Suite 200
1800 West Pasewalk Avenue
Norfolk, NE 68701
(402) 371-2520
(402) 371-4229 Fax
www.condorhospitality.com
For Immediate Release
Condor Hospitality Trust Reports 2015 Third Quarter Results
4.7% Increase in Same-Store RevPAR | YTD 16 Non-Core Hotels Sold | 3 Premium-Branded Hotels Acquired
Norfolk, Nebraska, November 13, 2015 – Condor Hospitality Trust, Inc. (NASDAQ: CDOR) (the “Company”) today announced results for the third quarter ended September 30, 2015.
“We continue to make significant progress towards the strategic repositioning of the Company,” said Bill Blackham, Condor’s Chief Executive Officer. “Our name change from Supertel Hospitality to Condor Hospitality together with the acquisition of three high quality hotels early in the fourth quarter represent just the initial steps in a new direction for the Company. We have successfully sold 16 legacy assets this year at attractive valuations while de-levering and recycling the capital into assets that represent the future of Condor – high-quality, premium upper-midscale and select service assets in the top 50 MSAs. The Company has no significant debt maturities until 2017 and had nearly $15.0 million of cash on its balance sheet as of the end of the quarter, further signs of a strengthening balance sheet and new direction for the Company. Simply put, we are very excited about the future,” noted Blackham.
2015 Third Quarter Highlights:
| · | Revenue per available room (RevPAR) for the same-store continuing operations hotels in the third quarter was $50.46, an increase of 4.7 percent over the same 2014 period. |
| · | Revenue from continuing operations in the third quarter was $15.6 million, compared to $16.9 million in the prior year, driven by a decrease in revenue of $2.0 million attributable to five hotels in continuing operations sold between the periods, which was partially offset by the aforementioned increase in same-store RevPAR. |
| · | Reported net earnings attributable to common shareholders was $10.3 million, compared to a loss of $(3.3) million in the same 2014 period. |
| · | Adjusted funds from operations (AFFO) was $1.4 million for the quarter, compared to $1.7 million in the same 2014 period. |
| · | Adjusted EBITDA was $3.5 million for the quarter, compared to $4.8 million in the same 2014 period. |
| · | Changed the Company name to Condor Hospitality Trust, Inc. in July from Supertel Hospitality, Inc. |
Acquisition and Disposition Highlights:
| · | Sold four non-core hotels in the third quarter and five non-core hotels following the close of the quarter, bringing to 16 the total number of hotels sold year-to-date. |
| · | Acquired three premium-branded hotels in an off-market transaction for $42.5 million at the beginning of October. |
Additional Events Highlights:
| · | Arinn Cavey joined the Company as Chief Accounting Officer in September. |
| · | Jonathan Gantt joined the Company as Senior Vice President and Chief Financial Officer in October. |
| · | Closed a $10.0 million mortgage loan in late October with Huntington National Bank to refinance an existing loan maturing in November 2015. |
Third Quarter Review
Operating and Financial Results
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
RevPAR: For the third quarter, revenue per available room (RevPAR) for the 42 continuing operations same-store hotels increased 4.7 percent to $50.46. The increase was driven by an 8.5 percent increase in average daily rate (ADR) to $72.10, partially offset by a 3.4 percent decline in occupancy to 70.0 percent, compared to the third quarter 2014.
Revenue: Third quarter 2014 operating results include five hotels that were sold in 2015 prior to September 30, 2015. Condor’s third quarter 2015 revenue from continuing operations declined 8.0 percent to $15.6 million compared to the same 2014 period. The decrease in revenue was primarily due to the loss of $2.0 million of revenue attributable to five hotels in continuing operations sold between the periods, which was partially offset by the aforementioned increase in same-store RevPAR. Notwithstanding the revenue decline from the sale of the five non-core hotels, POI from continuing operations remained essentially flat at $4.8 million in the third quarter 2015 over the prior year.
Net Earnings: Net earnings attributable to common shareholders was $10.3 million, or $2.09 per basic share and $0.13 per diluted share, respectively, for the third quarter 2015, compared to a net loss of $(3.3) million or $(0.69) per basic and diluted share for the same 2014 period. The results, excluding 2015 earnings per diluted share, include a non-cash derivative gain of $7.9 million for the three months ending September 30, 2015, compared to a derivative loss of $(4.6) million in the same quarter of 2014. When the value of the derivative liability increases, a loss is recorded and when it decreases, a gain is recorded. One of the key drivers of the value of the derivatives is the market value of the common stock.
Funds from Operations (FFO): Funds from operations (FFO) was $8.9 million for the third quarter 2015, compared to $(2.9) million in the same 2014 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities, gain on debt conversion, acquisition expense, and terminated equity transactions expense, in the third quarter 2015 was $1.4 million, compared to $1.7 million in the same 2014 period.
EBITDA: Earnings before interest, taxes, depreciation and amortization (EBITDA) was $12.7 million for the third quarter 2015, compared to $0.5 million in the same year-ago period. Adjusted EBITDA was $3.5 million, compared to $4.8 million for the third quarter 2014. Adjusted EBITDA is EBITDA before non-controlling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends declared and undeclared, unrealized gain/loss on derivatives, acquisition expense, gain on debt conversion and the expenses of the terminated equity transactions.
