Toggle SGML Header (+)


Section 1: 8-K (8-K)

8Kearningsrelease

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8‑K

CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934



August 7, 2018

Date of report (Date of earliest event reported)



Condor Hospitality Trust, Inc.

(Exact Name of Registrant as Specified in Its Charter)



Maryland

(State or Other Jurisdiction of Incorporation)



 

1-34087

52-1889548

(Commission File Number)

(IRS Employer Identification No.)

4800 Montgomery Lane, Suite 220

 

Bethesda, MD

20814

(Address of Principal Executive Offices)

(Zip Code)



 

(402) 371-2520

(Registrant’s Telephone Number, Including Area Code)



(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


 

Item 2.02  Results of Operations and Financial Condition.

On August 7, 2018, Condor Hospitality Trust, Inc. issued a press release on its earnings for the quarter ended June 30, 2018.  The press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits.

(d)  Exhibits.



 

99.1

Press Release dated August 7, 2018.




 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



 



Condor Hospitality Trust, Inc.



 

Date: August 7, 2018

By:  /s/ Arinn Cavey



Name: Arinn Cavey



Title: Chief Accounting Officer










(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Earnings Release Q2 2018







 

Picture 3

Picture 1





For Immediate Release



Condor Hospitality Trust Reports Second Quarter 2018 Results



BETHESDA, MD, August 7, 2018 – Condor Hospitality Trust, Inc. (NYSE American: CDOR) (the “Company”) today announced results for the second quarter ended June 30, 2018.  



SECOND QUARTER RELEASE FINANCIAL HIGHLIGHTS



·

Revenue of $17.8 million a 25% Increase to Revenue of $14.3 million in Last Year’s Second Quarter

·

Net Earnings Attributable to Common Shareholders of $2.7 million, or $0.23 per Diluted Share, compared to $4.7 million, or $0.37 per share in Last Year’s Second Quarter, which included an incremental $3.0 million Net Gain on Disposition of Assets; excluding Last Year’s additional Net Gain on Disposition of Assets, the increase in Net Earnings Attributable to Common Shareholders would have been 62% versus Last Year’s Second Quarter

·

Adjusted Funds from Operations Increased to $4.2 million, or $0.34 per Diluted Share, a 48% increase from $2.8 million in Last Year’s Second Quarter

·

Hotel EBITDA Increased to $8.0 million from $5.7 million, and Adjusted EBITDAre Increased 60% Over Last Year’s Second Quarter

·

Achieved 4.6%  Second Quarter Same-Store RevPAR Growth over Prior Year*

·

Expanded Second Quarter Same-Store Hotel EBITDA Margin by 230 Basis Points to 39.4% over Prior Year*



SECOND QUARTER PORTFOLIO ACCOMPLISHMENTS



·

Sold One Legacy Asset Generating $7.1 million in Gross Proceeds

·

Placed One Legacy Asset Under Contract for Sale with Expected Gross Proceeds of $5.1 million



*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:



Condor continues to grow new investment platform hotel revenues, operating income, and financial metrics as we once again delivered robust operating results in the second quarter of 2018Through our differentiated investment strategy, we achieved 4.6% same-store RevPAR growth and expanded hotel EBITDA margins by 230 bps on our new investment platform hotels.  Our investment strategy and asset management efforts are responsible for another quarter of extremely  favorable operating performance



We also continued to push towards the complete transformation of the portfolio in the second quarter.  We sold one legacy hotel asset for gross proceeds of $7.1 million and placed an additional legacy hotel under contract for sale with expected gross proceeds of $5.1 million.  We now have only two legacy hotels remaining, one of which is under contract to be sold.    Additionally, during the quarter we made significant progress towards making additional acquisitions that match our investment strategy.  When the next acquisition is announced and subsequently completed, it would be the sixteenth new investment platform hotel in our portfolio of high-quality, select-service assets in attractive growth markets.”



1

 


 

FINANCIAL SUMMARY

At June 30, 2018, the Company’s total portfolio included 17 hotels, representing 2,088 rooms.



