CDOR Condor Hospitality Trust Inc

Condor Hospitality Trust, Inc. (NYSE American: CDOR) (the “Company”) today announced results for the third quarter ended September 30, 2019.

THIRD QUARTER RELEASE FINANCIAL HIGHLIGHTS

• Revenue in the third quarter 2019 of $14.7 million, comprised of $14.7 million generated entirely from New Investment Platform Hotels, a 0.2% increase from $14.6 million generated by New Investment Platform Hotels in the $15.4 million 2018 third quarter Revenue that included $0.8 million of Legacy Hotel Revenue.
• Same-Store Revenue of $54.6 million for the first nine months of 2019 increased $0.5 million over the first nine months Same-Store Revenue of $54.1 million in 2018.
• Same-Store ADR for the New Investment Platform Hotels increased 2.1% in the first nine months of 2019 compared to the first nine months of 2018.
• Same-Store RevPAR for the New Investment Platform Hotels in the 2019 third quarter decreased 0.4% compared to the same quarter in 2018, affected by a continued weak convention and event schedule in San Antonio that had a direct impact on the SpringHill Suites. Excluding the SpringHill Suites, New Investment Platform RevPAR increased by 0.3%. Same-Store RevPAR of $101.71 for the New Investment Platform Hotels for the first nine months of 2019 Increased 1.0% over 2018 first nine months RevPAR of $100.74.
• Net Earnings (Loss) Attributable to Common Shareholders of ($2.1 million), or ($0.18) per Diluted Share in the third quarter, compared to $2.5 million, or $0.21 per share, in the 2018 third quarter. Decline in Net Earnings Attributable to Common Shareholders primarily caused by no Legacy Hotels remaining in the third quarter 2019, compared to $0.3 million of operating income generated from Legacy Hotels in the third quarter 2018, $1.1 million in Equity Transaction and Strategic Alternatives costs incurred in the third quarter 2019, and $0.2 million Decline in Net Gain on Derivatives and Convertible Debt for the quarter. Additionally, the third quarter 2018 included a $3.7 million gain from Legacy Hotel sales.
• Net Earnings (Loss) Attributable to Common Shareholders of ($3.7 million), or ($0.31) per Diluted Share, in the first nine months of 2019 compared to $5.9 million, or $0.49 per share, in the first nine months of 2018. Decline in Net Earnings Attributable to Common Shareholders primarily caused by decreased operating income generated from Legacy Hotels in the first nine months of 2019 of $1.0 million, $1.9 million in Equity Transaction and Strategic Alternatives costs incurred in the first nine months of 2019, and $1.6 million Decline in Net Gain on Derivatives and Convertible Debt for the period. Additionally, the first nine months of 2018 included a $5.6 million gain from Legacy Hotel sales.
• Adjusted Funds from Operations was $2.6 million, or $0.22 per Diluted Share, a $0.4 million increase from $2.2 million, or $0.18, in the 2018 third quarter.
• Same-Store Hotel EBITDA was flat for the quarter but is up $0.1 million for the first nine months of 2019 compared to the same time period in 2018.

MANAGEMENT COMMENTARY

Bill Blackham, Condor’s Chief Executive Officer, commented:

“For the first nine months of 2019 our portfolio has outperformed the upscale and upper midscale chain scales with 1.2% RevPAR growth compared to (0.5)% for upscale and 0.0% for upper midscale as reported by Smith Travel Research. Our proforma same-store RevPAR for the third quarter 2019 excluding the SpringHill Suites increased 0.3% as compared to (0.5)% for upscale and (0.1)% for upper midscale, as reported by Smith Travel Research while unadjusted same-store RevPAR declined 0.4% for the third quarter. In addition to the market conditions in San Antonio, the portfolio during the quarter experienced revenue disruption from an accidental fire protection sprinkler event in our Summerville hotel and sales, marketing and revenue management disruptions caused by management company changes at 7 of our hotels. In the first nine months of 2019 Same-Store Hotel EBITDA is approximately 0.5% higher than the same period in the prior year at $20.8 million compared to $20.7 million, and our margins while declining in the first nine months, did so moderately reducing 20 bps from 38.4% in 2018 to 38.2% in 2019 and notwithstanding industry cost pressures were flat at 34.6% for the third quarter of 2019 compared to 2018. On July 22, 2019 Condor announced the conclusion of a strategic alternatives process with the signing of a definitive agreement that contemplates the merger of the Company with the operating partnership of NexPoint Hospitality Trust, an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario and listed on the TSXV, resulting in a $11.10 per share cash price to be paid to common shareholders and a $10.00 per share cash price to be paid to Series E preferred shareholders at closing. We anticipate completing and closing the merger during the fourth quarter of 2019.”

FINANCIAL SUMMARY

At September 30, 2019, the Company’s total portfolio included 15 hotels, representing 1,908 rooms. The Company’s last remaining legacy asset was sold during the first quarter of 2019.

