WILLIAMSBURG, Va., Feb. 22, 2011 /PRNewswire/ -- MHI Hospitality
Corporation (Nasdaq: MDH) ("MHI" or the "Company"), a
self-managed and self-administered lodging real estate investment
trust ("REIT"), today reported consolidated results for the fourth
quarter and the year ended December 31,
2010.
HIGHLIGHTS:
- Net operating income ("NOI") increased 423.1%, or approximately
$1.1 million over the fourth quarter
2009, to approximately $1.3 million
and increased 65.8%, or approximately $2.5
million over the year ended December
31, 2009, to approximately $6.4
million;
- Occupancy increased to 60.0% in the fourth quarter 2010, an
increase of 6.0% over the same period for the prior year, and
increased to 66.0% for the year ended December 31, 2010, an increase of 9.3% over the
year ended December 31, 2009;
- Total room revenue increased approximately $0.8 million, or 6.7% over the fourth quarter
2009, to approximately $12.3 million
and increased approximately $4.2
million, or 8.5% over the year ended December 31, 2009, to approximately $53.1 million;
- Net loss before taxes improved 33.9%, or approximately
$0.7 million over the fourth quarter
2009, to approximately $1.3 million
compared to a net loss before taxes for the comparable 2009 period
of approximately $2.0 million, and
improved 36.9%, or approximately $1.8
million over the year ended December
31, 2009, to approximately $3.0
million, compared to a net loss before taxes for the year
ended December 31, 2009 of
approximately $4.8 million;
- Adjusted operating income increased approximately $1.0 million, or 32.4% over the fourth quarter
2009, to approximately $4.0 million
and increased approximately $2.8
million, or 19.4% over the year ended December 31, 2009, to approximately $17.6 million; and
- Funds from Operations ("FFO") remained constant at
approximately $1.2 million for the
fourth quarter 2010 compared to the fourth quarter 2009 and
remained constant at approximately $6.0
million for the year ended December
31, 2010 compared to the year ended December 31, 2009.
Andrew M. Sims, Chairman and
Chief Executive Officer of MHI Hospitality Corporation, commented,
"We continue to make substantial progress as our repositioned
hotels take market share and the industry is in recovery. We
have delivered improved year-over-year operating performance.
Funds from Operations, when adjusted for non-cash accruals,
trended positively in the quarter and for the year.
Additionally, we are pleased with other meaningful gains in
performance, which include increases of more than 66% and 423% in
net operating income for the full year and quarter,
respectively."
Mr. Sims continued, "In the year ahead we are committed to
further increasing our customer fair share in each market as we
continue to maximize the performance of our properties. We
are very pleased with the progress made and have great confidence
in the long-term growth potential of our real estate platform."
Operating Results
For the quarter ended December 31,
2010, the Company reported consolidated total revenue of
approximately $18.8 million, an
increase of 7.5% over the quarter ended December 31, 2009. The Company reported NOI
of approximately $1.3 million for the
quarter ended December 31, 2010, an
increase of approximately $1.1
million or 423.1% over the quarter ended December 31, 2009. The Company reported
interest expense of approximately $2.6
million for the quarter ended December 31, 2010, an increase of 4.5% or
approximately $0.1 million.
During the quarter, the Company incurred increased interest
expense of approximately $0.4 million
related to the June 2010 amendment to
the Company's credit agreement. Such additional interest expense
equated to a $0.03 reduction of FFO
per share for the fourth quarter 2010. The Company reported
an income tax benefit of approximately $0.2
million for the quarter ended December 31, 2010 compared to an income tax
benefit of approximately $0.8 million
for the quarter ended December 31,
2009, due to increased profitability in its TRS Lessee.
For the fourth quarter 2010, MHI also reported a consolidated
net loss attributable to the Company of approximately $0.9 million, or $0.09 per share, as compared to a consolidated
net loss attributable to the Company of approximately $0.8 million, or $0.10 per share, for the quarter ended
December 31, 2009. For the
fourth quarter 2010, FFO was approximately $1.2 million, or $0.09 per share, compared to FFO of approximately
$1.2 million, or $0.11 per share, for the fourth quarter 2009, the
difference in per share amounts due principally to an increase in
the number of shares and units outstanding pursuant to the
Company's rights offering in December
2009.
