Read Larry Connors' blog – Short Term Trading Strategies
HIGHLIGHTS:
-- Funds from Operations ("FFO") of approximately $0.23 per share
for second quarter
-- Same-store operating margins improved 4 percentage points over second
quarter 2008
-- Same-store hotel operating expenses decreased approximately $2.2 million
or 16.6% over second quarter 2008 as a result of the Company's
expense control and cost-cutting initiatives
-- Operating margins increased 12.8% over second quarter 2008
-- Total revenue increased 0.4 % over second quarter 2008
-- Total assets of approximately $220.5 million at June 30, 2009, versus
approximately $194.1 million at end of second quarter 2008
Andrew M. Sims, President and CEO of MHI Hospitality Corporation, commented, "Since our inception as a public company nearly five years ago and throughout this extraordinarily difficult business environment, we have consistently executed on our business model. Today, we have in place a well-located platform of hotel assets that is also substantially repositioned, with substantially all construction risk eliminated."
Added Sims, "We remain committed over the near term to three key objectives. First, we are expediting the ramp-up and marketing of this significantly improved asset base. Second, at both the property and corporate levels, we continue to put in place operating efficiencies as well as stringent expense controls that have produced improved operating margins. And third, we are actively seeking viable sources of capital in order to strengthen the balance sheet. We believe we have turned the corner in terms of operating metrics and, looking ahead, we expect to see improvements in those metrics for the balance of the year."
Operating Results
The Company reported consolidated total revenue of approximately $20.5 million for the three-month period ended June 30, 2009, an increase of 0.4% over the three-month period ended June 30, 2008. For the second quarter, the Company also reported consolidated net income of approximately $0.1 million, or $0.02 per share, as compared to consolidated net income of approximately $1.3 million, or $0.19 per share, for the comparable 2008 period. The Company reported net operating income for the same period of approximately $3.0 million, approximately the same amount of net operating income for the second quarter of 2008. During the second quarter, FFO was approximately $2.4 million, or $0.23 per share, compared to approximately $3.9 million, or $0.37 per share, for the second quarter of 2008. During the quarter, the Company reported an unrealized gain on the value of its interest rate swap of approximately $0.3 million as compared to an unrealized gain on the value of its interest rate swap of approximately $0.7 million for the second quarter of 2008. The interest rate swap is required by the Company's lenders on its revolving credit facility. During the quarter ended June 30, 2008, the Company recognized a gain of $0.75 million related to the purchase of a portion of the mortgage loan on the Crowne Plaza Hollywood Beach Resort by the joint venture that owns the property. The Company owns a 25.0% indirect interest in the joint venture. It should be noted that the unrealized gain on the value of the Company's interest rate swap as well as the gain related to the Hollywood financing transaction contributed approximately $0.03 per share to FFO for the second quarter 2009 as compared to contributing approximately $0.14 per share to FFO for the second quarter 2008.
FFO is a non-GAAP financial measure within the meaning of the rules of the Securities and Exchange Commission. The Company defines FFO as net income excluding extraordinary items, depreciation and minority interest. Management believes FFO is a key measure of a REIT's performance and should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company's operating performance. A reconciliation of this non-GAAP financial measure is included in the accompanying financial tables.
Portfolio Operating Performance
The following tables illustrate the key operating metrics for the three months and six months ended June 30, 2009 and 2008 for the properties owned during each respective reporting period ("consolidated" properties) as well as the six properties in the portfolio that were not under development and under the Company's control during all of 2008 and the six months ended June 30, 2009 ("same-store" properties). Accordingly, the same store data does not reflect the performance of the Sheraton Louisville Riverside, which opened in May 2008, the Crowne Plaza Tampa Westshore, which opened in March 2009, or the Crowne Plaza Hampton Marina, which was acquired in April 2008. Neither table includes performance data for the Crowne Plaza Hollywood Beach Resort which was acquired through a joint venture in August 2007 and in which the Company has a 25.0% indirect interest.