Name Change: On July 15, 2015, the Company changed its name to Condor Hospitality Trust, Inc. from Supertel Hospitality, Inc. The name change marks the beginning of a new strategic direction for the Company, including a repositioning of its portfolio into higher quality, significantly newer, upscale hotels. The Company’s common stock trading symbol changed from SPPR to CDOR. The trading symbol for the Company’s Series A preferred stock changed from SPPRP to CDORP and the trading symbol for the Company’s Series B preferred stock changed from SPPRO to CDORO.
Capital Reinvestment
The Company invested $1.8 million in capital improvements throughout the portfolio in the third quarter 2015 to upgrade its properties and maintain brand standards. Notable capital improvements in the third quarter included renovations at the Princeton, West Virginia Comfort Inn as well as the completion of upgrades at the Rocky Mount, Virginia Comfort Inn, and the Morgantown, West Virginia Quality Inn.
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
Balance Sheet
The Company had cash and available revolver of $14.9 million and $5.9 million, respectively, at September 30, 2015. After the close of the third quarter, $16.1 million of this cash and available revolver was reinvested in the purchase of three hotel properties. Additionally, the Company sold five hotels generating $5.3 million of cash after debt repayment and related expenses. This cash is available for reinvestment after satisfaction of operating needs.
At December 31, 2014, the Company had $42.1 million of debt with contractual maturities in 2015 (no debt matures in 2016). As of September 30, 2015, the Company had reduced that obligation to $14.1 million through refinancing, amortization and repayment using the proceeds from hotel sales. Since the end of the third quarter of 2015, the remaining 2015 debt maturity obligation was further reduced to $1.3 million as a result of the following transactions:
| · | An $11.7 million balance on a mortgage loan with Citigroup Global Markets Realty Corp. maturing November 11, 2015 was refinanced with a $10 million mortgage loan with Huntington National Bank maturing October 26, 2020; and |
| · | The sale of one hotel property was completed reducing a mortgage loan with GE Capital Franchise Finance LLC (“GE”) maturing December 15, 2015 by $1.1 million, bringing the remaining outstanding balance on this loan to $1.1 million. The Company anticipates that the net proceeds on the sale of the GE encumbered assets classified as held for sale will be sufficient to repay the remainder of this maturing loan. |
As of September 30, 2015, Condor had $54.8 million in outstanding debt on its held for use hotels with an average term of 1.6 years and weighted average annual interest rate of 5.9 percent.
Dividends
The Company did not declare a dividend on common stock in the third quarter 2015. The Company’s board of directors elected to suspend the payment of monthly dividends commencing December 31, 2013 on the outstanding shares of its 8.00% Series A Cumulative Convertible Preferred Stock (NASDAQ: CDORP), quarterly dividends on the outstanding shares of its 10.00% Series B Preferred Cumulative Stock (NASDAQ: CDORO), and quarterly dividends on the outstanding shares of its 6.25% Series C Cumulative Convertible Preferred Stock to preserve capital and improve liquidity. The board of directors will continue to monitor the dividend policy.
On August 6, 2015, the Company commenced an exchange offer of its common stock for its Series A and Series B preferred stock, however, with the subsequent volatility and unfavorable direction of the stock markets and the price of the common stock, the Company deemed it prudent, at that point in time, to cancel the related special shareholders meeting and terminate and withdraw the offer on September 17, 2015, without accepting any preferred shares for exchange.
[The Remainder of This Page Intentionally Left Blank]
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
Acquisitions and Dispositions Review
Acquisitions
In October 2015, following the close of the 2015 third quarter, the Company acquired three premium-branded hotels in an off-market transaction for $42.5 million.
The properties include the 116-room SpringHill Suites Downtown/Riverwalk located at 524 S. St. Mary’s Street in the heart of the popular Riverwalk district in San Antonio, TX; the 142-room Hotel Indigo Hartsfield-Jackson Atlanta International Airport located at 1776 Harvard Avenue in College Park (Atlanta), GA; and the 120-room Courtyard Jacksonville Flagler Center located at 14402 Old St. Augustine Road adjacent to the Flagler Center business park in Jacksonville, FL.
The assets are performing consistently with the Company’s underwriting at the time of acquisition.
Dispositions
In the third quarter 2015, the Company sold four non-core hotels with an aggregate of 498 rooms for combined gross proceeds of $24.4 million, generating cash of $11.7 million after debt repayment and related expenses.
The four hotels sold are:
| · | Days Inn in Ashland, KY, sold July 1, 2015, for $2.2 million |
| · | Days Inn in Alexandria, VA, sold July 13, 2015, for $6.5 million |
| · | Comfort Inn in Alexandria, VA, sold July 13, 2015, for $12.5 million |
| · | Super 8 in Manhattan, KS, sold August 28, 2015, for $3.2 million |
Following the close of the third quarter 2015, the Company sold five non-core hotels with an aggregate of 378 rooms for combined gross proceeds of $10.0 million, generating additional cash of $5.3 million after debt repayment and related expenses.
The five hotels sold are:
| · | Quality Inn in Sheboygan, WI, sold October 6, 2015, for $2.3 million |
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
| · | Super 8 in Hays, KS, sold October 14, 2015, for $1.9 million |
| · | Days Inn in Glasgow, KY, sold October 16, 2015, for $1.8 million |
| · | Super 8 in Tomah, WI, sold October 21, 2015, for $1.4 million |
| · | Rodeway Inn in Fayetteville, NC, sold November 3, 2015, for $2.6 million |
Currently, the Company is marketing seven hotels for sale and expects to generate approximately $6.3 million in cash after associated debt repayments and related expenses.