For the year ended December 31,
2010, the Company reported consolidated total revenue of
approximately $77.4 million, an
increase of 8.2% or approximately $5.9
million over the year ended December
31, 2009. The Company reported NOI of $6.4 million for the year ended December 31, 2010, an increase of approximately
$2.5 million or 65.8% over the year
ended December 31, 2009. The
Company reported an income tax provision of approximately
$0.2 million for the year ended
December 31, 2010 compared to an
income tax benefit of approximately $1.8
million for the year ended December
31, 2009, due to profitability in its TRS Lessee in 2010
compared to net operating losses in 2009. For the year ended
December 31, 2010, the Company also
reported a consolidated net loss attributable to the Company of
approximately $2.4 million, or
$0.25 per share, as compared to a
consolidated net loss attributable to the Company of approximately
$2.0 million, or $0.28 per share, for the year ended December 31, 2009. FFO for the year ended
December 31, 2010 remained constant
at approximately $6.0 million
compared to the year ended December 31,
2009. FFO per share for the year ended December 31, 2010 decreased to approximately
$0.46 compared to FFO per share of
approximately $0.55 for the year
ended December 31, 2009 due
principally to an increase in the number of shares and units
outstanding pursuant to the Company's rights offering in
December 2009.
Adjusted operating income and FFO are non-GAAP financial
measures within the meaning of the rules of the Securities and
Exchange Commission. The Company defines adjusted operating
income as net operating income excluding depreciation and
amortization, corporate general and administrative expenses, lease
revenue and related expenses as well as other fee income not
related to the Company's wholly-owned hotel properties. The Company
defines FFO as net income excluding extraordinary items,
depreciation and minority interest. Management believes FFO
is a key measure of a REIT's performance and should be considered
along with, but not as an alternative to, net income and cash flow
as a measure of the Company's operating performance.
Reconciliations of these non-GAAP financial measures are
included in the accompanying financial tables.
Portfolio Operating Performance
The following tables illustrate the key operating metrics for
the quarters and the years ended December
31, 2010 and 2009 for the Company's wholly-owned properties
during each respective reporting period ("consolidated" properties)
as well as the eight wholly-owned properties in the portfolio that
were not under development and under the Company's control during
all of 2009 and 2010 ("same-store" properties). Accordingly,
the same store data does not reflect the Crowne Plaza Tampa
Westshore, which opened in March
2009. The tables also exclude 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.
|
|
Consolidated (All
Hotels)
|
Quarter
ended
December 31,
2010
|
Quarter
ended
December 31,
2009
|
Variance
|
|
Occupancy
|
60.0%
|
56.6%
|
6.0%
|
|
Average Daily Rate
("ADR")
|
$ 105.72
|
$ 105.03
|
0.7%
|
|
Revenue per Available Room
("RevPAR")
|
$ 63.39
|
$ 59.42
|
6.7%
|
|
|
|
|
|
|
|
For the quarter ended December 31,
2010, the Company's consolidated properties realized a 6.7%
increase in RevPAR versus the same period in 2009. The RevPAR
increase was the result of a 6.0% increase in occupancy and a 0.7%
increase in ADR.
|
|
Consolidated (All
Hotels)
|
Year
ended
December 31,
2010
|
Year
ended
December 31,
2009
|
Variance
|
|
Occupancy
|
66.0%
|
60.4%
|
9.3%
|
|
ADR
|
$ 104.42
|
$ 107.21
|
-2.6%
|
|
RevPAR
|
$ 68.93
|
$ 64.74
|
6.5%
|
|
|
|
|
|
|
|
|
|
Same Store (8
Hotels)
|
Year
ended
December 31,
2010
|
Year
ended
December 31,
2009
|
Variance
|
|
Occupancy
|
66.6%
|
62.3%
|
7.0%
|
|
ADR
|
$ 106.08
|
$ 108.81
|
-2.5%
|
|
RevPAR
|
$ 70.69
|
$ 67.78
|
4.3%
|
|
|
|
|
|
|
|
For the year ended December 31,
2010, the Company's consolidated properties realized a 6.5%
increase in RevPAR versus the same period in 2009. The
consolidated properties' RevPAR increase was the result of a 9.3%
increase in occupancy offset by a 2.6% decrease in ADR. For
the year ended December 31, 2010, the
same-store portfolio generated a 4.3% increase in RevPAR compared
to the year ended December 31, 2009.
