MHI Hospitality Corporation Reports Financial Results for Fourth Quarter and Year 2012
MHI Hospitality Corporation ReportsFinancial Results for Fourth Quarter and Year 2012
WILLIAMSBURG, Va.--(BUSINESS WIRE)-- MHI Hospitality Corporation (Nasdaq: MDH) ("MHI" or the "Company"), a self-managed and self-administered lodging real estate investment trust (a "REIT"), today reported its consolidated results for the fourth quarter and the year ended December 31, 2012. The Company's results include the following*:
Three months ended | Year ended | ||||||||||||||
December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | ||||||||||||
($ in thousands except per share data) | |||||||||||||||
Total Revenue | $ | 20,434 | $ | 19,492 | $ | 87,343 | $ | 81,173 | |||||||
Net income (loss) attributable to the Company | 1,458 | (2,556 | ) | (4,105 | ) | (4,844 | ) | ||||||||
EBITDA | 6,849 | 2,127 | 18,032 | 15,081 | |||||||||||
Adjusted EBITDA | 4,613 | 3,648 | 20,183 | 17,052 | |||||||||||
Hotel EBITDA | 5,091 | 4,049 | 22,440 | 18,708 | |||||||||||
FFO | 4,165 | (890 | ) | 3,925 | 2,924 | ||||||||||
Adjusted FFO | 2,146 | 625 | 9,471 | 5,578 | |||||||||||
Net income (loss) per diluted share attributable to the Company | $ | 0.14 | $ | (0.26 | ) | $ | (0.39 | ) | $ | (0.50 | ) | ||||
FFO per share and unit | 0.32 | (0.07 | ) | 0.30 | 0.23 | ||||||||||
Adjusted FFO per share and unit | 0.17 | 0.05 | 0.73 | 0.43 | |||||||||||
(*) Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, hotel EBITDA, funds from operations ("FFO"), adjusted FFO, FFO per share and unit and adjusted FFO per share and unit are non-GAAP financial measures. See further discussion of these non-GAAP measures, including definitions related thereto, and reconciliations to net income (loss) later in this press release. All references in this release to the "Company", "MHI", "we", "us" and "our" refer to MHI Hospitality Corporation, its operating partnership and its subsidiaries and predecessors, unless the context otherwise requires or where otherwise indicated.
HIGHLIGHTS:
Common Dividends. As previously reported on January 22, 2013, the Company announced an increase of $0.005 or 16.7 percent in the quarterly dividend (distribution) on its common stock to $0.035 per share (and unit), payable on April 11, 2013 to stockholders (and unitholders) of record as of March 15, 2013.
RevPAR. Room revenue per available room ("RevPAR") for the Company's wholly-owned properties during the fourth quarter 2012 increased 4.4 percent to $69.67 over the comparable period in 2011 as a result of a 3.1 percent increase in occupancy and a 1.2 percent increase in average daily rate ("ADR"). For the year 2012, REVPAR increased 7.8 percent over 2011 to $78.65 as a result of a 4.1 percent increase in occupancy and a 3.6 percent increase in ADR.
Hotel EBITDA. The Company generated hotel EBITDA of approximately $5.1 million during the fourth quarter 2012, an increase of 25.7 percent or approximately $1.1 million over the comparable period in 2011. In the fourth quarter 2012, hotel EBITDA margin increased 409 basis points over the comparable period in 2011 to 25.1 percent. For the year 2012, the Company generated hotel EBITDA of approximately $22.4 million, an increase of 19.9 percent or approximately $3.7 million over the prior year. For the year 2012, hotel EBITDA margin increased 257 basis points over the prior year to 25.9 percent.
Adjusted EBITDA. The Company generated adjusted EBITDA of approximately $4.6 million during the fourth quarter 2012, an increase of 26.4 percent or approximately $1.0 million over the comparable period in 2011. For the year 2012, the Company generated adjusted EBITDA of approximately $20.2 million, an increase of 18.4 percent or approximately $3.1 million over the prior year.
Adjusted FFO. The Company generated adjusted FFO of approximately $2.1 million during the fourth quarter 2012, an increase of 243.6 percent or approximately $1.5 million over the comparable period in 2011. For the year 2012, the Company generated adjusted FFO of approximately $9.5 million, an increase of 69.8 percent or approximately $3.9 million over the prior year.
Andrew M. Sims, Chairman and Chief Executive Officer of MHI Hospitality Corporation, commented, "We posted a strong fourth quarter that rounded out excellent results for calendar 2012. Our portfolio results exceeded industry averages. We generated record hotel EBITDA and expanded EBITDA margins. We are proud of the improvements in portfolio profitability and the year's accomplishments: an improved balance sheet, increased liquidity and a reduction in our cost of capital. All in all, a very fine performance in 2012."
