2004 Net Income of $0.6 million; Added Nine
Hotels During the Quarter
|MCLEAN, Va., Oct. 28, 2004 - Highland Hospitality Corporation (NYSE:
HIH), a lodging real estate investment trust, or REIT, today reported its
consolidated financial results for the quarter ended September 30, 2004.
Consolidated Financial Results
For the quarter ended September 30, 2004, the Company reported consolidated total revenue of $36.0 million and consolidated net income of $0.6 million, or $.01 per diluted share. Funds from operations, or FFO, which is defined as consolidated net income plus depreciation and amortization, were $3.8 million, or $.10 per diluted share, for the quarter. Earnings before interest, income taxes and depreciation and amortization, or EBITDA, were $6.0 million, or $.15 per diluted share, for the quarter.
For the nine months ended September 30, 2004, the Company reported consolidated total revenue of $80.0 million and consolidated net income of $3.3 million, or $.08 per diluted share. FFO was $10.2 million, or $.26 per diluted share, for the nine-month period. EBITDA was $11.9 million, or $.30 per diluted share, for the nine-month period.
During the quarter, the Company acquired nine hotels consisting of 2,736 rooms for approximately $329.7 million, including the assumption of mortgage debt of $11.6 million. The financial results for the third quarter 2004 include the results of operations for each hotel from their respective acquisition dates.
"We are pleased with our overall performance for the third quarter given that our portfolio is growing rapidly and is under significant transition in terms of renovations and repositioning," said James L. Francis, Highland's Chief Executive Officer and President. "Due to our acquisition efforts, we added nine hotels during the quarter that significantly grow our portfolio and diversify our holdings consistent with our targeted strategy. As we enter the fourth quarter and into next year, we expect to see continued improvement in performance, driven by overall hotel industry improvements, coupled with our renovation, repositioning, and asset management efforts."
Both FFO and EBITDA are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission. Management believes both FFO and EBITDA to be key measures of a REIT's financial performance and should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company's operating performance. A reconciliation of these non-GAAP financial measures is included in the accompanying financial tables.
Hotel Operating Performance
For the quarter ended September 30, 2004, the Company's 17 hotels contributed
$36.0 million of total revenue and $8.2 million of hotel operating profit.
Included in the following table are the key hotel operating statistics
for the Company's 17 hotel properties for the third quarter 2004.
Also included is a comparison of the hotel operating statistics for the
third quarter 2004 and 2003 for the Company's 15 hotel properties that
were open and operating during both periods. This latter comparison
does not include, for either period, hotel operating statistics for the
Sugar Land Marriott hotel and Hilton Garden Inn Virginia Beach hotel, as
these two hotels did not open for business until October 2003 and November
2003, respectively. The hotel operating statistics for the 15 hotels
for the third quarter 2003 reflect the results of operations of the hotels
under previous ownership.
Total Comparable Comparable
During the third quarter 2004, the Company completed the following financing transactions:
During the third quarter 2004, the Company generated $10.5 million of cash flow from its operations and used $348.5 million in investing activities, primarily to acquire the nine hotels previously discussed. Funds for these acquisitions were provided through $276.6 million of issued or assumed debt and remaining proceeds from the Company's initial public offering.
The Company is currently in the process of completing a corporate term loan credit facility. The corporate term loan credit facility will provide additional capacity and flexibility for the Company to meet its stated investment objectives, while maintaining its targeted leverage objectives of approximately 50% debt-to-capitalization. The Company anticipates that this facility will be completed during the fourth quarter 2004.
Douglas W. Vicari, Highland's Executive Vice-President and Chief Financial Officer, stated, "Our financing activities during the quarter enabled us to close on our acquisition targets and further explore financing options as we develop our overall capital structure. To-date this year, we have raised approximately $265.0 million of fixed rate debt with a blended interest rate below 6.5%, which we believe leaves us well positioned for the future."
Acquisition Activity/Investment Outlook and Pipeline
During the third quarter 2004, the Company acquired nine hotels consisting
of 2,736 rooms for an aggregate purchase price of $329.7 million, including
the assumption of mortgage debt of $11.6 million. Included below
is a list of the properties acquired:
The Company continues to actively pursue investment opportunities that
fit its strategic objectives. Since its initial public offering on
December 19, 2003, the Company has committed approximately $670 million
of capital towards the completion of its acquisition pipeline. A
significant number of the hotels acquired to-date are under transition
in terms of renovation, rebranding, management company transition, or stabilization.
The breakdown of the transition is as follows:
James L. Francis stated, "Our current hotel portfolio is an excellent representation of our investment strategy. We continue to focus on hotels that will immediately produce solid and consistent current returns, as well as hotels that we believe will provide us with upside through renovation and franchise repositioning efforts. We see a strong and competitive acquisition market with many opportunities available to us, but we will continue to carefully allocate our capital to investments that will maximize our returns and increase shareholders' value over the long-term."
Dividend Update and Outlook
During the third quarter 2004, the Company declared a dividend of $.09 per share payable to its common shareholders of record as of September 30, 2004. The dividend was paid on October 15, 2004. As previously announced, the Company currently anticipates that it will declare a dividend for the fourth quarter 2004 ranging from $.14 - $.16 per share to its common shareholders of record as of December 31, 2004. The dividend is expected to be paid in mid-January 2005.
"We continue to be encouraged by the performance of our industry during the first nine months of 2004," advised Mr. Francis. "With key business travel and overall demand indicators pointing positive, we expect our portfolio will benefit from these strong fundamentals, as well as our efforts to renovate and reposition a significant number of our hotels."
On October 27, 2004, the Company announced the signing of a definitive
agreement to acquire the 197-room Sheraton Annapolis hotel for $18.0 million,
or approximately $91,400 per room.
Highland Hospitality Corporation is a self-advised lodging real estate investment trust, or REIT, focused on hotel investment primarily in the United States. The Company currently owns 17 hotel properties in ten states with an aggregate of 4,952 rooms.
Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Highland Hospitality Corporation
|Also See:||Newly Formed REIT, Highland Hospitality Corporation, Acquires First Three Properties for $71 million / December 2003|
|Highland Hospitality Corporation (HIH), a REIT, Expects IPO Proceeds of $342.3 million; Organized to Take Advantage of Lodging Investment Opportunities / December 2003|