Total Company Financial Results

($ in millions except per share amounts)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended June 30,

 

Six months ended June 30,



2018

 

2017

 

Change

 

2018

 

2017

 

Change

Revenue

$

17.8 

 

$

14.3 

 

25.1% 

 

$

34.5 

 

$

24.6 

 

40.2% 

Net Earnings (Loss) Attributable to Common Shareholders

$

2.7 

 

$

4.7 

 

-41.1%

 

$

3.4 

 

$

(9.3)

 

N/A

Diluted Earnings (Loss) per Share

$

0.23 

 

$

0.37 

 

-37.8%

 

$

0.28 

 

$

(1.28)

 

N/A



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from Operations (FFO)*

$

3.8 

 

$

2.6 

 

44.2% 

 

$

7.0 

 

$

1.9 

 

273.1% 

FFO per Diluted Share*

$

0.30 

 

$

0.18 

 

66.7% 

 

$

0.56 

 

$

(1.35)

 

N/A

Adjusted FFO*

$

4.2 

 

$

2.8 

 

47.7% 

 

$

7.7 

 

$

3.2 

 

143.4% 

Adjusted FFO per Diluted Share*

$

0.34 

 

$

0.24 

 

41.7% 

 

$

0.63 

 

$

0.40 

 

57.5% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel EBITDA*

$

8.0 

 

$

5.7 

 

41.5% 

 

$

15.4 

 

$

9.7 

 

59.0% 

Adjusted EBITDAre*

$

6.6 

 

$

4.1 

 

59.7% 

 

$

12.4 

 

$

6.6 

 

88.0% 



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



NEW INVESTMENT PLATFORM

At June 30, 2018, the Company’s new investment platform included 15 hotels, representing 1,908 rooms.



New Investment Platform Operational Results**

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





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended June 30,

 

Six months ended June 30,



2018

 

2017

 

Change

 

2018

 

2017

 

Change

Same-Store RevPAR

$

104.95 

 

$

100.37 

 

4.6% 

 

$

103.49 

 

$

99.27 

 

4.2% 

Same-Store Occupancy

 

84.00% 

 

 

82.01% 

 

2.4% 

 

 

81.88% 

 

 

80.70% 

 

1.5% 

Same-Store ADR

$

124.95 

 

$

122.40 

 

2.1% 

 

$

126.39 

 

$

123.01 

 

2.8% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Hotel EBITDA*^

$

6.6 

 

$

5.7 

 

15.4% 

 

$

12.8 

 

$

11.9 

 

7.9% 

Same-Store Hotel EBITDA Margin*

 

39.4% 

 

 

37.1% 

 

2.3% 

 

 

39.2% 

 

 

37.9% 

 

1.3% 



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

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

^  Due to differences in the allocation of JV preferred returns, JV activity was approximately 42% attributed to Condor in the second quarter of 2017 (to bring total year to date allocations to 80% in 2017) and 80% attributed to Condor in the second quarter of 2018.  Year to date allocations are at 80% for both periods presented.

2

 


 

LEGACY PLATFORM

At June 30, 2018, the Company’s legacy platform included 2 hotels, representing 180 rooms.



Legacy Platform Operational Results*

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





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended June 30,

 

Six months ended June 30,



2018

 

2017

 

Change

 

2018

 

2017

 

Change

Same-Store RevPAR

$

51.47 

 

$

55.67 

 

-7.5%

 

$

45.28 

 

$

50.48 

 

-10.3%

Same-Store Occupancy

 

73.20% 

 

 

79.31% 

 

-7.7%

 

 

66.09% 

 

 

75.40% 

 

-12.3%

Same-Store ADR

$

70.31 

 

$

70.19 

 

0.2% 

 

$

68.51 

 

$

66.95 

 

2.3% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Hotel EBITDA*

$

0.3 

 

$

0.4 

 

-12.9%

 

$

0.5 

 

$

0.6 

 

-14.4%

Same-Store Hotel EBITDA Margin*

 

35.5% 

 

 

37.7% 

 

-2.2%

 

 

31.1% 

 

 

32.8% 

 

-1.7%



* 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 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 53 legacy assets for a total gross sales price of approximately $161 million.



