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Temple Hotels Inc. Reports 2019 Third Quarter Financial Results

MISSISSAUGA, ON , Nov. 5, 2019 /CNW/ - Temple Hotels Inc. ("Temple" or the "Company") (TPH.TO) today reported its financial results for the three months ended September 30, 2019 ("third 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 nine months ended September 30, 2019 , 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.

Q3 2019 KEY POINTS/HIGHLIGHTS

  • Revenue decreased $4.1 million or 9% during the three months ended September 30, 2019 compared to 2018, due to a decrease in revenue within the Other Alberta, Fort McMurray and Other Canada portfolios of $1.9 million , $1.5 million and $0.7 million , respectively.

  • Hotel operating income decreased by $3.0 million or 21% during the three months ended September 30, 2019 compared to 2018, due to a decrease in hotel operating income within the Other Alberta, Other Canada and Fort McMurray portfolios of $1.1 million , $1.0 million and $0.9 million , respectively.

  • During the third quarter of 2019, a non-cash provision for impairment of $20.6 million was recorded to reflect the impact of economic conditions on the carrying value of Temple's hotel properties, predominantly in Fort McMurray, Alberta .

  • FFO decreased by $1.5 million during the three months ended September 30, 2019 , compared to the three months ended September 30, 2018 . On a basic per common share basis, FFO decreased by $0.21 per common share, compared to the third quarter of 2018. The increase in the weighted average number of common shares outstanding contributed to the decrease on a per common share basis.

  • On September 30, 2019 , the Company refinanced two mortgage loans and fully repaid a third mortgage loan. The two loans continue to be due on demand but are not subject to financial covenant tests until the fourth quarter of 2021, and the interest rate was reduced from 8.95% to 4.50%. As a condition of refinancing, the Company fully repaid the maturing balance of $15.8 million secured against one property located in Fort McMurray, Alberta , and paid down an aggregate of $5.0 million on the two refinanced loans.

  • Subsequent to September 30, 2019 , the Company refinanced a mortgage on a hotel property located in Fort McMurray, Alberta with the incumbent lender for one year at an interest rate of 4.66%. As a condition or refinancing, the Company paid down $14.0 million of the matured amount.

  • As at September 30, 2019 , total debt was $381.8 million , a decrease of $75.6 million , compared to $457.5 million at December 31, 2018 .


OPERATING RESULTS






Three Months Ended
September 30


Nine Months Ended
September 30


2019


2018


2019


2018









Total revenue

$41,403


$45,490


$116,532


$125,795

Hotel operating income

$10,968


$13,921


$26,160


$33,610

Provision for impairment

($20,573)


-


($19,345)


($6,785)

Net income (loss)

($19,409)


$2,780


($25,013)


($5,798)









Cash flow provided by operating activities

$3,605


$7,128


$4,261


$10,402

Funds from operations

$5,590


$7,086


$7,185


$12,019









Per common share (basic)








- Net income (loss)

($0.26)


$0.11


($0.48)


($0.23)

- FFO

$0.07


$0.28


$0.14


$0.48









Weighted average number of common shares

75,189,226


25,144,881


52,458,527


25,215,194









Occupancy

65%


69%


59%


63%

ADR

$145.18


$147.52


$141.19


$142.04

RevPar

$94.23


$101.80


$83.77


$90.12

 

Debt Covenants

At September 30, 2019 , the Company was not in compliance with debt service covenants affecting four mortgage loans in the aggregate amount of $68.0 million . The loan covenant breaches are expected to be resolved by debt refinancings, loan modification agreements and/or a waiver of the covenant requirements.

Room Revenue Statistics

As disclosed in the following chart, for the three months ended September 30, 2019 , RevPar for the Same Property portfolio was $94.23 , compared to $101.80 for the three months ended September 30, 2018 . RevPar for Same Property portfolio results generally reflect decreased occupancy and ADR levels at the Company's Fort McMurray and Other Alberta segments.

Room Revenue Statistics



Three Months Ended September 30



2019


2018



Occ



ADR


RevPar


Occ



ADR


RevPar

Same Property

















Fort McMurray


42%


$

123.83


$

52.11


48%


$

139.29


$

67.48

Other Alberta


50%


$

110.70


$

55.16


58%


$

117.81


$

68.18

Other Canada


79%


$

156.82


$

124.14


81%


$

156.92


$

126.97

Overall Portfolio


65%


$

145.18


$

94.23


69%


$

147.52


$

101.80


















Room Revenue Statistics



Nine Months Ended September 30



2019


2018



Occ



ADR


RevPar


Occ



ADR


RevPar

Same Property

















Fort McMurray


36%


$

131.19


$

47.81


47%


$

139.12


$

64.85

Other Alberta


49%


$

116.25


$

56.87


55%


$

119.64


$

65.80

Other Canada


72%


$

148.98


$

107.78


73%


$

148.72


$

108.49

Overall Portfolio


59%


$

141.19


$

83.77


63%


$

142.04


$

90.12


The above chart reflects 70% of the operating results of the Acclaim Hotel commencing March 11, 2019.

 

Other Hotel Revenue

During the third quarter of 2019, other hotel revenue in the Same Property portfolio decreased by $1.0 million or 9%, compared to the third quarter of 2018, comprised of a decrease of $0.6 million or 16% from the Other Alberta properties, a decrease of $0.2 million or 67% from the Fort McMurray portfolio and a decrease of $0.1 million or 2% from the Other Canada portfolio. In addition, other hotel revenue decreased by $0.4 million due to a non-cash commercial rent adjustment relating to the restructuring of a restaurant lease at a hotel located in Fort McMurray .

During the first nine months of 2019, other hotel revenue for the Same Property portfolio decreased $2.1 million or 6% compared to the first nine months of 2018, comprised of decreases in the Other Alberta, Fort McMurray and Other Canada properties of $1.6 million , $0.3 million and $0.2 million , respectively. In addition, other hotel revenue decreased by $0.4 million due to a non-cash commercial rent adjustment relating to the restructuring of a restaurant lease at a hotel located in Fort McMurray .

Operating Income and Profit Margin

Operating Income and Profit Margin







Three Months Ended September 30


Nine Months Ended September 30


Operating Income


Operating Profit Margin


Operating Income


Operating Profit Margin


2019


2018


2019


2018


2019


2018


2019


2018

Same Property (1)
















Fort McMurray

$749


$1,610


17%


29%


$1,426


$4,959


12%


31%

Other Alberta

45


1,144


1%


13%


1,038


4,011


4%


15%

Other Canada

10,174


11,167


33%


36%


23,696


24,640


29%


30%

Total portfolio

$10,968


$13,921


26%


31%


$26,160


$33,610


22%


27%


(1)  The above chart reflects 70% of the operating results of the Acclaim Hotel commencing March 11, 2019.

 

After accounting for the decrease in total revenues and the decrease in hotel operating costs, total operating income decreased by $3.0 million or 21% during the third quarter of 2019, compared to the third quarter of 2018, comprised of decreases of $1.1 million , $1.0 million and $0.9 million for the Other Alberta, Other Canada and Fort McMurray segments, respectively.

As disclosed in the preceding chart, the overall profit margin of the entire hotel portfolio declined from 31% in the third quarter 2018 to 26% in the third quarter of 2019.

ABOUT TEMPLE

Temple is a hotel investment company with hotel properties located across Canada . Temple is listed on the Toronto Stock Exchange under the symbols TPH (common shares). 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.


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