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Condor Hospitality Trust Reports 2015 Results (3/24/16)

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Condor Hospitality Trust Reports 2015 Results (3/24/16)

20 Non-Core Hotels Sold

3 Premium-Branded Hotels Acquired

$30.0 Million Capital Raise [1]

NORFOLK, NE--(Marketwired - March 24, 2016) - Condor Hospitality Trust, Inc. (NASDAQ: CDOR) (the "Company") today announced results for the fourth quarter and year ended December 31, 2015.

"The Company continued to accelerate the disposition of legacy hotels in 2015 to recycle capital into higher margin, increased quality lodging assets," said Bill Blackham, Condor's Chief Executive Officer. "As this transition evolves, the operating margins have increased from 24.3 percent in 2014 to 26.5 percent in 2015 and we expect further improvement in 2016 as we seek to sell over 20 additional legacy hotels and fully invest the proceeds into hotels that meet our new investment strategy."

2015 Key Accomplishments

Acquisitions: In October 2015, the Company acquired three premium-branded hotels in an off-market transaction for $42.5 million. The properties are representative of the new strategic direction of the Company's portfolio into higher quality, premium-branded select-service properties. The properties include the 116-room SpringHill Suites San Antonio Downtown/Riverwalk, the 142-room Hotel Indigo Hartsfield-Jackson Atlanta International Airport, and the 120-room Courtyard Jacksonville Flagler Center. The assets are performing consistently with the Company's underwriting at the time of acquisition.

Dispositions: In 2015, the Company sold 17 non-core hotels for gross proceeds of $54.7 million. Following the close of the fourth quarter 2015, the Company sold three non-core hotels with an aggregate of 364 rooms for combined gross proceeds of $7.0 million. The Company is currently marketing 14 hotels for sale and expects to generate approximately $11.0 million in cash after associated debt repayments and related expenses. These excess proceeds are expected to be recycled into properties that fit the Company's new investment criteria.

Balance Sheet: Significant progress has been made in reducing future debt maturities and improving the Company's liquidity position since December 31, 2014. 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 significant 2016 loan maturities. Based on the improvements in its liquidity and debt maturity schedule, management has concluded that there is no longer substantial doubt regarding the Company's ability to continue as a going concern.

Capital Raise: Subsequent to the close of the year, Condor announced that it had raised $30.0 million in a private placement transaction with an affiliate of the StepStone Group. A portion of the proceeds will be used to redeem in cash all outstanding Series A and Series B preferred stock on April 15, 2016, including all unpaid accrued dividends. Excess proceeds will be utilized by the Company to accelerate the strategic repositioning of its portfolio to high quality select-service, limited service, extended stay, and compact full service hotels. Simultaneously with StepStone's investment in Series D preferred stock, the Company's outstanding Series C preferred stock was also exchanged for the newly created Series D preferred stock, resulting in one class of preferred stock for which the Company can require conversion entirely to common stock upon the occurrence of defined capital events. Refer to the Company's Form 8-K filed March 16, 2016 for further details.

Management: On March 3, 2015, the Company hired industry veteran Bill Blackham as Chief Executive Officer. Mr. Blackham, previously the president and CEO of Eagle Hospitality, has an accomplished record of establishing and growing public and private companies. On September 21, 2015, the Company hired Arinn A. Cavey, formerly with KPMG LLP, as Chief Accounting Officer. Arinn will oversee the Company's financial plans, SEC compliance matters, and banking relationships. On October 27, 2015, the Company hired Jonathan J. Gantt, formerly with Starwood Hotels & Resorts, 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.

Rebranding: 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, premium-branded hotels. The Company's common stock trading symbol changed from SPPR to CDOR. In addition, the Company launched a new website: www.condorhospitality.com.

[1] Three hotels sold subsequent to year-end 2015; $30 million capital raise closed March 16, 2016

Summary Financial Results

RevPAR: For the fourth quarter, revenue per available room (RevPAR) for the 39 same-store hotels declined 3.5 percent to $35.87. The decrease was attributed to an 11.1 percent reduction in occupancy to 56.0 percent, partially offset by an 8.5 percent increase in average daily rate (ADR) to $64.05. In 2015, RevPAR for the same-store hotels increased 2.6 percent to $40.91. The increase was driven by a 7.3 percent increase in ADR to $64.34, offset by a 4.4 percent decline in occupancy to 63.6 percent.

Revenue: Condor's fourth quarter 2015 revenue from continuing operations was $13.1 million compared to $13.2 million in the same 2014 period. In 2015, revenue from continuing operations was $57.3 million, compared to $57.4 million in the prior year. The slight decrease in annual revenue in 2015 was primarily due to the loss of $4.2 million of revenue attributable to 10 hotels in continuing operations sold during the year, which was effectively offset by increased revenue from our October 2015 acquisitions of $2.6 million and increased revenue from legacy held for use ($1.1 million) and held for sale ($0.4 million) properties in continuing operations between the periods.

Net Earnings: Fourth quarter net earnings attributable to common shareholders was $3.4 million, or $0.69 per basic share and $0.01 per diluted share, respectively, compared to a net loss of $(3.8) million, or $(0.80) per basic and diluted share for the same 2014 period. For the year, net earnings attributable to common shareholders was $9.5 million, or $1.94 per basic share and $(0.00) per diluted share, compared to a net loss of $(19.7) million or $(5.05) 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 $3.6 million for the three months ended December 31, 2015, compared to a derivative loss of $(0.2) million in the same quarter of 2014, and a non-cash derivative gain of $11.6 million for 2015, compared to a derivative loss of $(14.4) million for the same 2014 period. 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.

Capital Reinvestment: The Company invested $2.2 million in capital improvements throughout the portfolio in the fourth quarter 2015 to upgrade its properties and maintain brand standards, bringing the year to date investment to $5.3 million. Notable capital improvements in 2015 included renovations at the Rocky Mount, Virginia, Comfort Inn and rebranding upgrades at three hotels: Princeton, West Virginia, Quality Inn; Morgantown, West Virginia, Quality Inn; and Culpeper, Virginia, Quality Inn.

Balance Sheet: The Company had cash and available revolver of $4.9 million and $2.5 million, respectively, at December 31, 2015. As of December 31, 2015, the Company had total outstanding debt of $87.5 million, with $70.3 million associated with assets held for use with a weighted average maturity of 3.0 years and a weighted average interest rate of 5.13%.

Dividends: The Company did not declare a dividend on common stock in the fourth 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. Upon the execution of the StepStone transaction and Preferred Series A and B redemption discussed above, all accumulated dividends will be paid in full. The board of directors will continue to monitor the dividend policy.

Outlook

"Condor has achieved significant progress in 2015 with key staffing additions, reduced interest costs on debt with staggered maturities, completed attractive acquisitions we expect to have attractive yields in 2016, and improved management contracts having better alignment to reward improved results," said Blackham. "The most important accomplishment started in 2015 and completed in the first quarter of 2016 is the convertible preferred stock setting the stage for significantly larger market capitalization needed to raise additional capital to implement our growth strategy. At this writing, we are evaluating many attractive properties for possible acquisition by the Company."

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 39 hotels in 18 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.

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http://www.marketwired.com/press-release/condor-hospitality-trust-reports-2015-results-nasdaq-cdor-2109124.htm

"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
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