Consolidated (All hotels) Quarter Ended Quarter Ended
June 30, 2009 June 30, 2008 Variance
------------- ------------- -------------
Occupancy % 66.8% 68.6% -2.5%
Average Daily Rate ("ADR") $110.47 $124.65 -11.4%
Revenue per Available Room
("RevPAR") $73.82 $85.47 -13.6%
Same Store (6 Hotels) Quarter Ended Quarter Ended
June 30, 2009 June 30, 2008 Variance
------------- ------------- -------------
Occupancy % 73.0% 73.9% -1.2%
Average Daily Rate ("ADR") $112.39 $125.24 -10.3%
Revenue per Available Room
("RevPAR") $82.02 $92.51 -11.3%
For the quarter ended June 30, 2009, the Company's properties realized a 13.6% decrease in RevPAR versus the same period in 2008. The RevPAR decrease was the result of a 2.5% decrease in occupancy and an 11.4% decrease in ADR. For the quarter ended June 30, 2009, the same-store portfolio realized an 11.3% decrease in RevPAR versus the same period in 2008. The RevPAR decrease was the result of a 1.2% decrease in occupancy compounded by a 10.3% decrease in ADR.
Consolidated (All Hotels) Six Months Six Months
Ended Ended
June 30, 2009 June 30, 2008 Variance
------------- ------------- -------------
Occupancy % 60.7% 66.8% -9.1%
Average Daily Rate ("ADR") $110.26 $122.03 -9.6%
Revenue per Available Room
("RevPAR") $66.96 $81.51 -17.8%
Same Store (6 Hotels) Six Months Six Months
Ended Ended
June 30, 2009 June 30, 2008 Variance
------------- ------------- -------------
Occupancy % 66.4% 69.3% -4.2%
ADR $111.77 $122.23 -8.6%
RevPAR $74.17 $84.71 -12.4%
For the six months ended June 30, 2009, the Company's properties realized a 17.8% decrease in RevPAR versus the same period in 2008. The RevPAR decrease was the result of a 9.1% decrease in occupancy and a 9.6% decrease in ADR. For the first six months of 2009, this same-store portfolio generated an 8.6% decrease in ADR from the comparable period in 2008.
Portfolio Update
As of June 30, 2009, total assets were approximately $220.5 million, including approximately $191.0 million of net investment in hotel properties plus approximately $10.0 million for the Company's joint venture investment in the Crowne Plaza Hollywood Beach Resort.
-- With the opening of the Crowne Plaza Tampa Westshore in the first
quarter, all currently planned portfolio renovations have been
completed.
-- Ramp-up efforts with a strong focus on sales and marketing are on pace
at approximately 50% of the Company's assets, including the Crowne
Plaza Tampa Westshore, the Sheraton Louisville Riverside, the Crowne
Plaza Hampton Marina and the Hilton Savannah DeSoto.
-- The Hilton Wilmington Riverside, following its 2007-2008 renovation,
regained its market position and realized RevPAR equivalent to 161.5% of
the average RevPAR realized by peer properties in the Wilmington, North
Carolina market, according to data provided by Smith Travel Research.
-- The Company is executing a relaunch with the Holiday Inn franchise at
its Raleigh, North Carolina asset, which it expects to complete by
year-end 2009.
Balance Sheet/Liquidity
At June 30, 2009, the Company had approximately $7.5 million of available cash and cash equivalents, of which approximately $0.9 million is reserved for capital improvements and certain other expenses. The Company has approximately $79.5 million outstanding on its $80.0 million revolving line of credit, which had been deployed primarily to fund the acquisition and renovation of the Sheraton Louisville Riverside Hotel, the Company's equity contribution to its joint venture with The Carlyle Group for the purchase of the Crowne Plaza Hollywood Beach Resort, as well as the acquisitions of the Tampa, Florida and Hampton, Virginia hotel properties. The Company has no debt maturing before May 2011.
On May 18, 2009, the Company entered into a fourth amendment to its credit agreement modifying the minimum tangible net worth covenant and waiving compliance with respect to such covenant for the quarter ended March 31, 2009. As of June 30, 2009, the Company was in compliance with all credit agreement covenants.
Dividend
On June 30, 2009, the Company paid a quarterly dividend of $0.01 per share of common stock to stockholders of record on the close of business Friday, June 19, 2009.
As previously announced, the most recent amendment to the credit agreement entered into in May 2009 permits the Company to pay in any given fiscal year a dividend in an amount minimally necessary to maintain the Company's REIT status, provided that no dividend may be paid during the first three quarters of such fiscal year. The Company anticipates the amount of such a dividend will remain at 90% of taxable income. Notwithstanding these limitations, the Company was permitted to pay the previously announced dividend on June 30, 2009. If certain liquidity thresholds and other conditions are met the Company may be able to declare and pay additional cash dividends in any fiscal year. Any future changes to the Company's current dividend policy will need to be in compliance with restrictions on the payment of cash dividends as set forth in the referenced amendment to the credit agreement.