Additional Events
On September 21, 2015, the Company hired Arinn A. Cavey as Chief Accounting Officer. Arinn will oversee the Company’s financial plans, SEC compliance matters and banking relationships.
On October 26, 2015, the Company successfully closed a $10.0 million mortgage loan with Huntington National Bank which was used to refinance an existing loan with Citigroup Global Markets Realty Corp. that was set to mature in November 2015. The loan was the last remaining significant loan maturity in 2015 and positions the Company with no 2016 loan maturities.
On October 27, 2015, the Company hired Jonathan J. Gantt as Senior Vice President and Chief Financial Officer. Jonathan will lead the Company’s capital raising efforts as well as provide overall direction for the Company’s accounting, financial reporting, tax, and budget activities.
Outlook
“The legacy portfolio continued to enjoy the benefit of pricing power in the third quarter with a 4.7 percent RevPAR increase over the same three month period last year and 5.0 percent year-to-date RevPAR growth compared to the same period last year," said Blackham. "The ADR increases included in these RevPAR increases were 8.5 percent in the third quarter and 6.5 percent year-to-date. As our legacy hotels dispositions continue to close, the leverage ratios and the liquidity measures for the Company have significantly improved during the year,” noted Mr. Blackham.
About Condor Hospitality Trust, Inc.
Condor Hospitality Trust, Inc. (NASDAQ: CDOR) is a self-administered real estate investment trust that specializes in the investment and ownership of upper midscale and upscale, premium-branded select-service, extended stay and limited service hotels. The Company currently owns 43 hotels in 20 states. Condor’s hotels are franchised by a number of the industry’s most well-regarded brand families including Hilton, Marriott, InterContinental Hotels Group, Choice and Wyndham. For more information or to make a hotel reservation, visit www.condorhospitality.com.
Contact:
Krista Arkfeld, Director of Corporate Communications
karkfeld@trustcondor.com
402-371-2520
Forward Looking Statement
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company’s filings with the Securities and Exchange
Commission.
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
SELECTED FINANCIAL DATA:
Condor Hospitality Trust, Inc.
Balance Sheet
As of September 30, 2015 and December 31, 2014
(Dollars in thousands)
| As of | ||||||
| September 30, | December 31, | |||||
| 2015 | 2014 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| Investments in hotel properties | $ | 129,038 | $ | 132,600 | ||
| Less accumulated depreciation | 50,808 | 51,632 | ||||
| 78,230 | 80,968 | |||||
| Cash and cash equivalents | 14,923 | 173 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $9 and $25 | 1,263 | 1,190 | ||||
| Prepaid expenses and other assets | 4,793 | 4,262 | ||||
| Deferred financing costs, net | 1,438 | 1,637 | ||||
| Investment in hotel properties, held for sale, net | 21,076 | 58,214 | ||||
| $ | 121,723 | $ | 146,444 | |||
| LIABILITIES AND EQUITY | ||||||
| LIABILITIES | ||||||
| Accounts payable, accrued expenses and other liabilities | $ | 7,448 | $ | 6,666 | ||
| Derivative liabilities, at fair value | 12,329 | 20,337 | ||||
| Debt related to hotel properties held for sale | 10,339 | 36,034 | ||||
| Long-term debt | 54,800 | 56,653 | ||||
| 84,916 | 119,690 | |||||
| Redeemable preferred stock | ||||||
| 10% Series B, 800,000 shares authorized; $.01 par value, 332,500 shares outstanding, liquidation preference of $8,312 | 7,662 | 7,662 | ||||
| EQUITY | ||||||
| Shareholders' equity | ||||||
| Preferred stock, 40,000,000 shares authorized; | ||||||
| 8% Series A, 2,500,000 shares authorized, $.01 par value, 803,270 shares outstanding, liquidation preference of $8,033 | 8 | 8 | ||||
| 6.25% Series C, 3,000,000 shares authorized, $.01 par value, 3,000,000 shares outstanding, liquidation preference of $30,000 | 30 | 30 | ||||
| Common stock, $.01 par value, 200,000,000 shares authorized; 4,932,222 and 4,692,965 shares outstanding | 49 | 47 | ||||
| Additional paid-in capital | 138,446 | 137,900 | ||||
| Accumulated deficit | (110,199) | (118,983) | ||||
| Total shareholders' equity | 28,334 | 19,002 | ||||
| Non-controlling interest | ||||||
| Non-controlling interest in consolidated partnership, redemption value $1,307 and $25 | 811 | 90 | ||||
| Total equity | 29,145 | 19,092 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||
| $ | 121,723 | $ | 146,444 | |||
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
Condor Hospitality Trust, Inc.
