Attached files
| file | filename |
|---|---|
| 8-K - CONDOR HOSPITALITY TRUST, INC. | sppr8k_nov13.htm |
For Immediate Release
Supertel Hospitality Reports 2014 Third Quarter Results
NORFOLK, NE., November 13, 2014 – Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT), today announced its results for the third quarter ended September 30, 2014.
Third Quarter Key Events
|
·
|
Revenue from continuing operations was $16.9 million, an increase of 8.2 percent over the same 2013 period.
|
|
·
|
Revenue per available room (RevPAR) for the continuing operations hotels was $47.36, an increase of 8.3 percent over the same 2013 period.
|
|
·
|
Sold four hotels in the third quarter and three hotels following the close of the quarter.
|
|
·
|
Adjusted EBITDA was $4.8 million, an increase of 5.1 percent over the same 2013 period.
|
|
·
|
Adjusted funds from operations (AFFO) was $1.7 million, an increase of 9.0 percent over the same 2013 period.
|
|
·
|
Net loss attributable to common shareholders was $(3.3) million.
|
Third Quarter Operating and Financial Results
Supertel’s third quarter 2014 revenue from continuing operations rose 8.2 percent to $16.9 million compared to the same year-ago period. Revenue per available room (RevPAR) improved by 8.3 percent to $47.36 over third quarter 2013, driven primarily by increased occupancy. The increase was due in part to improved results at four hotels rebranded in 2013, contributing an additional $0.5 million in revenue over the third quarter 2013. Two hotels that were impacted by a market downturn are recovering due to improving overall market conditions in the Washington D.C. market, contributing an additional $0.6 million in revenue over third quarter 2013. Third quarter 2014 results were also impacted by heightened construction business in the Midwest, along with market-centric rate and sales strategies utilized to capitalize on increased demand and muted supply growth. Additionally, stronger leisure demand throughout the summer served as a contributing factor to third quarter results.
The company had a 2014 third quarter net loss attributable to common shareholders of $(3.3) million, or $(0.69) per basic and diluted share, compared to net earnings of $0.86 million or $0.30 per basic share and $(0.13) per diluted share for the same 2013 period. The loss was primarily due to the non-cash impact of an increase in the valuation of the derivative liabilities for the quarter. The fair value of the derivative liabilities increased by an aggregate of $4.6 million and decreased by an aggregate of $2.7 million during the third quarter of 2014 and 2013, respectively. The change in fair value is recorded as a derivative gain or loss. The loss in the current quarter is due to the rise in the common stock price.
Funds from operations (FFO) was $(2.9) million for the 2014 third quarter, compared to $2.5 million in the same 2013 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities, acquisition and termination expense, and terminated equity transactions expense, in the 2014 third quarter was $1.7 million, compared to $1.6 million in the same 2013 period.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $0.5 million for the 2014 third quarter, compared to $4.7 million in the same year-ago period. Adjusted EBITDA was $4.8 million, compared to $4.6 million for the 2013 third quarter. Adjusted EBITDA is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives, acquisition and termination expense and terminated equity transactions expense.
In the third quarter 2014, the 47-hotel same store portfolio reported an increase in revenue per available room (RevPAR) of 8.3 percent to $47.36, led by a 6.6 percent improvement in occupancy to 71.5 percent, and a 1.6 percent increase in average daily rate (ADR) to $66.26, compared to the 2013 third quarter.
“The results we have seen within our existing core portfolio are encouraging as RevPAR growth remains strong and continues to bolster recent operating results,” said Kelly Walters, Supertel’s President and Chief Executive Officer. “We are pleased to see our portfolio perform in line with our peers and industry averages.”
“Our strategic capital investment in the legacy hotels, combined with our enhanced rate and sales strategies are providing solid results throughout our portfolio with many of our core assets leading the way,” said Jeffrey Dougan, Supertel’s Chief Operating Officer.
Disposition Program
In the 2014 third quarter the company sold four hotels with an aggregate of 488 rooms for combined gross proceeds of $6.5 million. The proceeds were used to reduce debt.
The four sold hotels include:
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·
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172-room Savannah Suites in Jonesboro, Georgia sold July 15, 2014 for $1.4 million
|
|
·
|
140-room Savannah Suites in Stone Mountain, Georgia sold August 21, 2014 for $1.5 million
|
|
·
|
60-room Super 8 in Moberly, Missouri sold September 19, 2014 for $1.7 million
|
|
·
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116-room Super 8 in Omaha (“M” Street), Nebraska sold September 30, 2014 for $1.9 million
|
Following the close of the 2014 third quarter, the company sold the following hotels:
|
·
|
79-room Days Inn (Empire) in Sioux Falls, South Dakota sold October 15, 2014 for $2.4 million
|
|
·
|
148-room Days Inn in Shreveport, Louisiana sold October 17, 2014 for $1.3 million
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|
·
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117-room Super 8 in Terre Haute, Indiana sold November 6, 2014 for $1.9 million
|
Proceeds from the sales were used to pay down associated debt and reduce the balance of the revolving credit facility.