The same-store properties' RevPAR increase was the result of
a 7.0% increase in occupancy offset by a 2.5% decrease in ADR.
Portfolio Update
As of December 31, 2010, total
assets were approximately $209.6
million, including approximately $183.9 million of net investment in hotel
properties plus approximately $9.5
million for the Company's joint venture investment in the
Crowne Plaza Hollywood Beach Resort.
On July 26, 2010, the Company
executed a Doubletree Franchise License Agreement (the "License
Agreement") with Hilton Worldwide for its Raleigh, North Carolina, property in order to
upbrand the hotel from its current Holiday Inn affiliation.
In conjunction with the License Agreement, the Company is
executing a Product Improvement Plan and expects to rebrand the
hotel no later than November 30,
2011. The License Agreement will remain in effect for
a period of 10 years from the conversion date.
Balance Sheet/Liquidity
At December 31, 2010, the Company
had approximately $5.2 million of
available cash and cash equivalents, of which approximately
$2.2 million was reserved for real
estate taxes, insurance, capital improvements and certain other
expenses. The Company has approximately $75.2 million outstanding on its line of credit,
which had been deployed primarily to fund the acquisitions and
renovations of the Sheraton Louisville Riverside and the Crowne
Plaza Tampa Westshore, the Company's equity contribution to its
joint venture with The Carlyle Group for the purchase of the Crowne
Plaza Hollywood Beach Resort, as well as the acquisition of the
Crowne Plaza Hampton Marina.
Our indebtedness under our credit facility matures in
May 2011. However, the
June 2010 amendment to our credit
agreement provides us the option to extend the maturity date for
one year to May 2012 provided we meet
certain loan-to-value requirements and satisfy certain additional
conditions. The loan-to-value requirements of the extension
provision of our credit agreement contemplate valuations of our
encumbered properties at a multiple of their net operating income,
as defined by our credit agreement. The maximum amount that
we can borrow under the credit facility during the extension period
is 70.0% of the value of the encumbered properties. We do not
believe our encumbered properties will realize sufficient operating
performance to allow the properties in our collateral pool to meet
the loan-to-value requirements of the extension provision. We
estimate that in order to exercise the extension option we will be
required to reduce the outstanding balance on the facility by
making a payment ranging between $17.5
million and $22.5 million during the second quarter
2011.
The mortgage on our Hampton,
Virginia property matures in June
2011 but may be extended for one additional 12-month period
subject to certain terms and conditions. The mortgage on our
Jacksonville, Florida property
matures in July 2011.
The Company currently is considering a number of alternatives to
address these maturities including refinancings of the existing
indebtedness as well as amendments to agreements with existing
lenders. The Company is also evaluating potential sources of
additional capital.
Dividend
As previously announced, the fifth amendment to the credit
agreement entered into in June 2010
permits the Company to pay in any given fiscal year a dividend in
an amount minimally necessary in order to maintain its status as a
REIT provided that no default or event of default exists at the
time of, or after giving effect to, the distribution and the
Company does not incur indebtedness to make the distribution.
The Company anticipates the amount of such a dividend will
remain at 90.0% of taxable income excluding net capital gains,
which does not necessarily equal net income as calculated in
accordance with GAAP. The credit agreement also provides that
the Company may make additional dividend distributions so long as
no event of default exists at the time, or after giving effect to,
such additional distributions if the Company maintains a minimum
liquidity position of $10.0 million
and satisfies a debt yield ratio of EBITDA to total liabilities of
at least 10.0% before and after giving effect to such distribution,
provided the aggregate amount of such distributions in a given year
cannot exceed 90.0% of FFO for the prior fiscal year. Any
future changes to the Company's current dividend policy will need
to be in compliance with restrictions on the payment of cash
dividends as set forth in the referenced amendment to the credit
agreement.
Outlook and Market Trends
Set forth below is guidance for 2011, which is predicated on
continued strengthening of the economy and expected improvements in
hotel lodging industry fundamentals. These projections are
based on occupancy and rate estimates that are consistent with
calendar year 2011 trend forecasts by Smith Travel Research for the
market segments in which the Company operates. The FFO forecast
reflects management's expectation that recently renovated and
opened properties, including the Hilton Savannah DeSoto and the
Crowne Plaza Tampa Westshore, will continue to experience increased
demand and improved operations and that there will be continued,
albeit slowed, expansion in the lodging industry through 2011.