Total Company Financial Results ($ in millions except per share amounts)

 

Three months ended September 30,

 

Nine months ended September 30,

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Revenue

$

14.7

 

$

15.5

 

-5.1%

 

$

46.7

 

$

50.0

 

-6.5%

Net Earnings (Loss) Attributable to Common Shareholders

$

(2.1)

 

$

2.5

 

NA

 

$

(3.7)

 

$

5.9

 

NA

Diluted Earnings (Loss) per Share

$

(0.18)

 

$

0.21

 

NA

 

$

(0.31)

 

$

0.49

 

NA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from Operations (FFO)*

$

0.7

 

$

1.7

 

-56.7%

 

$

4.8

 

$

8.7

 

-44.9%

FFO per Diluted Share*

$

0.05

 

$

0.13

 

-61.5%

 

$

0.37

 

$

0.69

 

-46.4%

Adjusted FFO*

$

2.6

 

$

2.2

 

18.0%

 

$

9.4

 

$

9.9

 

-4.4%

Adjusted FFO per Diluted Share*

$

0.22

 

$

0.18

 

22.2%

 

$

0.78

 

$

0.82

 

-4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel EBITDA*

$

5.9

 

$

6.2

 

-4.5%

 

$

20.9

 

$

21.6

 

-3.1%

Adjusted EBITDAre*

$

4.7

 

$

4.7

 

0.0%

 

$

17.1

 

$

17.1

 

0.0%

*Please see the Reg. G reconciliation tables at the end of this release.

Same Store Operational Results** ($ in millions except per share amounts and operating metrics)

 

Three months ended September 30,

 

Nine months ended September 30,

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Same-Store RevPAR

$

94.31

 

$

94.64

 

-0.4%

 

$

101.71

 

$

100.74

 

1.0%

Same-Store Occupancy

 

78.06%

 

 

78.73%

 

-0.9%

 

 

80.17%

 

 

81.06%

 

-1.1%

Same-Store ADR

$

120.81

 

$

120.21

 

0.5%

 

$

126.87

 

$

124.28

 

2.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Hotel EBITDA*

$

5.9

 

$

5.9

 

-0.1%

 

$

20.8

 

$

20.7

 

0.5%

Same-Store Hotel EBITDA Margin*

 

34.6%

 

 

34.6%

 

0.0%

 

 

38.2%

 

 

38.4%

 

-0.2%

*Please see the Reg. G reconciliation tables at the end of this release.

**Financial results presented above include results from prior to our ownership.

PORTFOLIO ACTIVITY

The Company’s investment strategy is to assemble a portfolio of premium-branded, select-service hotels in the top 100 Metropolitan Statistical Areas (“MSAs”) with a particular focus on MSAs ranked between 20 to 60. Since restarting its portfolio transformation in 2015, the Company has acquired 14 high-quality select-service hotels representing 1,808 rooms in its target markets for a total purchase price of approximately $277 million. Additionally, during this time, the Company has sold 55 legacy assets for a total gross sales price of approximately $170 million. Following the sale of the Quality Inn Solomons in the first quarter of 2019, there are no legacy hotels remaining in the Company’s portfolio.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

As of September 30, 2019, the Company had cash and cash equivalents (including restricted cash) of $12.0 million and available revolver borrowing capacity of $9.0 million. As of September 30, 2019, the Company had total outstanding long-term debt of $135.7 million associated with assets held for use with a weighted average maturity of 1.8 years and a weighted average interest rate of 4.52%.

CAPITAL INVESTMENTS

The Company invested $1.2 million in capital improvements throughout the portfolio in the three months ended September 30, 2019 to upgrade its properties and maintain brand standards.

OUTLOOK AND GUIDANCE

The Company has suspended guidance until further notice.

DIVIDENDS

On July 19, 2019, the Company entered into an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”) with NHT Operating Partnership LLC, a Delaware limited liability company (the “Parent”) and other parties thereto pursuant to which the Parent will acquire all of the issued and outstanding equity interests of the Company and its operating partnership through two mergers (the “proposed transaction”). During the term of the Merger Agreement, the Company may not pay cash dividends to holders of the Company common stock or the Series E Preferred Stock, except the Company is permitted to declare and pay a dividend to shareholders during the month in which an extension option for the closing of the transactions contemplated by the Merger Agreement is exercised by the Parent, subject to limitations as set forth in the Merger Agreement and the disclosure schedule delivered therewith that sets forth a limitation on the amount of any such dividends, and is based on available prior month adjusted funds from operations as calculated pursuant to the Merger Agreement. The holders of the Series E preferred stock have agreed to waive accrual of any unpaid dividends between signing and closing.

EARNINGS CALL

The Company will not be conducting a third quarter earnings conference call.

About Condor Hospitality Trust, Inc.

Condor Hospitality Trust, Inc. (NYSE American: 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 in the top 100 Metropolitan Statistical Areas (“MSAs”) with a particular focus on the top 20 to 60 MSAs. The Company currently owns 15 hotels in 8 states. Condor’s hotels are franchised by a number of the industry’s most well-regarded brand families including Hilton, Marriott, and InterContinental Hotels.

Forward-Looking Statement

This news release (including statements about the expected timing, completion and effects of the mergers and the other transactions contemplated by the Merger Agreement) may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “project”, “plan”, the negative version of these words or other similar expressions. Readers are cautioned not to place undue reliance on any such forward-looking statements.

All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Condor may not be able to complete the proposed transaction on the terms described herein or other acceptable terms or at all because of a number of factors, including without limitation, the following: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (ii) unknown, underestimated or undisclosed commitments or liabilities; (iii) the inability to complete the proposed transaction due to the failure to satisfy the closing conditions to the proposed transaction; (iv) risks related to disruption of management’s attention from Condor’s ongoing business operations due to the proposed transaction; (v) the effect of the announcement of the proposed transaction on the ability of the parties to retain and hire key personnel, maintain relationships with their franchisors, management companies and suppliers, and maintain their operating results and business generally; (vi) the risk that certain approvals or consents will not be received in a timely manner or that the proposed transaction will not be consummated in a timely manner; (vii) adverse changes in U.S. and non-U.S. governmental laws and regulations; and (viii) the risk of litigation, including shareholder litigation in connection with the proposed transaction, and the impact of any adverse legal judgments, fines, penalties, injunctions or settlements.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent Condor’s views as of the date on which such statements were made. Condor anticipates that subsequent events and developments may cause those views to change. These forward-looking statements should not be relied upon as representing Condor’s views as of any date subsequent to the date hereof. Condor expressly disclaims a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences.

