued operations | - | 469 | - | 469 |
Loss and comprehensive loss | (81,629) | (45,707) | (73,916) | (35,582) |
(1) See “Non-IFRS and Other Financial Measures”. |
INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PRESERVE UNITHOLDER VALUE
The Board of Directors (the “Board”) and management implemented 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
The RCF availability in 2024 is primarily limited by revised calculations based on the lesser of an implied debt service coverage ratio and a loan to value (“LTV”) test. The borrowing availability is subject to a maximum of 67.5% LTV based on the appraised value of the
The Sixth Amendment includes an option to extend the maturity of the term loan and RCF to
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.
The commercial mortgage-backed securities (“CMBS”) debt maturities are
To address the Q4 2023 CMBS loan maturities of
- AHIP entered into an agreement in the fourth quarter of 2023 to dispose of a hotel property in
Cranberry Township, Pennsylvania for$8.25 million . The disposition is expected to close in the first quarter of 2024, and the proceeds will be used to repay the$7.0 million non-recourse mortgage debt; and - AHIP initiated a managed foreclosure process for a hotel property in
Pittsburgh, Pennsylvania which is expected to result in a discharge of$9.3 million non-recourse mortgage debt.
To address the Q2 2024 CMBS loan maturity of
- AHIP entered into an agreement in the fourth quarter of 2023 to dispose of a hotel property in
Harrisonburg, Virginia for$8.55 million . The disposition is expected to close in the first quarter of 2024, and the proceeds will be used to partially satisfy the non-recourse mortgage debt; and - AHIP expects to close the CMBS refinancing of the remaining 3 assets for this loan in the first quarter of 2024 for gross proceeds of approximately
$17.0 million prior to capital reserves contribution of approximately$3.0 million .
To address the Q4 2024 CMBS loan maturity of
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
From
The amendment of the distribution policy reduces cash payments by
FINANCIAL INFORMATION
This news release should be read and used as preparation for reading AHIP’s the forthcoming audited consolidated financial statements, and management’s discussion and analysis for the years ended
Q4 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 income (loss) 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 plus business interruption proceeds or government grant for the loss of revenue for the reporting periods. For the three and twelve 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, 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 divided by interest expense for the trailing twelve months. The interest coverage ratio is a measure of AHIP’s ability to service the interest requirements of its outstanding debt.
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 Q4 2023, Q3 2023 and Q4 2022, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded nine properties, which is comprised of seven hotels sold in 2022, one hotel sold in 2023, and one hotel in respect of which AHIP is in a managed foreclosure process as of
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 | Twelve months ended | |||
(thousands of dollars, except per unit amounts, unaudited) | 2023 | 2022 | 2023 | 2022 |
Loss and comprehensive loss | (81,629) | (45,707) | (73,916) | (35,582) |
Adjustments: | ||||
Income attributable to non-controlling interest | (1,022) | (1,022) | (4,055) | (4,055) |
Depreciation and amortization | 8,732 | 8,722 | 34,948 | 37,952 |
Write-off of property, building and equipment | 2,636 | 4,781 | 10,570 | 4,919 |
Loss (gain) on sale of properties | 1,418 | 42 | (1,523) | (1,154) |
IFRIC 21 property taxes adjustment | 272 | 937 | - | - |
Change in fair value of interest rate swap contracts | 890 | 148 | 4,078 | (5,730) |
Change in fair value of warrants | (127) | 1,897 | (3,085) | (2,580) |
Impairment of cash-generating units | 67,433 | 39,407 | 72,170 | 44,081 |
Deferred income tax (recovery)/ expense | 1,676 | (1,192) | (172) | (577) |
Loss on disposal of discontinued operations | - | 469 | - | 469 |
Insurance loss on property and equipment | - | 99 | - | 99 |
FFO basic (1) | 279 | 8,581 | 39,015 | 37,842 |
Interest, accretion and amortization on convertible debentures (2) | - | 1,075 | 4,400 | 4,178 |
FFO diluted (1) (2) | 279 | 9,656 | 43,415 | 42,020 |
FFO per unit – basic (1) | 0.004 | 0.11 | 0.49 | 0.48 |
FFO per unit – diluted (1) (2) | 0.004 | 0.11 | 0.48 | 0.47 |
FFO payout ratio – basic – trailing twelve months (1) | 30.3% | 34.3% | 30.3% | 34.3% |
FFO payout ratio – diluted – trailing twelve months (1) | 37.0% | 35.2% | 37.0% | 35.2% |
Non-recurring items: | ||||
Gain on debt settlement | - | (3,281) | - | (5,625) |
Other income | 1,717 | - | (11,172) | (2,192) |
Measurements excluding non-recurring items: | ||||
Normalized FFO diluted (1) (2) | 1,996 | 6,375 | 32,243 | 34,203 |
Normalized FFO per unit – diluted (1) (2) | 0.03 | 0.07 | 0.36 | 0.38 |
Weighted average number of units outstanding: | ||||
Basic (000’s) | 78,898 | 78,779 | 78,853 | 78,755 |
