Condor Hospitality Trust Results

Condor Hospitality Trust Reports Fourth Quarter and Full Year 2017 Results

Condor Hospitality Trust

Condor Hospitality Trust, Inc. (NYSE American: CDOR)today announced results for the fourth quarter and year ended December 31, 2017.

FOURTH QUARTER RELEASE FINANCIAL HIGHLIGHTS

  • Revenue Growth of 45.9% over Prior Year to $15.3 million
  • Net Earnings Attributable to Common Shareholders of $1.2 million or $0.10 per Diluted Share
  • Adjusted Funds from Operations Increased to $3.3 million or $0.28 per Diluted Share Versus a Loss in Last Year’s Fourth Quarter
  • Hotel EBITDA Doubled to $6.0 million from $3.0 million, and Adjusted EBITDA Increased 250% Over Last Year’s Fourth Quarter
  • Achieved 2.5% Fourth Quarter Same-Store RevPAR Growth over Prior Year*
  • Expanded Fourth Quarter Same-Store Hotel EBITDA Margin by 340 Basis Points to 37.0% over Prior Year*

FY2017 PORTFOLIO ACCOMPLISHMENTS

  • Achieved 5.0% FY2017 Same-Store RevPAR Growth over Prior Year*
  • Closed Seven New Investment Platform Hotels for Approximately $132 million and Signed Contracts for Two Additional Acquisitions for Approximately $36 million
  • Closed Eight Legacy Asset Sales Generating $29.1 million in Gross Proceeds

*New investment platform hotels only; Includes results prior to our ownership to illustrate same-store performance

MANAGEMENT COMMENTARY

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

“The transition of Condor was substantially completed during 2017. We sold eight legacy hotel assets generating gross proceeds of $29.1 million and acquired or placed under contract nine new investment platform hotels for a purchase price of approximately $168 million. We continue to thrive in our operations, having achieved 5.0% RevPAR growth in 2017 for our same-store new investment platform hotels combined with a 50 bps increase in hotel EBITDA margin over last year. Our 5.0% RevPAR growth significantly outperformed both the industry and our public hotel REIT peer group.

“We have also had continued success subsequent to year end with the disposition of two additional legacy assets and the purchase of the TownePlace Suites Austin North Tech Ridge and Home2 Suites Summerville-Charleston bringing our new investment platform hotel acquisitions in and since 2015 to nearly $277 million. We have only three of our legacy assets remaining and one of these hotels is already under contract to be sold. We have now sold 52 legacy assets for approximately $153 million since the transition began almost three years ago. Our investment thesis continues to prove out as we execute our communicated strategy. We are excited to continue expanding our platform and create additional shareholder value in 2018 and beyond.”

FINANCIAL SUMMARY

At December 31, 2017, the Company’s total portfolio included 18 hotels, representing 2,176 rooms.

 

Total Company Financial Results

($ in millions except per share amounts)

                           
    Three months ended December 31,     Year ended December 31,
    2017   2016   Change     2017   2016   Change
Revenue   $ 15.3   $ 10.5     45.9 %     $ 55.5     $ 50.6     9.5 %
Net Earnings (Loss) Attributable to Common Shareholders   $ 1.2   $ 3.6     -67.1 %     $ (9.4 )   $ 2.0     -557.4 %
Diluted Earnings (Loss) per Share   $ 0.10   $ 0.65     -84.6 %     $ (1.00 )   $ 0.91     -209.9 %
                           
Funds from Operations (FFO)*   $ 2.3   $ (1.1 )   N/A       $ 6.3     $ 6.8     -6.9 %
FFO per Diluted Share*   $ 0.18   $ (2.26 )   N/A       $ (0.22 )   $ (15.40 )   N/A  
Adjusted FFO*   $ 3.3   $ (1.1 )   N/A       $ 9.8     $ 0.3     2961.4 %
Adjusted FFO per Diluted Share*   $ 0.28   $ (1.20 )   N/A       $ 0.98     $ 0.35     180.0 %
                           
Hotel EBITDA*   $ 6.0   $ 3.0     95.2 %     $ 22.0     $ 15.0     46.1 %
Adjusted EBITDA*   $ 4.6   $ 1.3     249.8 %     $ 16.2     $ 9.1     77.3 %
                           

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

                           

The improvement in year-over-year financial performance was primarily driven by higher revenue and higher margins. The per share amounts were impacted by an increased share count as a result of the conversion of our Series D preferred stock and the equity raise, both completed in the first quarter of 2017.