Additional factors that may affect Condor’s business or financial results are described in the risk factors included in Condor’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

SELECTED FINANCIAL DATA:

Condor Hospitality Trust, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited - In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

As of

 

 

September 30, 2019

 

December 31, 2018

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Investment in hotel properties, net

 

$

224,376

 

$

230,178

Investment in unconsolidated joint venture

 

 

4,649

 

 

5,866

Cash and cash equivalents

 

 

5,046

 

 

4,151

Restricted cash, property escrows

 

 

6,906

 

 

5,005

Accounts receivable, net

 

 

1,500

 

 

1,290

Prepaid expenses and other assets

 

 

1,131

 

 

2,227

Derivative assets, at fair value

 

 

428

 

 

639

Investment in hotel properties held for sale, net

 

 

-

 

 

4,092

Total Assets

 

$

244,036

 

$

253,448

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

$

7,993

 

$

5,336

Dividends and distributions payable

 

 

145

 

 

2,330

Derivative liabilities, at fair value

 

 

498

 

 

-

Convertible debt, at fair value

 

 

1,199

 

 

1,000

Long-term debt, net of deferred financing costs

 

 

134,017

 

 

135,810

Long-term debt related to hotel properties held for sale, net of deferred financing costs

 

 

-

 

 

1,120

Total Liabilities

 

 

143,852

 

 

145,596

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Preferred stock, 40,000,000 shares authorized:

 

 

 

 

 

 

6.25% Series E, 925,000 shares authorized, $.01 par value, 925,000 shares outstanding, liquidation preference of $9,394 and $9,250

 

 

10,050

 

 

10,050

Common stock, $.01 par value, 200,000,000 shares authorized; 11,916,309 and 11,886,003 shares outstanding

 

 

119

 

 

119

Additional paid-in capital

 

 

232,627

 

 

231,805

Accumulated deficit

 

 

(143,277)

 

 

(134,970)

Total Shareholders' Equity

 

 

99,519

 

 

107,004

Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $623 and $435

 

 

665

 

 

848

Total Equity

 

 

100,184

 

 

107,852

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

244,036

 

$

253,448

Condor Hospitality Trust, Inc. and Subsidiaries Consolidated Statements of Operations (Unaudited - In thousands, except per share data)

 

 

 

 

 

 

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Room rentals and other hotel services

 

$

14,666

 

$

15,462

 

$

46,746

 

$

49,975

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Hotel and property operations

 

 

9,718

 

 

10,148

 

 

29,266

 

 

31,318

Depreciation and amortization

 

 

2,405

 

 

2,423

 

 

7,161

 

 

7,126

General and administrative

 

 

1,210

 

 

1,599

 

 

4,445

 

 

5,073

Acquisition and terminated transactions

 

 

1

 

 

96

 

 

15

 

 

186

Equity transaction and strategic alternatives

 

 

1,052

 

 

-

 

 

1,886

 

 

-

Total operating expenses

 

 

14,386

 

 

14,266

 

 

42,773

 

 

43,703

Operating income

 

 

280

 

 

1,196

 

 

3,973

 

 

6,272

Net gain (loss) on disposition of assets

 

 

(14)

 

 

3,716

 

 

9

 

 

5,587

Equity (loss) in earnings of joint venture

 

 

(84)

 

 

(41)

 

 

595

 

 

251

Net gain (loss) on derivatives and convertible debt

 

 

(223)

 

 

116

 

 

(916)

 

 

719

Other expense, net

 

 

(27)

 

 

(23)

 

 

(80)

 

 

(57)

Interest expense

 

 

(1,912)

 

 

(2,154)

 

 

(6,169)

 

 

(6,173)

Impairment recovery, net

 

 

-

 

 

-

 

 

-

 

 

93

Earnings (loss) before income taxes

 

 

(1,980)

 

 

2,810

 

 

(2,588)

 

 

6,692

Income tax expense

 

 

(8)

 

 

(132)

 

 

(655)

 

 

(315)

Net earnings (loss)

 

 

(1,988)

 

 

2,678

 

 

(3,243)

 

 

6,377

Loss (earnings) attributable to noncontrolling interest

 

 

10

 

 

(20)

 

 

17

 

 

(47)

Net earnings (loss) attributable to controlling interests

 

 

(1,978)

 

 

2,658

 

 

(3,226)

 

 

6,330

Dividends declared and undeclared on preferred stock

 

 

(145)

 

 

(145)

 

 

(434)

 

 

(434)

Net earnings (loss) attributable to common shareholders

 

$

(2,123)

 

$

2,513

 

$

(3,660)

 

$

5,896

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Share

 

 

 

 

 

 

 

 

 

 

 

 

Total - Basic Earnings (Loss) per Share

 

$

(0.18)

 

$

0.21

 

$

(0.31)

 

$

0.50

Total - Diluted Earnings (Loss) per Share

 

$

(0.18)

 

$

0.21

 

$

(0.31)

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Financial Measures (Unaudited)

Non-GAAP financial measures are measures of our historical financial performance that are different from measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We report Funds from Operations (“FFO”), Adjusted FFO (“AFFO”), Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), EBITDA for real estate (“EBITDAre”), Adjusted EBITDAre, and Hotel EBITDA as non-GAAP measures that we believe are useful to investors as key measures of our operating results and which management uses to facilitate a periodic evaluation of our operating results relative to those of our peers. Our non-GAAP measures should not be considered as an alternative to U.S. GAAP net earnings as an indication of financial performance or to U.S. GAAP cash flows from operating activities as a measure of liquidity. Additionally, these measures are not indicative of funds available to fund cash needs or our ability to make cash distributions as they have not been adjusted to consider cash requirements for capital expenditures, property acquisitions, debt service obligations, or other commitments.

