Holloway Lodging's new deal
Holloway Lodging reported it's second quarter results recently and it had a strong quarter.This although for two thirds of the year it had one fewer hotel.However the Western Canadian hotels performed well.Yet the funds from operations were constsant.
However Holloway made a number of strategic transactions that overshadowed regular operations.It sold the Kamloops Holiday Inn and bought the Days Inn in Whitecourt, Alberta.It also acquired the remaining interest in the Holiday Inn in Stellarton,Nova Scotia and the additional 35% interest in the Super 8 Hotel in St. John's,Newfoudland for $2.1 million.
Royal Host
The main acquisition by far was acquiring Royal Host;it owns 17 hotels across Canada and the franchise rights to Travellodge and Thriftlodge.Royal Host had a significant amount of assets but had too much debt and paid high interest rates. It also was badly organized and had negative EBITDA.This acquisition almost doubles the number of hotels Holloway owns(from 19 to 36).Once it has been assimilated and earns synergies it should be a significant addition to Holloway earnings.Holloway has already seen an improvement here;there was $2 million in earnings for this half in comparison to a loss of $400,000in the same period of 2013.Adjusted Funds from Operations(AFFO) per share went from $.23 per share in the first half of 2013 to $.28 per share in the first half of 2014.
A full year in 2014
Holloway earned $2 million for the first half and this blog believes that it can squeeze much more from Royal Host which was badly financed.Probably something more can be done with their franchise rights.Consequently I don't think that earnings of $10 million is beyond reach and AFFO per share of $.60 with more disciplined management.In addition,Holloway will buy back 1 million shares and this will put upwards pressure on the earnings for the full year.
Holloway's price has moved from $4.00 in May up to the present price of about $4.95.This blog sees a price of $5.00 to $5.25 in September and $6.00 by the end of November.
However Holloway made a number of strategic transactions that overshadowed regular operations.It sold the Kamloops Holiday Inn and bought the Days Inn in Whitecourt, Alberta.It also acquired the remaining interest in the Holiday Inn in Stellarton,Nova Scotia and the additional 35% interest in the Super 8 Hotel in St. John's,Newfoudland for $2.1 million.
Royal Host
The main acquisition by far was acquiring Royal Host;it owns 17 hotels across Canada and the franchise rights to Travellodge and Thriftlodge.Royal Host had a significant amount of assets but had too much debt and paid high interest rates. It also was badly organized and had negative EBITDA.This acquisition almost doubles the number of hotels Holloway owns(from 19 to 36).Once it has been assimilated and earns synergies it should be a significant addition to Holloway earnings.Holloway has already seen an improvement here;there was $2 million in earnings for this half in comparison to a loss of $400,000in the same period of 2013.Adjusted Funds from Operations(AFFO) per share went from $.23 per share in the first half of 2013 to $.28 per share in the first half of 2014.
A full year in 2014
Holloway earned $2 million for the first half and this blog believes that it can squeeze much more from Royal Host which was badly financed.Probably something more can be done with their franchise rights.Consequently I don't think that earnings of $10 million is beyond reach and AFFO per share of $.60 with more disciplined management.In addition,Holloway will buy back 1 million shares and this will put upwards pressure on the earnings for the full year.
Holloway's price has moved from $4.00 in May up to the present price of about $4.95.This blog sees a price of $5.00 to $5.25 in September and $6.00 by the end of November.
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