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TPH - Temple Hotels Inc.


permabear

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They own or have equity interests in 4,244 hotel rooms across Canada, 41% of which are located in Alberta. 21% of their rooms are located in Fort Mac, AB. In 2014, 61% of their NOI was generated in Alberta. Management of the hotels is outsourced to the CEO/largest owner's private company.

 

EV of $733m or $173k per key (they paid $187k/key for the portfolio). Dividend payout of well over 100%. NOI in 2015 will not be sufficient to pay dividend (even after it was reduced ~45% in January). Management says they will rely on upward refinancing of their properties to pay for regular loan amortizations. The cost of their portfolio divided by total debt is 77%.

 

The stock is up almost 50% in the last 4 days. I have no idea why. I have not seen any news, insider buying, etc. Any ideas?

 

EDIT: for the record, this is a SHORT idea!

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What do you mean by 'came down to Holloway levels'? I think HLC is significantly cheaper regardless of TPH's share price (see below) and I agree that it is better run.

 

Looking at EV, HLC is $94k/room vs. TPH at $174k. Even if you wipe out all TPH equity, debtholders' claims total $142k/room - still much more expensive than HLC.

 

On a cap rate basis, HLC earned $32m in 2014 including only 5 months of RYL earnings. On a pro forma basis, HLC should do $40m NOI, which would imply a cap rate of 10.7% (NOI / EV). TPH did $58m NOI in 2014 and trades at a 7.9% cap rate. At $2/TPH share, that's an 8.5% cap. At $0/TPH share, that's 9.7% cap... still not as attractive as HLC!

 

Am I missing something here?

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  • 3 weeks later...

Civeo is much more levered to oil&gas/mining than Temple as they provide workforce accommodation. I think Temple is a short candidate and would stay away from Civeo too as it is highly levered and its assets are not adequately diversified. I would choose Holloway over Temple and Black Diamond Group over Civeo.

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  • 6 months later...
  • 4 weeks later...

Just for the record, I started this topic on May 6th calling a short on TPH @ $3.25, today it is trading at $0.86, or a 74% decline.

 

I agree Morguard will clean up the company, now that they have taken control, but I don't know what that means for shareholders. The company remains highly levered and shareholders could face continuing dilution.

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Just for the record, I started this topic on May 6th calling a short on TPH @ $3.25, today it is trading at $0.86, or a 74% decline.

 

I agree Morguard will clean up the company, now that they have taken control, but I don't know what that means for shareholders. The company remains highly levered and shareholders could face continuing dilution.

 

Good call. Morguard guys are smart. They have been buying the equity all the way down. Probably time to investigate this as a long opportunity but only if we have seen the lows for oil in this cycle.

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Just for the record, I started this topic on May 6th calling a short on TPH @ $3.25, today it is trading at $0.86, or a 74% decline.

 

I agree Morguard will clean up the company, now that they have taken control, but I don't know what that means for shareholders. The company remains highly levered and shareholders could face continuing dilution.

 

Good call. Morguard guys are smart. They have been buying the equity all the way down. Probably time to investigate this as a long opportunity but only if we have seen the lows for oil in this cycle.

 

Check out Holloway (TSX:HLC). Much more reasonably priced, less leverage, better diversified (away from oil & gas), stable management and operations. One of if not the cheapest hotel company in Canada.

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Just for the record, I started this topic on May 6th calling a short on TPH @ $3.25, today it is trading at $0.86, or a 74% decline.

 

I agree Morguard will clean up the company, now that they have taken control, but I don't know what that means for shareholders. The company remains highly levered and shareholders could face continuing dilution.

 

Hello Permabear - Do you have a rough idea of TPH's exposure to O&G based occupancy in Alberta. Thank you.

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They own or have equity interests in 4,244 hotel rooms across Canada, 41% of which are located in Alberta. 21% of their rooms are located in Fort Mac, AB. In 2014, 61% of their NOI was generated in Alberta.

 

This is helpful. Thanks. I believe not everything in AB is O&G related. AB has a small non-O&G economy as well? If I read your comment correctly, you are saying it's a 100% O&G exposure. I know places like Fort Mac are usually O&G but was thinking what else do they service?

 

Thanks again.

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They own or have equity interests in 4,244 hotel rooms across Canada, 41% of which are located in Alberta. 21% of their rooms are located in Fort Mac, AB. In 2014, 61% of their NOI was generated in Alberta.

 

This is helpful. Thanks. I believe not everything in AB is O&G related. AB has a small non-O&G economy as well? If I read your comment correctly, you are saying it's a 100% O&G exposure. I know places like Fort Mac are usually O&G but was thinking what else do they service?

 

Thanks again.

 

Fort Mac is basically the end of the road. If there was no oil there you'd have a few people doing forestry things, and service industries for the local native tribes, but the place would be 20-25X too big.

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