NEW INVESTMENT PLATFORM

At December 31, 2017, the Company’s new investment platform included 13 hotels, representing 1,693 rooms.

                           

New Investment Platform Operational Results*

($ in millions except per share amounts and operating metrics)

                           
    Three months ended December 31,     Year ended December 31,
    2017   2016   Change     2017   2016   Change
Same-Store RevPAR   $ 91.45     $ 89.23     2.5 %     $ 96.08     $ 91.49     5.0 %
Same-Store Occupancy     76.01 %     76.42 %   -0.5 %       79.51 %     77.09 %   3.1 %
Same-Store ADR   $ 120.31     $ 116.76     3.0 %     $ 120.85     $ 118.68     1.8 %
                           
Same-Store Hotel EBITDA*   $ 5.1     $ 4.5     13.0 %     $ 21.2     $ 19.9     6.6 %
Same-Store Hotel EBITDA Margin*     37.0 %     33.6 %   3.4 %       37.1 %     36.6 %   0.5 %
                           
*Financial results presented above include results from prior to our ownership. Please see the Reg. G reconciliation tables at the end of this release.
 

LEGACY PLATFORM

At December 31, 2017, the Company’s legacy platform included five hotels, representing 483 rooms.

                           

Legacy Platform Operational Results*

($ in millions except per share amounts and operating metrics)

                           
    Three months ended December 31,     Year ended December 31,
    2017   2016   Change     2017   2016   Change
Same-Store RevPAR   $ 45.26     $ 50.52     -10.4 %     $ 51.43     $ 49.18     4.6 %
Same-Store Occupancy     56.76 %     68.46 %   -17.1 %       65.97 %     64.65 %   2.0 %
Same-Store ADR   $ 79.74     $ 73.80     8.0 %     $ 77.96     $ 76.06     2.5 %
                           
Same-Store Hotel EBITDA*   $ 0.4     $ 0.7     -41.4 %     $ 2.5     $ 2.6     -1.9 %
Same-Store Hotel EBITDA Margin*     17.9 %     27.5 %   -9.6 %       26.2 %     27.7 %   -1.5 %
                                               

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

                                               

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 or placed under contract 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 52 legacy assets for a total gross sales price of approximately $153 million.

Acquisitions

During the third quarter of 2017, the Company agreed to acquire the TownePlace Suites Austin North Tech Ridge, and during the fourth quarter of 2017, the Company agreed to acquire the Home2 Suites Summerville-Charleston in South Carolina. The Company acquired both of these hotels in the first quarter of 2018 for a combined purchase price of $36.1 million. These two assets represent the fourteenth and fifteenth hotels, respectively, under the Company’s new investment platform. Aimbridge Hospitality was retained as the manager of the TownePlace Suites while Inn Ventures is managing our new Home2 Suites.

Dispositions

During the fourth quarter, the Company sold one legacy hotel asset, a 71-room Comfort Inn & Suites in Warsaw, IN for $5.0 million. Subsequent to year end, the Company sold the 41-room Supertel Inn in Creston, IA for $2.1 million and the Comfort Suites in South Bend, IN for $6.1 million. Net proceeds from the sales were applied to outstanding debt on the Company’s $150 million secured credit facility. The Company has only three legacy hotels remaining in the portfolio, and one of these hotels is currently under contract for sale while another is being marketed for sale.

BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

As of December 31, 2017, the Company had cash and cash equivalents (including restricted cash) of $10.3 million and available revolver lending capacity of $11.9 million. As of December 31, 2017, the Company had total outstanding long-term debt of $118.9 million associated with assets held for use with a weighted average maturity of 3.2 years and a weighted average interest rate of 4.5%.

In the fourth quarter, the Company refinanced three new investment platform hotels. The effect of this refinancing was to increase the ratio of fixed rate debt to total debt and to increase the credit facility availability for future acquisitions. The refinanced hotels were previously encumbered by floating-rate debt totaling $25.0 million (4.2% weighted average rate), which was refinanced with a $26.5 million mortgage loan from Wells Fargo. The new mortgage loan has an effective fixed rate of 4.44% and matures in five years with two one-year extension options.