The table below reconciles projected 2011 net loss to projected
FFO and provides projected key operating metrics and supplemental
information:
|
|
|
Low
Range
|
|
High
Range
|
|
|
Y/E Dec 31,
2011
|
|
Y/E Dec 31,
2011
|
|
Net loss
|
$
(1,935,000)
|
|
$
(977,500)
|
|
Noncontrolling
interest
|
(677,500)
|
|
(342,500)
|
|
Depreciation and
amortization
|
8,525,000
|
|
8,525,000
|
|
Equity in depreciation and
amortization of joint venture
|
550,000
|
|
550,000
|
|
|
|
|
|
|
FFO
|
$
6,462,500
|
|
$
7,755,000
|
|
|
|
|
|
|
Weighted average shares and
units
|
12,925,000
|
|
12,925,000
|
|
|
|
|
|
|
FFO per share and
unit
|
$
0.50
|
|
$
0.60
|
|
|
|
|
|
|
|
|
|
Earnings Call/Webcast
The Company will conduct its fourth quarter 2010 conference call
for investors and other interested parties at 10:00 a.m. Eastern Time (ET) on Tuesday, February 22, 2011. The conference
call will be accessible by telephone and through the Internet.
Interested individuals are invited to listen to the call by
telephone at 877-317-6789 (United
States) or 8666053852 (Canada). 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 22, 2011 through December 31, 2011. To access the
rebroadcast, dial 877-344-7529 and enter passcode number 447557.
A replay of the call also will be available on the Internet
at www.mhihospitality.com until February 22,
2012.
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 2,110
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%
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. MHI Hospitality
Corporation was organized in 2004 and is headquartered in
Williamsburg, Virginia. For
more information please visit www.mhihospitality.com.
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 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. 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 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,
2010
|
|
December 31,
2009
|
|
|
|
|
(unaudited)
|
|
(audited)
|
|
ASSETS
|
|
|
|
|
|
Investment in hotel properties,
net
|
|
$
183,898,660
|
|
$
188,587,507
|
|
Investment in joint
venture
|
|
9,464,389
|
|
9,685,844
|
|
Cash and cash
equivalents
|
|
2,992,888
|
|
3,490,487
|
|
Restricted cash
|
|
2,205,721
|
|
701,730
|
|
Accounts
receivable
|
|
1,868,380
|
|
1,625,161
|
|
Accounts
receivable-affiliate
|
|
17,375
|
|
32,444
|
|
Prepaid expenses, inventory and
other assets
|
|
2,335,783
|
|
2,046,082
|
|
Notes receivable,
net
|
|
100,000
|
|
100,000
|
|
Shell Island lease purchase,
net
|
|
1,080,882
|
|
1,441,176
|
|
Deferred income
taxes
|
|
4,746,938
|
|
4,920,973
|
|
Deferred financing costs,
net
|
|
872,415
|
|
1,328,351
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
209,583,431
|
|
$
213,959,755
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Line of credit
|
|
$
75,197,858
|
|
$
75,522,858
|
|
Mortgage loans
|
|
72,192,253
|
|
72,738,250
|
|
Loans payable
|
|
4,493,970
|
|
4,613,163
|
|
Accounts payable and accrued
liabilities
|
|
6,335,145
|
|
6,696,605
|
|
Advance deposits
|
|
555,902
|
|
547,653
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
$
158,775,128
|
|
$
160,118,529
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
MHI Hospitality Corporation
stockholders' equity
|
|
|
|
|
|
|
Preferred stock , par value
$0.01, 1,000,000 shares authorized, 0 shares
|
|
|
|
|
|
|
|
issued and
outstanding
|
|
$ —
|
|
$ —
|
|
|
Common stock, par value $0.01;
49,000,000 shares authorized; 9,541,286 shares and 9,096,943 shares
issued and outstanding at December 31,
|
|
|
|
|
|
|
|
2010 and December 31, 2009,
respectively
|
|
95,413
|
|
90,969
|
|
|
Additional paid in
capital
|
|
55,682,976
|
|
52,543,562
|
|
|
Distributions in excess of
retained earnings
|
|
(16,837,182)
|
|
(14,454,238)
|
|
|
|
Total MHI Hospitality
Corporation stockholders' equity
|
|
38,941,207
|
|
38,180,293
|
|
Noncontrolling
interest
|
|
11,867,096
|
|
15,660,933
|
|
TOTAL EQUITY
|
|
50,808,303
|
|
53,841,226