Outlook and Market Trends
The Company has decided to suspend the practice of providing guidance regarding projected financial performance for the near term due to ongoing unpredictable macro-economic conditions and their potential impact on the Company's markets and customer base. With a substantially repositioned portfolio now in place, management remains confident in the underlying strength of its business and expects to compete effectively over the longer term.
Earnings Call/Webcast
The Company will conduct its second quarter conference call for investors and other interested parties at 10:00 a.m. Eastern Time (ET) on Friday, August 7, 2009. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 800-860-2442. To participate on the webcast, log on to www.mhihospitality.com at least 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the live call on August 7, 2009 through September 7, 2009. To access the rebroadcast, dial 877-344-7529 and enter passcode number 432296. A replay of the call also will be available on the Internet at www.mhihospitality.com until September 30, 2009.
About MHI Hospitality Corporation
MHI Hospitality Corporation is a self-advised lodging REIT focused on the acquisition, redevelopment and management of mid-scale, upscale and upper-upscale full-service hotels in the Mid-Atlantic, Midwest and Southeastern United States. Currently, the Company's portfolio consists of nine properties comprising 2,110 rooms, all of which operate under the Hilton, InterContinental Hotels Group or Starwood Hotels and Resorts brands. In addition, the Company has a 25% interest in the Crowne Plaza Hollywood Beach Resort and a leasehold interest in the common area of Shell Island Resort, a resort condominium property. MHI Hospitality Corporation was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information please visit www.mhihospitality.com.
Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, these statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond the Company's control. Therefore, actual outcomes and results may differ materially from what is expressed, forecasted or implied in such forward-looking statements. Factors which could have a material adverse effect on the Company's future results, performance and achievements, include, but are not limited to: national and local economic and business conditions, including the current economic downturn, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs; the availability and terms of financing and capital and the general volatility of the securities markets, specifically, the impact of the current credit crisis which has severely constrained the availability of debt financing; risks associated with the level of the Company's indebtedness and its ability to meet covenants in its debt agreements; management and performance of the Company's hotels; risks associated with redevelopment and repositioning projects, including delays and cost overruns; supply and demand for hotel rooms in the Company's current and proposed market areas; the Company's ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations; and legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts. These risks and uncertainties are described in greater detail under "Risk Factors" in the Company's Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation and does not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although the Company believes its current expectations to be based upon reasonable assumptions, it can give no assurance that our expectations will be attained or that actual results will not differ materially.
Financial Tables Follow. . .
MHI HOSPITALITY CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2009 December 31, 2008
(unaudited) (audited)
------------ ------------
ASSETS
Investment in hotel properties, net $190,972,760 $154,295,611
Properties under development - 33,101,773
Investment in joint venture 10,028,357 10,253,732
Cash and cash equivalents 6,599,482 1,719,147
Restricted cash 866,337 2,573,444
Accounts receivable 2,691,703 1,352,203
Accounts receivable-affiliate 59,133 53,795
Prepaid expenses, inventory and
other assets 5,767,192 4,603,118
Notes receivable, net 100,000 100,000
Shell Island lease purchase, net 1,647,059 1,852,941
Deferred financing costs, net 1,726,778 1,312,670
------------ ------------
TOTAL ASSETS $220,458,801 $211,218,434
============ ============
LIABILITIES
Line of credit $79,487,858 $73,187,858
Mortgage loans 72,935,572 72,256,168
Loans payable 4,665,748 -
Accounts payable and accrued liabilities 9,823,914 11,451,976
Advance deposits 647,807 546,236
------------ ------------
TOTAL LIABILITIES 167,560,899 157,442,238
------------ ------------
Commitments and contingencies
EQUITY
MHI Hospitality Corporation stockholders' equity
Preferred stock , par value $0.01,
1,000,000 shares authorized, 0 shares