During the fourth quarter, the Company sold 163,054 shares of common stock under the ATM program at an average sales price of $10.1328 per share for gross proceeds totaling $1,652,191 and net proceeds, including cash commission fees paid to the Sales Agents and additional related costs, totaling $1,588,414.

Subsequent to December 31, 2017 through March 16, 2018, the Company has sold 12,334 shares of common stock under the ATM program at an average sales price of $10.40 per share for gross proceeds totaling approximately $128,000 and net proceeds, including cash commission fees paid to the Sales Agents and additional related costs, totaling approximately $125,000.

CAPITAL INVESTMENTS

The Company invested $2.8 million in capital improvements throughout the portfolio in the year ended December 31, 2017, to upgrade its properties and maintain brand standards.

OUTLOOK AND GUIDANCE

The Company reiterates its previously announced 2018 Outlook Forecast as included below. Condor plans to reexamine full year 2018 guidance following the end of the first quarter of 2018.

         
2018 Outlook ($ in millions except per share amounts)   Low   High
RevPAR growth (13 new investment platform hotels owned as of December 31, 2017)     3.0%     4.5%
2018 Outlook for 17-Hotel Portfolio        
Forecast hotel revenue   $ 74.0   $ 75.4
Forecast net earnings   $ 1.7   $ 2.5
Forecast earnings per share - Diluted   $ 0.09   $ 0.16
Forecast Hotel EBITDA*   $ 28.8   $ 29.7
Forecast AFFO per common share and common unit - Diluted*   $ 1.13   $ 1.19
             

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

             

DIVIDENDS

On December 19, 2017, the Board of Directors declared a quarterly cash common stock dividend of $0.195 per share for the fourth quarter of 2017. The common stock dividend represents an annualized yield of approximately 7.8% based on the closing price of the Company’s common shares on December 18, 2017. The fourth quarter dividend was paid on January 10, 2018 to shareholders of record as of January 2, 2018.

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 18 hotels in 10 states. Condor’s hotels are franchised by a number of the industry’s most well-regarded brand families including Hilton, Marriott, and InterContinental Hotels.

         

SELECTED FINANCIAL DATA:

         

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

         
    As of December 31,
    2017   2016
         

Assets

       
Investment in hotel properties, net   $ 206,925     $ 79,231  
Investment in unconsolidated joint venture     7,747       9,036  
Cash and cash equivalents     5,441       8,326  
Restricted cash, property escrows     4,894       5,350  
Accounts receivable, net of allowance for doubtful accounts of $11 and $21     1,707       1,416  
Prepaid expenses and other assets     3,220       1,666  
Derivative assets, at fair value     391       -  
Investment in hotel properties held for sale, net     12,655       35,640  
Total Assets   $ 242,980     $ 140,665  
         

Liabilities and Equity

       
         
Liabilities        
Accounts payable, accrued expenses, and other liabilities   $ 7,046     $ 4,698  
Dividends and distributions payable     2,470       1,125  
Derivative liabilities, at fair value     -       8  
Convertible debt, at fair value     1,069       1,315  
Long-term debt, net of deferred financing costs     115,605       47,918  
Long-term debt related to hotel properties held for sale, net of deferred financing costs     4,976       14,802  
Total Liabilities     131,166       69,866  
         
Equity        
Shareholders' Equity        
Preferred stock, 40,000,000 shares authorized:        
6.25% Series D, 6,700,000 shares authorized, $.01 par value, 6,245,156 shares outstanding, liquidation preference of $63,427 at December 31, 2016     -       61,333  
6.25% Series E, 925,000 shares authorized, $.01 par value, 925,000 shares outstanding, liquidation preference of $9,395 at December 31, 2017     10,050       -  
Common stock, $.01 par value, 200,000,000 shares authorized; 11,833,573 and 762,590 shares outstanding     118       8  
Additional paid-in capital     230,727       118,655  
Accumulated deficit     (130,489 )     (112,024 )
Total Shareholders' Equity     110,406       67,972  
Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $871 and $2,008     1,408       2,827  
Total Equity     111,814       70,799  
         
Total Liabilities and Equity   $ 242,980     $ 140,665  
                 
 

Condor Hospitality Trust, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

 
   

