Press Release: Legacy Hotels Real Estate Investment Trust
February 9, 2001
TORONTO, ONT -- Legacy Hotels Real Estate Investment Trust ("Legacy") announced Thursday its unaudited
financial results for the three months and audited financial results for the year ended December 31, 2000. Legacy
expects to release its 2000 annual report in March.
For the fourth quarter of 2000, gross operating revenues totalled $125.2 million, representing a gain of 8.5% compared
to the same quarter in 1999. Operating income from hotels operations, or hotel EBITDA, of $25.3 million increased
by 6.0% and net income of $9.8 million was down slightly compared to $10.0 million in this quarter last year. Distributable
income of $12.1 million was up 10.3% compared to the fourth quarter in 1999. Distributable income per unit was
down slightly compared to this quarter last year.
On a year over year basis for the quarter, average daily rates for the current portfolio were ahead of last year
by 4.0% or $5.52. Occupancy was 64.3%, 0.12 points below occupancy levels for the same period last year. The resulting
RevPAR for the current portfolio was up $3.38 or 3.8% compared to 1999 results. The two Winnipeg hotels acquired
in 2000 have been included in the year over year comparisons on a proforma basis.
Toronto, Ottawa and Montreal continue to be strong markets for Legacy's luxury and first class hotels. Calgary
has experienced some weakness over the past year as a result of new hotel supply in the market. Delta Toronto East
and Four Points Hotel Toronto Airport, acquired in September 1999, posted strong RevPAR growth of 7.7% and 10.6%,
respectively. The Fairmont Winnipeg had RevPAR growth of 6.8% and the Delta Winnipeg was down 12.2% for the quarter.
For the year, Legacy's gross operating revenues of $501.7 million exceeded 1999 results by 13.5%. Operating income
from hotel operations, or hotel EBITDA, increased by 13.9% to $121.7 million and net income of $62.9 million was
up 7.2% over 1999 levels. Distributable income of $67.3 million represented a 12.6% increase over the prior year.
On a per unit basis, distributable income was $1.084 compared to $1.009 in 1999.
In 2000, Legacy's portfolio had RevPAR growth of 1.5% to $103.93 resulting from a 6.4%, or $9.00, increase in average
daily rate combined with a drop in occupancy of 3.4 points.
Legacy's operating cash flow in 2000 allowed Legacy to increase cash distributions and complete several strategic
acquisitions while maintaining a conservative capital structure. Legacy's total debt outstanding at December 31,
2000 amounted to $442 million, representing approximately 38.7% of total assets, of which $332 million is long-term
and has staggered maturities to 2010. At December 31, 2000, Legacy's cash and short-term investments totalled $6.4
million and bank indebtedness was $12.1 million. For the year ended December 31, 2000, interest coverage on total
debt was 3.97 times.
As previously announced on December 14, 2000, Legacy's Board of Trustees declared a fourth quarter distribution
of $0.25 per unit to unitholders of record as of December 28, 2000, payable on December 29, 2000. For the year,
distributions totalled $0.98 per unit, exceeding last year by $0.09 or 10.1%.
Including the recently completed acquisition of The Fairmont Empress and Fairmont Le Château Frontenac, Legacy's
current portfolio now consists of 21 luxury and first class hotels from coast to coast in Canada with 9,579 rooms.
Fairmont Hotels & Resorts manages the ten luxury hotels and Delta Hotels manages the 11 first class properties.
Legacy's Units trade on The Toronto Stock Exchange under the trading symbol "LGY.UN".
