Reports Net Income of $2.2 million for 2nd Qtr
|MCLEAN, VA, August 4, 2004 – Highland Hospitality Corporation (NYSE:
HIH), a lodging real estate investment trust, or REIT, today reported its
consolidated financial results for the quarter ended June 30, 2004.
Consolidated Financial Results
For the quarter ended June 30, 2004, the Company reported consolidated
total revenue of $25.3 million and consolidated net income of $2.2 million,
or $.05 per diluted share. Funds from operations, or FFO, which is
defined as consolidated net income plus depreciation and amortization,
were $4.3 million, or $.11 per diluted share, for the quarter. Earnings
before interest, income taxes and depreciation and amortization, or EBITDA,
were $4.3 million, or $.11 per diluted share, for the quarter.
“We are pleased with our consolidated results for the quarter, as our portfolio performed well and the industry continues to show signs of a solid recovery,” said James L. Francis, President and Chief Executive Officer of Highland Hospitality Corporation. “We believe that our hotels will continue to benefit from overall 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 to net income is included in the accompanying financial tables.
Hotel Operating Performance
For the quarter ended June 30, 2004, the Company’s eight hotels generated $25.3 million of total revenue and $6.7 million of hotel operating profit. Included in the following table are the key hotel operating statistics for the Company’s eight hotel properties for the second quarter 2004. Also included is a comparison of the hotel operating statistics for the second quarter 2004 and 2003 for the Company’s six 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 six hotels for the second quarter 2003 reflect the results of operations of the hotels under previous ownership.
Total Comparable Comparable
As of June 30, 2004, the Company had $107.5 million of cash and cash
equivalents. Total assets were $394.9 million, including $256.2 million
of net investment in hotel properties, total debt was $17.0 million, and
stockholders’ equity was $354.4 million.
On June 17, 2004, the Company declared its first dividend payment to common shareholders. The dividend payment was $.13 per common share for the six months ended June 30, 2004. The dividend was paid on July 15, 2004 to stockholders of record as of June 30, 2004.
On July 9, 2004, the Company completed a $67.0 million fixed rate mortgage loan with Column Financial, Inc., an affiliate of Credit Suisse First Boston. The loan is secured by three assets: The Hyatt Regency hotel in Savannah, GA, the Renaissance Hotel and Conference Center in Portsmouth, VA and the Hilton Garden Inn BWI Airport hotel in Linthicum, MD. The term of the loan is seven years and carries an annual fixed rate of interest of 6.47%.
The Company is currently in negotiations with several financial institutions to obtain additional long-term fixed rate non-recourse property mortgage debt, as well as a revolving credit or term loan facility, to supplement the IPO proceeds in providing capital for acquisition opportunities. We intend to maintain target debt levels of 40-50% of historical asset cost. As of July 30, 2004, the Company had approximately $161 million of cash and cash equivalents available for acquisitions and general corporate needs.
The Company continues to actively pursue investment opportunities. Since its IPO through June 30, 2004, the Company has closed on eight hotel properties using $265 million of total consideration, payable in the form of cash, limited partnership units in Highland Hospitality, L.P., the Company’s operating partnership, and the assumption of debt.
During the second quarter 2004, the Company completed the following with respect to its investment pipeline:
James L. Francis stated, “We are delighted with our progress regarding our acquisition initiatives. We continue to focus on hotels that will provide us with upside through new management expertise, upgrading and renovating, franchise repositioning and intense asset management. The acquisition market remains competitive with many opportunities available to us, and we will continue to carefully allocate our capital to investments that will maximize our returns and increase stockholders’ value over the long-term.”
The Company declared and paid its first dividend to common stockholders for the first six months of 2004 and currently anticipates that it will pay a dividend for the third quarter 2004 based on current and projected cash flow performance.
“We remain encouraged by the performance of our industry and our portfolio
during the second quarter 2004,” advised Mr. Francis. “With key business
travel and overall demand indicators pointing positive, we expect that
the industry and our portfolio will continue to benefit from these strong
fundamentals. As we have stated previously, our performance for 2004
will be based on this favorable industry environment, combined with the
anticipated timing of our investments. We remain confident that we
will have invested significant capital by the end of 2004 and will be positioned
for continued improvements in the industry in 2005.”
Highland Hospitality Corporation is a self-advised lodging real estate investment trust, or REIT, focused on hotel investments primarily in the United States. The Company owns ten hotel properties in five states with an aggregate of 2,481 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:||Highland Hospitality Corporation, a New Lodging REIT with Seven Hotel Properties, Reports a Loss of $2.7 million for Period Ended December 31, 2003 / February 2004|
|Highland Hospitality Corporation (HIH), a REIT, Expects IPO Proceeds of $342.3 million; Organized to Take Advantage of Lodging Investment Opportunities / December 2003|