(Unaudited)

Three months ended

December 31,

 

Year ended December 31,

    2017   2016   2017   2016
Revenue                
Room rentals and other hotel services   $ 15,278     $ 10,470     $ 55,453     $ 50,647  
Operating Expenses                
Hotel and property operations     10,028       8,040       37,134       37,092  
Depreciation and amortization     2,085       1,094       6,898       5,190  
General and administrative     1,847       1,700       6,552       5,792  
Acquisition and terminated transactions     80       175       1,250       550  
Equity transactions     -       -       343       -  
Total operating expenses     14,040       11,009       52,177       48,624  
Operating income (loss)     1,238       (539 )     3,276       2,023  
Net gain on disposition of assets     2,004       7,318       6,807       23,132  
Equity in earnings (loss) of joint venture     (105 )     (190 )     190       (244 )
Net gain on derivatives and convertible debt     20       72       436       6,377  
Other income (expense), net     (28 )     (32 )     (111 )     55  
Interest expense     (1,706 )     (1,006 )     (5,174 )     (4,710 )
Loss on debt extinguishment     (167 )     (639 )     (967 )     (2,187 )
Impairment loss, net     (553 )     (220 )     (2,151 )     (1,477 )
Earnings from continuing operations before income taxes     703       4,764       2,306       22,969  
Income tax benefit (expense)     645       (125 )     595       (125 )
Earnings from continuing operations     1,348       4,639       2,901       22,844  
Gain from discontinued operations, net of tax     -       -       -       678  
Net earnings     1,348       4,639       2,901       23,522  
Earnings attributable to noncontrolling interest     (10 )     (99 )     (20 )     (727 )
Net earnings attributable to controlling interests     1,338       4,540       2,881       22,795  
Dividends declared and undeclared and in kind dividends deemed on preferred stock     (164 )     (975 )     (12,243 )     (20,748 )
Net earnings (loss) attributable to common shareholders   $ 1,174     $ 3,565     $ (9,362 )   $ 2,047  
                 

Earnings per Share

               
Continuing operations - Basic   $ 0.10     $ 4.68     $ (1.00 )   $ 1.82  
Discontinued operations - Basic     -       -       -       0.85  
Total - Basic Earnings (Loss) per Share   $ 0.10     $ 4.68     $ (1.00 )   $ 2.67  
                 

Diluted Earnings Per Share

               
Continuing operations - Diluted   $ 0.10     $ 0.65     $ (1.00 )   $ 0.78  
Discontinued operations - Diluted     -       -       -       0.13  
Total - Basic Earnings (Loss) per Share   $ 0.10     $ 0.65     $ (1.00 )   $ 0.91  
                                 

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”), Adjusted EBITDA, and Hotel EBITDA as non-GAAP financial measures that we believe are useful to investors as key measures of our operating results and that 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 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 to FFO and AFFO for the three months and years ended December 31, 2017 and 2016 (in thousands, except share and per share amounts). All amounts presented include both continuing and discontinued operations as well as our portion of the results of our unconsolidated Atlanta joint venture, the Atlanta Aloft JV, of which we own 80%.

         
   

Three months ended

December 31,

 

Years ended

December 31,

Reconciliation of Net earnings to FFO and AFFO

  2017   2016   2017   2016
Net earnings   $ 1,348     $ 4,639     $ 2,901     $ 23,522  
Depreciation and amortization expense     2,085       1,094       6,898       5,190  
Depreciation and amortization expense from JV     288       283       1,140       377  
Net gain on disposition of assets     (2,004 )     (7,318 )     (6,807 )     (23,813 )
Net loss on disposition of assets from JV     3       1       7       2  
Impairment loss, net     553       220       2,151       1,477  
FFO     2,273       (1,081 )     6,290       6,755  
Dividends declared and undeclared and in kind dividends deemed on preferred stock     (165 )     (975 )     (12,244 )     (20,748 )
FFO attributable to common shares and common units     2,108       (2,056 )     (5,954 )     (13,993 )
Net gain on derivatives and convertible debt     (20 )     (72 )     (436 )     (6,377 )
Net loss on derivatives from JV     -       5       2       5  
Acquisitions and terminated transactions expense     80       175       1,250       550  
Acquisition expense from JV     -       15       -       239  
Equity and terminated transactions     -       -       343       -  
Loss on debt extinguishment     167       639       967       2,187  
Stock-based compensation and LTIP expense     572       77       1,237       305  
Amortization of deferred financing fees     340       105       1,066       597  
Amortization of deferred financing fees from JV     45       22       181       68  
Non-recurring dividends above stated rates declared and undeclared and in kind dividends deemed on preferred stock     20       -       11,110       16,738  
AFFO attributable to common shares and common units   $ 3,312     $ (1,090 )   $ 9,766     $ 319  
                 
