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

May 13, 2008 02:35 ET

Royal Host REIT Announces First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 13, 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 results for the three months ended March 31, 2008.

Royal Host generated significantly higher investment income and stable continuing hotel results. The Trust reported a loss from continuing operations of $0.2 million compared to a $2.1 million loss in the first quarter of 2007. The Trust generated Distributable Income of $1.3 million (2007 - $1.0 million), or $0.05 per unit (2007 - $0.04 per unit). Net income increased to $12.1 million, or $0.44 per unit (2007 $2.3 million, or $0.10 per unit), mainly attributable to an $11.7 million gain on the sale of the Travelodge Hotel Burlington on the Lake.

During the first quarter of 2007, Royal Host continued to take significant steps to deliver on its commitment to create Unitholder value. In addition to the sale of the Travelodge Hotel Burlington on the Lake, the Trust also completed a Substantial Issuer Bid, repurchasing approximately 5.4 million, or 20%, of its issued and outstanding trust units, generating immediate accretion to Unitholders.

Hospitality revenue decreased 2.4% to $29.3 million in the three months ended March 31, 2008. Occupancy decreased due, in part, to the inclusion of the Easter holiday which resulted in a shift in demand for accommodations from the first quarter into the second quarter, negatively impacting comparison to 2007. Average daily rate ("ADR") grew by 3.1%. Revenue Per Available Room ("RevPAR") from continuing operations decreased by 1.4% to $56.25.

During the first quarter, Royal Host invested an additional $14.4 million into its portfolio of publicly-traded securities and generated $2.1 million of investment income (2007 - $1.4 million). The Trust also reinvested $2.2 million in its properties.

"The results of this quarter demonstrate the benefits of our opportunity-driven strategy. The combination of a strong hotel portfolio and various initiatives previously undertaken resulted in an increase in Distributable Income per unit despite the impact of the Easter holiday," said Brad Cann, Executive Vice President and Chief Financial Officer of Royal Host.

The Trust declared distributions of $4.2 million, or $0.165 per unit, in the three months ended March 31, 2008, consistent with 2007.

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



Three months ended March 31
------------------------------------------------------------
33 hotels / 4,168 rooms 2008 2007 Change (%)
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RevPAR $ 56.26 $ 57.03 (1.4)

Occupancy 55.9% 58.4% (4.3)

ADR $ 100.57 $ 97.59 3.1


The following table highlights the Trust's financial results for the three months ended March 31, 2008.



----------------------------------------------------------------------------
Three months ended March 31
($000's, except as otherwise noted) 2008 2007 Change (%)
----------------------------------------------------------------------------

Hospitality Revenue (Continuing Operations) 29,344 30,080 (2.4)

Hospitality Expenses 23,413 23,362 0.2
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Hospitality Gross Margin 5,931 6,718 (11.7)
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Hospitality Gross Margin % 20.2 22.3 (9.4)
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Investment Income 2,068 1,403 47.4
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Other Expenses 8,222 10,219 (19.5)
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Loss From Continuing Operations (223) (2,098) 89.4
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Income From Discontinued Operations 12,281 4,441 176.5
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Net Income 12,058 2,343 414.6
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----------------
Basic Per Unit Net Earnings ($)

From Continuing Operations (0.01) (0.08) 87.5

From Discontinued Operations 0.45 0.18 150.0
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0.44 0.10 340.0
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----------------

Distributable Income 1,310 1,021 28.3
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----------------
Distributions Declared on Trust Units 4,153 4,141 0.2
----------------
----------------
Basic Per Unit Distributable Income ($) 0.05 0.04 25.0
----------------
----------------
Per Unit Distributions Declared ($) 0.165 0.165 0.0
----------------
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Management of Royal Host will host an investor conference call on Wednesday, May 14, 2008 at 11:00 a.m. Eastern Time. The call may be accessed by dialing 1-866-542-4270 or 1-416-695-6616. A recording of this call will be available shortly after the call until May 22, 2008. To access this recording please dial 1-800-408-3053 or 1-416-695-5800 and provide the playback password 3259467. Alternatively, a recording of the audio webcast will also be available on the Trust's website after May 19, 2008.

Royal Host is a diversified hospitality trust that delivers Unitholder value through hotel ownership, investment, management and franchising. It is Canada's second-largest hotel Real Estate Investment Trust.

Royal Host owns a diversified portfolio of 33 operating hotels, comprising approximately 4,200 guest rooms. The portfolio includes limited, focused and full-service hotels in the mid-market to upscale hospitality segments, and is represented throughout Canada operating under such recognizable brands as Best Western®, Country Inns & Suites®, Hilton®, Holiday Inn®, Ramada®, Super 8®, Thriftlodge® and Travelodge®, as well as a number of unbranded properties such as the Chimo Hotel in Ottawa and the Grand Okanagan Resort and Conference Centre in Kelowna.

The Trust also maintains an investment portfolio of publicly-traded securities focused on the hospitality and service sectors. A uniquely diversified portfolio permits the Trust to readjust the balance of resources dedicated to direct hotel ownership and indirect investments in response to changing market dynamics.

In addition to providing management services to its own portfolio, Royal Host's team manages a number of properties on behalf of third parties using its proven training programs, operating procedures, revenue and yield management systems and sales programs.

Royal Host also owns the master franchise rights for Travelodge® and Thriftlodge® in Canada. Through its subsidiary, Travelodge Canada, Royal Host currently franchises over 100 locations, 13 of which are owned by the Trust, and receives a stable stream of revenue through monthly royalty fees paid by licensed hotel owners and by selling franchise licenses, which enhances the overall diversity of Royal Host's portfolio.

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 months ended March 31, 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