NEWS RELEASE TRANSMITTED BY CCN NEWSWIRE - A SERVICE OF ITG
FOR: ROYAL HOST REAL ESTATE INVESTMENT TRUST
TSE SYMBOL: RYL.UN
MAY 16, 2001 - 08:29 EDT
Royal Host Announces First Quarter Results for 2001
CALGARY, ALBERTA--Royal Host Real Estate Investment Trust (REIT)
today announced financial results for the three months ended March
31, 2001.
Royal Host's core business of hotel operations continues to
improve as room revenues continue to increase. Revenues are up by
5.6% and revenue per available room is up by 5% from the first
quarter of 2000. Royal Host is continuing to restructure its
non-core businesses. As a result, timeshare and non-recurring
revenue decreased in this quarter compared to the first quarter of
the previous year.
Operating margins continued their upward trend and improved to
24.9% from 22.8% in the same quarter last year, an increase of
9.1%. This improvement was largely due to the success of cost
cutting measures initiated by management in the later part of
2000, which began to impact operating results in the first quarter
of 2001.
Cash available for distribution for the first quarter was
$2,815,000 in 2001, a slight decrease of $207,000 from the
previous year. Basic per unit cash available for distribution was
$0.08 per unit in 2001 compared to $0.09 per unit in the same
quarter in 2000.
Interest expense peaked during this quarter and is expected to
decline in future quarters due to reductions in both interest
rates and total indebtedness.
The increase in capital tax was due to a one-time adjustment of an
over-accrual in the first quarter of 2000.
It is important to note that the hotel business is highly cyclical
throughout the calendar year, and the first quarter results are
traditionally the weakest and are not indicative of results for
the full year.
Outlook
R. B. Royer, President of Royal Host REIT states, "we are pleased
with these first quarter results and the outlook for Royal Host is
one of continued improvement in its core business; continued
future reductions in both interest and operating expenses; and a
substantially stronger balance sheet."
/T/
Hotel Statistics
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For the First Quarter
2001 2000 % change
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36 Hotel Portfolio
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ADR 82.60 $79.11 4.4%
Occupancy % 57.9% 57.6% 0.56%
RevPAR 47.81 45.54 5.0%
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/T/
Note 1: RevPAR is a function of average daily room rate and
occupancy.
Note 2: The figures above reflect the 50% co-tenancy arrangement
and, as a result, include only 50% of the operations of that
property.
Capital Structure and Liquidity
As part of the Trust Indenture, Royal Host is required to maintain
debt levels at less than 45% of Total Assets plus Accumulated
Depreciation. As at March 31, 2001, the ratio was 37%.
During the first quarter, Royal Host further improved its balance
sheet by raising an additional $20 million of equity through a
"bought" deal with a syndicate of underwriters. The net proceeds
of this offering are estimated at $18.7 million after all fees and
expenses. In addition, subsequent to the end of the quarter, the
underwriters exercised a portion of the over allotment of units
for additional proceeds of $2.4 million. Royal Host used $6.1
million of the net proceeds to reduce its outstanding debt prior
to the end of the quarter. The balance of the proceeds will
predominantly be used to upgrade and reposition certain hotel
properties and for working capital and general trust purposes.
/T/
Consolidated Statement of Net Earnings and Cash Available for Distribution
For the three months ended March 31, 2001 and 2000
(in thousands of dollars)
2001 2000
3 Months 3 Months
March 31 March 31
----------- -----------
Hospitality Revenues
Rooms 18,916 17,910
Food & beverage 4,605 4,728
Lease and other hospitality revenues 4,883 6,227
----------- -----------
28,404 28,865
Hospitality Expenses 21,340 22,283
----------- -----------
Operating Income 7,064 6,582
----------- -----------
Other (Income) and Expenses
Interest income (14) (15)
Interest on mortgages and other debt 3,802 3,395
Trust administration 402 573
Capital and future income taxes 176 (548)
Depreciation & amortization 4,788 5,451
----------- -----------
9,154 8,856
----------- -----------
Net Loss (2,090) (2,274)
Add: Depreciation and amortization
of capital assets 4,424 5,193
Add: Amortization of deferred
financing fees 364 258
Add:(deduct): Future income tax
expense (recovery) 117 (155)
----------- -----------
Cash Available for Distribution 2,815 3,022
----------- -----------
Per Unit Cash Available for
Distribution
- basic 0.08 0.09
- fully diluted 0.08 0.09
Consolidated Balance Sheets
As at March 31, 2001 & December 31, 2000
(in thousands of dollars)
2001 2000
ASSETS
Current Assets
Cash and short-term investments 16,561 6,799
Accounts and notes receivable 8,604 12,320
Deposits and prepaid expenses 3,041 2,603
Inventories 3,334 2,903
Future income taxes 1,150 1,470
----------- -----------
32,690 26,095
Capital Assets 330,031 332,916
Long-term Notes Receivable and
Other Assets 4,277 4,604
----------- -----------
366,998 363,615
----------- -----------
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued
liabilities 15,686 15,936
Current portion of mortgages
and other debt 51,165 51,802
Current portion of capital leases 953 928
Distributions payable 2,145 1,874
Other current liabilities 1,494 2,013
----------- -----------
71,443 72,553
Mortgages and Other Debt 101,397 107,051
Capital Leases 1,965 2,205
Future Income Taxes 1,682 1,885
Deferred Revenue 2,240 2,145
Equity 188,271 177,776
----------- -----------
366,998 363,615
----------- -----------
/T/
Royal Host REIT owns 36 hotels, manages 75 properties and
franchises 92 locations for almost 16,000 guest rooms in the
mid-market to upscale segments. Royal Host also owns the
Travelodge Master Franchise in Canada, provides hotel and resort
management services for the portfolio and to third party
properties, markets vacation intervals in hotels, resorts, and
operates a facility for customers to trade and bank prepaid
vacation weeks.
Royal Host maximizes earnings while balancing risk for its
unitholders through efficient operations, strong marketing and a
focus on providing travelers with superior accommodations and
travel experiences. Royal Host units are traded on the Toronto
Stock Exchange (RYL.UN).
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Royal Host Real Estate Investment Trust
Peter Sikora
Chief Financial Officer
(403) 259-9800
(403) 259-8580 (FAX)
E-mail: investorinfo@royalhost.com
Website: www.royalhost.com