FFO attributable to common shares and partnership units - Basic and Diluted   $ 2,108     $ (2,056 )   $ (5,954 )   $ (13,993 )
                 
FFO per common share and partnership unit - Basic   $ 0.18     $ (2.26 )   $ (0.22 )   $ (15.40 )
FFO per common share and partnership unit - Diluted   $ 0.18     $ (2.26 )   $ (0.22 )   $ (15.40 )
                 
Weighted average common shares and partnership units - Basic FFO     11,698,642       910,632       9,558,182       908,593  
Weighted average common shares and partnership units - Diluted FFO     11,718,966       910,632       9,558,182       908,593  
                 
AFFO attributable to common shares and partnership units - Basic   $ 3,312     $ (1,090 )   $ 9,766     $ 319  
Convertible note interest     16       -       63       -  
Preferred dividends at stated rates     144       -       1,134       -  
AFFO attributable to common shares and partnership units - Diluted   $ 3,472     $ (1,090 )   $ 10,963     $ 319  
                 
AFFO per common share and partnership unit - Basic   $ 0.28     $ (1.20 )   $ 1.02     $ 0.35  
AFFO per common share and partnership unit - Diluted   $ 0.28     $ (1.20 )   $ 0.98     $ 0.35  
                 
Weighted average common shares and partnership units - Basic AFFO     11,698,642       910,632       9,558,182       908,593  
Weighted average common shares and partnership units - Diluted AFFO     12,484,346       910,632       11,213,584       908,593  
                                 

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 partnership units, which is FFO reduced by preferred stock dividends. AFFO is FFO attributable to common shares and partnership 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 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 partnership unit because our partnership units are redeemable for common shares. We believe it is meaningful for the investor to understand FFO and AFFO applicable to common shares and partnership units.

EBITDA, Adjusted EBITDA, and Hotel EBITDA

The following table reconciles net earnings to EBITDA, Adjusted EBITDA, and Hotel EBITDA for the three months and years ended December 31, 2017 and 2016 (in thousands). All amounts presented include both continuing and discontinued operations as well as our portion of the results of our unconsolidated Atlanta Aloft JV.

                 
    Three months ended

December 31,

  Year ended

December 31,

Reconciliation of Net earnings to EBITDA, Adjusted EBITDA, and Hotel EBITDA

  2017   2016   2017   2016
Net earnings   $ 1,348     $ 4,639     $ 2,901     $ 23,522  
Interest expense     1,706       1,006       5,174       4,715  
Interest expense from JV     471       427       1,941       618  
Loss on debt extinguishment     167       639       967       2,187  
Income tax expense (benefit)     (645 )     125       (595 )     125  
Depreciation and amortization expense     2,085       1,094       6,898       5,190  
Depreciation and amortization expense from JV     288       283       1,140       377  
EBITDA     5,420       8,213       18,426       36,734  
Net gain on disposition of assets     (2,004 )     (7,318 )     (6,807 )     (23,813 )
Net loss on disposition of assets from JV     3       1       7       2  
Impairment loss, net     553       220       2,151       1,477  
Net gain on derivatives and convertible debt     (20 )     (72 )     (436 )     (6,377 )
Net loss on derivative from JV     -       5       2       5  
Stock-based compensation and LTIP expense     572       77       1,237       305  
Acquisition and terminated transactions expense     80       175       1,250       550  
Acquisition and terminated transactions expense from JV     -       15       -       239  
Equity and terminated transactions expense     -       -       343       -  
Adjusted EBITDA     4,604       1,316       16,173       9,122  
General and administrative expense, excluding stock compensation and LTIP expense     1,275       1,623       5,315       5,487  
Other expense (income), net     28       32       111       (55 )
Unallocated hotel and property operations expense     43       77       351       467  
Hotel EBITDA   $ 5,950     $ 3,048     $ 21,950     $ 15,021  
                 