As of the date of this release, the company is marketing nine hotels for sale and expects to generate approximately $24.4 million in gross proceeds.
Capital Reinvestment
The company invested $0.9 million in capital improvements throughout the portfolio in the 2014 third quarter and $2.2 million year to date to upgrade its properties and maintain brand standards. Notable capital improvements in the third quarter included a lobby and fitness center expansion and renovation at the Green Bay, Wisconsin Super 8, and interior pool enhancements and exterior patio upgrades at the Fort Wayne, Indiana Comfort Suites.
Balance Sheet
On August 1, 2014, Supertel’s revolving credit facility with Great Western Bank was extended to June 30, 2015. Additionally, the interest rate was reduced from 4.95 percent to 4.5 percent.
As of September 30, 2014, Supertel had $81 million in outstanding debt on its continuing operations hotels with an average term of 2.2 years and weighted average annual interest rate of 6.4 percent.
Dividends
The company did not declare a dividend on common stock in the 2014 third quarter. 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: SPPRP), quarterly dividends on the outstanding shares of its 10.00% Series B Preferred Cumulative Stock (NASDAQ: SPPRO), and the 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.
Outlook
“Just over five years ago, Supertel embarked on a strategy to reduce its debt burden and improve operational margins by methodically monetizing the outdated and underperforming non-core assets in the portfolio, and to date we have sold more than half of the hotels we owned at the beginning of the recession which began in 2008,” said Walters. “Concurrently, we strengthened our management capabilities, both internally and externally, and the benefits of that re-engineering are now showing in our RevPAR growth and improving AFFO performance, which was up 8.3 percent and 9.0 percent, respectively, for continuing operations hotels in the third quarter.”
“Looking toward 2015, we believe the company’s core portfolio is situated to capture its share of the industry’s continuing RevPAR growth. The Smith Travel Research forecast for 2015 calls for RevPAR growth of approximately 4.5 percent in our segments of the chain scale, and our budgets will reflect those forecasts. Our challenge remains acquiring the necessary cost effective capital to sustain operations and to fuel growth.”
About Supertel Hospitality, Inc.
Supertel Hospitality, Inc. (NASDAQ: SPPR) is a self-administered real estate investment trust that specializes in the ownership of select-service hotels. The company currently owns 56 hotels comprising 4,799 rooms in 20 states. Supertel’s hotels are franchised by a number of the industry’s most well-regarded brand families including Hilton, Choice and Wyndham. For more information or to make a hotel reservation, visit www.supertelinc.com.
Contact:
Krista Arkfeld, Director of Corporate Communications
karkfeld@supertelinc.com
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.
Selected Financial Data:
Balance Sheets
As of September 30, 2014 and December 31, 2013
(In thousands, except share and per share data)
|
As of
|
|||||
|
September 30,
2014
|
December 31,
2013
|
||||
|
(unaudited)
|
|||||
|
ASSETS
|
|||||
|
Investments in hotel properties
|
$
|
192,953
|
$
|
194,078
|
|
|
Less accumulated depreciation
|
70,574
|
68,475
|
|||
|
122,379
|
125,603
|
||||
|
Cash and cash equivalents
|
499
|
45
|
|||
|