Acquisitions

During the second quarter of 2018, the Company did not acquire any hotels. However, during the quarter we made significant progress towards making additional acquisitions that match our investment strategy.



Dispositions

During the second quarter of 2018, the Company sold the Comfort Suites in Fort Wayne, IN for $7.1 millionNet proceeds from the sales were applied to outstanding debt on the Company’s $150 million secured credit facility.  The Company has only two legacy hotels remaining in the portfolio, and one of these hotels, the Super 8 in Creston, IA, is currently under contract for sale with expected gross proceeds of $5.1 million. 



The Company continues to evaluate all capital raising alternatives and opportunities to grow through the continued acquisition of high-quality, select-service assets primarily in secondary markets



BALANCE SHEET AND CAPITAL MARKETS ACTIVITY

As of June 30, 2018, the Company had cash and cash equivalents (including restricted cash) of $11.3 million and available revolver borrowing capacity of $5.7 million.  As of June 30, 2018, the Company had total outstanding long-term debt of $142.2 million associated with assets held for use with a weighted average maturity of 2.6 years and a weighted average interest rate of 4.76%.



During the second quarter of 2018, the Company sold 16,140 shares of common stock under the ATM program at an average sales price of $10.40 per share for net proceeds totaling approximately $0.2 million



CAPITAL INVESTMENTS

The Company invested $1.2 million in capital improvements throughout the portfolio in the quarter ended June 30, 2018, to upgrade its properties and maintain brand standards.



OUTLOOK AND GUIDANCE







 

 

 

 

 

 

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

 

 

 

 

 

 

    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.

3

 


 

DIVIDENDS

On May  23, 2018, the Board of Directors declared a quarterly cash common stock dividend of $0.195 per share for the second quarter of 2018.  The common stock dividend represented an annualized yield of approximately 7.6% based on the closing price of the Company’s common shares on May  22, 2018.  The second quarter dividend was paid on July 3, 2018 to shareholders of record as of June 15, 2018.



EARNINGS CALL

The Company will conduct its quarterly conference call on Wednesday,  August 8, 2018, at 9:00 AM ET.  To participate in the conference call, dial 1-877-425-9470 [International: 1-201-389-0878] approximately ten minutes before the call begins.



A live webcast of the Earnings Call will also be available through the Company's website. To access, log on to http://condorhospitality.com ten minutes prior to the call. A replay of the conference call webcast will be archived and available online through the Investor Relations section of http://condorhospitality.com.  



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 17 hotels in 9 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

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual events, results or performance to differ from those projected presented in the forward-looking statement. These forward-looking statements are based on assumptions that management has made in light of experience in the business in which the Company operates, as well as other factors management believes to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of events, performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect events, performance or results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include among other things, risk factors described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

4

 


 

SELECTED FINANCIAL DATA:



Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Balance Sheets

 (Unaudited - In thousands, except share and per share data)







 

 

 

 

 

 



 

As of



 

June 30, 2018

 

December 31, 2017



 

 

 

 

 

 

Assets

 

 

 

 

 

 

Investment in hotel properties, net

 

$

238,364 

 

$

205,730 

Investment in unconsolidated joint venture

 

 

7,078 

 

 

7,747 

Cash and cash equivalents

 

 

5,920 

 

 

5,441 

Restricted cash, property escrows

 

 

5,419 

 

 

4,894 

Accounts receivable, net

 

 

1,953 

 

 

1,707 

Prepaid expenses and other assets

 

 

2,719 

 

 

3,220 

Derivative assets, at fair value

 

 

975 

 

 

391 

Investment in hotel properties held for sale, net

 

 

1,205 

 

 

13,850 

Total Assets

 

$

263,633 

 

$

242,980 



 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 



 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

$

7,099 

 

$

7,046 

Dividends and distributions payable

 

 

2,479 

 

 

2,470 

Convertible debt, at fair value

 

 

1,050 

 

 

1,069 

Long-term debt, net of deferred financing costs

 

 

139,300 

 

 

112,621 

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

 

 

2,352 

 

 

7,960 

Total Liabilities

 

 

152,280 

 

 

131,166 



 

 

 

 

 

 

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 $9,395

 

 

10,050 

 

 

