Press release from CNW Group
Holloway Lodging REIT provides corporate update
Wednesday, July 18, 2012
Holloway Lodging REIT provides corporate update07:43 EDT Wednesday, July 18, 2012/NOT FOR DISTRIBUTION ON U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/HALIFAX, July 18, 2012 /CNW/ - Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN) ("Holloway") announced on May 8, 2012 that it had entered into a letter of intent with a third party for a potential acquisition of all of Holloway's trust units (the "Units") and on June 12, 2012 that it had received expressions of interest from multiple parties regarding potential strategic transactions involving Holloway and/or its assets. Holloway has terminated discussions with such parties regarding a strategic transaction after determining that the proposals it received were not in the best interests of Holloway or its unitholders. Holloway intends to continue executing on its current business plan while remaining open to any proposals regarding strategic transactions that would maximize unitholder value.Recent Discussions with Third PartiesSince February 28, 2012, Holloway received three unsolicited acquisition proposals. Party A proposed an all-cash acquisition of Holloway at a moderate premium to the current market price of the Units. Party B proposed an all-stock merger with Holloway that implied a moderate premium to the current market price of the Units. Party C proposed to acquire ten hotels owned by Holloway.Holloway engaged in discussions with each of the parties that proposed a strategic transaction involving Holloway. In each case, the Board of Trustees of Holloway determined that the proposed transaction was not in the best interests of Holloway or its unitholders and terminated discussions.Holloway's StrategyHolloway's recent discussions with third parties regarding a strategic transaction confirmed the Board of Trustees' view that the trading price of Holloway's units over the last several months was not reflective of Holloway's intrinsic value. While the acquisition proposals Holloway received offered a premium to Holloway's recent trading price, the Board of Trustees is of the view that Holloway can generate superior value for its unitholders by continuing to execute on its current business plan.Holloway's focus going forward will be to increase its per-Unit net asset value. In doing so, Holloway will emphasize:Further debt reduction. Since June 30, 2011, Holloway has reduced its net debt by $120.8 million or 53% (total debt less unrestricted cash). Over time, debt reduction is expected to result in materially less interest expense, greater financial flexibility and increased net asset value.Hotel acquisitions. Holloway will seek to acquire additional hotels where doing so is accretive to its cash flow and net asset value.Unit repurchases. Holloway has not engaged in Unit repurchases since January 2012 due to its discussions regarding a strategic transaction. Holloway intends to repurchase Units where doing so represents an attractive use of capital.As previously disclosed, the Board of Trustees will also assess the merits of reinstating its distribution in the second half of 2012.Michael Rapps, Holloway's Chairman, stated "Over the last year, we have meaningfully reduced our debt and currently have a solid balance sheet. Our focus going forward will be increasing our per-unit net asset value and our current financial position provides many avenues for us to do that. While we are interested in growing our hotel portfolio, we will only acquire additional hotels if such acquisitions represent good value and are accretive to our unitholders."While none of the discussions Holloway engaged in with third parties resulted in a strategic transaction, Holloway will review and evaluate any strategic proposal it may receive from time to time that the Board of Trustees believes is in the best interests of Holloway and its unitholders.Holloway intends to release its second quarter results on or about August 14, 2012. These results will show continued positive hotel performance and the positive impact of our balance sheet initiatives.ABOUT HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUSTHolloway is a real estate investment trust focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets. Holloway owns 17 hotels with 1,665 rooms. Holloway's trust units trade on the TSX under the symbol HLR.UN.This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to Holloway's future outlook and anticipated events or results and may include statements regarding Holloway's future financial position, business strategy, financial results, plans and objectives. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what the REIT currently expects and there can be no assurance that such statements will prove to be accurate. Some of these risks and uncertainties are described under "Risk Factors" in Holloway's annual information form for the year ended December 31, 2011 which is available on the REIT's profile on the SEDAR website at www.sedar.com. The REIT does not intend to update or revise any such forward-looking information should its assumptions and estimates change.For further information: Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 443-5101.