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Temple Hotels Inc. 5 year 7% Series F Convertible Redeemable Unsecured Debentures

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Temple Hotels Inc. Reports 2017 Second Quarter Financial Results
Temple Hotels Inc. Reports 2017 Second Quarter Financial Results

Canada NewsWire

MISSISSAUGA, ON, Aug. 8, 2017 /CNW/ - Temple Hotels Inc. ("Temple" or the "Company") (TSX: TPH) today reported its financial results for the three months ended June 30, 2017 ("second quarter"). The following comments in regard to the financial position and operating results of Temple should be read in conjunction with Management's Discussion & Analysis and the financial statements for the three and six months ended June 30, 2017, which may be obtained from the Temple website at www.templehotels.ca or the SEDAR website at www.sedar.com.

Monetary data in the tables of this press release, unless otherwise indicated, are in thousands of Canadian dollars, except for per common share, average daily rate ("ADR"), and revenue per available room ("RevPar") amounts.

Q2 2017 KEY POINTS/HIGHLIGHTS

  • Revenue increased by $1.4 million or 3% during the three months ended June 30, 2017 compared to 2016, primarily due to an increase in revenue within the Fort McMurray and Other Canada portfolios of $1.5 million and $0.3 million, respectively, partially offset by a decrease in revenue within the Other Alberta portfolio of $0.4 million.

  • Hotel operating income decreased by $0.3 million or 2% during the three months ended June 30, 2017 compared to 2016, primarily due to a decrease in hotel operating income within the Other Alberta and Other Canada portfolios of $0.4 million and $0.1 million, respectively, partially offset by an increase in hotel operating income within the Fort McMurray portfolio of $0.3 million.

  • FFO increased by $2.0 million during the three months ended June 30, 2017, compared to 2016. On a basic per common share basis, FFO decreased by $0.10 per common share, compared to the second quarter of 2016, primarily as a result of an increase in the weighted average number of common shares outstanding.

  • During 2017, the Company has reduced its level of debt by $57.1 million through the repayment of convertible debentures and $7.5 million of amortizing principal repayments. The Company has strengthened its financial position with the prudent use of capital and, as of the date hereof, the Company has reduced its number of covenant violations from ten to five loan breaches.

  • Subsequent to June 30, 2017, the Company refinanced a five loan mortgage portfolio at an interest rate of 5.20% and included a $7.5 million repayment of the aggregate balance.

  • On June 30, 2017, the Company repaid the 7.75% Series D convertible debentures in the amount of $34.3 million.

  • On June 22, 2017, the common shares were consolidated on the basis of one (1) post-consolidation common share for six (6) pre-consolidation common shares (the "Share Consolidation"). The number of common shares and deferred common shares, the conversion price and the number of common shares issuable upon conversion of the outstanding convertible debentures, the exercise price and the number of common shares issuable upon exercise of the outstanding options of the Company, and per common share amounts, were also proportionally adjusted to reflect the Share Consolidation for all periods presented in this press release.

OPERATING RESULTS


Three Months Ended June 30


Six Months Ended June 30


2017


2016


2017


2016









Total revenue

$43,389


$41,955


$79,628


$77,721

Hotel operating income

$12,717


$12,996


$20,116


$20,081

Recovery of (provision for) impairment

$ -


$303


$ -


($43,574)

Net income (loss)

$2,708


($980)


($2,860)


($69,358)

Net income (loss) per common share - basic and diluted

$0.11


($0.08)


($0.11)


($5.34)









Cash flow provided by operating activities

$6,289


$4,975


$2,348


$4,570

Funds from operations

$6,673


$4,654


$6,458


$3,405









Per common share








‑ Funds from operations

$0.26


$0.36


$0.25


$0.26









Weighted average number of common shares

25,344,413


12,999,203


25,341,273


12,990,686









Occupancy

65%


61%


60%


56%

ADR

$139.00


$141.51


$136.19


$139.14

RevPar

$90.81


$86.33


$81.58


$78.52

 