issued and outstanding - -
Common stock, par value $0.01; 49,000,000
shares authorized; 6,964,263 shares and
6,939,613 shares issued and outstanding
at June 30, 2009 and December 31, 2008,
respectively 69,643 69,396
Additional paid in capital 48,664,039 48,586,775
Distributions in excess of
retained earnings (12,963,038) (12,341,122)
------------ ------------
Total MHI Hospitality Corporation
stockholders' equity 35,770,644 36,315,049
------------ ------------
Noncontrolling interest 17,127,258 17,461,147
------------ ------------
TOTAL EQUITY 52,897,902 53,776,196
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $220,458,801 $211,218,434
============ ============
MHI HOSPITALITY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
----------- ----------- ----------- -----------
REVENUE
Rooms department $14,173,691 $13,882,421 $24,622,781 $24,624,523
Food and beverage
department 5,156,464 5,464,637 9,063,282 9,278,695
Other operating
departments 1,202,364 1,107,870 2,345,646 2,069,172
----------- ----------- ----------- -----------
Total revenue 20,532,519 20,454,928 36,031,709 35,972,390
EXPENSES
Hotel operating
expenses
Rooms department 3,665,264 3,610,400 6,732,438 6,746,290
Food and beverage
department 3,313,253 3,748,067 6,032,642 6,742,574
Other operating
departments 195,452 229,716 374,337 424,019
Indirect 7,454,902 7,635,084 14,386,976 13,894,225
----------- ----------- ----------- -----------
Total hotel
operating
expenses 14,628,871 15,223,267 27,526,393 27,807,108
Depreciation and
amortization 2,085,460 1,589,683 3,996,058 2,980,606
Corporate general
and administrative 853,807 709,894 1,753,104 1,672,262
----------- ----------- ----------- -----------
Total operating
expenses 17,568,138 17,522,844 33,275,555 32,459,976
----------- ----------- ----------- -----------
NET OPERATING INCOME 2,964,381 2,932,084 2,756,154 3,512,414
Other income (expense)
Interest expense (2,583,849) (1,719,758) (4,584,707) (2,877,179)
Interest income 14,342 18,808 27,828 34,822
Equity in earnings
of joint venture (123,141) 525,298 (12,024) 594,810
Loan impairment
charge - (200,000) - (200,000)
Unrealized gain
(loss) on
hedging activities 300,673 737,335 537,257 (29,273)
Gain (Loss) on
disposal
of assets 8,870 (125,450) 8,870 (116,972)
----------- ----------- ----------- -----------
Net income (loss)
before taxes 581,276 2,168,317 (1,266,622) 918,622
Income tax benefit
(provision) (371,423) (98,496) 524,855 407,059
----------- ----------- ----------- -----------
Net income (loss) 209,853 2,069,821 (741,767) 1,325,681
Adjust: Net
(income) loss
attributable to
the noncontrolling
interest (73,412) (724,992) 259,137 (464,269)
----------- ----------- ----------- -----------
Net income (loss)
attributable to
the Company $136,441 $1,344,829 $(482,630) $861,412
=========== =========== =========== ===========
Net income (loss)
per share
attributable
to the Company
Basic $0.02 $0.19 $(0.07) $0.12
Diluted $0.02 $0.19 $(0.07) $0.12
Weighted average
number of shares
outstanding
Basic 6,964,263 6,939,613 6,961,106 6,934,829
Diluted 6,990,263 6,975,613 6,987,106 6,971,829
MHI HOSPITALITY CORPORATION
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (FFO)
(unaudited)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net income (loss) $136,441 $1,344,829 $(482,630) $861,412
Adjust
noncontrolling
interest 73,412 724,992 (259,137) 464,269
Add depreciation
and amortization 2,085,460 1,589,683 3,996,058 2,980,606
Add equity in
depreciation
and amortization
of joint venture 135,702 137,044 271,879 272,812
Adjust gain
(loss) on
disposal of assets (8,870) 125,450 (8,870) 116,972
----------- ----------- ----------- -----------
FFO $2,422,145 $3,921,998 $3,517,300 $4,696,071
=========== =========== =========== ===========
Weighted average
shares outstanding 6,964,263 6,939,613 6,961,106 6,934,829
Weighted average
units outstanding 3,737,607 3,737,607 3,737,607 3,737,607
----------- ----------- ----------- -----------
Weighted average
shares and units 10,701,870 10,671,220 10,698,713 10,672,436
=========== =========== =========== ===========
FFO per share and unit $0.23 $0.37 $0.33 $0.44
=========== =========== =========== ===========
Industry analysts and investors use Funds from Operations, FFO, as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, NAREIT. FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Management believes that the use of FFO, combined with the required GAAP presentations, has improved the understanding of the operating results of REITs among the investing public and made comparisons of REIT operating results more meaningful. Management considers FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company's real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.
SOURCE MHI Hospitality Corporation
http://www.mhihospitality.com
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.