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American Hotel Income Properties REIT LP Reports Third Quarter 2021 Results

Revenues increased to $68.4 million compared to $63.6 million in Q2 2021
Q3 ADR of $118.49 matched Q3 2019 levels, Occupancy of 68.8% & RevPAR of $81.50
Q3 2021 diluted FFO per unit of $0.321; or $0.16 per unit excluding non-recurring items
New distribution policy adopted; reinstating monthly distributions in March 2022 at an annual rate of USD$0.18 per unit
Payment of deferred March 2020 distribution to be made on December 31, 2021
Total liquidity as at September 30, 2021 was $43.6 million

(numbers are in U.S. dollars unless otherwise indicated)

VANCOUVER, BC, Nov. 9, 2021 /PRNewswire/ – American Hotel Income Properties REIT LP (“AHIP”, or the “Company”) (TSX:HOT) (TSX:HOT) (TSX:HOT) announced today its financial results for the three and nine months ended September 30, 2021.

“During the third quarter our portfolio continued to post impressive results, with both top and bottom-line measures nearing pre-COVID levels.” said Jonathan Korol, CEO. Mr. Korol continued, “Persistent demand from the domestic leisure traveller and signs of improvement from business customers resulted in Q3 average daily rate matching Q3 2019 numbers. In addition, steady Occupancy together with persistent margin improvements resulted in portfolio net operating income finishing within three percentage points of 2019 levels. These results demonstrate signs of continued improvement despite the ongoing COVID-19 pandemic.”

“We are pleased to announce that the Board has approved the re-instatement of monthly distributions on our units with payment commencing in March 2022 at an annual rate of USD$0.18 per unit. In addition, the Board also approved the payment of our deferred March 2020 distribution on December 31, 2021.” Mr. Korol added: “The return of our monthly distribution is appropriate and possible due to the financial resiliency of our portfolio. Throughout the pandemic, AHIP’s portfolio has demonstrated one of the primary benefits of the premium-branded select service hotel operating model – the ability to generate cash flow at fluctuating levels of demand.”

“We believe this distribution policy is sustainable and will help us manage our liquidity and maintain discipline with our balance sheet, which in turn will improve AHIP’s access to capital markets to fund new acquisitions.” Mr. Korol continued: “As one of the first North American public lodging REITs to announce the re-instatement of regular distributions, I am extremely proud of the measures adopted by our team during the pandemic and the ongoing dedication of our hotel associates, absent which we would not have reached this milestone so soon.”

_____________________________

1 Including two non-recurring items further discussed in this news release not adjusted for in accordance with the REALPAC Whitepaper on FFO.

THREE MONTHS ENDED SEPTEMBER 30, 2021 FINANCIAL HIGHLIGHTS

Revenues for the quarter increased by $22.1 million (or 47.7%) to $68.4 million (2020 – $46.3 million) compared to the prior year, reflecting the ongoing recovery from significantly lower demand in the prior year due to COVID-19.
Revenue per Available Room (“RevPAR”) increased 47.9% to $81.50 (2020 – $55.12) caused by Average Daily Rate (“ADR”) increases of 22.7% to $118.49 (2020 – $96.53) and Occupancy increase by 1,170 basis points to 68.8% (2020 – 57.1%).
Net income and comprehensive income for the quarter was $15.7 million (2020 – loss of $12.7 million) primarily as a result of the recognition of $14.7 million of other income from the estimated forgiveness of government-guaranteed loans and changes in the fair value of the interest rate swaps and warrants in the period. A strong recovery in leisure travel and decrease in finance costs further strengthened AHIP’s financial performance.
Net operating income (“NOI”) for Q3 2021 increased to $26.4 million (2020 – $14.6 million). The increase in NOI is due to overall improvements in ADR.
Funds from operations (“FFO”) for Q3 2021 increased to $26.4 million (2020 – $0.1 million) and adjusted funds from operations (“AFFO”) increased to $26.1 million (2020 – $0.2 million). The increase in FFO and AFFO is due to higher NOI from an improvement in operations and two non-recurring items: $14.7 million of other income from the estimated forgiveness of government-guaranteed loans offset by a $1.0 million expense for an inventory adjustment. Excluding these two non-recurring items FFO and AFFO were $12.7 million and $12.4 million respectively.
Q3 2021 Diluted FFO per Unit was $0.32 (2020 – $0.00) and Diluted AFFO per Unit was $0.32 (2020 – $0.00). Excluding the two above noted non-recurring items, these amounts were $0.16 and $0.15 per Unit, respectively.
Strong performance continued through October 2021, with Occupancy of 70.2%, ADR of $117.88 and RevPAR of $82.70, each at 0.89x, 0.98x and 0.87x of October 2019 levels, respectively.
During the three months ended September 30, 2021, AHIP estimated that approximately $14.7 million of its total $15.1 million government-guaranteed loans will meet the specific criteria for forgiveness. Accordingly, for the three and nine months ended September 30, 2021, AHIP recorded $14.7 million as other income and reduced the carrying value of these loans to the estimated settlement amount.

