iCrowdNewswire Nov 10, 20201:14 PM ET
American Hotel Income Properties REIT LP announced today its financial results for the three and nine months ended September 30, 2020.
“While AHIP’s third quarter was impacted by the ongoing pandemic, we were pleased to see continued occupancy and RevPAR improvement across our portfolio of 78 Premium Branded hotels – all of which have been open since mid-June,” said Jonathan Korol, CEO. “Our team’s operational emphasis on cost containment has yielded impressive results with higher Q3 NOI margins of 31.5% compared to 15.8% in Q2. We have also successfully negotiated loan relief for all of our loans, and remain focused on our balance sheet to further enhance our liquidity position.”
Mr. Korol continued: “While we expect the trend of sequential occupancy and RevPAR improvement to moderate as we enter the seasonally slower winter months, our strategically well-positioned suite-focused hotels, primarily in drive-to secondary markets, should continue to see higher demand, compared to hotels in more urban environments and hotels that are more reliant on group and corporate customers.”
THREE MONTHS ENDED SEPTEMBER 30, 2020 FINANCIAL HIGHLIGHTS
- Revenues for the quarter decreased 47.7% to $46.3 million (Q3 2019 – $88.5 million) as a result of lower demand due to the significant impact of COVID-19 and portfolio changes between periods. On a sequential basis, revenue for the quarter increased 69.8% from Q2 2020. All of AHIP’s hotels segments experienced material revenue growth compared to Q2 2020, including AHIP’s extended-stay, select-service and Embassy Suites properties.
- Average Daily Rate (“ADR”) for the quarter decreased 3.7% compared to Q3 2019, to $96.53 (Q3 2019 – $100.19) due to the impact of COVID-19 and portfolio changes between periods. On a sequential basis, ADR increased 1.5% from Q2 2020.
- Occupancy during the third quarter decreased 19.4 percentage points to 57.1% (Q3 2019 – 76.5%). Average occupancy in July was 55.3%. Average occupancy in August was 58.3%. Average occupancy in September was 57.7%. On a sequential basis, third quarter occupancy increased 22.4 percentage points compared to Q2 2020 occupancy of 34.7%. AHIP’s 24 extended-stay properties continued to see strong occupancy during the third quarter, recording 70.6% average occupancy.
- Revenue per Available Room (“RevPAR”) for the quarter decreased 28.1% to $55.12 (Q3 2019 – $76.65) due to significantly reduced demand related to COVID-19. On a sequential basis, RevPAR increased 67.0% from Q2 2020.
- The STR RevPAR index, which compares the performance of AHIP-owned hotels to their competitive set in each region, indicated AHIP’s 78 Premium Branded hotels have, in aggregate, significantly outperformed their identified direct competition with an average index rating of 122.6 during the quarter (Q3 2019 – 118.3) – with 100.0 representing a ‘fair share’ of the market.
- Net Operating Income (“NOI”) decreased by 50.8% to $14.6 million (Q3 2019 – $29.7 million) due to lower revenues, partially offset by expense reduction initiatives. On a sequential basis, NOI increased 239% from Q2 2020.
- NOI Margins decreased to 31.5% (Q3 2019 – 33.5%) as a result of lower revenue.
- Loss and comprehensive loss for the third quarter was ($12.1) million, compared to net income and comprehensive income of $2.1 million in Q3 2019, as a result of lower NOI, higher interest expenses, and $2.5 of non-cash impairment charges related to three hotels.
- Diluted loss per Unit for the quarter was ($0.15) compared to a diluted income per Unit of $0.03 in Q3 2019.
- Funds from operations (“FFO”) in Q3 2020 decreased to $0.1 million (Q3 2019 – $15.6 million) and adjusted funds from operations (“AFFO”) decreased to $0.2 million (Q3 2019 – $14.1 million), due to the impact of COVID-19.
- Q3 2020 diluted FFO per Unit was $0.00 (Q3 2019 – $0.20) and diluted AFFO per Unit was $0.00 (Q3 2019 – $0.18).
Same-property metrics represent the performance of the 66 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 second quarter decreased 42.4% to $39.3 million (Q3 2019 – $68.3 million) due to lower demand as a result of the impact of COVID-19.
- Same-property ADR decreased 18.2% to $95.54 (Q3 2019 – $116.86).
- Same-property RevPAR decreased 41.0% to $54.46 (Q3 2019 – $92.32).
- Same-property occupancy decreased 22.0 percentage points to 57.0% (Q3 2019 – 79.0%).
- Same-property NOI was $12.3 million (Q3 2019 – $23.2 million) and the NOI margin was 31.4% (Q3 2019 – 34.1%). NOI declines were due to lower revenues caused by lower demand as a result of the impact of COVID-19, which were partially offset by expense reduction initiatives.