10,050 

Common stock, $.01 par value, 200,000,000 shares authorized; 11,881,570 and 11,833,573 shares outstanding

 

 

119 

 

 

118 

Additional paid-in capital

 

 

231,474 

 

 

230,727 

Accumulated deficit

 

 

(131,739)

 

 

(130,489)

Total Shareholders' Equity

 

 

109,904 

 

 

110,406 

Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $962 and $871

 

 

1,449 

 

 

1,408 

Total Equity

 

 

111,353 

 

 

111,814 



 

 

 

 

 

 

Total Liabilities and Equity

 

$

263,633 

 

$

242,980 

5

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited - In thousands, except per share data)









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 



 

Three months ended June 30,

 

Six months ended June 30,



 

2018

 

2017

 

2018

 

2017

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Room rentals and other hotel services

 

$

17,834 

 

$

14,252 

 

$

34,513 

 

$

24,613 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Hotel and property operations

 

 

10,756 

 

 

9,224 

 

 

21,170 

 

 

16,837 

Depreciation and amortization

 

 

2,444 

 

 

1,769 

 

 

4,703 

 

 

2,820 

General and administrative

 

 

1,605 

 

 

1,511 

 

 

3,474 

 

 

3,003 

Acquisition and terminated transactions

 

 

71 

 

 

215 

 

 

90 

 

 

717 

Equity transactions

 

 

 -

 

 

 -

 

 

 -

 

 

343 

Total operating expenses

 

 

14,876 

 

 

12,719 

 

 

29,437 

 

 

23,720 

Operating income

 

 

2,958 

 

 

1,533 

 

 

5,076 

 

 

893 

Net gain on disposition of assets

 

 

1,895 

 

 

4,852 

 

 

1,871 

 

 

4,849 

Equity in earnings of joint venture

 

 

63 

 

 

25 

 

 

292 

 

 

136 

Net gain on derivatives and convertible debt

 

 

156 

 

 

227 

 

 

603 

 

 

402 

Other expense, net

 

 

(20)

 

 

(39)

 

 

(34)

 

 

(40)

Interest expense

 

 

(2,091)

 

 

(1,092)

 

 

(4,019)

 

 

(2,063)

Loss on debt extinguishment

 

 

 -

 

 

 -

 

 

 -

 

 

(800)

Impairment (loss) recovery, net

 

 

 -

 

 

(479)

 

 

93 

 

 

(750)

Earnings before income taxes

 

 

2,961 

 

 

5,027 

 

 

3,882 

 

 

2,627 

Income tax expense

 

 

(54)

 

 

(35)

 

 

(183)

 

 

(35)

Net earnings

 

 

2,907 

 

 

4,992 

 

 

3,699 

 

 

2,592 

Earnings attributable to noncontrolling interest

 

 

(21)

 

 

(67)

 

 

(27)

 

 

(17)

Net earnings attributable to controlling interests

 

 

2,886 

 

 

4,925 

 

 

3,672 

 

 

2,575 

Dividends declared and in kind dividends deemed on preferred stock

 

 

(145)

 

 

(271)

 

 

(289)

 

 

(11,874)

Net earnings (loss) attributable to common shareholders

 

$

2,741 

 

$

4,654 

 

$

3,383 

 

$

(9,299)



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

 

Total - Basic Earnings (Loss) per Share

 

$

0.23 

 

$

0.40 

 

$

0.28 

 

$

(1.28)

Total - Diluted Earnings (Loss) per Share

 

$

0.23 

 

$

0.37 

 

$

0.28 

 

$

(1.28)



 

 

 

 

 

 

 

 

 

 

 

 

 



6

 


 

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 to FFO and AFFO for the three and six months ended June 30, 2018 and 2017 (in thousands). All amounts presented include our portion of the results of our unconsolidated Atlanta JV.