Accounts receivable, net of allowance for
|
|||||
|
doubtful accounts of $33 and $20
|
2,021
|
1,083
|
|||
|
Prepaid expenses and other assets
|
6,246
|
4,000
|
|||
|
Deferred financing costs, net
|
1,990
|
2,601
|
|||
|
Investment in hotel properties, held for sale, net
|
24,087
|
38,753
|
|||
|
$
|
157,222
|
$
|
172,085
|
||
|
LIABILITIES AND EQUITY
|
|||||
|
LIABILITIES
|
|||||
|
Accounts payable, accrued expenses and other liabilities
|
$
|
10,250
|
$
|
7,745
|
|
|
Derivative liabilities, at fair value
|
20,125
|
5,907
|
|||
|
Debt related to hotel properties held for sale
|
16,235
|
35,224
|
|||
|
Long-term debt
|
80,971
|
82,821
|
|||
|
127,581
|
131,697
|
||||
|
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;
|
|||||
|
4,689,977 and 2,897,539 shares outstanding
|
47
|
29
|
|||
|
Additional paid-in capital
|
137,892
|
135,293
|
|||
|
Distributions in excess of retained earnings
|
(116,092)
|
(102,747)
|
|||
|
Total shareholders' equity
|
21,885
|
32,613
|
|||
|
Noncontrolling interest
|
|||||
|
Noncontrolling interest in consolidated partnership,
|
|||||
|
redemption value $24 and $87
|
94
|
113
|
|||
|
Total equity
|
21,979
|
32,726
|
|||
|
COMMITMENTS AND CONTINGENCIES
|
|||||
|
$
|
157,222
|
$
|
172,085
|
||
Statement of Operations
For the three and nine months ended September 30, 2014 and 2013, respectively
(Unaudited - In thousands, except per share data)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||
|
REVENUES
|
|||||||||||
|
Room rentals and other hotel services
|
$
|
16,902
|
$
|
15,619
|
$
|
44,251
|
$
|
41,789
|
|||
|
EXPENSES
|
|||||||||||
|
Hotel and property operations
|
12,009
|
11,436
|
32,933
|
32,146
|
|||||||
|
Depreciation and amortization
|
1,624
|
1,554
|
4,844
|
4,676
|
|||||||
|
General and administrative
|
912
|
946
|
2,989
|
2,986
|
|||||||
|
Acquisition and termination expense
|
0
|
679
|
0
|
728
|
|||||||
|
Terminated equity transactions
|
11
|
1,082
|
76
|
1,082
|
|||||||
|
14,556
|
15,697
|
40,842
|
41,618
|
||||||||
|
EARNINGS (LOSS) BEFORE NET GAIN (LOSS)
|
|||||||||||
|
ON DISPOSITIONS OF
|
|||||||||||
|
ASSETS, OTHER INCOME, INTEREST EXPENSE
|
|||||||||||
|
AND INCOME TAXES
|
2,346
|
(78)
|
3,409
|
171
|
|||||||
|
Net gain (loss) on dispositions of assets
|
63
|
(9)
|
36
|
(46)
|
|||||||
|
Derivative gain (loss)
|
(4,615)
|
2,674
|
(14,218)
|
4,494
|
|||||||
|
Other income (loss)
|
(12)
|
(3)
|
113
|
11
|
|||||||
|
Interest expense
|
(1,774)
|
(1,454)
|
(5,321)
|
(4,124)
|
|||||||
|
Loss on debt extinguishment
|
(37)
|
(43)
|
(141)
|
(250)
|
|||||||
|
Impairment
|
0
|
(165)
|
119
|
(171)
|
|||||||
|
EARNINGS (LOSS) FROM CONTINUING
|
|||||||||||
|
OPERATIONS BEFORE INCOME TAXES
|
(4,029)
|
922
|
(16,003)
|
85
|
|||||||
|
Income tax expense
|
0
|
0
|
0
|
0
|
|||||||
|
EARNINGS (LOSS) FROM
|
|||||||||||
|
CONTINUING OPERATIONS
|
(4,029)
|
922
|
(16,003)
|
85
|
|||||||
|
Gain (loss) from discontinued operations, net of tax
|
1,628
|
777
|
2,639
|
(73)
|
|||||||
|
NET EARNINGS (LOSS)
|
(2,401)
|
1,699
|
(13,364)
|
12
|
|||||||
|
Loss (earnings) attributable to non-controlling interest
|
3
|
(3)
|
19
|
0
|
|||||||
|
NET EARNINGS (LOSS) ATTRIBUTABLE
|
|||||||||||
|
TO CONTROLLING INTERESTS
|
(2,398)
|
1,696
|
(13,345)
|
12
|
|||||||
|
Preferred stock dividends declared and undeclared
|
(868)
|
(837)
|
(2,572)
|
(2,512)
|
|||||||
|
NET EARNINGS (LOSS) ATTRIBUTABLE
|
|||||||||||
|
TO COMMON SHAREHOLDERS
|
$
|
(3,266)
|
$
|
859
|
$
|
(15,917)
|
$
|
(2,500)
|
|||
|
NET EARNINGS (LOSS) PER COMMON SHARE
|
|||||||||||
|