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
|
$
209,583,431
|
|
$
213,959,755
|
|
|
|
|
|
|
|
|
|
|
MHI
HOSPITALITY CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
|
|
|
|
|
|
Quarter
ended
|
|
Quarter
ended
|
|
Year
ended
|
|
Year
ended
|
|
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Rooms department
|
$
12,305,892
|
|
$
11,534,547
|
|
$
53,090,084
|
|
$
48,939,286
|
|
|
Food and beverage
department
|
5,510,269
|
|
4,804,583
|
|
19,905,509
|
|
17,992,536
|
|
|
Other operating
departments
|
1,003,340
|
|
1,167,856
|
|
4,386,751
|
|
4,586,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
18,819,501
|
|
17,506,986
|
|
77,382,344
|
|
71,518,726
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Hotel operating
expenses
|
|
|
|
|
|
|
|
|
|
Rooms department
|
3,594,877
|
|
3,520,015
|
|
15,090,190
|
|
14,018,102
|
|
|
Food and beverage
department
|
3,491,471
|
|
3,243,799
|
|
13,248,212
|
|
12,234,104
|
|
|
Other operating
departments
|
156,789
|
|
193,833
|
|
697,037
|
|
775,036
|
|
|
Indirect
|
7,415,299
|
|
7,349,384
|
|
30,026,159
|
|
29,026,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hotel operating
expenses
|
14,658,436
|
|
14,307,031
|
|
59,061,598
|
|
56,053,780
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,125,424
|
|
2,271,676
|
|
8,506,802
|
|
8,420,085
|
|
Corporate general and
administrative
|
702,044
|
|
673,351
|
|
3,389,764
|
|
3,170,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
17,485,904
|
|
17,252,058
|
|
70,958,164
|
|
67,644,492
|
|
|
|
|
|
|
|
|
|
|
|
|
NET OPERATING
INCOME
|
1,333,597
|
|
254,928
|
|
6,424,180
|
|
3,874,234
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(2,645,167)
|
|
(2,530,193)
|
|
(10,030,517)
|
|
(9,661,871)
|
|
|
Interest income
|
6,527
|
|
4,309
|
|
22,305
|
|
41,999
|
|
|
Equity income (loss) in joint
venture
|
11,842
|
|
(79,401)
|
|
16,931
|
|
(249,367)
|
|
|
Unrealized gain (loss) on
hedging activities
|
69,659
|
|
365,991
|
|
700,488
|
|
1,220,162
|
|
|
Loss on disposal of
assets
|
(87,175)
|
|
—
|
|
(171,304)
|
|
(42,870)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before
taxes
|
(1,310,717)
|
|
(1,984,366)
|
|
(3,037,916)
|
|
(4,817,713)
|
|
Income tax benefit
(provision)
|
151,958
|
|
780,252
|
|
(214,344)
|
|
1,807,126
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(1,158,759)
|
|
(1,204,114)
|
|
(3,252,261)
|
|
(3,010,587)
|
|
Add: Net loss attributable to
the noncontrolling interest
|
304,762
|
|
405,726
|
|
869,317
|
|
1,036,757
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the
Company
|
$
(853,997)
|
|
$
(798,388)
|
|
$
(2,382,944)
|
|
$
(1,973,830)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable
to the Company
|
|
|
|
|
|
|
Basic
|
$ (0.09)
|
|
$ (0.10)
|
|
$ (0.25)
|
|
$ (0.28)
|
|
|
Diluted
|
$ (0.09)
|
|
$ (0.10)
|
|
$ (0.25)
|
|
$ (0.28)
|
|
Weighted average number of
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
9,541,286
|
|
7,682,883
|
|
9,447,275
|
|
7,143,829
|
|
|
Diluted
|
9,557,286
|
|
7,708,883
|
|
9,463,275
|
|
7,169,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHI
HOSPITALITY CORPORATION
RECONCILIATION OF NET LOSS TO
FUNDS FROM OPERATIONS (FFO)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
|
Quarter
ended
|
|
Year
ended
|
|
Year
ended
|
|
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to the Company
|
|
$ (853,997)
|
|
$ (798,388)
|
|
$
(2,382,944)
|
|
$
(1,973,830)
|
|
|
Adjust noncontrolling
interest
|
(304,762)
|
|
(405,726)
|
|
(869,317)
|
|
(1,036,757)
|
|
|
Add depreciation and
amortization
|
2,125,424
|
|
2,271,676
|
|
8,506,802
|
|
8,420,085
|
|
|
Add equity in depreciation and
amortization of joint venture
|
136,395
|
|
137,768
|
|
546,055
|
|
545,580
|
|
|
Add loss on disposal of
assets
|
87,175
|
|
—
|
|
171,304
|
|
42,870
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
$ 1,190,235
|
|
$ 1,205,330
|
|
$ 5,971,900
|
|
$ 5,997,948
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
9,541,286