Operating Activities

  • Net Income (Loss) – Temple completed the second quarter of 2017 with a net income of $2.7 million, compared to a net loss of $1.0 million during the same period in 2016. The increase in net income is mainly due to a decrease in depreciation of $2.3 million, an increase in other income of $1.6 million, a decrease in interest expense of $0.6 million, partially offset by an increase in deferred income tax expense of $0.4 million, a decrease in recovery of impairment of $0.3 million, and a decrease in hotel operating income of $0.4 million. On a per common share basis, net income was $0.11 for the second quarter of 2017, compared to a net loss of $0.08 during the second quarter of 2016.

  • Occupancy and ADR – The increase in revenue primarily reflects higher occupancy levels within the Fort McMurray segment as well as higher ADR levels within the Other Canada segment. In the second quarter of 2017, the occupancy levels of the Fort McMurray segment increased by 25 percentage points to 57% in comparison to the second quarter of 2016. In addition, reduced ADR levels within the Other Alberta and Fort McMurray segments resulted in a lower operating margin as unfavourable market conditions continue to affect oil-dependent markets in Alberta.

  • Cash Provided by Operating Activities – Cash provided by operating activities increased by $1.3 million during the second quarter of 2017, compared to the second quarter of 2016. Excluding working capital adjustments, cash provided by operating activities increased by $2.0 million, compared to 2016.

  • Funds from Operations ("FFO") – During the second quarter of 2017, FFO increased by $2.0 million compared to the second quarter of 2016. On a basic per common share basis, FFO decreased by $0.10 per common share, compared to the second quarter of 2016. The increase in FFO mainly reflects insurance proceeds of $2.1 million relating to a property loss claim as well as lower interest expense, partially offset by a decrease in net operating income and an increase in other expenses.

Liquidity and Financing Activities

As of June 30, 2017, the unrestricted cash balance of Temple was $13.9 million and working capital was $8.3 million.

  • On June 27, 2017, the Company completed the financing of two properties in the amount of $15.6 million. The loan bears interest at either prime plus 2.50% or bankers' acceptance plus 3.50% for a term of 2 years.

  • On June 30, 2017, the Company fully repaid upon maturity the 7.75% Series D convertible debentures in the amount of $34.3 million.

  • During June 2017, the Company extended a mortgage portfolio comprising three loans at their maturing amount of $37.5 million, for a term of one year.

  • During June 2017, the Company refinanced a hotel property located in Sudbury, Ontario, at its maturing amount of $8.4 million, at an interest rate of 4.69% for a term of 7 years.

  • Subsequent to June 30, 2017, the Company refinanced a five-loan mortgage portfolio with the incumbent lender. The five loans are cross collateralized and three of the loans were refinanced for a five year term at an interest rate of 5.20% and are not subject to any financial covenants during the first 12 months of the term. As a condition of refinancing, the Company paid down the maturing, aggregate balance by $7.5 million. The fourth mortgage loan of five in the portfolio does not mature until November 2019, and the fifth has been extended for 12 months.

Investing Activities

As disclosed in the Statement of Cash Flows in the financial statements, the investing activities of Temple resulted in a net cash outflow of $1.2 million during the second quarter of 2017. Investing activities primarily reflect cash outflows related to capital expenditures on hotel properties.

ANALYSIS OF OPERATING RESULTS

Analysis of Net Income (Loss) and Comprehensive Net Income (Loss)


Three Months Ended


Six Months Ended


June 30


June 30


2017


2016


Increase/
(Decrease)
in Income


2017


2016


Increase/
(Decrease)
in Income

Revenue













Room revenue

$32,113


$30,517


$1,596


$57,495


$55,579


$1,916


Other hotel revenue

11,276


11,438


(162)


22,133


22,142


(9)


Total revenue

43,389


41,955


1,434


79,628


77,721


1,907













Hotel operating costs

30,672


28,959


(1,713)