Balance Sheet/Liquidity
At December 31, 2012, the Company had approximately $10.3 million of available cash and cash equivalents, of which approximately $3.1 million is reserved for real estate taxes, capital improvements and certain other expenses or otherwise restricted. At December 31, 2012, the Company had approximately $153.9 million in outstanding debt at a weighted average interest rate of approximately 5.63%. At December 31, 2012, the Company also had $7.0 million of availability under its existing Note Agreement with Essex Equity High Income Joint Investment Vehicle, LLC.
2013 Outlook
Set forth below is guidance for 2013, which is predicated on continued strengthening of the economy and expected improvements in hotel lodging industry fundamentals. The outlook is based on estimates of occupancy and average daily rates that are consistent with most recent calendar year 2013 forecasts by Smith Travel Research for the market segments in which the Company operates.
The table below reflects the Company's projections, within a range, of various financial measures for 2013:
Low Range | High Range | ||||||
Y/E Dec 31, 2013 | Y/E Dec 31, 2013 | ||||||
($ in thousands except per share data) | |||||||
Total Revenue | $ | 87,425 | $ | 91,170 | |||
Net income (loss) | (2,131 | ) | 90 | ||||
EBITDA | 18,165 | 20,485 | |||||
Adjusted EBITDA | 20,065 | 22,285 | |||||
Hotel EBITDA | 22,465 | 24,435 | |||||
FFO | 7,164 | 9,384 | |||||
Adjusted FFO | 10,164 | 12,384 | |||||
Net income (loss) per share attributable to the Company | $ | (0.16 | ) | $ | 0.01 | ||
FFO per share and unit | 0.55 | 0.72 | |||||
Adjusted FFO per share and unit | 0.78 | 0.95 | |||||
Earnings Call/Webcast
The Company will conduct its fourth quarter 2012 conference call for investors and other interested parties at 10:00 a.m. Eastern Time on Tuesday, February 19, 2013. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 888.317.6016 (United States), 855.669.9657 (Canada) or +1 412.317.6016 (International). 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 one hour after completion of the live call on February 19, 2013 through December 31, 2013. To access the rebroadcast, dial 877.344.7529 and enter conference number 10023435. A replay of the call also will be available on the Internet at www.mhihospitality.com until December 31, 2013.
About MHI Hospitality Corporation
MHI Hospitality Corporation is a self-managed and self-administered lodging REIT focused on the acquisition, renovation, upbranding and repositioning of upscale to upper upscale full-service hotels in the Mid-Atlantic and Southern United States. Currently, the Company's portfolio consists of investments in ten hotel properties, nine of which are wholly-owned and comprise 2,113 rooms. All of the Company's wholly-owned properties operate under the Hilton Worldwide, InterContinental Hotels Group and Starwood Hotels and Resorts brands. The Company has a 25.0 percent interest in the Crowne Plaza Hollywood Beach Resort. MHI Hospitality Corporation was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information please visit www.mhihospitality.com.
Contact at the Company:
Scott Kucinski
Director - Investor Relations
MHI Hospitality Corporation
410 West Francis Street
Williamsburg, Virginia 23185
757.229.5648
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 recessionary economic conditions existing over the last several years, that 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 magnitude, sustainability and timing of the economic recovery in the hospitality industry and in the markets in which the Company operates; the availability and terms of financing and capital and the general volatility of the securities markets; risks associated with the level of the Company's indebtedness and its ability to meet covenants in its debt agreements and, if necessary, to refinance the maturity of such indebtedness or modify such debt agreements; management and performance of the Company's hotels; risks associated with the conflicts of interest of the Company's officers and directors; 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; the Company's ability to successfully expand into new markets; legislative/regulatory changes, including changes to laws governing taxation of REITs; the Company's ability to maintain its qualification as a REIT; and the Company's ability to maintain adequate insurance coverage. 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 to 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 its expectations will be attained or that actual results will not differ materially.
Financial Tables Follow...