Summarized Financial Data For the quarter ended December 31, 2000 Thousands of dollars except per unit amounts (Unaudited) Three months ended December 31 2000 1999 -------- -------- Operating revenues Rooms $70,224 $64,204 Food & Beverage 47,803 44,944 Other 7,160 6,267 --------- --------- 125,187 115,415 Gross operating profit 39,097 35,987 Hotel EBITDA 25,290 23,851 Operating income 17,502 16,957 Net income 9,823 10,012 Distributable income 12,052 10,927 Distributions 16,874 13,626 Distributions per unit $0.250 $0.230 Outstanding units 67,496,893 59,244,492 Legacy Hotels Real Estate Investment Trust Consolidated Statement of Net Income (Stated in thousands of dollars except per unit amounts) (Unaudited) Three Months ended Twelve Months ended December 31 December 31 2000 1999 2000 1999 -------- -------- -------- -------- Operating revenues Room $ 70,223 $ 64,204 $ 310,559 $ 272,679 Food and Beverage 47,802 44,944 164,024 144,785 Others 7,162 6,267 27,148 24,472 ---------- ---------- ---------- ---------- 125,187 115,415 501,731 441,936 Operating expenses 86,090 79,427 327,195 289,515 ---------- ---------- ---------- ---------- Gross operating profit 39,097 35,988 174,536 152,421 Hotel management fees 6,230 5,465 22,726 18,118 Property taxes, rent and insurance 7,578 6,672 30,132 27,467 ---------- ---------- ---------- ---------- Operating income from hotel operations 25,289 23,851 121,678 106,836 Other income (note 3) 818 - 1,118 - Other expenses Amortization 7,059 5,344 24,353 18,596 Advisory fee 1,200 1,123 4,553 4,261 Other 346 426 1,754 1,312 ---------- ---------- ---------- ---------- 8,605 6,893 30,660 24,169 ---------- ---------- ---------- ---------- Income before interest expense and provision for income taxes 17,502 16,958 92,136 82,667 Interest expense, net 7,502 6,914 29,072 23,873 ---------- ---------- ---------- ---------- Income before provision for income taxes 10,000 10,044 63,064 58,794 Provision for income taxes (note 2) 177 32 129 100 ---------- ---------- ---------- ---------- Net income for the period $ 9,823 $ 10,012 $ 62,935 $ 58,694 ---------- ---------- ---------- ---------- Distributable income for the period $ 12,052 $ 10,927 $ 67,348 $ 59,799 ---------- ---------- ---------- ---------- Basic net income per unit $ 0.146 $ 0.169 $ 1.013 $ 0.991 ---------- ---------- ---------- ---------- Net income per unit on a fully diluted basis $ 0.145 $ 0.169 $ 1.011 $ 0.989 ---------- ---------- ---------- ---------- Distributable income per unit $ 0.179 $ 0.184 $ 1.084 $ 1.009 ---------- ---------- ---------- ---------- Distributable income per unit on a fully diluted basis $ 0.178 $ 0.184 $ 1.082 $ 1.008 ---------- ---------- ---------- ---------- Distributions per unit $ 0.250 $ 0.230 $ 0.980 $ 0.890 ---------- ---------- ---------- ---------- Legacy Hotels Real Estate Investment Trust Consolidated Balance Sheet (Stated in thousands of dollars) (Unaudited) ASSETS December 31 2000 1999 ------------ ------------ Current assets Cash and short-term investments $ 6,376 $ 11,121 Accounts receivable 34,874 26,139 Materials and supplies 4,099 3,939 Prepaid expenses 2,496 2,106 ------------ ------------ 47,845 43,305 Capital assets 1,091,549 1,020,946 Other assets 3,993 1,596 ------------ ------------ $ 1,143,387 $ 1,065,847 ------------ ------------ ------------ ------------ LIABILITIES Current liabilities Bank indebtedness $ 12,107 $ - Bank loans 109,676 44,782 Accounts payable and accrued liabilities 53,972 48,856 Current portion of long term debt 238 75,211 Other 132 132 Accrued distributions - - ------------ ------------ 176,125 168,981 Debentures payable 325,000 325,000 Mortgage payable 7,307 7,550 Other liabilities 2,111 1,343 Future income taxes (Note 2) 6,330 - Unitholders' interest Unitholders' equity (Note 5) 631,058 561,993 Contributed surplus 49 - Retained earnings (deficit) (Note 2) (4,593) 980 ------------ ------------ 626,514 562,973 ------------ ------------ $ 1,143,387 $ 1,065,847 ------------ ------------ ------------ ------------ Legacy Hotels Real Estate Investment Trust Consolidated Cash Flows Statement (Stated in thousands of dollars) (Unaudited) Three