Statement of Operations
For the three and nine months ended September 30, 2015 and 2014
(Unaudited - Dollars in thousands except per share data)
| Three months ended | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| REVENUES | ||||||||||||
| Room rentals and other hotel services | $ | 15,556 | $ | 16,902 | $ | 44,266 | $ | 44,251 | ||||
| EXPENSES | ||||||||||||
| Hotel and property operations | 10,774 | 12,009 | 32,099 | 32,933 | ||||||||
| Depreciation and amortization | 1,099 | 1,624 | 3,836 | 4,844 | ||||||||
| General and administrative | 1,451 | 912 | 4,183 | 2,989 | ||||||||
| Acquisition expense | 177 | 0 | 194 | 0 | ||||||||
| Terminated equity transactions | 180 | 11 | 180 | 76 | ||||||||
| 13,681 | 14,556 | 40,492 | 40,842 | |||||||||
| EARNINGS BEFORE NET GAIN ON DISPOSITIONS OF ASSETS, OTHER INCOME, INTEREST EXPENSE AND INCOME TAXES | 1,875 | 2,346 | 3,774 | 3,409 | ||||||||
| Gain on dispositions of assets | 2,928 | 63 | 2,806 | 36 | ||||||||
| Unrealized derivative gain (loss) | 7,895 | (4,615) | 8,008 | (14,218) | ||||||||
| Other income | (4) | (12) | 122 | 113 | ||||||||
| Interest expense | (1,118) | (1,774) | (4,135) | (5,321) | ||||||||
| Loss on debt extinguishment | (104) | (37) | (111) | (141) | ||||||||
| Impairment (loss) recovery | 313 | 0 | (3,517) | 119 | ||||||||
| EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 11,785 | (4,029) | 6,947 | (16,003) | ||||||||
| Income tax expense | 0 | 0 | 0 | 0 | ||||||||
| EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 11,785 | (4,029) | 6,947 | (16,003) | ||||||||
| Gain from discontinued operations, net of tax | 169 | 1,628 | 2,558 | 2,639 | ||||||||
| NET EARNINGS (LOSS) | 11,954 | (2,401) | 9,505 | (13,364) | ||||||||
| Loss (earnings) attributable to non-controlling interest | (724) | 3 | (721) | 19 | ||||||||
| NET EARNINGS (LOSS) ATTRIBUTABLE TO CONTROLLING INTERESTS | 11,230 | (2,398) | 8,784 | (13,345) | ||||||||
| Preferred stock dividends - undeclared | (914) | (868) | (2,707) | (2,572) | ||||||||
| NET EARNINGS (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 10,316 | $ | (3,266) | $ | 6,077 | $ | (15,917) | ||||
| NET EARNINGS (LOSS) PER COMMON SHARE- BASIC AND DILUTED | ||||||||||||
| EPS from continuing operations - basic and diluted | $ | 2.06 | $ | (1.04) | $ | 0.78 | $ | (5.11) | ||||
| EPS from discontinued operations - basic and diluted | $ | 0.03 | $ | 0.35 | $ | 0.47 | $ | 0.73 | ||||
| EPS Basic - Total | $ | 2.09 | $ | (0.69) | $ | 1.25 | $ | (4.38) | ||||
| EPS Diluted - Total | $ | 0.13 | $ | (0.69) | $ | (0.02) | $ | (4.38) | ||||
| AMOUNTS ATTRIBUTABLE TO COMMON SHAREHOLDERS | ||||||||||||
| Earnings (loss) from continuing operations, net of tax | $ | 10,158 | $ | (4,894) | $ | 3,790 | $ | (18,556) | ||||
| Gain from discontinued operations, net of tax | 158 | 1,628 | 2,287 | 2,639 | ||||||||
| Net earnings (loss) attributable to common shareholders | $ | 10,316 | $ | (3,266) | $ | 6,077 | $ | (15,917) | ||||
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - In thousands, except per share data)
| Three months | Nine months | |||||||||||
| ended September 30 | ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| RECONCILIATION OF NET EARNINGS (LOSS) TO FFO AND ADJUSTED FFO | ||||||||||||
| Numerator: | ||||||||||||
| Adjusted FFO | ||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 10,316 | $ | (3,266) | $ | 6,077 | $ | (15,917) | ||||
| Depreciation and amortization | 1,099 | 1,624 | 3,836 | 4,956 | ||||||||
| Gain on disposition of assets | (2,926) | (2,168) | (4,465) | (2,776) | ||||||||
| (Loss) earnings attributable to non-controlling interest | 724 | (3) | 721 | (19) | ||||||||
| Impairment loss (recovery) | (313) | 921 | 3,396 | 1,398 | ||||||||
| FFO attributable to common shareholders - basic | $ | 8,900 | $ | (2,892) | $ | 9,565 | $ | (12,358) | ||||
| Unrealized derivative (gain) loss | (7,895) | 4,615 | (8,008) | 14,218 | ||||||||
| Gain on debt conversion | 0 | 0 | 0 | (88) | ||||||||
| Acquisition expense | 177 | 0 | 194 | 0 | ||||||||
| Terminated equity transactions | 180 | 11 | 180 | 76 | ||||||||
| Adjusted FFO attributable to common shareholders - basic | $ | 1,362 | $ | 1,734 | $ | 1,931 | $ | 1,848 | ||||
| Preferred stock dividends declared and undeclared | 522 | 491 | 1,543 | 1,535 | ||||||||
| Adjusted FFO attributable to common shareholders - diluted | $ | 1,884 | $ | 2,225 | $ | 3,474 | $ | 3,383 | ||||
| Diluted FFO | ||||||||||||
| FFO attributable to common shareholders-basic | $ | 8,900 | $ | (2,892) | $ | 9,565 | $ | (12,358) | ||||
| Preferred stock dividends declared and undeclared | 522 | 0 | 1,543 | 0 | ||||||||
| Unrealized derivatives (gain) loss | (7,895) | 0 | (8,008) | 0 | ||||||||
| FFO attributable to common shareholders-diluted | $ | 1,527 | $ | (2,892) | $ | 3,100 | $ | (12,358) | ||||
| Denominator (FFO Weighted Average Common Shares): | ||||||||||||
| Basic FFO | 5,597,523 | 4,685,815 | 5,394,039 | 3,629,588 | ||||||||
| Warrants - employees | 5,745 | 0 | 5,745 | 0 | ||||||||
| Restricted stock | 714 | 0 | 648 | 0 | ||||||||
| Preferred stock | 18,750,000 | 0 | 18,750,000 | 0 | ||||||||
| Warrants | (361,115) | 0 | (78,272) | 0 | ||||||||
