/PRNewswire/ — MHI Hospitality Corporation (NASDAQ: MDH) (the “Company”), a self-managed and self-administered lodging real estate investment trust (“REIT”), today reported consolidated results for the first quarter ended March 31, 2011.
Net operating income (“NOI”) increased 161.5% or approximately $0.5 million over first quarter 2010 to approximately $0.9 million;Total room revenue increased approximately $0.8 million or 6.7% over first quarter 2010 to approximately $12.9 million; Adjusted operating income increased approximately $0.5 million or 14.2% over first quarter 2010 to approximately $3.9 million;Funds from Operations (“FFO”) was $0.07 per share and unit or $0.9 million for first quarter 2011; andNet loss before taxes remained constant at approximately $1.3 million for the first quarter 2011 compared to the first quarter 2010.
Andrew M. Sims, Chief Executive Officer of MHI Hospitality Corporation, commented, “In the first quarter of 2011, MHI experienced continued growth in top-line revenue, consistent with the Company’s projections for the fiscal year. MHI also recognized positive results in hotel-generated profits, highlighted by sustained margin growth.”.
The Company reported a provision for income tax of approximately $50,000 for the quarter ended March 31, 2011 compared to an income tax benefit of approximately $0.2 million for the quarter ended March 31, 2010, due to increased profitability of its TRS Lessee. The Company reported interest expense of approximately $2.6 million for the quarter ended March 31, 2011, an increase of 11.9%, or approximately $0.3 million, over the quarter ended March 31, 2010. The variance in the deferred portion of the income tax provision between first quarter 2011 and the comparable 2010 period equated to a $0.02 reduction in FFO per share and unit for the first quarter 2011 over first quarter 2010. For first quarter 2011, MHI also reported a consolidated net loss attributable to the Company of approximately $1.0 million, or $0.10 per share, compared to a consolidated net loss attributable to the Company of approximately $0.8 million, or $0.08 per share, for the quarter ended March 31, 2010. For first quarter 2011, FFO was approximately $0.9 million, or $0.07 per share and unit, compared to FFO of approximately $1.2 million, or $0.09 per share and unit, for first quarter 2010. The Company reported NOI of approximately $0.9 million for the quarter ended March 31, 2011, an increase of 161.5%, or approximately $0.5 million, over the quarter ended March 31, 2010. The unrealized gain in value on the Company’s interest-rate swap was approximately $50,000 for first quarter 2011 compared to an unrealized gain of approximately $385,000 for first quarter 2010. During the first quarter 2011, the Company incurred increased interest expense of approximately $0.3 million related to the June 2010 amendment to the Company’s credit agreement. . The Company reported consolidated total revenue of approximately $18.5 million for the quarter ended March 31, 2011, an increase of 5.8%, or approximately $1.0 million, over the quarter ended March 31, 2010. The lower unrealized gain equated to a $0.03 reduction in FFO per share and unit for first quarter 2011 over first quarter 2010.
The table excludes 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. The following table illustrates the key operating metrics for the quarters ended March 31, 2011 and 2010 for the Company’s wholly-owned properties during each respective reporting period (“consolidated” properties). .
Eastern Time (ET) on Tuesday, May 3, 2011. A replay of the call also will be available on the Internet at www.mhihospitality.com until December 31, 2011. . Interested individuals are invited to listen to the call by telephone at 877-317-6789 (United States), 8666053852 (Canada) or +1 412-317-6789 (International). The Company will conduct its first quarter 2011 conference call for investors and other interested parties at 10:00 a.m. 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 May 3, 2011 through December 31, 2011. To participate on the webcast, log on to www.mhihospitality.com at least fifteen (15) minutes before the call to download the necessary software. To access the rebroadcast, dial 877-344-7529 and enter passcode number 450247. The conference call will be accessible by telephone and through the Internet.
MHI Hospitality Corporation was organized in 2004 and is headquartered in Williamsburg, Virginia. For more information please visit www.mhihospitality.com. The Company has a 25.0% interest in the Crowne Plaza Hollywood Beach Resort. The Company also has a leasehold interest in the common area of Shell Island Resort, a resort condominium property. All of the Company’s wholly-owned properties operate under the Hilton Worldwide, InterContinental Hotels Group and Starwood Hotels and Resorts brands. Currently, the Company’s portfolio consists of investments in ten hotel properties, nine of which are wholly-owned and comprise 2,110 rooms. 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.
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. Therefore, actual outcomes and results may differ materially from what is expressed, forecasted or implied in such forward-looking statements. 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. 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. 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. 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 recent economic downturn, 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, specifically, the impact of the recent 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 and, if necessary, to refinance or seek an extension of the maturity of such indebtedness; 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 real estate investment trusts; the Company’s ability to maintain its qualification as a REIT; and the Company’s ability to maintain adequate insurance coverage. 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.
Management considers FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance. 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. 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. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Management believes 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. 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. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Industry analysts and investors use Funds from Operations, FFO, as a supplemental operating performance measure of an equity REIT. 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. 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”).
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