Months ended Twelve Months ended December 31 December 31 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Operating activities Net income $ 9,823 $ 10,012 $ 62,935 $ 58,694 Adjustments for: Amortization of capital assets 7,059 5,345 24,353 18,596 Other 690 304 1,155 696 Future income taxes 98 - (44) - ---------- ---------- ---------- ---------- 17,670 15,661 88,399 77,986 Changes in non-cash working capital (Increase) decrease in accounts receivable 9,922 11,474 (7,360) (3,231) (Increase) decrease in materials and supplies (247) (181) 52 (174) (Increase) decrease in prepaid expenses 3,200 2,909 232 1,118 Increase (decrease) in accounts payable and accrued liabilities (10,643) (9,109) 3,836 4,212 ---------- ---------- ---------- ---------- 2,232 5,093 (3,240) 1,925 ---------- ---------- ---------- ---------- Cash flows from operations 19,902 20,754 85,159 79,911 ---------- ---------- ---------- ---------- Financing activities Net proceeds from equity units - - 52,936 - Distributions (33,749) (27,253) (62,134) (52,728) Buy-back of units by Legacy - - (1,222) - Increase (decrease) in bank loans 89,676 - (44,782) 44,782 Net proceeds from bankers' acceptances (75,000) - 109,676 - Repayment of debentures - - (75,000) - Repayment of mortgage (55) (49) (216) (192) Repayment of deferred rent (33) (33) (132) (144) ---------- ---------- ---------- ---------- Cash flows from financing activities (19,161) (27,335) (20,874) (8,282) ---------- ---------- ---------- ---------- Investing activities Acquisitions (Note 3) (1,558) 537 (45,007) (65,976) Additions to capital assets (9,772) (4,641) (33,538) (28,088) Proceeds from sale of capital assets 60 162 60 162 Other assets (2,315) (411) (2,652) (411) ---------- ---------- ---------- ---------- Cash flows used for investing activities (13,585) (4,353) (81,137) (94,313) ---------- ---------- ---------- ---------- Cash position (x) Increase (decrease) in cash (12,844) (10,934) (16,852) (22,684) Cash at beginning of period 7,113 22,055 11,121 33,805 ---------- ---------- ---------- ---------- Cash at end of period $ (5,731) $ 11,121 $ (5,731) $ 11,121 ---------- ---------- ---------- ---------- Supplemental Disclosure Income taxes paid 134 183 1,237 183 Interest received 82 291 292 3,130 Interest paid 13,422 13,268 29,009 28,466 (x) Cash comprises cash, bank indebtedness and short-term investments. Legacy Hotels Real Estate Investment Trust Notes to Consolidated Financial Statements (Stated in Thousands of Dollars) (Unaudited) 1. In December 1999, Legacy announced a program to repurchase in a 12 month period, up to 1 million of its outstanding units. In the twelve month period ended December 31, 2000, 133,900 units were repurchased for cancellation for $1,106. Of the cost, $1,271 was charged to unitholders' equity and the difference, net of costs associated with the repurchase, was reflected as contributed surplus. 2. Effective January 1, 2000, Legacy Hotels Corporation, a wholly owned subsidiary subject to tax on its taxable income under the Canadian Income Tax Act, adopted the liability method for providing for income taxes retroactively without restating prior years. Under this method, future income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities, and are measured using the substantively enacted tax rates and laws that are expected to be in effect in the periods in which the future income tax assets or liabilities are expected to be settled or realized. The result was to increase future income tax liabilities by $6,374 and decrease opening retained earnings (deficit) by the same amount as at January 1, 2000 and to increase (decrease) future income tax expense for the three and twelve month period ended December 31, 2000 by $98 and $(44) respectively. Historically, income taxes have been comprised primarily of large corporations tax. 3. Effective September 29, 2000, Legacy acquired The Lombard in Winnipeg for $11.6 million cash and the issuance of 1,986,301 units valued at $17.4 million, for a total purchase price of $29.0 million, plus working capital and acquisition expenses. The issue price for the units was $8.76, based