Diluted (000’s) (2) | 79,776 | 89,487 | 89,673 | 89,299 |
(1) See “Non-IFRS and Other Financial Measures”. (2) The calculation of FFO diluted, FFO per unit – diluted, normalized FFO diluted, normalized FFO per unit – diluted, weighted average number of units outstanding - diluted for the twelve months ended |
RECONCILIATION OF FFO TO AFFO
Three months ended | Twelve months ended | |||
(thousands of dollars, except per unit amounts, unaudited) | 2023 | 2022 | 2023 | 2022 |
FFO basic (1) | 279 | 8,581 | 39,015 | 37,842 |
FFO diluted (1) | 279 | 9,656 | 43,415 | 42,020 |
Maintenance capital expenditures | (3,694) | (2,720) | (12,355) | (10,549) |
AFFO basic (1) | (3,415) | 5,861 | 26,660 | 27,293 |
AFFO diluted (1) | (3,415) | 6,936 | 31,060 | 31,471 |
AFFO per unit – basic (1) | (0.04) | 0.07 | 0.34 | 0.35 |
AFFO per unit – diluted (1) | (0.04) | 0.08 | 0.35 | 0.35 |
AFFO payout ratio – basic – trailing twelve months (1) | 44.4% | 47.6% | 44.4% | 47.6% |
AFFO payout ratio – diluted – trailing twelve months (1) | 52.3% | 47.4% | 52.3% | 47.4% |
Measurements excluding non-recurring items: | ||||
AFFO diluted (1) | (1,698) | 3,655 | 19,888 | 23,654 |
AFFO per unit – diluted (1) | (0.02) | 0.04 | 0.22 | 0.26 |
(1) See “Non-IFRS and Other Financial Measures”. |
DEBT TO GROSS BOOK VALUE
(thousands of dollars, unaudited) | ||
Debt | 688,585 | 699,881 |
Gross Book Value | 1,326,070 | 1,329,865 |
Debt-to-Gross Book Value | 51.9% | 52.6% |
(thousands of dollars, unaudited) | ||
Term loans and revolving credit facility | 633,298 | 643,929 |
2026 Debentures (at face value) | 50,000 | 50,000 |
Unamortized portion of debt financing costs | 4,065 | 4,437 |
Lease liabilities | 1,239 | 1,591 |
Unamortized portion of mark-to-market adjustments | (17) | (76) |
Debt | 688,585 | 699,881 |
(thousands of dollars, unaudited) | ||
Total Assets | 954,887 | 1,052,795 |
Accumulated depreciation and impairment | 365,970 | 272,540 |
on property, buildings and equipment | ||
Accumulated amortization on intangible assets | 5,213 | 4,530 |
Gross Book Value | 1,326,070 | 1,329,865 |
DEBT TO EBITDA
(thousands of dollars, unaudited) | ||
Debt | 688,585 | 699,881 |
EBITDA (trailing twelve months) | 64,732 | 71,293 |
Debt-to-EBITDA (times) | 10.6x | 9.8x |
INTEREST COVERAGE RATIO
(thousands of dollars, unaudited) | ||
EBITDA (trailing twelve months) | 64,732 | 71,293 |
Interest Expense (trailing twelve months) | 33,752 | 33,695 |
Interest Coverage Ratio (times) | 1.9x | 2.1x |
The reconciliation of income from operating activities to NOI, hotel EBITDA and EBITDA is shown below:
Three months ended | Twelve months ended | |||
(thousands of dollars, unaudited) | 2023 | 2022 | 2023 | 2022 |
Income from operating activities | 7,765 | 10,665 | 48,424 | 51,202 |
Depreciation and amortization | 8,732 | 8,722 | 34,948 | 37,952 |
IFRIC 21 property taxes | 272 | 937 | - | - |
NOI | 16,769 | 20,324 | 83,372 | 89,154 |
Management fees | (1,328) | (2,124) | (8,103) | (9,213) |
15,441 | 18,200 | 75,269 | 79,941 | |
General administrative expenses | (2,810) | (2,496) | (10,537) | (8,648) |
EBITDA | 12,631 | 15,704 | 64,732 | 71,293 |
The reconciliation of NOI to normalized NOI is shown below:
Three months ended | Twelve months ended | |||
(thousands of dollars, unaudited) | 2023 | 2022 | 2023 | 2022 |
NOI | 16,769 | 20,324 | 83,372 | 89,154 |
Business interruption insurance proceeds | 95 | - | 3,541 | - |
Normalized NOI | 16,864 | 20,324 | 86,913 | 89,154 |
The reconciliation of finance costs to interest expense is shown below:
Three months ended | Twelve months ended | |||
(thousands of dollars, unaudited) | 2023 | 2022 | 2023 | 2022 |
Finance costs | 9,845 | 6,187 | 36,105 | 31,615 |
Gain on debt settlement | - | 3,281 | 1,155 | 5,625 |
Amortization of debt financing costs | (650) | (783) | (2,067) | (2,382) |
Accretion of Debenture liability | (250) | (232) | (987) | (828) |
Amortization of Debenture costs | (109) | (94) | (414) | (335) |
Dividends on Series B preferred shares | (4) | - | (16) | - |
Amortization of mark-to-market adjustments | 6 | - | 36 | - |
Debt defeasance and other costs | - | - | (14) | - |
Accretion of management fee | (46) | - | (46) | - |
Interest Expense | 8,792 | 8,359 | 33,752 | 33,695 |
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 year 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 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; 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 planned property dispositions, including the expected terms and timing thereof and the financial impact thereof on AHIP; AHIP’s planned refinancing of three hotels in
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 2024 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; AHIP may not complete its currently planned divestures and loan refinancings on the terms currently contemplated or in accordance with the timing currently contemplated, or at all; 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 has not replaced its interest rate swaps, which is expected to create continued 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 2024.
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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