59,512


57,640


(1,872)

Hotel operating income

12,717


12,996


(279)


20,116


20,081


35













Interest expense

7,393


8,019


626


14,678


15,898


1,220

Other expense (income)

(1,658)


(76)


1,582


(1,776)


(183)


1,593

Share based compensation

31


85


54


66


173


107

General and administrative













expenses

879


865


(14)


1,606


1,673


67

Depreciation and amortization

3,764


6,109


2,345


8,968


12,503


3,535


2,308


(2,006)


4,314


(3,426)


(9,983)


6,557

Equity income on investment in













hotel properties

411


317


94


542


478


64

Recovery of (provision for)













impairment

-


303


(303)


-


(43,574)


43,574

Change in fair value of financial













instruments: gain

-


23


(23)


-


90


(90)

Deferred income tax













recovery (expense)

(11)


383


(394)


24


(16,369)


16,393

Net income (loss) and













comprehensive income (loss)

$2,708


($980)


$3,688


($2,860)


($69,358)


$66,498

Per Common Share Results:













Basic and diluted

$0.11


($0.08)




($0.11)


($5.34)



 

Hotel Revenue

Analysis of Total Hotel Revenues


Three Months Ended June 30


Six Months Ended June 30





Increase/





Increase/


2017


2016


(Decrease)


2017


2016


(Decrease)

Same Property


















Fort McMurray



















Room revenue

$

6,532


$

4,748


$

1,784


$

11,051


$

8,890


$

2,161


Other hotel revenue


324



634



(310)



685



1,226



(541)


$

6,856


$

5,382


$

1,474


$

11,736


$

10,116


$

1,620

Other Alberta



















Room revenue

$

5,318


$

5,679


$

(361)


$

9,748


$

10,500


$

(752)


Other hotel revenue


4,661



4,699



(38)



9,333



9,512



(179)


$

9,979


$

10,378


$

(399)


$

19,081


$

20,012


$

(931)

Other Canada



















Room revenue

$

20,263


$

20,090


$

173


$

36,696


$

36,189


$

507


Other hotel revenue


6,291



6,105



186



12,115



11,404



711


$

26,554


$

26,195


$

359


$

48,811


$

47,593


$

1,218

Total



















Room revenue

$

32,113


$

30,517


$

1,596


$

57,495


$

55,579


$

1,916


Other hotel revenue


11,276



11,438



(162)



22,133



22,142



(9)


Total hotel revenue

$

43,389


$

41,955


$

1,434


$

79,628


$

77,721


$

1,907

 

During the second quarter of 2017, room revenue increased by $1.6 million or 5%, compared to the second quarter of 2016. The increase is comprised of a $1.8 million (38%) increase in the Fort McMurray portfolio and a $0.2 million (1%) increase in the Other Canada portfolio, partially offset by a $0.4 million (6%) decrease in the Other Alberta portfolio.

The increase in Same Property room revenue during the second quarter of 2017, compared to the second quarter of 2016, is largely due to an increase in occupancy and RevPar for the Fort McMurray segment, as the second quarter of 2016 was negatively impacted by wildfires and mandatory evacuation, which led to a period of hotel closures due to the repair and remediation of properties in Fort McMurray, partially offset by the continued unfavourable market conditions affecting oil‑dependent markets in the Other Alberta segment. 

Room Revenue Statistics

As disclosed in the following chart, for the second quarter ended June 30, 2017, RevPar for the overall portfolio was $90.81, compared to $86.33 for the second quarter ended June 30, 2016.

For the six months ended June 30, 2017, RevPar for the overall portfolio was $81.58, compared to $78.52 for the six months ended 2016.

RevPar for Same Property portfolio results generally reflect increased occupancy levels in the Fort McMurray and Other Canada segments, offset by reduced ADR levels in the Other Alberta segment.

