Legacy Hotels Real Estate Investment Trust Reports Second Quarter Results
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Legacy Hotels Real Estate Investment Trust Reports Second Quarter Results
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-08-03
New tax legislation results in non-cash $35 million ($0.29 per unit) future income tax provision
Legacy Hotels Real Estate Investment Trust ("Legacy" or the "Trust") (TSX:LGY.UN) today announced its financial results for the quarter and six months ended June 30, 2007. All amounts are in Canadian dollars unless otherwise indicated.
"Our second quarter results were in-line with our expectations. The particular strength experienced in the second quarter of 2006 limited second quarter growth achieved in 2007. Year-to-date operating results remain well ahead of the prior period with hotel EBITDA improving over 10%, distributable income per unit up 75% and funds from operations per unit up 25%," said Neil J. Labatte, Legacy's President and Chief Executive Officer.
Second Quarter Highlights
- On July 12, 2007, Legacy announced that it had entered into an agreement to be acquired by a group of investors including, Cadbridge Investors LP (a limited partnership formed by Cadim, a division of the Caisse de depot et placement du Quebec, and Westmont Hospitality Group, "Cadbridge") and InnVest Real Estate Investment Trust ("InnVest") for $12.60 in cash per unit (the "Offer"). Legacy's board of trustees unanimously approved the transaction and unanimously recommends that unitholders deposit their units to the Offer.
- Second quarter comparable portfolio RevPAR(1) decreased 0.5% with a 1.1 point decline in occupancy offsetting a 0.9% improvement in average daily rate(1) ("ADR"). RevPAR for the Delta managed portfolio grew 1.4% compared to a 1.1% decline for the Fairmont managed portfolio.
- Revenues increased 2.1% driven by the addition of the Delta Bow Valley hotel.
- Hotel EBITDA(1) grew modestly to $62.2 million, benefiting from successful prior period property tax appeals approximating $2.3 million.
- Second quarter results reflect $1.7 million of legal and financial advisory costs for services relating to the Offer as well as a non-cash future income tax charge of $35.0 million as a result of tax legislation with respect to the taxation of certain listed Canadian trusts ("SIFT trusts") and partnerships.
- Diluted distributable income(1) of $0.23 per unit compares to $0.24 per unit in the prior year.
- Diluted funds from operations(1) ("FFO") of $0.32 per unit was in-line with the prior period.
Year-to-date Highlights
- RevPAR improved 2.7% driven by increases in ADR and occupancy of 2.0% and 0.5 point, respectively.
- Hotel EBITDA is up 10.2% to $81.9 million, benefiting from a 90 basis point margin improvement
- Diluted distributable income per unit improved 75% to $0.14 per unit. This compares to year-to-date distributions declared of $0.16 per unit.
- Diluted FFO per unit is up 25% to $0.30 per unit.
- Over 95% of Legacy's maturing convertible debentures were converted to equity during the first quarter of 2007.
- In February 2007, Legacy successfully refinanced a $115.0 million mortgage, resulting in approximately $0.5 million in annual interest savings.
- In March 2007, Legacy acquired the fee interest in the Delta Beausejour hotel.
"We are comfortable with the year-to-date growth experienced. Looking ahead, overall lodging fundamentals remain positive driven by expectations of further demand growth and limited near-term supply," continued Labatte. "Our recent announcement regarding the anticipated sale of the Trust supports the continued investment demand for high quality hotel real estate investments and buyers' expectations of future growth within the industry, and our portfolio specifically."
Legacy will host a conference call on Thursday August 2, 2007 at 10:30 a.m. Eastern Time to discuss these results.
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