| Diluted FFO | 23,992,867 | 4,685,815 | 24,072,160 | 3,629,588 | ||||||||
| Denominator (Adjusted FFO Weighted Average Common Shares) | ||||||||||||
| Basic FFO | 5,597,523 | 4,685,815 | 5,394,039 | 3,629,588 | ||||||||
| Warrants - employees | 5,745 | 0 | 5,745 | 0 | ||||||||
| Restricted stock | 714 | 566 | 648 | 7,175 | ||||||||
| Preferred Stock | 18,750,000 | 18,750,000 | 18,750,000 | 9,903,846 | ||||||||
| Warrants | (361,115) | 3,750,000 | (78,272) | 3,750,000 | ||||||||
| Convertible debt | 0 | 0 | 0 | 737,179 | ||||||||
| Adjusted Diluted FFO | 23,992,867 | 27,186,381 | 24,072,160 | 18,027,788 | ||||||||
| FFO per share - basic | $ | 1.59 | $ | (0.62) | $ | 1.77 | $ | (3.40) | ||||
| Adjusted FFO per share - basic | $ | 0.24 | $ | 0.37 | $ | 0.36 | $ | 0.51 | ||||
| FFO per share - diluted | $ | 0.06 | $ | (0.62) | $ | 0.13 | $ | (3.40) | ||||
| Adjusted FFO per share - diluted | $ | 0.08 | $ | 0.08 | $ | 0.14 | $ | 0.19 | ||||
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
The number of weighted average shares of common stock for the three months ended September 30, 2015 is significantly higher than the outstanding shares at September 30, 2014 due to the issuance of common stock from the rights offering during the last month of the second quarter of 2014.
FFO and Adjusted FFO (“AFFO”) are non-GAAP financial measures. We consider FFO and AFFO to be market accepted measures of an equity REIT's operating performance, which are necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net earnings computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets and impairment, plus depreciation and amortization of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. Our interpretation of the NAREIT definition is that non-controlling interest in net earnings (loss) should be added back to (deducted from) net earnings (loss) as part of reconciling net earnings (loss) to FFO. AFFO is FFO adjusted to exclude gains or losses on derivative liabilities and gain on debt conversion, which are non-cash charges against earnings and which do not represent results from our core operations. AFFO also adds back acquisition expense and terminated equity transactions expense. FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and AFFO should not be considered as alternatives to net earnings (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO and AFFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO and AFFO for similar REITs.
Diluted FFO per share and diluted Adjusted FFO per share are computed after adjusting the numerator and denominator of the basic computation for the effects of any dilutive potential common shares outstanding during the period. The Company’s outstanding stock options and certain warrants to purchase common stock would be antidilutive and are not included in the dilution computation.
We use FFO and AFFO as performance measures to facilitate a periodic evaluation of our operating results relative to those of our peers. We consider FFO and AFFO to be useful additional measures of performance for an equity REIT because they facilitate an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO and AFFO provide a meaningful indication of our performance.
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Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
| Three months | Nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| RECONCILIATION OF NET EARNINGS (LOSS) TO ADJUSTED EBITDA | ||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 10,316 | $ | (3,266) | $ | 6,077 | $ | (15,917) | ||||||||
| Interest expense, including discontinued operations | 1,169 | 2,033 | 4,386 | 6,380 | ||||||||||||
| Loss on debt extinguishment | 104 | 157 | 111 | 261 | ||||||||||||
| Depreciation and amortization, including discontinued operations | 1,099 | 1,624 | 3,836 | 4,956 | ||||||||||||
| EBITDA | 12,688 | 548 | 14,410 | (4,320) | ||||||||||||
| Earnings (loss) attributable to non-controlling interest | 724 | (3) | 721 | (19) | ||||||||||||
| Gain on disposition of assets | (2,926) | (2,168) | (4,465) | (2,776) | ||||||||||||
| Impairment loss (recovery) | (313) | 921 | 3,396 | 1,398 | ||||||||||||
| Preferred stock dividends undeclared | 914 | 868 | 2,707 | 2,572 | ||||||||||||
| Unrealized (gain) loss on derivatives | (7,895) | 4,615 | (8,008) | 14,218 | ||||||||||||
| Gain on debt conversion | 0 | 0 | 0 | (88) | ||||||||||||
| Acquisition expense | 177 | 0 | 194 | 0 | ||||||||||||
| Terminated equity transactions | 180 | 11 | 180 | 76 | ||||||||||||
| ADJUSTED EBITDA | $ | 3,549 | $ | 4,792 | $ | 9,135 | $ | 11,061 | ||||||||
EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We calculate EBITDA and Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though EBITDA and Adjusted EBITDA also do not represent amounts that accrue directly to common shareholders. In calculating Adjusted EBITDA, we add back non-controlling interest, net (gain) loss on disposition of assets, preferred stock dividends, acquisition expense and terminated equity transactions expense, which are cash charges. We also add back impairment, gain on debt conversion and unrealized gain or loss on derivatives, which are non-cash charges.