Occupancy at the Fort McMurray properties increased during the second quarter of 2017 compared to the second quarter of 2016, but is still impacted by the unfavourable market conditions in Alberta. Over time, it is expected that those involved in the rebuilding of the region will create demand for accommodation, putting upward pressure on occupancy rates.

Room Revenue Statistics



Three Months Ended June 30



2017


2016



Occ



ADR


RevPar


Occ



ADR


RevPar

Same Property

















Fort McMurray


57%


$

138.91


$

78.67


32%


$

171.20


$

55.24

Other Alberta


57%


$

122.57


$

69.25


58%


$

127.46


$

73.97

Other Canada


72%


$

144.09


$

104.03


73%


$

140.25


$

103.34


















Overall Portfolio


65%


$

139.00


$

90.81


61%


$

141.51


$

86.33


















Room Revenue Statistics



Six Months Ended June 30



2017


2016



Occ



ADR


RevPar


Occ



ADR


RevPar

Same Property

















Fort McMurray


47%


$

138.91


$

65.72


32%


$

161.29


$

51.47

Other Alberta


52%


$

122.72


$

63.81


53%


$

128.73


$

68.38

Other Canada


68%


$

139.52


$

94.75


67%


$

137.20


$

93.12


















Overall Portfolio


60%


$

136.19


$

81.58


56%


$

139.14


$

78.52

 

The above chart does not reflect the operating results for the Cortona Residence, which is 100% leased at an annual net rent of $2.1 million.

Operating Income and Profit Margin

Operating Income and Profit Margin


Three Months Ended June 30


Six Months Ended June 30


Operating Income


Operating Profit Margin


Operating Income


Operating Profit Margin


2017


2016


2017


2016


2017


2016


2017


2016

Same Property
















Fort McMurray

$2,931


$2,650


43%


49%


$4,377


$3,966


37%


39%

Other Alberta

1,661


2,092


17%


20%


2,976


3,622


16%


18%

Other Canada

8,125


8,254


31%


32%


12,763


12,493


26%


26%

Total portfolio

$12,717


$12,996


29%


31%


$20,116


$20,081


25%


26%

 

After accounting for the increase in total revenues and the increase in hotel operating costs, total operating income decreased by $0.3 million or 2% during the second quarter of 2017, compared to the second quarter of 2016. The decrease is comprised of a decrease of $0.4 million or 21% for the Other Alberta segment and a decrease of $0.1 million or 2% for the Other Canada segment, partially offset by an increase of $0.3 million or 11% in operating income for the Fort McMurray segment.

For the first six months of 2017, total operating income was consistent to the first six months of 2016, which was comprised of an increase of $0.4 million or 10% in Fort McMurray segment and an increase of $0.3 million or 2% for the Other Canada segment, partially offset by a decrease of $0.7 million or 18% for the Other Alberta segment.

As disclosed in the preceding chart, the overall profit margin of the entire hotel portfolio was at 29% for the second quarter of 2017 compared to 31% for the second quarter of 2016. For the six months ended June 30, 2017, the overall profit margin was 25%, compared to 26% for the six months ended June 30, 2016.

ABOUT TEMPLE

Temple is a growth oriented hotel investment company with hotel properties located across Canada. Temple is listed on the Toronto Stock Exchange under the symbols TPH (common shares), TPH.DB.E and TPH.DB.F (convertible debentures). The primary long‑term investment objectives of the Company are to yield stable and growing cash flows and to maximize the long‑term share value of the Company through the active management of its assets, accretive acquisitions, and the performance of value‑added capital improvement programs on selected properties, as deemed appropriate. For further information on Temple, please visit our website at www.templehotels.ca.

This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements.

SOURCE Temple Hotels Inc.

View original content: http://www.newswire.ca/en/releases/archive/August2017/08/c5730.html

K. Rai Sahi, FCA, FCGA, Chief Executive Officer, or Paul Miatello, CA, CPA, Chief Financial Officer, Tel: (905) 281-3800, Fax: (905) 281-5890, Email: info@morguard.comCopyright CNW Group 2017

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