- BASIC AND DILUTED
|
|||||||||||
|
EPS from continuing operations - Basic
|
$
|
(1.04)
|
$
|
0.03
|
$
|
(5.11)
|
$
|
(0.84)
|
|||
|
EPS from discontinued operations - Basic
|
$
|
0.35
|
$
|
0.27
|
$
|
0.73
|
$
|
(0.03)
|
|||
|
EPS Basic - Total
|
$
|
(0.69)
|
$
|
0.30
|
$
|
(4.38)
|
$
|
(0.87)
|
|||
|
EPS Diluted - Total
|
$
|
(0.69)
|
$
|
(0.13)
|
$
|
(4.38)
|
$
|
(0.87)
|
|||
Reconciliation of Non-GAAP Financial Measures – Funds From Operations
(Unaudited - In thousands, except per share data)
|
Three months
ended September 30,
|
Nine Months
ended September 30,
|
||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||
|
RECONCILIATION OF NET EARNINGS
|
|||||||||||
|
(LOSS) TO FFO
|
|||||||||||
|
Net earnings (loss) attributable
|
|||||||||||
|
to common shareholders
|
$
|
(3,266)
|
$
|
859
|
$
|
(15,917)
|
$
|
(2,500)
|
|||
|
Depreciation and amortization
|
1,624
|
1,749
|
4,956
|
5,551
|
|||||||
|
Net (gain) loss on disposition of assets
|
(2,168)
|
(365)
|
(2,776)
|
(1,662)
|
|||||||
|
Impairment
|
921
|
263
|
1,398
|
1,723
|
|||||||
|
FFO available to common shareholders
|
$
|
(2,889)
|
$
|
2,506
|
$
|
(12,339)
|
$
|
3,112
|
|||
|
Unrealized (gain) loss on derivatives
|
4,615
|
(2,674)
|
14,218
|
(4,494)
|
|||||||
|
Gain on debt conversion
|
0
|
0
|
(88)
|
0
|
|||||||
|
Acquisition and termination expense
|
0
|
679
|
0
|
728
|
|||||||
|
Terminated equity transactions
|
11
|
1,082
|
76
|
1,082
|
|||||||
|
Adjusted FFO
|
$
|
1,737
|
$
|
1,593
|
$
|
1,867
|
$
|
428
|
|||
|
Numerator: diluted Adjusted FFO
|
|||||||||||
|
Adjusted FFO attributable to
|
|||||||||||
|
common shareholders-basic
|
$
|
1,737
|
$
|
1,593
|
$
|
1,867
|
$
|
428
|
|||
|
Preferred C dividend
|
491
|
469
|
1,451
|
1,406
|
|||||||
|
Convertible loan interest
|
0
|
0
|
85
|
0
|
|||||||
|
Adjusted FFO attributable to
|
|||||||||||
|
common shareholders-diluted
|
$
|
2,228
|
$
|
2,062
|
$
|
3,403
|
$
|
1,834
|
|||
|
calculation of FFO per share - basic
|
4,686
|
2,891
|
3,630
|
2,889
|
|||||||
|
calculation of FFO per share - diluted
|
4,686
|
10,392
|
3,630
|
10,391
|
|||||||
|
Denominator:
|
|||||||||||
|
Weighted average number
|
|||||||||||
|
of common shares - basic Adjusted FFO
|
4,686
|
2,891
|
3,630
|
2,889
|
|||||||
|
Restricted stock
|
1
|
1
|
7
|
2
|
|||||||
|
Convertible loan
|
0
|
0
|
737
|
0
|
|||||||
|
Preferred stock
|
18,750
|
3,750
|
9,904
|
3,750
|
|||||||
|
Warrants
|
3,750
|
3,750
|
3,750
|
3,750
|
|||||||
|
of common shares - diluted Adjusted FFO
|
27,187
|
10,392
|
18,028
|
10,391
|
|||||||
|
FFO per share - basic
|
$
|
(0.62)
|
$
|
0.87
|
$
|
(3.40)
|
$
|
1.08
|
|||
|
Adjusted FFO per share - basic
|
$
|
0.37
|
$
|
0.55
|
$
|
0.51
|
$
|
0.15
|
|||
|
FFO per share - diluted
|
$
|
(0.62)
|
$
|
0.29
|
$
|
(3.40)
|
$
|
0.43
|
|||
|
Adjusted FFO per share - diluted
|
$
|
0.08
|
$
|
0.20
|
$
|
0.19
|
$
|
0.18
|
|||
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 income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation, amortization and impairment of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. AFFO is FFO adjusted to exclude gains or losses on derivative liabilities and gain on debt conversion, which are non-cash charges against income and which do not represent results from our core operations. AFFO also adds back acquisition costs and equity offering 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 income (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 it facilitates 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.
EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||
|
RECONCILIATION OF NET
|
|||||||||||
|
EARNINGS (LOSS) TO
|
|||||||||||
|
ADJUSTED EBITDA
|
|||||||||||
|
Net earnings (loss)
|
|||||||||||
|
attributable to common shareholders
|
$
|
(3,266)
|
$
|
859
|
$
|
(15,917)
|
$
|
(2,500)
|
|||
|
Interest expense,
|
|||||||||||
|
including discontinued operations
|
2,033
|
1,962
|
6,380
|
6,409
|
|||||||
|
Loss on debt extinguishment
|
157
|
166
|
261
|
937
|
|||||||
|
Depreciation and amortization,
|
|||||||||||
|
including discontinued operations
|
1,624
|
1,749
|
4,956
|
5,551
|
|||||||
|
EBITDA
|
548
|
4,736
|
(4,320)
|
10,397
|
|||||||
|
Noncontrolling interest
|
(3)
|
3
|
(19)
|
0
|
|||||||
|
Net gain on disposition of assets
|
(2,168)
|
(365)
|
(2,776)
|
(1,662)
|
|||||||
|
Impairment
|
921
|
263
|
1,398
|
1,723
|
|||||||
|
Preferred stock dividends
|
|||||||||||
|
declared and undeclared
|
868
|
837
|
2,572
|
2,512
|
|||||||
|
Unrealized (gain) loss on derivatives
|
4,615
|
(2,674)
|
14,218
|
(4,494)
|
|||||||
|
Gain on debt conversion
|
0
|
0
|
(88)
|
0
|
|||||||
|
Acquisition and termination expense
|
0
|
679
|
0
|
728
|
|||||||
|
Terminated equity transactions
|
11
|
1,082
|
76
|
1,082
|
|||||||
|
ADJUSTED EBITDA
|
$
|
4,792
|
$
|
4,561
|
$
|
11,061
|
$
|
10,286
|
|||
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 an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we add back noncontrolling interest, net (gain) loss on disposition of assets, preferred stock dividends, acquisition expenses and equity offering expense which are cash charges. We also add back impairment and unrealized gain or loss on derivatives and gain on debt conversion, 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 income, 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.
Property Operating Income (POI) – Continuing and Discontinued Operations
This presentation includes non-GAAP financial measures, and should not be considered as an alternative to loss from continuing operations or loss 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. Same store results for the quarter are for 47 hotels in continuing operations.
|
Unaudited-in thousands except statistical data:
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
|||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
Total Same Store Hotels:
|
|||||||||||||||
|
Revenue per available room (RevPAR):
|
$
|
47.36
|
$
|
43.74
|
$
|
41.65
|
$
|
39.35
|
|||||||
|
Average daily room rate (ADR):
|
$
|
66.26
|
$
|
65.21
|
$
|
64.10
|
$
|
63.77
|
|||||||
|
Occupancy percentage:
|
71.5
|
%
|
67.1
|
%
|
65.0
|
%
|
61.7
|
%
|
|||||||
|
Revenue from room rentals and
|
|||||||||||||||
|
other hotel services consists of:
|
|||||||||||||||
|
Room rental revenue
|
$
|
16,372
|
$
|
15,122
|
$
|
42,720
|
$
|
40,368
|
|||||||
|
Telephone revenue
|
2
|
2
|
7
|
7
|
|||||||||||
|
Other hotel service revenues
|
528
|
495
|
1,524
|
1,414
|
|||||||||||
|
Total revenue from room rentals
|
|||||||||||||||
|
and other hotel services
|
$
|
16,902
|
$
|
15,619
|
$
|
44,251
|
$
|
41,789
|
|||||||
|
Hotel and property operations expense
|
|||||||||||||||
|
Total hotel and property operations expense
|
$
|
12,009
|
$
|
11,436
|
$
|
32,933
|
$
|
32,146
|
|||||||
|
Property Operating Income ("POI")
|
|||||||||||||||
|
Total property operating income
|
$
|
4,893
|
$
|
4,183
|
$
|
11,318
|
$
|
9,643
|
|||||||
|
POI as a percentage of revenue from
|
|||||||||||||||
|
room rentals and other hotel services
|
|||||||||||||||
|
Total POI as a percentage of revenue
|
28.9
|
%
|