on a simple average of the unit closing price on the TSE for the 20 days preceding June 30, 2000. Legacy entered into an asset management and purchase agreement with the vendor of The Lombard on June 30, 2000. Under the asset management agreement, Legacy was entitled to a fee based on the net income from The Lombard less interest on the cash portion of the purchase price and the amount of any distributions on Units for the period June 30 to the closing date. In the fourth quarter, Legacy recorded an asset management fee of $818 for the period October 1, 2000 to November 19, 2000, the date the acquisition received regulatory approval. On June 26, 2000, Legacy acquired the Crowne Plaza in Winnipeg for $29.5 million and its working capital of $303, plus acquisition expenses. The acquisition was financed through a draw on the acquisition facility of $28.0 million with the balance from cash on hand. During the third quarter of 1999, Legacy acquired the leasehold interest in the Delta Barrington in Halifax from Delta Hotels Limited and the Delta Toronto East and the Four Points Hotel Toronto Airport from Canadian Pacific Hotels Corporation for $64,449, plus acquisition expenses. 4. In the second quarter, Legacy entered into bond forwards with settlement dates of less than one year. As at December 31, 2000 the fair value liability of the bond forwards was approximately $5,064. 5. On August 10, 2000, Legacy issued 6,400,000 units at $8.60 per unit, of which 2,900,000 units were acquired by Canadian Pacific Hotels & Resorts Inc. Net proceeds amounting to $53,686 were used to repay bank loans under the acquisition facility. As at December 31, 2000 Legacy had 67,496,893 units outstanding (1999 - 59,442,492), analyzed as follows: Number Amount ------------- --------------- Balance, January 1 59,244,492 $ 561,993 Issued on August 10, 2000 6,400,000 53,686 Issued to acquire The Lombard 1,986,301 17,400 Costs relating to the equity issue on August 10, 2000 - (750) Units repurchase plan (133,900) (1,271) ------------- --------------- Balance, December 31 67,496,893 $ 631,058 ------------- --------------- 6. On December 4, 2000, the Unitholders approved the purchase of The Empress, located in Victoria, British Columbia, and Le Château Frontenac, located in Quebec City, Quebec, for an aggregate price of approximately $305 million plus approximately $9 million in closing costs. Both hotels were owned by Canadian Pacific Hotels Real Estate Corporation. The transaction closed on February 1, 2001. The purchase price included 14.7 million exchangeable shares at a price of $8.60 per share for $126.4 million and the balance of the purchase was satisfied by a note. This note will be repaid from the net proceeds of secured, non-recourse loans to the company from third party lenders. These loans are expected to be finalized in February 2001. Legacy Hotels Real Estate Investment Trust Summary Statistics (Unaudited) Three Months ended Twelve Months ended December 31 December 31 2000 1999 2000 1999 -------- -------- -------- -------- Occupancy (%) 64.3 64.5 69.6 73.0 Average Daily Rate ($) 142.66 137.14 149.33 140.33 RevPAR ($) 91.77 88.39 103.93 102.40 (Stated in thousands of dollars) ---------------------------------------------- Operating revenues $ 125,187 $ 115,415 $ 501,731 $ 441,936 Gross operating profit $ 39,097 $ 35,988 $ 174,536 $ 152,421 Hotel EBITDA $ 25,289 $ 23,851 $ 121,678 $ 106,836 Operating income $ 17,502 $ 16,958 $ 92,136 $ 82,667 Net income $ 9,823 $ 10,012 $ 62,935 $ 58,694 Distributable income $ 12,052 $ 10,927 $ 67,348 $ 59,799 Distributable income per unit $ 0.179 $ 0.184 $ 1.084 $ 1.009 Distributable income per unit on a fully diluted basis $ 0.178 $ 0.184 $ 1.082 $ 1.008 Gross Operating Profit Margin 31.2% 31.2% 34.8% 34.5% 1. Occupancy and Average Daily Rate statistics are for the current portfolio of properties excluding The Fairmont Winnipeg restated on rooms paid basis. 