Royal Host Real Estate Investment Trust
TSX : RYL.DB.A
TSX : RYL.UN
TSX : RYL.DB.B
TSX : RYL.DB.C
TSX : RYL.DB.D

Royal Host Real Estate Investment Trust

August 12, 2008 00:01 ET

Royal Host REIT Announces Record Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 12, 2008) - Royal Host Real Estate Investment Trust ("Royal Host" or the "Trust") (TSX:RYL.UN)(TSX:RYL.DB.A)(TSX:RYL.DB.B)(TSX:RYL.DB.C)(TSX:RYL.DB.D) today announced record results for the three and six months ended June 30, 2008.

Royal Host generated record net income of $18.0 million, or $0.84 per unit, for the three months ended June 30, 2008, compared to $4.8 million, or $0.18 per unit, in the second quarter of 2007. Distributable income for the three months ended June 30, 2008 increased to $7.7 million (2007 - $6.5 million), or $0.36 per unit (2007 - $0.25 per unit).

Income from continuing operations increased to $5.3 million, or $0.25 per unit, for the three months ended June 30, 2008 (2007 - $3.7 million, or $0.14 per unit). Hospitality gross margin increased $0.6 million, or 5.7%, to $11.9 million. The Trust generated stable investment income, including a significant increase in interest and investment income.

Income from discontinued operations increased to $12.7 million, or $0.59 per unit (2007 - $1.1 million, or $0.04 per unit) attributable mainly to a gain on the sale of the Holiday Inn Edmonton - The Palace in June 2008.

The following table highlights the Trust's financial results for the three and six months ended June 30, 2008.



Three months ended Six months ended
June 30 June 30
----------------------------------------------------------------------------
($000's, except as otherwise 2008 2007 Change 2008 2007 Change
noted) (rest- (%) (rest- (%)
ated) ated)
----------------------------------------------------------------------------
Hospitality Revenue 35,143 34,597 1.6 62,823 63,030 (0.3)
Hospitality Expenses 23,256 23,352 0.4 45,693 45,690 -
-------------- -------------
Hospitality Gross Margin 11,887 11,245 5.7 17,130 17,340 (1.2)
-------------- -------------
Hospitality Gross Margin % 33.8 32.5 27.3 27.5
-------------- -------------
Investment Income 2,249 2,551 (11.8) 4,317 3,954 9.2
-------------- -------------
Other Expenses 8,802 10,123 (13.0) 18,864 20,177 (6.5)
-------------- -------------
Income From Continuing
Operations 5,334 3,643 46.4 4,583 1,117 310.3
Income From Discontinued
Operations 12,693 1,137 1,016.4 25,502 6,041 322.1
-------------- -------------
Net Income 18,027 4,810 185.3 30,085 7,158 320.3
-------------- -------------
-------------- -------------
Basic Per Unit Net Earnings
($)
From Continuing Operations 0.25 0.14 78.6 0.19 0.04 375.0
From Discontinued Operations 0.59 0.04 1,375.0 1.05 0.24 337.5
-------------- -------------
0.84 0.18 366.7 1.24 0.28 342.9
-------------- -------------
-------------- -------------
Distributable Income 7,655 6,544 17.0 9,030 7,512 20.2
-------------- -------------
-------------- -------------
Distributions Declared on
Trust Units 3,533 4,361 (19.0) 7,686 8,502 (9.6)
-------------- -------------
-------------- -------------
Basic Per Unit Distributable
Income ($) 0.36 0.25 44.0 0.37 0.30 23.3
-------------- -------------
-------------- -------------
Per Unit Distributions
Declared ($) 0.165 0.165 - 0.33 0.33 -
-------------- -------------
-------------- -------------


Hospitality revenue from continuing operations for the second quarter increased to $35.1 million (2007 - $34.6 million). RevPAR increased to $67.64 (2007 - $67.55); an increase was offset by a decrease in Occupancy.

"Throughout 2008 Royal Host has pursued opportunities to create incremental Unitholder value. The significant gains realized on asset sales and the redeployment of capital into marketable securities and unit repurchases have improved per unit results," commented Patrick Lambie, Executive Vice President. "The resulting proceeds provide Royal Host with the financial flexibility to pursue opportunities which may result from current economic uncertainty," he added.

The following table summarizes room statistics for the Trust's continuing hospitality operations.



CONTINUING HOSPITALITY Three months Six months
OPERATIONS ended June 30 ended June 30
----------------------------------------------------------------------------
32 hotels / 4,031 rooms 2008 2007 Change 2008 2007 Change
(%) (%)
----------------------------------------------------------------------------
RevPAR $67.64 $67.55 0.1 $60.87 $61.25 (0.6)
Occupancy 64.5% 66.7% (3.3) 60.0% 62.4% (3.8)
ADR $104.95 $101.27 3.6 $101.40 $98.17 3.3


During the second quarter, Royal Host took advantage of unique opportunities to sell the Holiday Inn Edmonton - The Palace and the El Rancho Motor Hotel & Convention Centre, generating gains on sales of $13.0 million, bringing gains on sales to $24.8 million in 2008.

Management of Royal Host will host an investor conference call on Wednesday, August 13, 2008 at 11:00 a.m. Eastern Time. The call may be accessed by dialing 1-416-642-5213 or 1-866-321-8231 and quoting confirmation code 2432922. A recording of this call will be available shortly after the call until August 21, 2008. To access this recording please dial 1-647-436-0148 or 1-888-203-1112 and provide the playback password 2432922. Alternatively, a recording of the audio webcast will also be available on the Trust's website after August 21, 2008.

Royal Host is a uniquely diversified hospitality trust that delivers Unitholder value through hotel ownership, investment, management and franchising. Royal Host's portfolio of Canadian hotels operates under a variety of recognizable brands as well as a number of unbranded properties. The Trust's hotel portfolio is further enhanced by a stable franchising business, a successful hotel management operation, and a portfolio of publicly-traded securities from within the hospitality and service sectors.

Royal Host trust units and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL.UN", "RYL.DB.A", "RYL.DB.B", "RYL.DB.C" and "RYL.DB.D", respectively.

The above statements in regard to the financial results should be read in conjunction with Royal Host's unaudited consolidated financial statements for the three and six months ended June 30, 2008 and its management's discussion and analysis, which are available on Royal Host's website at www.royalhost.com as well as the SEDAR website at www.sedar.com.

This press release contains certain forward-looking statements relating, but not limited to, Royal Host's operations, anticipated financial performance, business prospects, and strategies. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", or similar words suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Such factors include, but are not limited to economic, competitive, and lodging industry conditions. Royal Host disclaims any responsibility to update any such forward-looking statements except as required by law.

Contact Information

  • Royal Host Real Estate Investment Trust
    A. Brad Cann, CA
    Executive Vice President and Chief Financial Officer
    (403) 259-9800
    (403) 259-8580 (FAX)
    Website: www.royalhost.com