Condor Hospitality Trust Inc fka CDOR

[Enterprising Investor]

Supertel Hospitality Reports 2013 Second Quarter Results (8/14/13)

NORFOLK, NE--(Marketwired - Aug 14, 2013) - Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT), today announced its results for the second quarter ended June 30, 2013.

2013 Second Quarter Highlights

•Sold eight non-core hotels in the second quarter and two non-core hotels following the close of the quarter.

•Signed purchase agreements to acquire six premium branded upscale and upper midscale hotels for $60.8 million in the second quarter, and two premium branded upper midscale hotels for $21.25 million following the close of the second quarter, which collectively encompass an aggregate of 744 rooms, subject to obtaining financing and completing due diligence.

•Strengthened management depth with the hiring of Jeffrey Dougan as Senior Vice President and Chief Operating Officer.

•Reported a 3.4 percent decline in revenues from continuing operations to $16.7 million.

•Recorded a 6.7 percent decline in same store revenue per available room (RevPAR) due primarily to disruption caused by brand changes at four core hotels. Excluding the four reflagged hotels and two hotels in Alexandria, VA that experienced management changes during the second quarter, RevPAR declined 0.3 percent over the prior year.

•Reported net earnings attributable to common shareholders of $0.07 per basic share, unchanged from the second quarter of 2012.

•Recorded a 3.2 percent decline in FFO to $3.0 million in the 2013 second quarter from $3.1 million in the second quarter of 2012.

•Filed a registration statement, which is currently under review, with the Securities and Exchange Commission (SEC) to raise up to $115 million in a follow-on common stock offering.

Second Quarter Operating and Financial Results

Second quarter 2013 revenues from continuing operations declined 3.4 percent, to $16.7 million, compared to the same year-ago period.

The company reported net earnings attributable to common shareholders of $1.5 million, or $0.07 and $0.0 per basic and diluted share, respectively, for the 2013 second quarter, compared to net earnings of $1.6 million or $0.07 per basic and diluted share, for the same 2012 period.

Funds from operations (FFO) was $3.0 million for the 2013 second quarter, compared to $3.1 million in the same 2012 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities and acquisition expense, in the 2013 second quarter was $0.87 million, compared to $2.4 million in the same 2012 period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $6.1 million for the 2013 second quarter, compared to $6.7 million in the same 2012 period. Adjusted EBITDA, which is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives and acquisition expense, declined to $4.4 million, compared to $6.2 million for the 2012 second quarter.

In the 2013 second quarter, the 56-hotel same store portfolio RevPAR declined 6.7 percent to $38.75, with a 0.1 percent improvement in ADR to $59.81 offset by a 6.8 percent decline in occupancy to 64.8 percent, compared to the 2012 second quarter. Excluding the four reflagged hotels and two hotels in Alexandria, VA that experienced management changes during the second quarter, RevPAR declined 0.3 percent to $38.94, with a 2.1 percent improvement in ADR to $58.41 offset by a 2.2 percent decline in occupancy to 66.7 percent.

"Our results continued to be significantly impacted in the East South Central and South Atlantic regions primarily by the rebranding of four hotels," said Kelly Walters, Supertel's President and Chief Executive Officer. "We are beginning to see positive up-trends at two of the reflagged hotels, but we realize the brand changes will impact us both in the short term and, to a lesser extent, in the long term."

The South Atlantic region, which covers Florida, Georgia, Maryland, North Carolina, Virginia and West Virginia, experienced a 17.0 percent decline in RevPAR in the second quarter. Part of the decline was due to the transition and refurbishment-related disruption at the 76-room former Hampton Inn in Shelby, NC, that was reflagged as a Comfort Inn and the 120-room former Comfort Inn in Fayetteville, NC that was reflagged as a Rodeway Inn.

The 150-room Comfort Inn and 200-room Days Inn located in Alexandria, VA were impacted by management changes and a drop in occupancy in the Washington, D.C. market. Corrective steps have been taken and the two hotels showed marked improvement in July. "These hotels have historically been solid performers for us and we expect them to recover a significant share of their former occupancy," said Walters. Excluding the four reflagged hotels and the two Alexandria hotels from the company's results, second quarter RevPAR from the other 50 continuing operations hotels was $38.94, a decrease of 0.3 percent over the prior year.

"Overall, we saw a drop in occupancy this quarter, and we see the same effects within our markets' competitive sets. Our hotels, primarily located in secondary and tertiary markets, aren't seeing the demand like their larger market counterparts," Walters said. "Demand has slowed and we continue to focus on balancing room rate against occupancy to optimize revenue and margins."

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