EBITDA and Adjusted EBITDA do not represent cash generated from operating activities determined by GAAP and should not be considered as alternatives to net earnings, cash flow from operations or any other operating performance measure prescribed by GAAP. EBITDA and Adjusted EBITDA are not measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither do the measurements reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA and Adjusted EBITDA may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of our operating performance. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.
10 | Page
Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
Property Operating Income (POI) – Continuing and Discontinued Operations
This presentation includes non-GAAP financial measures, and should not be considered as an alternative to earnings (loss) from continuing operations or gain from discontinued operations, net of tax. The company believes that the presentation of hotel property operating income (POI) is helpful to investors, and represents a more useful description of its core operations, as it better communicates the comparability of its hotels’ operating results.
| Unaudited-in thousands | Three months | Nine months | |||||||||||||||
| except statistical data: | ended September 30, | ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Revenue from room rentals and | |||||||||||||||||
| other hotel services consists of: | |||||||||||||||||
| Room rental revenue | $ | 15,107 | $ | 16,371 | $ | 42,711 | $ | 42,720 | |||||||||
| Other hotel service revenues | 449 | 531 | 1,555 | 1,531 | |||||||||||||
| Total revenue from room rentals and other hotel services | $ | 15,556 | $ | 16,902 | $ | 44,266 | $ | 44,251 | |||||||||
| Hotel and property operations expense | |||||||||||||||||
| Total hotel and property operations expense | $ | 10,774 | $ | 12,009 | $ | 32,099 | $ | 32,933 | |||||||||
| Property Operating Income ("POI") | |||||||||||||||||
| Total property operating income | $ | 4,782 | $ | 4,893 | $ | 12,167 | $ | 11,318 | |||||||||
| POI as a percentage of revenue from room rentals and other hotel services | |||||||||||||||||
| Total POI as a percentage of revenue | 30.7 | % | 28.9 | % | 27.5 | % | 25.6 | % | |||||||||
| Discontinued Operations | |||||||||||||||||
| Room rentals and other hotel services | |||||||||||||||||
| Total room rental and other hotel services | $ | 865 | $ | 3,664 | $ | 3,580 | $ | 12,651 | |||||||||
| Hotel and property operations expense | |||||||||||||||||
| Total hotel and property operations expense | $ | 643 | $ | 2,841 | $ | 2,551 | $ | 9,944 | |||||||||
| Property Operating Income ("POI") | |||||||||||||||||
| Total property operating income | $ | 222 | $ | 823 | $ | 1,029 | $ | 2,707 | |||||||||
| POI as a percentage of revenue from | |||||||||||||||||
| room rentals and other hotel services | |||||||||||||||||
| Total POI as a percentage of revenue | 25.7 | % | 22.5 | % | 28.7 | % | 21.4 | % | |||||||||
11 | Page
Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
(Unaudited - In thousands, except statistical data)
POI from continuing operations is reconciled to net earnings (loss) as follows:
| Three months | Nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Earnings (loss) from continuing operations | $ | 11,785 | $ | (4,029) | $ | 6,947 | $ | (16,003) | ||||||||
| Depreciation and amortization | 1,099 | 1,624 | 3,836 | 4,844 | ||||||||||||
| Gain on dispositions of assets | (2,928) | (63) | (2,806) | (36) | ||||||||||||
| Unrealized derivative (gain) loss | (7,895) | 4,615 | (8,008) | 14,218 | ||||||||||||
| Other income | 4 | 12 | (122) | (113) | ||||||||||||
| Interest expense | 1,118 | 1,774 | 4,135 | 5,321 | ||||||||||||
| Loss on debt extinguishment | 104 | 37 | 111 | 141 | ||||||||||||
| General and administrative expense | 1,451 | 912 | 4,183 | 2,989 | ||||||||||||
| Acquisition expense | 177 | 0 | 194 | 0 | ||||||||||||
| Terminated equity transactions | 180 | 11 | 180 | 76 | ||||||||||||
| Impairment loss (recovery) | (313) | 0 | 3,517 | (119) | ||||||||||||
| POI - continuing operations | $ | 4,782 | $ | 4,893 | $ | 12,167 | $ | 11,318 | ||||||||
POI from discontinued operations is reconciled to gain from discontinued operations, net of tax, as follows:
| Three months | Nine months | |||||||||||
| ended September 30, | ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Gain from discontinued operations, net of tax | $ | 169 | $ | 1,628 | $ | 2,558 | $ | 2,639 | ||||
| Depreciation and amortization from discontinued operations | 0 | 0 | 0 | 112 | ||||||||
| Gain on dispositions of assets from discontinued operations | 2 | (2,105) | (1,660) | (2,740) | ||||||||
| Interest expense from discontinued operations | 51 | 259 | 251 | 1,059 | ||||||||
| Loss on debt extinguishment | 0 | 120 | 0 | 120 | ||||||||
| Impairment loss (recovery) from discontinued operations | 0 | 921 | (120) | 1,517 | ||||||||
| POI - discontinued operations | $ | 222 | $ | 823 | $ | 1,029 | $ | 2,707 | ||||
| Three months | Nine months | ||||||||||||||||
| ended September 30, | ended September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| POI--continuing operations | 4,782 | 4,893 | 12,167 | 11,318 | |||||||||||||
| POI--discontinued operations | 222 | 823 | 1,029 | 2,707 | |||||||||||||
| Total - POI | $ | 5,004 | $ | 5,716 | $ | 13,196 | $ | 14,025 | |||||||||
| Total POI as a percentage of revenues | 30.5 | % | 27.8 | % | 27.6 | % | 24.6 | % | |||||||||
12 | Page
Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
Condor Hospitality Trust, Inc.