Revenue   $ 15,278     $ 10,470     $ 55,453     $ 50,653  
JV revenue     1,987       1,914       9,266       2,962  
Total Company and JV revenue   $ 17,265     $ 12,384     $ 64,719     $ 53,615  
Hotel EBITDA as a percentage of revenue     34 %     25 %     34 %     28 %
                                 

We calculate EBITDA and Adjusted EBITDA by adding back to net earnings or loss certain non-operating expenses and certain non-cash charges that 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. In calculating Adjusted EBITDA, we adjust EBITDA to add back net gain/loss on disposition of assets, acquisition and terminated transactions expense, and equity transactions expense, which are cash charges. We also add back impairment, stock –based compensation expense, and gain/loss on derivatives and convertible debt, which are non-cash charges. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

We believe EBITDA and Adjusted EBITDA 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 EBITDA 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 months and years ended December 31, 2017 and 2016 (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 December 31, 2017, with the exception of the Residence Inn Austin which was opened on August 3, 2016 (no prior period results available) and reflect the performance of these 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. All amounts presented include both continuing and discontinued operations as well as 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 Same-Store to Actual
    Three months ended

December 31,

  Year ended

December 31,

    2017   2016   2017   2016
Condor and JV Revenue - Actual   $ 17,265     $ 12,384     $ 64,719     $ 53,615  
Revenue earned on properties owned at December 31, 2017 prior to the Company's ownership, including the JV prior to ownership and excluding the Residence Inn Austin     -       7,378       8,344       34,984  
Revenue earned on properties disposed of prior to December 31, 2017 during the period of ownership     (367 )     (3,987 )     (5,004 )     (25,069 )
Revenue earned on Residence Inn Austin subsequent to ownership     (1,025 )     -       (1,386 )     -  
Total Revenue - Same-Store   $ 15,873     $ 15,775     $ 66,673     $ 63,530  
                 
    Revenue - Same-Store by Type
    Three months ended

December 31,

  Year ended

December 31,

    2017   2016   2017   2016
New investment platform   $ 13,722     $ 13,377     $ 57,064     $ 54,255  
Legacy held for use     767       895       3,612       3,399  
Legacy held for sale     1,384       1,503       5,997       5,876  
Total Revenue - Same-Store   $ 15,873     $ 15,775     $ 66,673     $ 63,530  
                 
    Hotel EBITDA - Reconciliation of Same-Store to Actual
    Three months ended

December 31,

  Year ended

December 31,

    2017   2016   2017   2016
Condor and JV Hotel EBITDA - Actual   $ 5,950     $ 3,048     $ 21,950     $ 15,021  
Hotel EBITDA earned on properties owned at December 31, 2017 prior to the Company's ownership, including the JV prior to ownership and excluding the Residence Inn Austin     -       3,056       3,416       13,738  
Hotel EBITDA earned on properties disposed of prior to December 31, 2017 during the period of ownership     (98 )     (952 )     (1,144 )     (6,330 )
Hotel EBITDA earned on Residence Inn Austin subsequent to ownership     (391 )     -       (528 )     -  
Total Hotel EBITDA - Same-Store   $ 5,461     $ 5,152     $ 23,694     $ 22,429  
                 
    Hotel EBITDA - Same-Store by Type
    Three months ended

December 31,

  Year ended

December 31,

    2017   2016   2017   2016
New investment platform   $ 5,075     $ 4,493     $ 21,175     $ 19,861  
Legacy held for use     190       324       1,145       1,124  
Legacy held for sale     196       335       1,374       1,444  
Total Hotel EBITDA - Same-Store   $ 5,461     $ 5,152     $ 23,694     $ 22,429  
                 
    Hotel EBITDA Margin by Property Type
    Three months ended

December 31,

  Year ended

December 31,

    2017   2016   2017   2016
Adjusted new investment platform, including JV     37.0 %     33.6 %     37.1 %     36.6 %
Legacy held for use     24.8 %     36.2 %     31.7 %     33.1 %
Legacy held for sale     14.2 %     22.3 %     22.9 %     24.6 %
Total Portfolio     34.4 %     32.7 %     35.5 %     35.3 %
                                 

Non-GAAP Measures Included in 2018 Guidance and Outlook

The following tables reconcile forecast net earnings to forecast FFO and AFFO and forecast EBITDA, Adjusted EBITDA, and Hotel EBITDA for the year ending December 31, 2018 (in millions, except per share amounts) using the definitions of these non-GAAP measures as discussed above.