MHI HOSPITALITY CORPORATION | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
December 31, 2012 | December 31, 2011 | |||||||
(unaudited) | (audited) | |||||||
ASSETS | ||||||||
Investment in hotel properties, net | $ | 176,427,904 | $ | 181,469,432 | ||||
Investment in joint venture | 8,638,967 | 8,966,795 | ||||||
Cash and cash equivalents | 7,175,716 | 4,409,959 | ||||||
Restricted cash | 3,079,894 | 2,690,391 | ||||||
Accounts receivable, net | 1,478,923 | 1,702,616 | ||||||
Accounts receivable-affiliate | 8,657 | 24,880 | ||||||
Prepaid expenses, inventory and other assets | 1,684,951 | 1,877,456 | ||||||
Notes receivable, net | — | 100,000 | ||||||
Shell Island sublease, net | 480,392 | 720,588 | ||||||
Deferred income taxes | 2,649,282 | 4,061,749 | ||||||
Deferred financing costs, net | 2,406,183 | 3,275,580 | ||||||
TOTAL ASSETS | $ | 204,030,869 | $ | 209,299,446 | ||||
LIABILITIES | ||||||||
Line of credit | $ | — | $ | 25,537,290 | ||||
Mortgage debt | 135,674,432 | 94,157,825 | ||||||
Loans payable | 4,025,220 | 9,275,220 | ||||||
Series A Cumulative Redeemable Preferred Stock, par value $0.01, 27,650 shares authorized, 14,228 and 25,354 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively | 14,227,650 | 25,353,698 | ||||||
Accounts payable and accrued liabilities | 6,786,684 | 7,437,246 | ||||||
Advance deposits | 625,822 | 453,077 | ||||||
Dividends and distributions payable | 389,179 | 258,772 | ||||||
Warrant derivative liability | 4,969,752 | 2,943,075 | ||||||
TOTAL LIABILITIES | 166,698,739 | 165,416,203 | ||||||
Commitments and contingencies | ||||||||
EQUITY | ||||||||
MHI Hospitality Corporation stockholders' equity | ||||||||
Preferred stock, par value $0.01; 972,350 shares authorized, 0 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively | — | — | ||||||
Common stock, par value $0.01; 49,000,000 shares authorized; 9,999,786 shares and 9,953,786 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively | 99,998 | 99,538 | ||||||
Additional paid in capital | 57,020,979 | 56,911,039 | ||||||
Distributions in excess of retained earnings | (27,179,392 | ) | (22,074,739 | ) | ||||
Total MHI Hospitality Corporation stockholders' equity | 29,941,585 | 34,935,838 | ||||||
Noncontrolling interest | 7,390,545 | 8,947,405 | ||||||
TOTAL EQUITY | 37,332,130 | 43,883,243 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 204,030,869 | $ | 209,299,446 | ||||
MHI HOSPITALITY CORPORATION | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
REVENUE | ||||||||||||||||
Rooms department | $ | 13,542,843 | $ | 12,964,006 | $ | 60,824,016 | $ | 56,187,231 | ||||||||
Food and beverage department | 5,713,500 | 5,491,370 | 21,961,328 | 20,482,457 | ||||||||||||
Other operating departments | 1,177,995 | 1,036,651 | 4,557,876 | 4,502,816 | ||||||||||||
Total revenue | 20,434,338 | 19,492,027 | 87,343,220 | 81,172,504 | ||||||||||||
EXPENSES | ||||||||||||||||
Hotel operating expenses | ||||||||||||||||
Rooms department | 3,809,974 | 3,793,650 | 16,613,769 | 15,841,985 | ||||||||||||
Food and beverage department | 3,471,822 | 3,514,984 | 14,284,057 | 13,617,847 | ||||||||||||
Other operating departments | 114,346 | 117,388 | 480,307 | 537,969 | ||||||||||||
Indirect | 7,792,530 | 7,842,129 | 32,919,610 | 31,784,191 | ||||||||||||
Total hotel operating expenses | 15,188,672 | 15,268,151 | 64,297,743 | 61,781,992 | ||||||||||||
Depreciation and amortization | 2,136,208 | 2,241,952 | 8,661,769 | 8,702,880 | ||||||||||||
Corporate general and administrative | 1,005,818 | 871,382 | 4,078,826 | 4,025,794 | ||||||||||||
Total operating expenses | 18,330,698 | 18,381,485 | 77,038,338 | 74,510,666 | ||||||||||||
NET OPERATING INCOME | 2,103,640 | 1,110,542 | 10,304,882 | 6,661,838 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (2,367,164 | ) | (2,768,983 | ) | (12,382,146 | ) | (10,821,815 | ) | ||||||||
Interest income | 4,173 | 2,989 | 16,158 | 14,808 | ||||||||||||
Equity income (loss) in joint venture | 156,921 | 100,989 | 172,172 | (60,094 | ) | |||||||||||
Unrealized gain (loss) on warrant derivative | 2,317,973 | (1,575,075 | ) | (2,026,677 | ) | (1,309,075 | ) | |||||||||
Unrealized gain on hedging activities | — | — | ||||||||||||||