|
|
7,682,883
|
|
9,447,275
|
|
7,143,829
|
|
Weighted average units
outstanding
|
3,356,493
|
|
3,737,607
|
|
3,446,169
|
|
3,737,607
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and
units
|
12,897,779
|
|
11,420,490
|
|
12,893,444
|
|
10,881,436
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share and
unit
|
|
$ 0.09
|
|
$ 0.11
|
|
$ 0.46
|
|
$ 0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industry analysts and investors use Funds from Operations, FFO,
as a supplemental operating performance measure of an equity REIT.
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"). 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. Historical cost accounting for real estate assets in
accordance with GAAP implicitly assumes that the value of real
estate assets diminishes predictably over time. 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.
Thus, NAREIT created FFO as a supplemental measure of REIT
operating performance that excludes historical cost depreciation,
among other items, from GAAP net income. 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. Management considers FFO to be a
useful measure of adjusted net income (loss) for reviewing
comparative operating and financial performance. 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. 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.
MHI
HOSPITALITY CORPORATION
RECONCILIATION OF NET OPERATING
INCOME TO ADJUSTED OPERATING INCOME
(unaudited)
|
|
|
|
|
|
|
Quarter
ended
|
|
Quarter
ended
|
|
Year
ended
|
|
Year
ended
|
|
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating
income
|
|
$ 1,333,597
|
|
$ 254,928
|
|
$ 6,424,180
|
|
$ 3,874,234
|
|
|
Add corporate general and
administrative
|
702,044
|
|
673,351
|
|
3,389,764
|
|
3,170,627
|
|
|
Add depreciation and
amortization
|
2,125,424
|
|
2,271,676
|
|
8,506,802
|
|
8,420,085
|
|
|
Subtract net lease rental
income
|
(109,250)
|
|
(126,750)
|
|
(443,000)
|
|
(445,000)
|
|
|
Subtract other fee
income
|
(51,644)
|
|
(51,618)
|
|
(238,198)
|
|
(248,039)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income
|
|
$ 4,000,171
|
|
$ 3,021,587
|
|
$
17,639,548
|
|
$
14,771,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We provide adjusted operating income as supplemental information
for investors. We eliminate corporate-level costs and
expenses to arrive at property-level results because we believe
property-level results provide investors with supplemental
information into the ongoing operating performance of our hotels.
We eliminate depreciation and amortization because, even
though depreciation and amortization are property-level expenses,
these non-cash expenses, which are based on historical cost
accounting for real estate assets, implicitly assume that the value
of real estate assets diminishes predictably over time. As
noted earlier, because real estate values have historically risen
or fallen with market conditions, many industry investors have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves.
As a result of the elimination of corporate-level costs and
expenses, depreciation and amortization, net lease income as well
as other fee income not related to our wholly-owned hotel
properties, the adjusted operating income we present should not be
used to evaluate our performance as a whole. Management
compensates for these limitations by separately considering the
impact of these excluded items to the extent they are material to
operating decisions or assessments or our operating performance.
Our consolidated statements of operations include such
amounts, all of which should be considered by investors when
evaluating our performance.
We also believe that providing adjusted operating income
provides investors and management with useful information for
evaluating the period-to-period performance of our hotels and
facilitates comparisons with other hotels REITs and hotel
owners.
SOURCE MHI Hospitality Corporation