- Cash and cash equivalents increased by
$3.2 million during Q2 2020 despite the worst economic quarter the world has ever experienced; - Q2 2020 revenue from Skyline’s hotels and resorts was
$7.0 million compared to$45.8 million in Q2 2019, an unprecedented decline of 85% due to the impact of COVID-19; - Skyline’s operating expenses from hotels and resorts also declined by 68% including the effect of subsidies received in response to the crisis;
- EBITDA for the first six months of 2020 remained positive at
$2.3 million versus$23.7 million in the first half of 2019; - Unrestricted cash and available lines of credit as at
June 30, 2020 totalled approximately$44 million ; - Occupancy of all of the Company’s US hotels and Canadian resorts show a steady improvement from their lows in April;
- The Company received independent, third-party appraisals for 73% of its US hotels and Canadian resorts as at
June 30, 2020 , which resulted in a reduction in the Company’s shareholders equity of$19.9 million net of tax; - Midroog reaffirmed the Baa1 investment grade rating of the Company’s bonds, with negative implications due to COVID-19. All principal and interest payments required have been made and the Company is not in default on any debt covenants;
- Skyline announced the sale of the Port McNicoll development lands under a power of sale agreement, which is expected to close on
August 17 th and will result in$5 million of cash receipts in the second half of 2020; and - Gil Blutrich resigned from the Board of Directors (and previously ceased to be a member of Management) and was replaced on the Board by
Blake Lyon .
“The first half of 2020 presented new and unprecedented challenges to the world economy, which directly affected Skyline’s properties. Nonetheless, Skyline was able to increase its cash reserves during this period and continues to manage through this unprecedented world event” commented
COVID-19 RECAP AND UPDATE
At the end of 2019, the COVID-19 virus began spreading rapidly, and during Q1 2020, the virus was declared a global pandemic by the
The Company’s hotels located in
In response to the COVID-19 crisis, the Canadian and US Governments have unveiled multiple stimulus measures for which the Company qualifies or believes it qualifies. In the US, Skyline received loans under the Paycheque Protection Program (“PPP”).
In
The effect of the COVID-19 virus had a materially negative impact on the economy and businesses, in general, and on the Company’s operating and financial results during the second quarter of 2020. Should there be no further relief in the restrictions and/or should government restrictions be renewed, the financial and operating results of the Company could be materially affected. The foregoing update of the Company is based on Management’s current assessment of the business and the North American hospitality industry as a whole, and may be considered forward-looking information for purposes of applicable Canadian and Israeli securities legislation. Readers are cautioned that actual results may vary. Refer to the section “Forward-Looking Statements” below.
SUMMARY OF FINANCIAL RESULTS
C$000’s | For the Three Months Ended | For the Six Months Ended | ||
2020 | 2019 | 2020 | 2019 | |
NOI from | (4,775) | 9,240 | 2,732 | 22,007 |
NOI from Hotels & Resorts Margin | (68%) | 20% | 6% | 23% |
Same Asset NOI | (4,775) | 9,211 | 2,732 | 21,517 |
Same Asset NOI Margin | (68%) | 20% | 6% | 22% |
Adjusted EBITDA | (6,808) | 11,098 | 2,283 | 23,667 |
Adjusted EBITDA Margin | (93%) | 15% | 3% | 18% |
FFO | (7,727) | 5,885 | (4,975) | 12,994 |
INCOME STATEMENT HIGHLIGHTS
All amounts in millions of Canadian dollars unless otherwise stated
Second Quarter 2020 Results
- Total revenue for Q2 2020 was
$7.3 , compared to$73.7 in Q2 2019. Revenue from hotels and resorts decreased by 85% to$45.8 due to the impact of COVID-19. At the same time, Skyline reduced its operating expenses from hotels and resorts by 68% in response to the crisis including the effect of government subsidies. Revenue from the sale of residential real estate was$0.3 . In Q2 2020 Skyline sold one unit at Copeland House, while during this period last year Skyline provided occupancy 63 units atLakeside Lodge and recorded revenue of$27.9 . - Same asset NOI for Q2 2020 was negative