         
    Low   High
Forecast net earnings   $ 1.7     $ 2.5  
Depreciation and amortization expense     11.4       11.4  
Net gain on disposition of assets     -       -  
Forecast FFO     13.1       13.9  
Preferred dividends     (0.6 )     (0.6 )
Forecast FFO attributable to common shares and common units     12.5       13.3  
Acquisitions and terminated transactions expense     -       -  
Stock-based compensation and LTIP expense     1.0       1.0  
Amortization of deferred financing fees     0.2       0.2  
Forecast AFFO attributable to common shares and common units - Basic   $ 13.7     $ 14.5  
         
Forecast AFFO attributable to common shares and common units - Diluted   $ 14.3     $ 15.1  
Forecast AFFO per common share and common unit - Diluted   $ 1.13     $ 1.19  
Diluted common shares and common units     12.7       12.7  
         
    Low   High
Forecast net earnings   $ 1.7     $ 2.5  
Interest expense     8.5       8.5  
Depreciation and amortization expense     11.4       11.4  
Forecast EBITDA     21.5       22.4  
Acquisitions and terminated transactions expense     -       -  
Stock-based compensation and LTIP expense     1.0       1.0  
Net gain on disposition of assets     -       -  
Forecast Adjusted EBITDA     22.5       23.4  
Cash general and administrative expense and other expenses     6.3       6.3  
Forecast Hotel EBITDA (17 Hotels)   $ 28.8     $ 29.7  
                 

Condor Hospitality Trust, Inc.

Operating Statistics

The following tables present our same-store occupancy, Average Daily Rate (“ADR”), and RevPAR for all our hotels owned at December 31, 2017, with the exception of the Austin Residence Inn, which was opened on August 3, 2016 (no prior period results available). 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 80% ownership of the Atlanta Aloft 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 December 31,
    2017   2016
    Occupancy   ADR   RevPAR   Occupancy   ADR   RevPAR
Solomons Hilton Garden Inn   74.48 %   $ 113.86   $ 84.80   67.21 %   $ 116.60   $ 78.37
Atlanta Hotel Indigo   71.90 %   $ 101.34   $ 72.86   67.45 %   $ 101.61   $ 68.54
Jacksonville Courtyard by Marriott   73.03 %   $ 113.20   $ 82.67   75.48 %   $ 110.91   $ 83.72
San Antonio SpringHill Suites   83.78 %   $ 120.32   $ 100.80   71.22 %   $ 121.70   $ 86.68
Leawood Aloft   77.34 %   $ 126.88   $ 98.13   79.81 %   $ 123.95   $ 98.92
Lexington Home2 Suites   79.97 %   $ 114.35   $ 91.44   78.09 %   $ 113.64   $ 88.74
Round Rock Home2 Suites   80.47 %   $ 114.07   $ 91.80   78.13 %   $ 117.46   $ 91.77
Tallahassee Home2 Suites   77.92 %   $ 133.72   $ 104.19   88.37 %   $ 121.32   $ 107.21
South Haven Home2 Suites   87.07 %   $ 109.76   $ 95.56   92.03 %   $ 108.24   $ 99.61
Lake Mary Hampton Inn & Suites   88.50 %   $ 128.98   $ 114.15   82.19 %   $ 113.00   $ 92.87
El Paso Fairfield Inn   71.46 %   $ 99.54   $ 71.13   82.12 %   $ 106.75   $ 87.66
Wholly owned new investment platform properties   78.51 %   $ 116.81   $ 91.71   78.41 %   $ 114.24   $ 89.57
Atlanta Aloft JV   63.02 %   $ 142.94   $ 90.09   66.11 %   $ 132.30   $ 87.46
Total new investment platform   76.01 %   $ 120.31   $ 91.45   76.42 %   $ 116.76   $ 89.23
                         