FFO and AFFO

The following table reconciles net earnings (loss) to FFO and AFFO for the three and nine months ended September 30, 2019 and 2018 (in thousands). All amounts presented include our portion of the results of our unconsolidated Atlanta JV.

 

Three months ended September 30,

 

Nine months ended September 30,

Reconciliation of Net earnings (loss) to FFO and AFFO

2019

 

2018

 

2019

 

2018

Net earnings (loss)

$

(1,988)

 

$

2,678

 

$

(3,243)

 

$

6,377

Depreciation and amortization expense

 

2,405

 

 

2,423

 

 

7,161

 

 

7,126

Depreciation and amortization expense from JV

 

299

 

 

289

 

 

895

 

 

866

Net (gain) loss on disposition of assets

 

14

 

 

(3,716)

 

 

(9)

 

 

(5,587)

Net loss on disposition of assets from JV

 

2

 

 

15

 

 

2

 

 

29

Impairment recovery, net

 

-

 

 

-

 

 

-

 

 

(93)

FFO

 

732

 

 

1,689

 

 

4,806

 

 

8,718

Dividends declared and undeclared on preferred stock

 

(145)

 

 

(145)

 

 

(434)

 

 

(434)

FFO attributable to common shares and common units

 

587

 

 

1,544

 

 

4,372

 

 

8,284

Net loss (gain) on derivatives and convertible debt

 

223

 

 

(116)

 

 

916

 

 

(719)

Net loss on derivatives from JV

 

-

 

 

-

 

 

1

 

 

-

Acquisition and terminated transactions expense

 

1

 

 

96

 

 

15

 

 

186

Equity transaction and strategic alternatives

 

1,052

 

 

-

 

 

1,886

 

 

-

Stock-based compensation expense

 

141

 

 

247

 

 

901

 

 

912

Amortization of deferred financing fees

 

286

 

 

363

 

 

981

 

 

1,080

Amortization of deferred financing fees from JV

 

143

 

 

45

 

 

234

 

 

136

Loss on extinguishment of debt from JV

 

138

 

 

-

 

 

138

 

 

-

AFFO attributable to common shares and common units

$

2,571

 

$

2,179

 

$

9,444

 

$

9,879

 

 

 

 

 

 

 

 

 

 

 

 

FFO attributable to common shares and common units - Basic Shares

$

587

 

$

1,544

 

$

4,372

 

$

8,284

Convertible note interest and fair value adjustments

 

-

 

 

-

 

 

-

 

 

27

Preferred dividends and fair value adjustments

 

-

 

 

-

 

 

-

 

 

-

FFO attributable to common shares and common units - Diluted Shares

$

587

 

$

1,544

 

$

4,372

 

$

8,311

 

 

 

 

 

 

 

 

 

 

 

 

FFO per common share and common unit - Basic

$

0.05

 

$

0.13

 

$

0.37

 

$

0.70

FFO per common share and common unit - Diluted

$

0.05

 

$

0.13

 

$

0.37

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common units - Basic FFO

 

11,919,944

 

 

11,892,404

 

 

11,901,936

 

 

11,867,801

Weighted average common shares and common units - Diluted FFO

 

11,925,323

 

 

11,899,760

 

 

11,921,438

 

 

11,980,377

 

 

 

 

 

 

 

 

 

 

 

 

AFFO attributable to common shares and common units - Basic Shares

$

2,571

 

$

2,179

 

$

9,444

 

$

9,879

Convertible note interest

 

16

 

 

16

 

 

48

 

 

48

Preferred dividends at stated rates

 

-

 

 

-

 

 

434

 

 

434

AFFO attributable to common shares and common units - Diluted Shares

$

2,587

 

$

2,195

 

$

9,926

 

$

10,361

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per common share and common unit - Basic

$

0.22

 

$

0.18

 

$

0.79

 

$

0.83

AFFO per common share and common unit - Diluted

$

0.22

 

$

0.18

 

$

0.78

 

$

0.82

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common units - Basic AFFO

 

11,919,944

 

 

11,892,404

 

 

11,901,936

 

 

11,867,801

Weighted average common shares and common units - Diluted AFFO

 

12,690,703

 

 

11,997,029

 

 

12,686,818

 

 

12,648,488

We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net earnings or loss computed in accordance with GAAP, excluding gains or losses from sales of real estate assets, impairment, and the depreciation and amortization of real estate assets. FFO is calculated both for the Company in total and as FFO attributable to common shares and common units, which is FFO reduced by preferred stock dividends. AFFO is FFO attributable to common shares and common units adjusted to exclude items we do not believe are representative of the results from our core operations, including non-cash gains or losses on derivatives and convertible debt, stock-based compensation expense, amortization of certain fees, losses on debt extinguishment, and in-kind dividends above stated rates, and cash charges for acquisition and equity transaction and strategic alternatives costs. 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.

We consider FFO to be a useful additional measure 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 assumes 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 provides a meaningful indication of our performance. We believe that AFFO provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income and FFO, is beneficial to an investor’s understanding of our operating performance. We present FFO and AFFO per common share and common unit because our common units are redeemable for common shares. We believe it is meaningful for the investor to understand FFO and AFFO applicable to common shares and common units.

EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA

The following table reconciles net earnings (loss) to EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA for the three and nine months ended September 30, 2019 and 2018 (in thousands). All amounts presented our portion of the results of our unconsolidated Atlanta JV.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

Reconciliation of Net earnings (loss) to EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA

2019

 

2018

 

2019

 

2018

Net earnings (loss)

$

(1,988)

 

$

2,678

 

$

(3,243)

 

$

6,377

Interest expense

 

1,912

 

 

2,154

 

 

6,169

 

 

6,173

Interest expense from JV

 

536

 

 

543

 

 

1,645

 

 

1,553

Loss on extinguishment of debt from JV

 

138

 

 

-

 

 

138

 

 

-

Income tax expense

 

8

 

 

132

 

 

655

 

 

315

Depreciation and amortization expense

 

2,405

 

 

2,423

 

 

7,161

 

 

7,126

Depreciation and amortization expense from JV

 

299

 

 

289

 

 

895

 

 

866

EBITDA

 

3,310

 

 

8,219

 

 

13,420

 

 

22,410

Net (gain) loss on disposition of assets

 

14

 

 

(3,716)

 

 

(9)

 

 

(5,587)

Net loss on disposition of assets from JV

 

2

 

 

15

 

 

2

 

 

29

Impairment recovery, net

 

-

 

 

-

 

 

-

 

 

(93)

EBITDAre

 

3,326

 

 

4,518

 

 

13,413

 

 

16,759

Net loss (gain) on derivatives and convertible debt

 

223

 

 

(116)

 

 

916

 

 

(719)

Net loss on derivative from JV

 

-

 

 

-

 

 

1

 

 

-

Stock-based compensation expense

 

141

 

 

247

 

 

901

 

 

912

Acquisition and terminated transactions expense

 

1

 

 

96

 

 

15

 

 

186

Equity transaction and strategic alternatives

 

1,052

 

 

-

 

 

1,886

 

 

-

Adjusted EBITDAre

 

4,743

 

 

4,745

 

 

17,132

 

 

17,138

General and administrative expense, excluding stock compensation expense

 

1,069

 

 

1,352

 

 

3,544

 

 

4,161

Other expense, net

 

27

 

 

23

 

 

80

 

 

57

Unallocated hotel and property operations expense

 

86

 

 

81

 

 

153

 

 

229

Hotel EBITDA

$

5,925

 

$

6,201

 

$

20,909

 

$

21,585

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

14,666

 

$

15,462

 

$

46,746

 

$

49,975

JV revenue

 

2,446

 

 

2,485

 

 

8,092

 

 

7,587

Condor and JV revenue

$

17,112

 

$

17,947

 

$

54,838

 

$

57,562

Hotel EBITDA as a percentage of revenue

 

34.6%

 

 

34.6%

 

 

38.1%

 

 

37.5%

We calculate EBITDA, EBITDAre, and Adjusted EBITDAre by adding back to net earnings or loss certain non-operating expenses and certain non-cash charges which are based on historical cost accounting that 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. In calculating EBITDA, we add back to net earnings or loss interest expense, loss on debt extinguishment, income tax expense, and depreciation and amortization expense. NAREIT adopted EBITDAre in order to promote an industry-wide measure of REIT operating performance. We adjust EBITDA by adding back net gain/loss on disposition of assets and impairment charges to calculate EBITDAre. To calculate Adjusted EBITDAre, we adjust EBITDAre to add back acquisition and terminated transactions expense and equity transaction and strategic alternatives expense, which are cash charges. We also add back stock –based compensation expense and gain/loss on derivatives and convertible debt, which are non-cash charges. EBITDA, EBITDAre, and Adjusted EBITDAre, as presented, may not be comparable to similarly titled measures of other companies.

We believe EBITDA, EBITDAre, and Adjusted EBITDAre to be useful additional measures of our operating performance, excluding the impact of our capital structure (primarily interest expense), our asset base (primarily depreciation and amortization expense), and other items we do not believe are representative of the results from our core operations.

The Company further excludes general and administrative expenses, other non-operating income or expense, and certain hotel and property operations expenses that are not allocated to individual properties in assessing hotel performance (primarily certain general liability and other insurance costs, land lease costs, and office and banking fees) from Adjusted EBITDAre to calculate Hotel EBITDA. Hotel EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Hotel EBITDA is intended to isolate property level operational performance over which the Company’s hotel operators have direct control. We believe Hotel EBITDA is helpful to investors as it better communicates the comparability of our hotels’ operating results for all of the Company’s hotel properties and is used by management to measure the performance of the Company’s hotels and the effectiveness of the operators of the hotels.

Same-Store Revenue and Hotel EBITDA

The following tables present our same-store revenue, Hotel EBITDA, and Hotel EBITDA margin broken down by property type for the three and nine months ended September 30, 2019 and 2018 (in thousands) and reconcile these same-store measures to total revenue and Hotel EBITDA as presented above. Same-store results include all our hotels owned at September 30, 2019. Results for the hotels for periods prior to our ownership were provided to us by prior owners and have not been adjusted by us or audited or reviewed by our independent auditors. All amounts presented include our portion of the results of our unconsolidated Atlanta Aloft JV. Results for periods prior to the Company’s ownership have not been included in the Company’s actual consolidated financial statements and are included here only for comparison purposes.