$4.8 compared to$9.2 in Q2 2019. The decrease was driven mainly by the impact of COVID-19 as discussed above. - Adjusted EBITDA for Q2 2020 was negative
$6.8 compared to$11.1 in Q2 2019. The decrease is attributable to the impact of COVID-19 on the Company’s hotels and resorts as discussed above. - Fair value gain on investment properties totalled
$4.9 due to increased value of the Company’s land located atBlue Mountain . - Net financial expense for Q2 2020 totalled
$1.7 , compared to$4.4 in Q2 2019. Interest expense of$3.8 was$1.8 lower relative to$5.5 Q2 2019 due to the repayment of construction debt in 2019 and lower interest rates. Interest rates decreased during 2020 due to stimulative measures taken by central banks in response to the COVID-19 pandemic. Skyline benefited from this as the majority of its mortgages bear variable interest rates. The decline in interest expense was coupled with net foreign exchange movement of$2.4 , which was the result of appreciation of the Canadian dollar relative to the US dollar. - FFO for Q2 2020 was negative
$7.7 compared to$5.9 in Q2 2019. The decrease was due to the impact of COVID-19 on earnings at hotels and resorts. - Net loss for Q2 2020 amounted to
$7.3 , compared to net income of$3.1 in Q2 2019. Excluding minority interests, the Company had a net loss of$7.5 in Q2 2020, compared to net income of$2.2 in Q2 2019. - Total comprehensive loss for Q2 2020 was
$33.7 compared to total comprehensive loss of$11.0 in Q2 2019. The Q2 2020 loss was driven by revaluation of the Company’s property, plant and equipment, coupled with foreign exchange losses.
First Half (“1H”) 2020 Results
- Total revenue for 1H 2020 was
$78.9 , compared to$130.6 in 1H 2019. Revenue from hotels and resorts decreased by 50% to$48.5 due to the impact of COVID-19. Revenue from the sale of residential real estate was$30.4 . During Q1 2020, the Company completed the sale of phases 2 and 3 of the Second Nature development project located nearBlue Mountain . Upon final closing of the transaction, the Company recorded revenue of$28.9 , received net cash proceeds of$5.4 , and repaid construction debt in the amount of$2.4 . As part of the transaction, the Company gave the purchaser a 3-year vendor take back loan in the amount of$23.7 . - Same asset NOI for 1H 2020 was
$2.7 , a decrease of 87% compared to$21.5 in 1H 2019. The decrease was driven mainly by the impact of COVID-19 as discussed above. - Adjusted EBITDA for 1H 2020 was
$2.3 , a decrease of 90% compared to$23.7 in 1H 2019. The decrease is attributable to the impact of COVID-19 on the Company’s hotels and resorts as discussed above. - Net financial expense for 1H 2020 totalled
$12.1 , compared to$9.1 in 1H 2019. Interest expense was$3.3 lower relative to 1H 2019 due to the repayment of construction debt and lower interest rates. Interest rates decreased during 1H 2020 due to stimulative measures taken by central banks in response to the COVID-19 pandemic. The decline in interest expense was offset by net foreign exchange movement of$4.1 , which was the result of depreciation of the Canadian dollar relative to the US dollar. This impacted the valuation of the Company’s bonds.$6.5 million of non-cash FX gains were also realized, however these gains are included in the Company’s other comprehensive income in accordance with IFRS. - FFO for 1H 2020 was negative
$4.9 compared to$13.0 in 1H 2019. The decrease was due to the impact of COVID-19 on earnings at hotels and resorts. - Net loss for 1H 2020 amounted to
$13.2 , compared to net income of$1.6 in 1H 2019. Excluding minority interests, the Company had a net loss of$12.8 in 1H 2020, compared to net income of$2.4 in 1H 2019. - Total comprehensive loss for 1H 2020 was
$26.2 compared to total comprehensive loss of$15.9 in 1H 2019. The 1H 2020 loss was driven by revaluation of the Company’s property, plant and equipment, offset by foreign exchange gains.