26.8
|
%
|
25.6
|
%
|
23.1
|
%
|
|||||||
|
Discontinued Operations
|
|||||||||||||||
|
Room rentals and other hotel services
|
|||||||||||||||
|
Total room rental and other hotel services
|
$
|
3,664
|
$
|
6,063
|
$
|
12,651
|
$
|
20,474
|
|||||||
|
Hotel and property operations expense
|
|||||||||||||||
|
Total hotel and property operations expense
|
$
|
2,841
|
$
|
4,736
|
$
|
9,944
|
$
|
16,856
|
|||||||
|
Property Operating Income ("POI")
|
|||||||||||||||
|
Total property operating income
|
$
|
823
|
$
|
1,327
|
$
|
2,707
|
$
|
3,618
|
|||||||
|
POI as a percentage of revenue from
|
|||||||||||||||
|
room rentals and other hotel services
|
|||||||||||||||
|
Total POI as a percentage of revenue
|
22.5
|
%
|
21.9
|
%
|
21.4
|
%
|
17.7
|
%
|
|||||||
POI from continuing operations is reconciled to net loss as follows:
(Unaudited - In thousands)
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
||||||||||||
|
RECONCILIATION OF NET LOSS FROM
|
2014
|
2013
|
2014
|
2013
|
|||||||||
|
CONTINUING OPERATIONS TO POI
|
|||||||||||||
|
FROM CONTINUING OPERATIONS
|
|||||||||||||
|
Net earnings (loss)
|
|||||||||||||
|
from continuing operations
|
$
|
(4,029)
|
$
|
922
|
$
|
(16,003)
|
$
|
85
|
|||||
|
Depreciation and amortization
|
1,624
|
1,554
|
4,844
|
4,676
|
|||||||||
|
Net loss on disposition of assets
|
(63)
|
9
|
(36)
|
46
|
|||||||||
|
Derivative (gain) loss
|
4,615
|
(2,674)
|
14,218
|
(4,494)
|
|||||||||
|
Other (income) expense
|
12
|
3
|
(113)
|
(11)
|
|||||||||
|
Interest expense
|
1,774
|
1,454
|
5,321
|
4,124
|
|||||||||
|
Loss on debt extinguishment
|
37
|
43
|
141
|
250
|
|||||||||
|
General and administrative expense
|
912
|
946
|
2,989
|
2,986
|
|||||||||
|
Acquisition and termination expense
|
0
|
679
|
0
|
728
|
|||||||||
|
Equity offering expense
|
11
|
1,082
|
76
|
1,082
|
|||||||||
|
Impairment expense
|
0
|
165
|
(119)
|
171
|
|||||||||
|
POI - continuing operations
|
$
|
4,893
|
$
|
4,183
|
$
|
11,318
|
$
|
9,643
|
|||||
POI from discontinued operations is reconciled to loss from discontinued operations, net of tax, as follows:
(Unaudited - In thousands)
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||
|
Gain (loss) from discontinued operations
|
$
|
1,628
|
$
|
777
|
$
|
2,639
|
$
|
(73)
|
|||
|
Depreciation and amortization
|
|||||||||||
|
from discontinued operations
|
0
|
195
|
112
|
875
|
|||||||
|
Net gain on disposition of assets
|
|||||||||||
|
from discontinued operations
|
(2,105)
|
(374)
|
(2,740)
|
(1,708)
|
|||||||
|
Interest expense from discontinued operations
|
259
|
508
|
1,059
|
2,285
|
|||||||
|
Loss on debt extinguishment
|
120
|
123
|
120
|
687
|
|||||||
|
Impairment losses from discontinued operations
|
921
|
98
|
1,517
|
1,552
|
|||||||
|
POI - discontinued operations
|
$
|
823
|
$
|
1,327
|
$
|
2,707
|
$
|
3,618
|
|||
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
POI--continuing operations
|
4,893
|
4,183
|
11,318
|
9,643
|
|||||||||||
|
POI--discontinued operations
|
823
|
1,327
|
2,707
|
3,618
|
|||||||||||
|
Total - POI
|
$
|
5,716
|
$
|
5,510
|
$
|
14,025
|
$
|
13,261
|
|||||||
|
Total POI as a percentage of revenues
|
27.8
|
%
|
25.4
|
%
|
24.6
|
%
|
21.3
|
%
|
|||||||
Results of Operations
For three and nine months ended September 30, 2014 and 2013, respectively
The following table represents our RevPAR, ADR and occupancy by region for the three and nine months ended September 30, 2014 and 2013, respectively. The comparisons of same store operations (excluding held for sale hotels) are for 47 hotels owned as of July 1, 2013 and January 1, 2013, respectively. Same store calculations exclude 12 properties which are held for sale as well as properties which have been sold.
