Royal Host Real Estate Investment Trust

Royal Host Real Estate Investment Trust

March 07, 2008 02:15 ET

Royal Host REIT Delivers Record Results

CALGARY, ALBERTA--(Marketwire - March 7, 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 year ended December 31, 2007.

Royal Host continued to generate strong financial performance in 2007 in each of its businesses and undertook several initiatives directed at increasing Unitholder value. The Trust generated Distributable Income of $21.0 million, or $0.81 per trust unit and net income increased to a record $14.4 million.

Hospitality revenue increased 1.9% to a record $147.0 million in 2007. Revenue Per Available Room ("RevPAR") from continuing operations increased by 2.4% to $65.80 for 2007, owing to the strength of the Trust's diversified portfolio and effective revenue management strategies.

Hospitality gross margin increased by 4.1% to a record $44.9 million in 2007, reflecting RevPAR growth and strict discipline on costs. Gross margin as a percentage of hospitality revenue increased to 30.5% from 29.9% in 2006.

In 2007, Royal Host further enhanced its diversification by assembling a $50 million portfolio of publicly-traded securities with a focus on the hospitality and service sectors and yielded positive investment income.

The Trust also increased Unitholder value by reinvesting $10.2 million in its properties, closing an offering of $60 million of 5.90%, 7-year convertible debentures, and repurchasing approximately 8% of its issued and outstanding trust units and $5.1 million of convertible debentures.

"The year ended December 31, 2007 was marked by numerous accomplishments. As a result of the diligence of our team and the disciplined and innovative allocation of capital, we achieved strong broad-based financial performance," said Brad Cann, Executive Vice President and Chief Financial Officer. "As we enter 2008, the outlook for the Canadian hospitality sector remains favourable. Royal Host has maintained a strong balance sheet, developed an innovative investment strategy and is poised to seize the great number of opportunities that still exist in our sector," he added.

The Trust distributed $0.66 per trust unit in 2007, representing a 32% increase over 2006 ($0.50 per trust unit). In aggregate, the Trust declared distributions to Unitholders of $17.4 million (2006 - $12.7 million), representing 82.7% of Distributable Income.

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

Three months ended Years ended
December 31 December 31
36 hotels / Change Change
4,423 rooms 2007 2006 % 2007 2006 %

RevPAR $ 59.72 $ 57.45 4.0 $ 65.80 $ 64.26 2.4
Occupancy 59.9% 60.5% (1.0) 64.5% 65.8% (2.0)
ADR $ 99.75 $ 95.03 5.0 $102.08 $ 97.71 4.5

The following table highlights the Trust's financial results for the year ended December 31, 2007.

($000's, except as otherwise noted) 2007 2006 Change

Hospitality Revenue (Continuing Operations) 147,002 144,281 1.9

Hospitality Expenses 102,123 101,162 1.0

Hospitality Gross Margin 44,879 43,119 4.1

Hospitality Gross Margin % 30.5% 29.9% 2.0

Royal Private Residence Club - 8,790 (100.0)

Other Expenses 34,119 38,433 (11.2)

Income From Continuing Operations 10,760 13,476 (20.2)
Income From Discontinued Operations 3,616 782 362.4

Net Income 14,376 14,258 0.8

Basic Per Unit Net Earnings ($)
From Continuing Operations 0.41 0.53 (22.6)
From Discontinued Operations 0.14 0.03 366.7
0.55 0.56 (1.8)

Distributable Income 21,045 26,753 (21.3)

Distributions Declared on Trust Units 17,414 12,714 37.0

Basic Per Unit Distributable Income ($) 0.81 1.05 (22.9)

Per Unit Distributions Declared ($) 0.66 0.50 32.0

Management of Royal Host will hold a conference call to discuss its year-end results at 9:00 a.m. Eastern Time on Friday, March 7, 2008. The call may be accessed at 1-877-677-0837 or 1-416-641-6120. A replay of the call will be available shortly after the call until March 14, 2008, and may be accessed at 1-800-408-3053 or 1-416-695-5800 with the password 3251597. The replay will also be available on the Trust's website after March 14, 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 34 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 well 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 audited consolidated financial statements for the year ended December 31, 2007 and its management's discussion and analysis, which are available on Royal Host's website at as well as the SEDAR website at

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
    Vice President and Chief Financial Officer
    (403) 259-9800
    (403) 259-8580 (FAX)