Operating Statistics
The statistical measures are calculated for the hotels in continuing operations on a same-store basis; for the three and nine month periods September 30, 2015 and September 30, 2014 the statistics include 42 hotels owned throughout all comparable periods (excluding properties held for sale and included in discontinued operations as well as properties which have been sold).
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||||||||||||||||||
| Room | Room | |||||||||||||||||||||
| Region | Count | RevPAR | Occupancy | ADR | Count | RevPAR | Occupancy | ADR | ||||||||||||||
| Mountain | 106 | $ | 54.99 | 78.4 | % | $ | 70.16 | 106 | $ | 59.68 | 87.3 | % | $ | 68.38 | ||||||||
| West North Central | 975 | 45.42 | 75.5 | % | 60.12 | 975 | 41.71 | 76.0 | % | 54.87 | ||||||||||||
| East North Central | 723 | 61.93 | 74.7 | % | 82.87 | 723 | 55.29 | 74.2 | % | 74.48 | ||||||||||||
| Middle Atlantic | 142 | 48.96 | 70.9 | % | 69.06 | 142 | 47.56 | 75.4 | % | 63.11 | ||||||||||||
| South Atlantic | 746 | 53.86 | 63.5 | % | 84.76 | 746 | 54.74 | 69.0 | % | 79.36 | ||||||||||||
| East South Central | 301 | 49.21 | 67.8 | % | 72.57 | 301 | 46.06 | 63.3 | % | 72.72 | ||||||||||||
| West South Central | 176 | 17.53 | 45.0 | % | 38.94 | 176 | 24.26 | 65.9 | % | 36.84 | ||||||||||||
| Total Same Store | 3,169 | $ | 50.46 | 70.0 | % | $ | 72.10 | 3,169 | $ | 48.19 | 72.5 | % | $ | 66.43 | ||||||||
| States included in the Regions | ||||||||||||||||||||||
| Mountain | Montana | |||||||||||||||||||||
| West North Central | Iowa, Kansas, Missouri, Nebraska and South Dakota | |||||||||||||||||||||
| East North Central | Indiana and Wisconsin | |||||||||||||||||||||
| Middle Atlantic | Pennsylvania | |||||||||||||||||||||
| South Atlantic | Florida, Maryland, North Carolina, Virginia and West Virginia | |||||||||||||||||||||
| East South Central | Kentucky and Tennessee | |||||||||||||||||||||
| West South Central | Louisiana | |||||||||||||||||||||
13 | Page
Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
| Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||||||||||||||||||
| Room | Room | |||||||||||||||||||||
| Brand | Count | RevPAR | Occupancy | ADR | Count | RevPAR | Occupancy | ADR | ||||||||||||||
| Select Service | ||||||||||||||||||||||
| Upscale | ||||||||||||||||||||||
| Hilton Garden Inn | 100 | $ | 98.85 | 81.6 | % | $ | 121.17 | 100 | $ | 87.53 | 74.7 | % | $ | 117.19 | ||||||||
| Total Upscale | 100 | $ | 98.85 | 81.6 | % | $ | 121.17 | 100 | $ | 87.53 | 74.7 | % | $ | 117.19 | ||||||||
| Upper Midscale | ||||||||||||||||||||||
| Comfort Inn / Suites * | 1,018 | 57.93 | 70.4 | % | 82.30 | 1,018 | 55.84 | 73.3 | % | 76.17 | ||||||||||||
| Clarion | 59 | 42.20 | 70.4 | % | 59.90 | 59 | 28.47 | 46.9 | % | 60.72 | ||||||||||||
| Total Upper Midscale | 1,077 | $ | 57.07 | 70.4 | % | $ | 81.07 | 1,077 | $ | 54.34 | 71.9 | % | $ | 75.62 | ||||||||
| Midscale | ||||||||||||||||||||||
| Quality Inn * | 251 | 59.41 | 66.5 | % | 89.39 | 251 | 55.21 | 70.9 | % | 77.88 | ||||||||||||
| Total Midscale | 251 | $ | 59.41 | 66.5 | % | $ | 89.39 | 251 | $ | 55.21 | 70.9 | % | $ | 77.88 | ||||||||
| Economy | ||||||||||||||||||||||
| Days Inn | 379 | 33.13 | 59.8 | % | 55.41 | 379 | 34.99 | 68.9 | % | 50.80 | ||||||||||||
| Super 8 | 1,161 | 44.97 | 75.3 | % | 59.75 | 1,161 | 42.83 | 77.1 | % | 55.55 | ||||||||||||
| Other Economy (1) | 201 | 44.22 | 55.2 | % | 80.10 | 201 | 42.67 | 57.6 | % | 74.05 | ||||||||||||
| Total Economy | 1,741 | $ | 42.31 | 69.6 | % | $ | 60.80 | 1,741 | $ | 41.10 | 73.1 | % | $ | 56.26 | ||||||||
| Total Same Store | 3,169 | $ | 50.46 | 70.0 | % | $ | 72.10 | 3,169 | $ | 48.19 | 72.5 | % | $ | 66.43 | ||||||||
| (1) | Includes Rodeway Inn and Independent Brands | |||||||||||||||||||||
*On July 15, 2015, the Morgantown Comfort Inn was reflagged as a Quality Inn.