|
Three months ended September 30, 2014
|
Three months ended September 30, 2013
|
||||||||||||||||||||
|
Room
|
Room
|
||||||||||||||||||||
|
Region
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
|||||||||||||
|
Mountain
|
106
|
$
|
59.68
|
87.3
|
%
|
$
|
68.38
|
106
|
$
|
51.43
|
79.4
|
%
|
$
|
64.75
|
|||||||
|
West North Central
|
1,150
|
41.10
|
73.3
|
%
|
56.05
|
1,150
|
38.57
|
71.1
|
%
|
54.26
|
|||||||||||
|
East North Central
|
723
|
55.29
|
74.2
|
%
|
74.48
|
723
|
56.02
|
75.1
|
%
|
74.60
|
|||||||||||
|
Middle Atlantic
|
142
|
47.56
|
75.4
|
%
|
63.11
|
142
|
48.22
|
76.2
|
%
|
63.31
|
|||||||||||
|
South Atlantic
|
1,097
|
51.67
|
68.2
|
%
|
75.76
|
1,097
|
43.99
|
58.6
|
%
|
75.06
|
|||||||||||
|
East South Central
|
364
|
45.97
|
66.8
|
%
|
68.84
|
364
|
42.72
|
65.6
|
%
|
65.08
|
|||||||||||
|
West South Central
|
176
|
24.26
|
65.9
|
%
|
36.84
|
176
|
19.40
|
48.8
|
%
|
39.75
|
|||||||||||
|
Total Same Store
|
3,758
|
$
|
47.36
|
71.5
|
%
|
$
|
66.26
|
3,758
|
$
|
43.74
|
67.1
|
%
|
$
|
65.21
|
|||||||
|
Total Continuing Operations
|
3,758
|
$
|
47.36
|
71.5
|
%
|
$
|
66.26
|
3,758
|
$
|
43.74
|
67.1
|
%
|
$
|
65.21
|
|||||||
|
Nine months ended September 30, 2014
|
Nine months ended September 30, 2013
|
||||||||||||||||||||
|
Room
|
Room
|
||||||||||||||||||||
|
Region
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
|||||||||||||
|
Mountain
|
106
|
$
|
46.56
|
75.9
|
%
|
$
|
61.34
|
106
|
$
|
43.31
|
73.9
|
%
|
$
|
58.61
|
|||||||
|
West North Central
|
1,150
|
35.64
|
65.9
|
%
|
54.07
|
1,150
|
34.21
|
64.3
|
%
|
53.21
|
|||||||||||
|
East North Central
|
723
|
46.51
|
66.1
|
%
|
70.36
|
723
|
45.03
|
65.0
|
%
|
69.23
|
|||||||||||
|
Middle Atlantic
|
142
|
43.07
|
71.3
|
%
|
60.41
|
142
|
43.25
|
70.5
|
%
|
61.39
|
|||||||||||
|
South Atlantic
|
1,097
|
47.70
|
63.8
|
%
|
74.83
|
1,097
|
44.25
|
58.7
|
%
|
75.43
|
|||||||||||
|
East South Central
|
364
|
40.32
|
60.6
|
%
|
66.50
|
364
|
37.08
|
57.5
|
%
|
64.48
|
|||||||||||
|
West South Central
|
176
|
22.00
|
59.3
|
%
|
37.10
|
176
|
18.24
|
44.3
|
%
|
41.20
|
|||||||||||
|
Total Same Store
|
3,758
|
$
|
41.65
|
65.0
|
%
|
$
|
64.10
|
3,758
|
$
|
39.35
|
61.7
|
%
|
$
|
63.77
|
|||||||
|
Total Continuing Operations
|
3,758
|
$
|
41.65
|
65.0
|
%
|
$
|
64.10
|
3,758
|
$
|
39.35
|
61.7
|
%
|
$
|
63.77
|
|||||||
|
States included in the Regions
|
|
|
Mountain
|
Montana
|
|
West North Central
|
Iowa, Kansas, Missouri and Nebraska
|
|
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
|
Operating Statistics by Chain Scale
For three and nine months ended September 30, 2014 and 2013, respectively
The following table represents our RevPAR, ADR and occupancy by chain scale for the three and nine months ended September 30, 2014 and 2013, respectively. The comparisons of same store operations (excluding held for sale hotels) are for 47 hotels owned as of July 1, 2013 and January 1, 2013, respectively. Same store calculations exclude 12 properties which are held for sale as well as properties which have been sold.
|
Three months ended September 30, 2014
|
Three months ended September 30, 2013
|
||||||||||||||||||||
|
Room
|
Room
|
||||||||||||||||||||
|
Brand
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
|||||||||||||
|
Select Service
|
|||||||||||||||||||||
|
Upscale
|
|||||||||||||||||||||
|
Hilton Garden Inn
|
100
|
$
|
87.53
|
74.7
|
%
|
$
|
117.19
|
100
|
$
|