NINE MONTHS ENDED SEPTEMBER 30, 2021 FINANCIAL HIGHLIGHTS

For AHIP’s current portfolio of premium branded hotels only and using prior ownership’s financial information for the 12 premium branded hotels acquired in December 2019, AHIP’s existing portfolio has meaningfully narrowed the previously sizeable gap between 2021 and 2019 demand levels, while exceeding 2019 net operating income margin levels:

Metric

Jan-21

Feb-21

Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Occupancy (%)

51.2%

59.9%

69.4%

68.6%

68.4%

73.1%

73.1%

67.5%

65.7%

Recovery (vs. 2019)

0.77x

0.81x

0.86x

0.85x

0.85x

0.88x

0.90x

0.84x

0.87x

ADR (US$)

$90.81

$93.87

$98.22

$103.16

$109.06

$115.33

$120.34

$118.20

$116.68

Recovery (vs. 2019)

0.81x

0.81x

0.82x

0.88x

0.92x

0.96x

1.01x

1.00x

0.98x

RevPAR (US$)

$46.52

$56.24

$68.13

$70.79

$74.60

$84.28

$87.93

$79.78

$76.63

Recovery (vs. 2019)

0.63x

0.66x

0.70x

0.75x

0.78x

0.85x

0.90x

0.84x

0.85x

NOI Margin (%)

25.2%

28.0%

39.8%

38.8%

40.7%

44.3%

41.7%

36.5%

37.3%

Recovery (vs. 2019)

0.85x

0.90x

0.99x

1.08x

1.08x

1.18x

1.15x

1.05x

1.03x

 

Metric

Q1-21

Q2-21

Q3-21

Occupancy (%)

60.2%

70.0%

68.8%

Recovery (vs. 2019)

0.82x

0.86x

0.87x

ADR (US$)

$94.70

$109.31

$118.49

Recovery (vs. 2019)

0.82x

0.92x

1.00x

RevPAR (US$)

$56.99

$76.53

$81.50

Recovery (vs. 2019)

0.67x

0.80x

0.87x

NOI Margin (%)

32.1%

41.4%

38.6%

Recovery (vs. 2019)

0.93x

1.12x

1.08x

AHIP’s five Embassy Suites properties, which represent 1,311 rooms or 15% of our portfolio, remained 26% below 2019 RevPAR largely driven by an 1,887 basis points decrease in Occupancy levels. This is a significant improvement from the second quarter where RevPAR was 36% below 2019 levels and 2,130 basis points below 2019 Occupancy rates.
RevPAR increased by 35.5% to $71.76 (2020 – $52.95) with Occupancy increasing by 1,510 basis points to 66.4% (2020 – 51.3%). ADR increased by 4.8% to $108.15 (2020 – $103.21), partially offset by two months of higher pre-COVID ADR in January and February 2020.
AHIP’s 24 extended stay properties were the strongest performing segment with recovery of RevPAR to 0.85x of 2019 RevPAR.
FFO increased to $35.9 million (2020 – ($4.3) million). AFFO increased to $35.5 million (2020 – ($4.8) million). Excluding the two above noted non-recurring items, these amounts are $22.2 million and $21.8 million, respectively.
Diluted FFO per Unit was $0.46 (2020 – ($0.06)) and Diluted AFFO per Unit was $0.44 (2020 – ($0.06)). Excluding the two above noted non-recurring items, these amounts are $0.28 and $0.28 per Unit, respectively.
The STR RevPAR index, which compares the performance of AHIP-owned hotels to their competitive set in each region, indicated AHIP’s 78 Premium Branded hotels have, in aggregate, outperformed their identified direct competition with an average index rating of 109.5 during the quarter (Q3 2020 – 122.4), with 100.0 representing a fair share of the market.
NOI increased to $67.8 million (2020 – $36.6 million) due to higher revenues and expense reduction initiatives. NOI Margins increased to 37.9% (2020 – 27.2%) attributable to extensive cost saving measures and relaxed brand standards which reduced operating expenses during this period compared to the prior period.
Net income and comprehensive income was $2.2 million (2020 – loss of $45.5 million), as a result of a $14.7 million gain recognized from loan forgiveness. A higher NOI, lack of impairment charges, partially offset by higher deferred tax expense, further contributed to AHIP’s positive performance.
As part of effective asset management of the …

Full story available on Benzinga.com

Article: benzinga.com

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