 

 

 

 

 

 

 

 

 

 

 



Three months ended June 30,

 

Six months ended June 30,

Reconciliation of Net earnings to FFO and AFFO

2018

 

2017

 

2018

 

2017

Net earnings

$

2,907 

 

$

4,992 

 

$

3,699 

 

$

2,592 

Depreciation and amortization expense

 

2,444 

 

 

1,769 

 

 

4,703 

 

 

2,820 

Depreciation and amortization expense from JV

 

292 

 

 

214 

 

 

577 

 

 

568 

Net gain on disposition of assets

 

(1,895)

 

 

(4,852)

 

 

(1,871)

 

 

(4,849)

Net loss on disposition of assets from JV

 

 

 

 

 

14 

 

 

Impairment loss (recovery), net

 

 -

 

 

479 

 

 

(93)

 

 

750 

FFO

 

3,755 

 

 

2,604 

 

 

7,029 

 

 

1,884 

Dividends declared and in kind dividends deemed on preferred stock

 

(145)

 

 

(271)

 

 

(289)

 

 

(11,874)

FFO attributable to common shares and common units

 

3,610 

 

 

2,333 

 

 

6,740 

 

 

(9,990)

Net gain on derivatives and convertible debt

 

(156)

 

 

(227)

 

 

(603)

 

 

(402)

Net loss on derivative from JV

 

 -

 

 

 

 

 -

 

 

Acquisition and terminated transactions expense

 

71 

 

 

215 

 

 

90 

 

 

717 

Equity transactions expense

 

 -

 

 

 -

 

 

 -

 

 

343 

Loss on debt extinguishment

 

 -

 

 

 -

 

 

 -

 

 

800 

Stock-based compensation and LTIP expense

 

263 

 

 

80 

 

 

665 

 

 

157 

Amortization of deferred financing fees

 

364 

 

 

280 

 

 

717 

 

 

416 

Amortization of deferred financing fees from JV

 

46 

 

 

33 

 

 

91 

 

 

90 

Non-recurring dividends above stated rates declared and in kind dividends deemed on preferred stock

 

 -

 

 

127 

 

 

 -

 

 

11,030 

AFFO attributable to common shares and common units

$

4,198 

 

$

2,843 

 

$

7,700 

 

$

3,163 







 

 

 

 

 

 

 

 

 

 

 

FFO attributable to common shares and common units - Basic Shares

$

3,610 

 

$

2,333 

 

$

6,740 

 

$

(9,990)

Convertible note interest and fair value adjustments

 

17 

 

 

(9)

 

 

13 

 

 

 -

Preferred dividends and fair value adjustments

 

158 

 

 

(95)

 

 

337 

 

 

 -

FFO attributable to common shares and common units - Diluted Shares

$

3,785 

 

$

2,229 

 

$

7,090 

 

$

(9,990)



 

 

 

 

 

 

 

 

 

 

 

FFO per common share and common unit - Basic

$

0.30 

 

$

0.20 

 

$

0.57 

 

$

(1.35)

FFO per common share and common unit - Diluted

$

0.30 

 

$

0.18 

 

$

0.56 

 

$

(1.35)



 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common units - Basic FFO

 

11,875,093 

 

 

11,705,933 

 

 

11,855,295 

 

 

7,421,791 

Weighted average common shares and common units - Diluted FFO

 

12,648,633 

 

 

12,494,519 

 

 

12,641,162 

 

 

7,421,791 











 

 

 

 

 

 

 

 

 

 

 

AFFO attributable to common shares and common units - Basic Shares

$

4,198 

 

$

2,843 

 

$

7,700 

 

$

3,163 

Convertible note interest

 

16 

 

 

16 

 

 

32 

 

 

32 

Preferred dividends at stated rates

 

145 

 

 

144 

 

 

289 

 

 

650 

AFFO attributable to common shares and common units - Diluted Shares

$

4,359 

 

$

3,003 

 

$

8,021 

 

$

3,845 



 

 

 

 

 

 

 

 

 

 

 

AFFO per common share and common unit - Basic

$

0.35 

 

$

0.24 

 

$

0.65 

 

$

0.43 

AFFO per common share and common unit - Diluted

$

0.34 

 

$

0.24 

 

$

0.63 

 

$

0.40 

7

 


 



 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common units – Basic AFFO

 

11,875,093 

 

 

11,705,933 

 

 

11,855,295 

 

 

7,421,791 

Weighted average common shares and common units – Diluted AFFO

 

12,648,633 

 

 

12,494,519 

 

 

12,641,162 

 

 

9,496,127 



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 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.  