Legacy hotels held for sale   54.15 %   $ 88.63   $ 47.99   63.99 %   $ 81.24   $ 51.99
Legacy hotels held for use   61.12 %   $ 66.55   $ 40.68   75.95 %   $ 63.29   $ 48.07
Total legacy   56.76 %   $ 79.74   $ 45.26   68.46 %   $ 73.80   $ 50.52
                         
Total portfolio   71.48 %   $ 112.73   $ 80.58   74.55 %   $ 107.48   $ 80.12
                         
Austin Residence Inn   69.38 %   $ 131.24   $ 91.06   -     $ -   $ -
                         
     
    Year ended December 31,
    2017   2016
    Occupancy   ADR   RevPAR   Occupancy   ADR   RevPAR
Solomons Hilton Garden Inn   79.21 %   $ 118.73   $ 94.04   71.66 %   $ 119.48   $ 85.61
Atlanta Hotel Indigo   73.86 %   $ 101.62   $ 75.06   70.27 %   $ 103.87   $ 72.99
Jacksonville Courtyard by Marriott   74.40 %   $ 114.03   $ 84.84   76.77 %   $ 113.63   $ 87.23
San Antonio SpringHill Suites   80.24 %   $ 128.61   $ 103.19   72.18 %   $ 124.46   $ 89.83
Leawood Aloft   81.18 %   $ 126.94   $ 103.05   81.81 %   $ 125.70   $ 102.83
Lexington Home2 Suites   82.70 %   $ 114.67   $ 94.84   78.84 %   $ 111.76   $ 88.11
Round Rock Home2 Suites   83.18 %   $ 118.31   $ 98.41   84.51 %   $ 117.86   $ 99.61
Tallahassee Home2 Suites   81.48 %   $ 125.71   $ 102.42   79.63 %   $ 117.00   $ 93.17
South Haven Home2 Suites   90.40 %   $ 115.25   $ 104.18   92.74 %   $ 113.73   $ 105.47
Lake Mary Hampton Inn & Suites   84.51 %   $ 122.91   $ 103.87   75.75 %   $ 111.77   $ 84.67
El Paso Fairfield Inn   72.26 %   $ 104.49   $ 75.51   75.96 %   $ 107.85   $ 81.92
Wholly owned new investment platform properties   80.05 %   $ 117.76   $ 94.27   77.95 %   $ 115.29   $ 89.87
Atlanta Aloft JV   76.66 %   $ 137.60   $ 105.49   72.62 %   $ 137.61   $ 99.94
Total new investment platform   79.51 %   $ 120.85   $ 96.08   77.09 %   $ 118.68   $ 91.49
                         
Legacy hotels held for sale   62.37 %   $ 84.47   $ 52.68   61.22 %   $ 83.70   $ 51.24
Legacy hotels held for use   72.01 %   $ 68.53   $ 49.34   70.39 %   $ 64.94   $ 45.71
Total legacy   65.97 %   $ 77.96   $ 51.43   64.65 %   $ 76.06   $ 49.18
                         
Total portfolio   76.32 %   $ 112.12   $ 85.58   74.16 %   $ 109.94   $ 81.54
                         
Austin Residence Inn   76.02 %   $ 132.12   $ 100.43   -     $ -   $ -
                         
 
Condor Hospitality Trust, Inc.
Property List | As of the Date of this Release
 
New Investment Platform | Acquired from January 1, 2012 - March 19, 2018

Ref

 

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 New Investment Platform           1,908       $288.1
                         
Current Legacy Hotel Portfolio

Ref

 

Hotel Name

 

City

 

State

 

Rooms

 

Acquisition Date

 

Status2

16   Super 8   Creston   IA   121   09/19/1978   Hold3
17   Quality Inn   Solomons   MD   59   06/01/1986   Hold
18   Comfort Suites   Ft. Wayne   IN   127   11/07/2005   HFS
    Total           307        
                         
    Total Portfolio | As of March 19, 2018           2,215        
                         
1 | Owned 80% by Condor
2 | HFS indicates the asset was marketed as held for sale at December 31, 2017
3 | Asset considered HFS subsequent to December 31, 2017
 
                         
Dispositions | For Period January 1, 2015 - March 19, 2018

Ref

 

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
    Total 2018           176       $8.2
                         
    Total Dispositions           4,389       $153.4
                         
 
Acquisitions | For Period January 1, 2015 - March 19, 2018

Ref

 

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

 



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