BALANCE SHEET HIGHLIGHTS
- Total assets as at
June 30, 2020 were$666 compared to$676 as atDecember 31, 2019 . The decrease was a result of a revaluation of the Company’s property, plant and equipment that resulted in a decline in value, offset by an increase in the fair value of the Company’s investment property and a$14 increase in cash and cash equivalents. - Cash and cash equivalents were
$41 as atJune 30, 2020 compared to$26.9 as atDecember 31, 2019 . The increase is driven by the Company accessing its available credit facilities and receipt of funds from the Canadian and US governments, offset by property capital improvements and repayment of bond and loan principal. - Net debt as at
June 30, 2020 totalled$295 , an increase of$19 compared to net debt of$276 as atDecember 31, 2019 , driven by FX movement in the Company’s US dollar-denominated debt. - Total Equity was
$251 ($226 attributable to shareholders), representing 38% of total assets. As atJune 30, 2020 equity per share attributable to shareholders was34.20 NIS ($13.51 ), compared to the closing share price of12.46 NIS ($4.92 ), a discount of 64%. As of this date, the Company’s shares were trading at13.11 NIS , implying a discount of 62%.
A breakdown of the change in fair value described above is summarized in the table below:
C$000’s | YTD Fair Value Change | Tax Impact | Net Change – OCI | Net Change – Net Income |
Property, Plant & Equipment | ||||
Courtyard by Marriott hotels | (22,597) | 5,154 | (17,443) | - |
Renaissance | (1,070) | 122 | (948) | - |
(1,576) | 360 | (1,216) | - | |
- | - | - | - | |
Deerhurst | (950) | 252 | (698) | - |
Horseshoe | (710) | 188 | (522) | - |
Total – PP&E | (26,903) | 6,076 | (20,827) | - |
Investment Properties | 4,858 | (1,358) | - | 3,523 |
Total Change | (22,045) | 4,741 | (20,827) | 3,523 |
About Skyline
Skyline is a Canadian company that specializes in hospitality real estate investments in
The Company is traded on the Tel Aviv Stock Exchange (ticker: SKLN) and is a reporting issuer in
For more information:
Chief Financial Officer
robw@skylineinvestments.com
1 (647) 207-5312
VP, Asset Management & Investor Relations
benn@skylineinvestments.com
1 (416) 368-2565 ext 2222
Non-IFRS Measures
The Company’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). However, the following measures: NOI, NOI Margin, FFO, FFO per share and Adjusted EBITDA are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS, and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance determined in accordance with IFRS. NOI, NOI Margin, FFO, FFO per share and Adjusted EBITDA as computed by the Company, may differ from similar measures as reported by other companies in similar or different industries. However, these non-IFRS measures are recognized supplemental measures of performance for real estate issuers widely used by the real estate industry, particularly by those publicly traded entities that own and operate income-producing properties, and the Company believes they provide useful supplemental information to both management and readers in measuring the financial performance of the Company. Further details on non-IFRS measures are set out in the Company’s Management's Discussion and Analysis for the period ended
Forward-Looking Statements
This release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the Company. In some cases, forward-looking statements can be identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside our control that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include the extent of the impact of the COVID-19 virus on our business, operations and financial performance, the imposition (or relaxation) of government restrictions (including the duration and terms of such restrictions), expected consumer and commercial behaviour, as well as other risks detailed in our public filings with the Canadian and Israeli Securities Administrators. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, we undertake no obligation to update any forward-looking or other statements herein whether as a result of new information, future events or otherwise.
Investor Relations Contact:
Tel 617-535-7742
Arr@LifeSciAdvisors.com
Source:
2020 GlobeNewswire, Inc., source