8

 


 

EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA



The following table reconciles net earnings to EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA for the three and six months ended June 30, 2018 and 2017 (in thousands). All amounts presented our portion of the results of our unconsolidated Atlanta JV.







 

 

 

 

 

 

 

 

 

 

 



Three months ended June 30,

 

Six months ended June 30,

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

2018

 

2017

 

2018

 

2017

Net earnings

$

2,907 

 

$

4,992 

 

$

3,699 

 

$

2,592 

Interest expense

 

2,091 

 

 

1,092 

 

 

4,019 

 

 

2,063 

Interest expense from JV

 

518 

 

 

330 

 

 

1,010 

 

 

992 

Loss on debt extinguishment

 

 -

 

 

 -

 

 

 -

 

 

800 

Income tax expense

 

54 

 

 

35 

 

 

183 

 

 

35 

Depreciation and amortization expense

 

2,444 

 

 

1,769 

 

 

4,703 

 

 

2,820 

Depreciation and amortization expense from JV

 

292 

 

 

214 

 

 

577 

 

 

568 

EBITDA

 

8,306 

 

 

8,432 

 

 

14,191 

 

 

9,870 

Net gain on disposition of assets

 

(1,895)

 

 

(4,852)

 

 

(1,871)

 

 

(4,849)

Net loss on disposition of assets from JV

 

 

 

 

 

14 

 

 

Impairment loss (recovery), net

 

 -

 

 

479 

 

 

(93)

 

 

750 

EBITDAre

 

6,418 

 

 

4,061 

 

 

12,241 

 

 

5,774 

Net gain on derivatives and convertible debt

 

(156)

 

 

(227)

 

 

(603)

 

 

(402)

Net loss on derivative from JV

 

 -

 

 

 

 

 -

 

 

Stock-based compensation and LTIP expense

 

263 

 

 

80 

 

 

665 

 

 

157 

Acquisition and terminated transactions expense

 

71 

 

 

215 

 

 

90 

 

 

717 

Equity transactions expense

 

 -

 

 

 -

 

 

 -

 

 

343 

Adjusted EBITDAre

 

6,596 

 

 

4,131 

 

 

12,393 

 

 

6,591 

General and administrative expense, excluding stock compensation and LTIP expense

 

1,342 

 

 

1,431 

 

 

2,809 

 

 

2,846 

Other expense, net

 

20 

 

 

39 

 

 

34 

 

 

40 

Unallocated hotel and property operations expense

 

59 

 

 

65 

 

 

148 

 

 

197 

Hotel EBITDA

$

8,017 

 

$

5,666 

 

$

15,384 

 

$

9,674 



 

 

 

 

 

 

 

 

 

 

 

Revenue

$

17,834 

 

$

14,252 

 

$

34,513 

 

$

24,613 

JV revenue

 

2,484 

 

 

1,851 

 

 

5,102 

 

 

4,840 

Condor and JV revenue

$

20,318 

 

$

16,103 

 

$

39,615 

 

$

29,453 

Hotel EBITDA as a percentage of revenue

 

39.5% 

 

 

35.2% 

 

 

38.8% 

 

 

32.8% 



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 transactions 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. 



9

 


 

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 six months ended June 30, 2018 and 2017 (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 June 30, 2018, with the exception of the Austin TownePlace Suites  (opened on January 3, 2017) and the Summerville Home2 Suites (opened on July 18, 2017), for which prior period results are not available for all periods presented, 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 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 June 30,

 

Six months June 30,



 

2018

 

2017

 

2018

 

2017

Condor and JV Revenue - Actual*

 

$

20,318 

 

$

16,103 

 

$

39,615 

 

$

29,453 

Revenue earned on properties owned at June 30, 2018 prior to the Company's ownership, excluding the Austin TownePlace Suites and the Summerville Home2 Suites

 

 

 -

 

 

3,228 

 

 

 -

 

 

10,190 

Revenue earned on properties disposed of prior to June 30, 2018 during the period of ownership

 

 

(496)

 

 

(2,909)