 

 

Revenue - Reconciliation of Actual to Same-Store

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

2019

 

2018

 

2019

 

2018

Condor and JV Revenue - Actual

 

$

17,112

 

$

17,947

 

$

54,838

 

$

57,562

Revenue earned on properties disposed of prior to September 30, 2019 during the period of ownership

 

 

-

 

 

(825)

 

 

(272)

 

 

(4,122)

Revenue earned on properties owned at September 30, 2019 prior to ownership

 

 

-

 

 

-

 

 

-

 

 

637

Total Revenue - Same-Store

 

$

17,112

 

$

17,122

 

$

54,566

 

$

54,077

 

 

Hotel EBITDA - Reconciliation of Actual to Same-Store

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

2019

 

2018

 

2019

 

2018

Condor and JV Hotel EBITDA - Actual

 

$

5,925

 

$

6,201

 

$

20,909

 

$

21,585

Hotel EBITDA earned on properties disposed of prior to September 30, 2019 during the period of ownership

 

 

-

 

 

(274)

 

 

(63)

 

 

(1,128)

Hotel EBITDA earned on properties owned at September 30, 2019 prior to ownership

 

 

-

 

 

-

 

 

-

 

 

285

Total Hotel EBITDA - Same-Store

 

$

5,925

 

$

5,927

 

$

20,846

 

$

20,742

 

 

Hotel EBITDA Margin

 

 

Three months ended September 30,

 

Nine months September 30,

 

 

2019

 

2018

 

2019

 

2018

Total Hotel EBITDA Margin

 

 

34.6%

 

 

34.6%

 

 

38.2%

 

 

38.4%

Condor Hospitality Trust, Inc. Operating Statistics

The following tables present our same-store occupancy, ADR, and RevPAR for all our hotels owned at September 30, 2019. Same-store occupancy, ADR, and RevPAR reflect the performance of hotels during the entire period, regardless of our ownership during the period presented. Results for the hotels for periods prior to our ownership were provided to us by prior owners and have not been adjusted by us or audited or reviewed by our independent auditors. The performance metrics for the hotel acquired through our Atlanta JV, also presented below, reflect 100% of the operating results of the property, including our interest and the interest of our partner.

 

Three months ended September 30,

 

 

 

 

2019

 

2018

 

 

 

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

 

Growth

Solomons Hilton Garden Inn

81.29%

 

$

120.27

 

$

97.77

 

79.65%

 

$

129.80

 

$

103.39

 

 

-5.4%

Atlanta Hotel Indigo

73.70%

 

$

101.40

 

$

74.73

 

72.60%

 

$

101.94

 

$

74.00

 

 

1.0%

Jacksonville Courtyard by Marriott

71.65%

 

$

116.27

 

$

83.31

 

72.21%

 

$

113.52

 

$

81.97

 

 

1.6%

San Antonio SpringHill Suites

74.13%

 

$

119.90

 

$

88.88

 

78.39%

 

$

125.19

 

$

98.14

 

 

-9.4%

Leawood Aloft

70.38%

 

$

130.56

 

$

91.89

 

78.96%

 

$

123.19

 

$

97.28

 

 

-5.5%

Lexington Home2 Suites

86.50%

 

$

117.56

 

$

101.69

 

84.65%

 

$

111.14

 

$

94.07

 

 

8.1%

Round Rock Home2 Suites

83.29%

 

$

110.62

 

$

92.13

 

81.74%

 

$

113.74

 

$

92.97

 

 

-0.9%

Tallahassee Home2 Suites

80.09%

 

$

119.11

 

$

95.40

 

88.04%

 

$

114.45

 

$

100.77

 

 

-5.3%

South Haven Home2 Suites

89.40%

 

$

122.60

 

$

109.60

 

86.60%

 

$

112.06

 

$

97.05

 

 

12.9%

Lake Mary Hampton Inn & Suites

68.70%

 

$

126.29

 

$

86.76

 

77.72%

 

$

122.32

 

$

95.06

 

 

-8.7%

Austin Residence Inn

80.43%

 

$

127.59

 

$

102.62

 

78.07%

 

$

124.16

 

$

96.93

 

 

5.9%

El Paso Fairfield Inn

88.60%

 

$

107.52

 

$

95.26

 

82.52%

 

$

102.05

 

$

84.21

 

 

13.1%

Austin TownePlace Suites

68.32%

 

$

106.07

 

$

72.47

 

69.66%

 

$

109.98

 

$

76.62

 

 

-5.4%

Summerville Home2 Suites

82.92%

 

$

129.09

 

$

107.04

 

80.08%

 

$

126.55

 

$

101.35

 

 

5.6%

Wholly owned new investment platform properties

77.89%

 

$

118.13

 

$

92.01

 

79.13%

 

$

116.21

 

$

91.95

 

 

0.1%

Atlanta Aloft JV

79.16%

 

$

138.00

 

$

109.24

 

76.16%

 

$

147.26

 

$

112.16

 

 

-2.6%

Total Same-Store Portfolio

78.06%

 

$

120.81

 

$

94.31

 

78.73%

 

$

120.21

 

$

94.64

 

 

-0.4%

Same-Store Hotel Comparison

 

3Q19

 

3Q18

 

Growth

8 Negative RevPAR Same-Store Hotels

 

$

89.31

 

$

93.02

 

 

-4.0%

7 Positive RevPAR Same-Store Hotels

 

$

99.04

 

$

96.18

 

 

3.0%

Total Same-Store Portfolio

 

$

94.31

 

$

94.64

 

 

-0.4%

 

Nine months ended September 30,

 

 

 

 

2019

 

2018

 

 

 

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

 

Growth

Solomons Hilton Garden Inn

78.01%

 

$

122.93

 

$

95.90

 

78.27%

 

$

126.07

 

$

98.68

 

 

-2.8%

Atlanta Hotel Indigo

76.16%

 

$

107.72

 

