Temple Hotels slows down
Temple Hotels reported their first quarter results recently.Their full year(2013) was quite appealing.They slowed down a little for this quarter but still have a good trajectory.In 2013 they acquired 8 hotels for an expenditure of $197 million.Total revenue increased by 57% and operating income by 44%. Funds from operations(FFO) increased by a whopping $.31 per share and adjusted funds from operations(AFFO) by $.19 per share.Consequently for 2013 FFO per share was $.79 per share and AFFO per share was $.70.They sold all their Holloway Lodging (HLC) shares for $21 million and paid down some debt.Now debt is 67% of total appraised value.On the other hand they raised 10 million new shares for $57 million and diluted their earnings somewhat.
The first quarter 2014
Operating revenue increased for the first quarter but only by 20% while room revenue increased by 30%.The profit margin decreased from 35% to 29%.The occupancy rate fell from 71%to 70% which is only a slight reduction.Funds from operations increased by 25% while AFFO reduced by about 15%.But with the increase in share capital( 10 million shares) both FFO and AFFO per share fell .Cash balance (partly because of the new equity issue) was up to almost $30 million.So now AFFO per share which is a proxy for earnings per share is about $.62 to $.65 per share.This is down a little from the fiscal year results which was $.70 per share .Still the P/E multiple is about 8 times earnings and is better than only a very few real estate REITs.Temple has a positive cash balance and a low debt to book value so it is just taking a breath now.It will be ready to make another acquisition soon. Right now it's price to book value is about .26 to .28 so it's assets are very undervalued.Other larger REITs have a price to book value closer to .5 to .75 ; a more normal price to book ratio would put Temple Hotels in the $8.00 to $9.00 range.First TPH will have to get back to $6.25 where it was a month ago.
The first quarter 2014
Operating revenue increased for the first quarter but only by 20% while room revenue increased by 30%.The profit margin decreased from 35% to 29%.The occupancy rate fell from 71%to 70% which is only a slight reduction.Funds from operations increased by 25% while AFFO reduced by about 15%.But with the increase in share capital( 10 million shares) both FFO and AFFO per share fell .Cash balance (partly because of the new equity issue) was up to almost $30 million.So now AFFO per share which is a proxy for earnings per share is about $.62 to $.65 per share.This is down a little from the fiscal year results which was $.70 per share .Still the P/E multiple is about 8 times earnings and is better than only a very few real estate REITs.Temple has a positive cash balance and a low debt to book value so it is just taking a breath now.It will be ready to make another acquisition soon. Right now it's price to book value is about .26 to .28 so it's assets are very undervalued.Other larger REITs have a price to book value closer to .5 to .75 ; a more normal price to book ratio would put Temple Hotels in the $8.00 to $9.00 range.First TPH will have to get back to $6.25 where it was a month ago.
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