2. RevPAR statistics are for the current portfolio of properties excluding The Fairmont Winnipeg. RevPAR is defined as average room revenue per available room. 3. Gross operating profit margin represents gross operating profit as a percentage of operating revenues. Schedule of Occupancy (%) Three months ended Twelve months ended December 31 December 31 2000 1999 2000 1999 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL HOTEL PORTFOLIO 64.3 64.5 69.6 73.0 ------- ------- ------- ------- ------- ------- ------- ------- FAIRMONT MANAGED 64.4 65.7 70.2 74.3 ------- ------- ------- ------- The Fairmont Hotel Vancouver 56.0 63.7 69.0 75.8 The Fairmont Waterfront 58.7 57.2 72.5 74.8 The Fairmont Palliser 56.0 56.8 63.2 69.7 The Fairmont Hotel Macdonald 64.4 67.7 65.0 71.5 The Fairmont Royal York 69.9 72.2 73.4 77.7 Fairmont Château Laurier 74.8 74.2 78.3 80.1 Fairmont The Queen Elizabeth 63.8 63.0 68.0 69.5 The Fairmont Winnipeg 63.1 62.2 64.0 71.6 DELTA MANAGED 64.2 62.8 68.9 71.2 ------- ------- ------- ------- Delta Calgary Airport 65.5 48.2 64.9 60.4 Delta Beauséjour 69.5 61.5 69.7 70.0 Delta Halifax 62.3 57.0 70.9 67.7 Delta Prince Edward 37.6 39.9 53.3 56.4 Delta Bessborough 64.6 65.2 69.9 62.9 Delta Centre-Ville 61.3 59.7 65.5 68.1 Delta Ottawa Hotel and Suites 72.4 81.3 80.0 83.4 Delta Barrington 65.9 59.6 67.5 78.0 Delta Toronto East 62.5 61.6 66.3 69.3 Four Points Hotel Toronto Airport 78.5 71.8 83.0 79.9 Delta Winnipeg 63.5 76.4 66.8 82.5 Schedule of Average Daily Rates ($) Three months ended Twelve months ended December 31 December 31 2000 1999 2000 1999 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL HOTEL PORTFOLIO $142.66 $137.14 $149.33 $140.33 ------- ------- ------- ------- ------- ------- ------- ------- FAIRMONT MANAGED 162.27 156.64 171.24 159.87 ------- ------- ------- ------- The Fairmont Hotel Vancouver $164.70 $160.51 $192.13 $184.76 The Fairmont Waterfront 171.43 163.40 200.44 192.92 The Fairmont Palliser 157.85 156.73 165.96 157.01 The Fairmont Hotel Macdonald 145.08 137.72 146.52 134.61 The Fairmont Royal York 179.84 172.87 182.96 165.51 Fairmont Château Laurier 177.22 166.18 177.97 161.46 Fairmont The Queen Elizabeth 146.45 143.15 151.20 142.60 The Fairmont Winnipeg 112.18 106.63 111.59 110.57 DELTA MANAGED 116.48 110.00 119.65 112.75 ------- ------- ------- ------- Delta Calgary Airport 112.51 123.70 123.01 127.52 Delta Beauséjour 93.92 89.47 96.93 97.52 Delta Halifax 108.87 106.47 113.33 109.20 Delta Prince Edward 108.94 102.15 133.96 127.13 Delta Bessborough 93.16 87.04 94.65 86.27 Delta Centre-Ville 135.10 121.49 136.24 125.25 Delta Ottawa Hotel and Suites 130.75 117.84 128.76 118.17 Delta Barrington 118.92 110.37 123.02 103.99 Delta Toronto East 143.76 135.39 146.10 136.08 Four Points Hotel Toronto Airport 107.64 106.31 110.63 105.06 Delta Winnipeg 96.81 91.61 94.28 93.25 SCHEDULE OF REVPAR ($) Three months ended Twelve months ended December 31 December 31 2000 1999 2000 1999 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL HOTEL PORTFOLIO 91.77 88.39 $103.93 $102.40 ------- ------- ------- ------- ------- ------- ------- ------- FAIRMONT MANAGED 104.50 102.93 120.15 118.74 ------- ------- ------- ------- The Fairmont Hotel Vancouver 92.21 102.23 $132.58 $140.06 The Fairmont Waterfront 100.62 93.52 145.36 144.34 The Fairmont Palliser 88.39 89.08 104.88 109.39 The Fairmont Hotel Macdonald 93.46 93.28 95.19 96.30 The Fairmont Royal York 125.75 124.78 134.19 128.56 Fairmont Château Laurier 132.60 123.31 139.39 129.36 Fairmont The Queen Elizabeth 93.38 90.23 102.78 99.12 The Fairmont Winnipeg 70.81 66.33 71.40 79.15 DELTA MANAGED 74.83 69.06 82.37 80.29 ------- ------- ------- ------- Delta Calgary Airport 73.73 59.60 79.80 77.03 Delta Beauséjour 65.26 55.06 67.56 68.31 Delta Halifax 67.82 60.68 80.31 73.87 Delta Prince Edward 40.97 40.74 71.33 71.69 Delta Bessborough 60.14 56.74 66.11 54.22 Delta Centre-Ville 82.74 72.56 89.22 85.35 Delta Ottawa Hotel and Suites 94.65 95.78 102.99 98.50 Delta Barrington 78.31 65.74 83.00 81.07 Delta Toronto East 89.85 83.43 96.82 94.33 Four Points Hotel Toronto Airport 84.46 76.38 91.84 83.96 Delta Winnipeg 61.42 69.99 62.93 76.94
For further information
M. Jerry Patava, Executive Vice President and Chief Financial Officer, tel: (416) 874-2450, email: jerry.patava@fairmont.com,
website: www.legacyhotels.ca