$

82.04

 

78.29%

 

$

103.45

 

$

80.99

 

 

1.3%

Jacksonville Courtyard by Marriott

76.56%

 

$

121.20

 

$

92.79

 

80.13%

 

$

116.48

 

$

93.34

 

 

-0.6%

San Antonio SpringHill Suites

80.28%

 

$

130.59

 

$

104.84

 

84.56%

 

$

137.68

 

$

116.42

 

 

-10.0%

Leawood Aloft

69.49%

 

$

132.42

 

$

92.01

 

73.76%

 

$

127.81

 

$

94.27

 

 

-2.4%

Lexington Home2 Suites

80.92%

 

$

116.18

 

$

94.01

 

80.76%

 

$

112.71

 

$

91.02

 

 

3.3%

Round Rock Home2 Suites

84.15%

 

$

116.72

 

$

98.22

 

85.50%

 

$

118.48

 

$

101.30

 

 

-3.0%

Tallahassee Home2 Suites

89.15%

 

$

125.15

 

$

111.57

 

86.77%

 

$

120.13

 

$

104.24

 

 

7.0%

South Haven Home2 Suites

90.70%

 

$

119.14

 

$

108.06

 

86.44%

 

$

114.61

 

$

99.07

 

 

9.1%

Lake Mary Hampton Inn & Suites

79.09%

 

$

138.79

 

$

109.76

 

81.98%

 

$

136.94

 

$

112.27

 

 

-2.2%

Austin Residence Inn

82.91%

 

$

136.01

 

$

112.77

 

81.85%

 

$

130.77

 

$

107.03

 

 

5.4%

El Paso Fairfield Inn

86.01%

 

$

105.69

 

$

90.90

 

81.63%

 

$

100.67

 

$

82.18

 

 

10.6%

Austin TownePlace Suites

72.37%

 

$

112.11

 

$

81.13

 

78.64%

 

$

117.84

 

$

92.68

 

 

-12.5%

Summerville Home2 Suites

83.32%

 

$

130.73

 

$

108.92

 

85.10%

 

$

129.06

 

$

109.83

 

 

-0.8%

Wholly owned new investment platform properties

80.24%

 

$

122.58

 

$

98.36

 

81.39%

 

$

120.85

 

$

98.36

 

 

0.0%

Atlanta Aloft JV

79.70%

 

$

154.97

 

$

123.52

 

78.94%

 

$

147.26

 

$

116.24

 

 

6.3%

Total Same-Store Portfolio

80.17%

 

$

126.87

 

$

101.71

 

81.06%

 

$

124.28

 

$

100.74

 

 

1.0%

Same-Store Hotel Comparison

 

YTD19

 

YTD18

 

Growth

8 Negative RevPAR Same-Store Hotels

 

$

105.7

 

$

99.59

 

 

6.1%

7 Positive RevPAR Same-Store Hotels

 

$

97.49

 

$

101.95

 

 

-4.4%

Total Same-Store Portfolio

 

$

101.71

 

$

100.74

 

 

1.0%

 

 

 

 

 

 

 

Condor Hospitality Trust, Inc.

 

Property List | As of November 14, 2019

 

 

 

 

 

 

 

 

New Investment Platform | Acquired from January 1, 2012 - November 14, 2019

 

Hotel Name

City

State

Rooms

Acquisition Date

Purchase Price (in millions)

1

Hilton Garden Inn

Dowell/Solomons

MD

100

05/25/2012

$11.5

2

SpringHill Suites

San Antonio

TX

116

10/01/2015

$17.5

3

Courtyard by Marriott

Jacksonville

FL

120

10/02/2015

$14.0

4

Hotel Indigo

College Park

GA

142

10/02/2015

$11.0

5

Aloft1

Atlanta

GA

254

08/22/2016

$43.6

6

Aloft

Leawood

KS

156

12/14/2016

$22.5

7

Home2 Suites

Lexington

KY

103

03/24/2017

$16.5

8

Home2 Suites

Round Rock

TX

91

03/24/2017

$16.8

9

Home2 Suites

Tallahassee

FL

132

03/24/2017

$21.5

10

Home2 Suites

Southaven

MS

105

04/14/2017

$19.0

11

Hampton Inn & Suites

Lake Mary

FL

130

06/19/2017

$19.3

12

Fairfield Inn & Suites

El Paso

TX

124

08/31/2017

$16.4

13

Residence Inn

Austin

TX

120

08/31/2017

$22.4

14

TownePlace Suites

Austin

TX

122

01/18/2018

$19.8

15

Home2 Suites

Summerville

SC

93

02/21/2018

$16.3

 

Total Portfolio | As of November 14, 2019

 

 

1,908

 

$288.1

 

 

 

 

 

 

 

1 | Owned 80% by Condor

 

 

 

 

 

 

 

55 Dispositions | For Period January 1, 2015 - November 14, 2019

 

Hotel Name

City

State

Rooms

Disposition Date

Gross Proceeds (in millions)