Condor Hospitality Trust, Inc.
Operating Statistics
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||||||||||||||
| Room | Room | |||||||||||||||||||||
| Region | Count | RevPAR | Occupancy | ADR | Count | RevPAR | Occupancy | ADR | ||||||||||||||
| Mountain | 106 | $ | 43.39 | 70.0 | % | $ | 62.03 | 106 | $ | 46.56 | 75.9 | % | $ | 61.34 | ||||||||
| West North Central | 975 | 38.74 | 68.8 | % | 56.34 | 975 | 35.11 | 67.4 | % | 52.09 | ||||||||||||
| East North Central | 723 | 49.57 | 65.3 | % | 75.87 | 723 | 46.51 | 66.1 | % | 70.36 | ||||||||||||
| Middle Atlantic | 142 | 44.26 | 67.5 | % | 65.57 | 142 | 43.07 | 71.3 | % | 60.41 | ||||||||||||
| South Atlantic | 746 | 50.89 | 61.8 | % | 82.30 | 746 | 50.49 | 65.1 | % | 77.59 | ||||||||||||
| East South Central | 301 | 44.85 | 63.2 | % | 70.92 | 301 | 40.66 | 58.3 | % | 69.73 | ||||||||||||
| West South Central | 176 | 19.40 | 50.6 | % | 38.35 | 176 | 22.00 | 59.3 | % | 37.10 | ||||||||||||
| Total Same Store | 3,169 | $ | 43.98 | 64.8 | % | $ | 67.87 | 3,169 | $ | 41.87 | 65.7 | % | $ | 63.73 | ||||||||
| States included in the Regions | ||||||||||||||||||||||
| Mountain | Montana | |||||||||||||||||||||
| West North Central | Iowa, Kansas, Missouri, Nebraska and South Dakota | |||||||||||||||||||||
| East North Central | Indiana and Wisconsin | |||||||||||||||||||||
| Middle Atlantic | Pennsylvania | |||||||||||||||||||||
| South Atlantic | Florida, Maryland, North Carolina, Virginia and West Virginia | |||||||||||||||||||||
| East South Central | Kentucky and Tennessee | |||||||||||||||||||||
| West South Central | Louisiana | |||||||||||||||||||||
14 | Page
Condor Hospitality Trust, Inc. 2015 | Third Quarter Earnings Release
| Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||||||||||||||
| Room | Room | |||||||||||||||||||||
| Brand | Count | RevPAR | Occupancy | ADR | Count | RevPAR | Occupancy | ADR | ||||||||||||||
| Select Service | ||||||||||||||||||||||
| Upscale | ||||||||||||||||||||||
| Hilton Garden Inn | 100 | $ | 88.86 | 76.9 | % | $ | 115.53 | 100 | $ | 78.07 | 68.7 | % | $ | 113.64 | ||||||||
| Total Upscale | 100 | $ | 88.86 | 76.9 | % | $ | 115.53 | 100 | $ | 78.07 | 68.7 | % | $ | 113.64 | ||||||||
| Upper Midscale | ||||||||||||||||||||||
| Comfort Inn / Suites * | 1,018 | $ | 51.29 | 65.9 | % | $ | 77.83 | 1,018 | $ | 49.35 | 67.9 | % | $ | 72.71 | ||||||||
| Clarion | 59 | 41.29 | 70.3 | % | 58.71 | 59 | 30.27 | 47.0 | % | 64.42 | ||||||||||||
| Total Upper Midscale | 1,077 | $ | 50.75 | 66.1 | % | $ | 76.72 | 1,077 | $ | 48.31 | 66.7 | % | $ | 72.39 | ||||||||
| Midscale | ||||||||||||||||||||||
| Quality Inn * | 251 | 44.44 | 55.4 | % | 80.17 | 251 | 43.57 | 60.0 | % | 72.58 | ||||||||||||
| Total Midscale | 251 | $ | 44.44 | 55.4 | % | $ | 80.17 | 251 | $ | 43.57 | 60.0 | % | $ | 72.58 | ||||||||
| Economy | ||||||||||||||||||||||
| Days Inn | 379 | 30.32 | 58.0 | % | 52.28 | 379 | 30.15 | 61.0 | % | 49.41 | ||||||||||||
| Super 8 | 1,161 | 37.98 | 68.3 | % | 55.60 | 1,161 | 35.29 | 67.8 | % | 52.05 | ||||||||||||
| Other Economy (1) | 201 | 45.27 | 55.9 | % | 81.04 | 201 | 47.38 | 62.5 | % | 75.84 | ||||||||||||
| Total Economy | 1,741 | $ | 37.15 | 64.6 | % | $ | 57.49 | 1,741 | $ | 35.57 | 65.7 | % | $ | 54.13 | ||||||||
| Total Same Store | 3,169 | $ | 43.98 | 64.8 | % | $ | 67.87 | 3,169 | $ | 41.87 | 65.7 | % | $ | 63.73 | ||||||||
| Brands | ||||||||||||||||||||||
(1) Includes Rodeway Inn and Independent Brands
*On July 15, 2015, the Morgantown Comfort Inn was reflagged as a Quality Inn.
15 | Page