80.77
|
66.6
|
%
|
$
|
121.36
|
|||||||
|
Total Upscale
|
100
|
$
|
87.53
|
74.7
|
%
|
$
|
117.19
|
100
|
$
|
80.77
|
66.6
|
%
|
$
|
121.36
|
|||||||
|
Upper Midscale
|
|||||||||||||||||||||
|
Comfort Inn / Suites
|
1,298
|
55.51
|
72.0
|
%
|
77.14
|
1,298
|
52.45
|
69.6
|
%
|
75.37
|
|||||||||||
|
Clarion
|
59
|
28.47
|
46.9
|
%
|
60.72
|
59
|
32.73
|
53.8
|
%
|
60.84
|
|||||||||||
|
Total Upper Midscale
|
1,357
|
$
|
54.33
|
70.9
|
%
|
$
|
76.67
|
1,357
|
$
|
51.60
|
68.9
|
%
|
$
|
74.88
|
|||||||
|
Midscale
|
|||||||||||||||||||||
|
Sleep Inn
|
90
|
34.78
|
55.8
|
%
|
62.29
|
90
|
32.88
|
53.2
|
%
|
61.84
|
|||||||||||
|
Quality Inn
|
122
|
51.82
|
65.4
|
%
|
79.26
|
122
|
44.91
|
56.4
|
%
|
79.66
|
|||||||||||
|
Total Midscale
|
212
|
$
|
44.58
|
61.3
|
%
|
$
|
72.70
|
212
|
$
|
39.80
|
55.0
|
%
|
$
|
72.35
|
|||||||
|
Economy
|
|||||||||||||||||||||
|
Days Inn
|
642
|
37.86
|
71.3
|
%
|
53.13
|
642
|
32.96
|
60.4
|
%
|
54.55
|
|||||||||||
|
Super 8
|
1,246
|
42.68
|
76.0
|
%
|
56.17
|
1,246
|
39.29
|
73.3
|
%
|
53.59
|
|||||||||||
|
Other Economy (1)
|
201
|
42.67
|
57.6
|
%
|
74.05
|
201
|
38.53
|
50.3
|
%
|
76.62
|
|||||||||||
|
Total Economy
|
2,089
|
$
|
41.20
|
72.8
|
%
|
$
|
56.62
|
2,089
|
$
|
37.27
|
67.1
|
%
|
$
|
55.51
|
|||||||
|
Total Same Store
|
3,758
|
$
|
47.36
|
71.5
|
%
|
$
|
66.26
|
3,758
|
$
|
43.74
|
67.1
|
%
|
$
|
65.21
|
|||||||
|
Total Continuing Operations
|
3,758
|
$
|
47.36
|
71.5
|
%
|
$
|
66.26
|
3,758
|
$
|
43.74
|
67.1
|
%
|
$
|
65.21
|
|||||||
|
Includes Rodeway Inn and Independent Brands
|
|||||||||||||||||||||
|
Nine months ended September 30, 2014
|
Nine months ended September 30, 2013
|
||||||||||||||||||||
|
Room
|
Room
|
||||||||||||||||||||
|
Brand
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
Count
|
RevPAR
|
Occupancy
|
ADR
|
|||||||||||||
|
Select Service
|
|||||||||||||||||||||
|
Upscale
|
|||||||||||||||||||||
|
Hilton Garden Inn
|
100
|
$
|
78.07
|
68.7
|
%
|
$
|
113.64
|
100
|
$
|
81.48
|
65.3
|
%
|
$
|
124.80
|
|||||||
|
Total Upscale
|
100
|
$
|
78.07
|
68.7
|
%
|
$
|
113.64
|
100
|
$
|
81.48
|
65.3
|
%
|
$
|
124.80
|
|||||||
|
Upper Midscale
|
|||||||||||||||||||||
|
Comfort Inn / Suites
|
1,298
|
$
|
49.07
|
66.3
|
%
|
$
|
74.04
|
1,298
|
$
|
46.13
|
63.6
|
%
|
$
|
72.54
|
|||||||
|
Clarion
|
59
|
30.27
|
47.0
|
%
|
64.42
|
59
|
31.24
|
47.4
|
%
|
65.92
|
|||||||||||
|
Total Upper Midscale
|
1,357
|
$
|
48.25
|
65.4
|
%
|
$
|
73.74
|
1,357
|
$
|
45.48
|
62.9
|
%
|
$
|
72.32
|
|||||||
|
Midscale
|
|||||||||||||||||||||
|
Sleep Inn
|
90
|
39.19
|
57.5
|
%
|
68.11
|
90
|
36.81
|
53.5
|
%
|
68.81
|
|||||||||||
|
Quality Inn
|
122
|
38.67
|
53.0
|
%
|
72.90
|
122
|
32.07
|
44.4
|
%
|
72.22
|
|||||||||||
|
Total Midscale
|
212
|
$
|
38.89
|
55.0
|
%
|
$
|
70.77
|
212
|
$
|
34.08
|
48.3
|
%
|
$
|
70.62
|
|||||||
|
Economy
|
|||||||||||||||||||||
|
Days Inn
|
642
|
33.17
|
63.4
|
%
|
52.31
|
642
|
31.27
|
58.2
|
%
|
53.75
|
|||||||||||
|
Super 8
|
1,246
|
35.47
|
67.1
|
%
|
52.85
|
1,246
|
33.56
|
65.3
|
%
|
51.42
|
|||||||||||
|
Other Economy (1)
|
201
|
47.38
|
62.5
|
%
|
75.84
|
201
|
44.21
|
55.2
|
%
|
80.03
|
|||||||||||
|
Total Economy
|
2,089
|
$
|
35.91
|
65.5
|
%
|
$
|
54.80
|
2,089
|
$
|
33.88
|
62.1
|
%
|
$
|
54.54
|
|||||||
|
Total Same Store
|
3,758
|
$
|
41.65
|
65.0
|
%
|
$
|
64.10
|
3,758
|
$
|
39.35
|
61.7
|
%
|
$
|
63.77
|
|||||||
|
Total Continuing Operations
|
3,758
|
$
|
41.65
|
65.0
|
%
|
$
|
64.10
|
3,758
|
$
|
39.35
|
61.7
|
%
|
$
|
63.77
|
|||||||
|
Includes Rodeway Inn and Independent Brands
|
|||||||||||||||||||||