1

Super 8

West Plains

MO

49

01/15/2015

$1.5

2

Super 8

Green Bay

WI

83

01/29/2015

$2.2

3

Super 8

Columbus

GA

74

03/16/2015

$0.9

4

Sleep Inn & Suites

Omaha

NE

90

03/19/2015

$2.9

5

Savannah Suites

Chamblee

GA

120

04/01/2015

$4.4

6

Savannah Suites

Augusta

GA

172

04/01/2015

$3.4

7

Super 8

Batesville

AR

49

04/30/2015

$1.5

8

Days Inn

Ashland

KY

63

07/01/2015

$2.2

9

Comfort Inn

Alexandria

VA

150

07/13/2015

$12.0

10

Days Inn

Alexandria

VA

200

07/13/2015

$6.5

11

Super 8

Manhattan

KS

85

08/28/2015

$3.2

12

Quality Inn

Sheboygan

WI

59

10/06/2015

$2.3

13

Super 8

Hays

KS

76

10/14/2015

$1.9

14

Days Inn

Glasgow

KY

58

10/16/2015

$1.8

15

Super 8

Tomah

WI

65

10/21/2015

$1.4

16

Rodeway Inn

Fayetteville

NC

120

11/03/2015

$2.6

17

Savannah Suites

Savannah

GA

160

12/22/2015

$4.0

 

Total 2015

 

 

1,673

 

$54.7

18

Super 8

Kirksville

MO

61

01/04/2016

$1.5

19

Super 8

Lincoln

NE

133

01/07/2016

$2.8

20

Savannah Suites

Greenville

SC

170

01/08/2016

$2.7

21

Super 8

Portage

WI

61

03/30/2016

$2.4

22

Super 8

O'Neill

NE

72

04/25/2016

$1.7

23

Quality Inn

Culpeper

VA

49

05/10/2016

$2.2

24

Super 8

Storm Lake

IA

59

05/19/2016

$2.8

25

Clarion Inn

Cleveland

TN

59

05/24/2016

$2.2

26

Super 8

Coralville

IA

84

05/26/2016

$3.4

27

Super 8

Keokuk

IA

61

05/27/2016

$2.2

28

Comfort Inn

Chambersburg

PA

63

06/06/2016

$2.1

29

Super 8

Pittsburg

KS

64

08/08/2016

$1.6

30

Super 8

Mount Pleasant

IA

54

09/09/2016

$1.9

31

Quality Inn

Danville

KY

63

09/19/2016

$2.3

32

Super 8

Menomonie

WI

81

09/26/2016

$3.0

33

Comfort Inn

Glasgow

KY

60

10/14/2016

$2.4

34

Days Inn

Sioux Falls

SD

86

11/04/2016

$2.1

35

Comfort Inn

Shelby

NC

76

11/07/2016

$4.1

36

Comfort Inn

Rocky Mount

VA

61

11/17/2016

$2.2

37

Days Inn

Farmville

VA

59

11/17/2016

$2.4

38

Comfort Suites

Marion

IN

62

11/18/2016

$3.0

39

Comfort Inn

Farmville

VA

50

11/30/2016

$2.6

40

Quality Inn

Princeton

WV

50

12/05/2016

$2.1

41

Super 8

Burlington

IA

62

12/21/2016

$2.8

42

Savannah Suites

Atlanta

GA

164

12/22/2016

$2.9

 

Total 2016

 

 

1,864

 

$61.4

43

Comfort Inn

New Castle

PA

79

03/27/2017

$2.5

44

Super 8

Billings

MT

106

03/28/2017

$4.2

45

Comfort Inn

Harlan

KY

61

04/03/2017

$1.9

46

Comfort Suites

Lafayette

IN

62

04/18/2017

$3.9

47

Key West Inn

Key Largo

FL

40

05/17/2017

$7.6

48

Quality Inn

Morgantown

WV

81

08/30/2017

$2.6

49

Days Inn

Bossier City

LA

176

09/13/2017

$1.4

50

Comfort Inn & Suites

Warsaw

IN

71

12/20/2017

$5.0

 

Total 2017

 

 

676

 

$29.1

51

Supertel Inn/Conference Center

Creston

IA

41

01/25/2018

$2.1

52

Comfort Suites

South Bend

IN

135

03/15/2018

$6.1

53

Comfort Suites

Ft. Wayne

IN

127

05/30/2018

$7.1

54

Super 8

Creston

IA

121

08/30/2018

$5.1

 

Total 2018

 

 

424

 

$20.4

55

Quality Inn

Solomons

MD

59

03/22/2019

$4.3

 

Total 2019

 

 

59

 

$4.3

 

 

 

 

 

 

 

 

Total Dispositions

 

 

4,696

 

$169.9

 

 

 

 

 

 

 

Acquisitions | For Period January 1, 2015 - November 14, 2019

 

Hotel Name

City

State

Rooms

Acquisition Date

Purchase Price (in millions)

1

SpringHill Suites

San Antonio

TX

116

10/01/2015

$17.5

2

Courtyard by Marriott

Jacksonville

FL

120

10/02/2015

$14.0

3

Hotel Indigo

College Park

GA

142

10/02/2015

$11.0

4

Aloft1

Atlanta

GA

254

08/22/2016

$43.6

5

Aloft

Leawood

KS

156

12/14/2016

$22.5

6

Home2 Suites

Lexington

KY

103

03/24/2017

$16.5

7

Home2 Suites

Round Rock

TX

91

03/24/2017

$16.8

8

Home2 Suites

Tallahassee

FL

132

03/24/2017

$21.5

9

Home2 Suites

Southaven

MS

105

04/14/2017

$19.0

10

Hampton Inn & Suites

Lake Mary

FL

130

06/19/2017

$19.3

11

Fairfield Inn & Suites

El Paso

TX

124

08/31/2017

$16.4

12

Residence Inn

Austin

TX

120

08/31/2017

$22.4

13

TownePlace Suites

Austin

TX

122

01/18/2018

$19.8

14

Home2 Suites

Summerville

SC

93

02/21/2018

$16.3

 

Total Acquisitions

 

 

1,808

 

$276.6

 

1 | Owned 80% by Condor

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191114005817/en/

Arinn Cavey acavey@trustcondor.com