NINE MONTHS ENDED SEPTEMBER 30, 2020 FINANCIAL HIGHLIGHTS
- Revenues for the first nine months of 2020 decreased 47.7% to $135.4 million (2019 – $259.1 million) as a result of lower demand due to the significant impacts from COVID-19 and portfolio changes between periods.
- Average Daily Rate (“ADR”) increased 4.2% compared to the first nine months of 2019, to $103.21 (2019 – $99.01) due to portfolio changes between periods, partially offset by the impacts from COVID-19.
- Occupancy during the first nine months of 2020 decreased 24.4 percentage points to 51.3% (2019 – 75.7%) as a result of lower demand due to the significant impacts from COVID-19.
- Revenue per Available Room (“RevPAR”) decreased 29.4% compared to the first nine months of last year, to $52.95 (2019 – $74.95).
- Net Operating Income (“NOI”) decreased by 58.2% to $36.8 million (2019 – $87.9 million) due to lower revenues, and partially offset by expense reduction initiatives.
- NOI Margins decreased to 27.1% (2019 – 33.9%) as a result of lower revenue.
- Loss and comprehensive loss for the first nine months of 2020 was ($45.5) million, compared to net income and comprehensive income of $7.5 million in 2019, as a result of lower NOI, fair value changes on interest rate swaps, impairment charges related to certain hotels, and increased interest expense.
- Diluted loss per Unit for the first nine months was ($0.58) compared to a diluted income per Unit of $0.10 in the first nine months of 2019.
- Funds from operations (“FFO”) in the first nine months of 2020 decreased to ($4.3) million (2019 – $45.1 million) and adjusted funds from operations (“AFFO”) decreased to ($4.8) million (2019 – $40.7 million), due to the impact of COVID-19.
- Diluted FFO per Unit in the first nine months of 2020 was ($0.06) (2019 – $0.57) and diluted AFFO per Unit was ($0.06) (2019 – $0.51).
Capital Metrics and Liquidity
- As at September 30, 2020, AHIP had an unrestricted cash balance of $26.9 million (December 31, 2019 – $17.8 million), a restricted cash balance of $25.7 million and available revolver capacity of $13.3 million.
- AHIP is current on all of its loan payments and has successfully obtained loan relief under all of its loan agreements, including all of its CMBS loans totaling approximately $578 million. The relief provisions under AHIP’s CMBS loans allow for the use of restricted cash reserves to fund debt service and/or provide waivers of the requirement to fund FF&E reserves for periods of up to 90 days. These relief initiatives provide additional flexibility for AHIP as the Company continues to recover from the impact of COVID-19 on the hotel sector.
- As at September 30, 2020, AHIP’s debt had a weighted average remaining term of 4.8 years (Q3 2019 – 5.7 years) and a weighted average interest rate of 4.55% (Q3 2019 – 4.64%), with no significant debt maturities until June 2022.
- AHIP’s debt-to-gross book value as at September 30, 2020 was 58.2% (September 30, 2019 – 53.6%).
THIRD QUARTER DEVELOPMENTS
- On August 31, 2020, AHIP completed the sale of its 86-room Wingate Tampa hotel property for gross purchase price of $7.5 million.
- On October 7, 2020, Jonathan Korol joined AHIP as Chief Executive Officer, and has agreed to receive half of his salary in units through 2021 to further align his interests with unitholders.
- On October 30, 2020, the purchaser of AHIP’s former Economy Lodging Portfolio repaid a $2.4 million short term loan including accrued interest.
- Average hotel occupancy for the month of October 2020 was 58.3%.
- On November 6, 2020, AHIP entered into an agreement to extend the time for payment of the remaining deferred purchase price of $17.1 million for the acquisition of 12 Premium Branded properties that completed December 3, 2019 from December 31, 2020 to periodic payments ending December 31, 2021.
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 and nine months ended September 30, 2020, which are available on AHIP’s website at www.ahipreit.com and on SEDAR at www.sedar.com.
Q3 2020 FINANCIAL RESULTS CONFERENCE CALL
Management will host a conference call at 1:00 p.m. Eastern time / 10:00 a.m. Pacific time on Wednesday, November 10, 2020 to review the financial results for the three months ended September 30, 2020.
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 American Hotel Income Properties’ Q3 2020 Analyst Call.
Dial in numbers:
North America Toll free:
International or local Toronto:
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 4:00 p.m. Eastern time / 1:00 p.m. Pacific time on November 10, 2020 until January 12, 2021. The webcast recording of this conference call will also be available at www.ahipreit.com on the Events and Presentation page.
Please enter replay PIN number 9064238 followed by the # key.
Replay dial in numbers:
North America Toll free:
International or local Toronto:
Certain non-IFRS financial measures are included in this news release, which include NOI, NOI Margin 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, NOI Margin 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, NOI Margin, FFO, diluted FFO per Unit, AFFO, diluted AFFO per Unit and debt-to-gross book value, 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, NOI Margin, 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 November 9, 2020, which is available on SEDAR at www.sedar.com and on AHIP’s website at www.ahipreit.com.