 

 

(1,657)

 

 

(6,425)

Revenue earned on Austin TownePlace Suites and Summerville Home2 Suites subsequent to ownership

 

 

(2,161)

 

 

 -

 

 

(3,574)

 

 

 -

Total Revenue - Same-Store*

 

$

17,661 

 

$

16,422 

 

$

34,384 

 

$

33,218 







 

 

 

 

 

 

 

 

 

 

 

 



 

Revenue - Same-Store by Type



 

Three months ended June 30,

 

Six months June 30,



 

2018

 

2017

 

2018

 

2017

New investment platform*

 

$

16,729 

 

$

15,414 

 

$

32,745 

 

$

31,402 

Legacy held for use

 

 

333 

 

 

426 

 

 

598 

 

 

805 

Legacy held for sale

 

 

599 

 

 

582 

 

 

1,041 

 

 

1,011 

Total Revenue - Same-Store*

 

$

17,661 

 

$

16,422 

 

$

34,384 

 

$

33,218 









 

 

 

 

 

 

 

 

 

 

 

 



 

Hotel EBITDA - Reconciliation of Same-Store to Actual



 

Three months ended June 30,

 

Six months June 30,



 

2018

 

2017

 

2018

 

2017

Condor and JV Hotel EBITDA - Actual*

 

$

8,017 

 

$

5,666 

 

$

15,384 

 

$

9,674 

Hotel EBITDA earned on properties owned at June 30, 2018 prior to the Company's ownership, excluding the Austin TownePlace Suites and the Summerville Home2 Suites

 

 

 -

 

 

1,237 

 

 

 -

 

 

4,230 

Hotel EBITDA earned on properties disposed of prior to June 30, 2018 during the period of ownership

 

 

(101)

 

 

(808)

 

 

(345)

 

 

(1,415)

Hotel EBITDA earned on Austin TownePlace Suites and Summerville Home2 Suites subsequent to ownership

 

 

(992)

 

 

 -

 

 

(1,699)

 

 

 -

Total Hotel EBITDA - Same-Store*

 

$

6,924 

 

$

6,095 

 

$

13,340 

 

$

12,489 

10

 


 







 

 

 

 

 

 

 

 

 

 

 

 



 

Hotel EBITDA - Same-Store by Type



 

Three months ended June 30,

 

Six months June 30,



 

2018

 

2017

 

2018

 

2017

New investment platform*

 

$

6,593 

 

$

5,715 

 

$

12,830 

 

$

11,893 

Legacy held for use

 

 

74 

 

 

116 

 

 

117 

 

 

193 

Legacy held for sale

 

 

257 

 

 

264 

 

 

393 

 

 

403 

Total Hotel EBITDA - Same-Store*

 

$

6,924 

 

$

6,095 

 

$

13,340 

 

$

12,489 







 

 

 

 

 

 

 

 

 

 

 

 



 

Hotel EBITDA Margin by Property Type



 

Three months ended June 30,

 

Six months June 30,



 

2018

 

2017

 

2018

 

2017

New investment platform

 

 

39.4% 

 

 

37.1% 

 

 

39.2% 

 

 

37.9% 

Legacy held for use

 

 

22.2% 

 

 

27.2% 

 

 

19.6% 

 

 

24.0% 

Legacy held for sale

 

 

42.9% 

 

 

45.4% 

 

 

37.8% 

 

 

39.9% 

Total Portfolio - Same-Store

 

 

39.2% 

 

 

37.1% 

 

 

38.8% 

 

 

37.6% 



* Due to differences in the allocation of JV preferred returns, JV activity was approximately 42% attributed to Condor in the second quarter of 2017 (to bring total year to date allocations to 80% in 2017) and 80% attributed to Condor in the second quarter of 2018.  Year to date allocations are at 80% for both periods presented.

11

 


 

Non-GAAP Measures Included in 2018 Guidance and Outlook



The following tables reconcile forecast net earnings to forecast FFO and AFFO and forecast EBITDA, EBITDAre, Adjusted EBITDAre, 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.













 

 

 

 

 

 

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

 

 

 

 

 

 

    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 











 

 

 

 

 

 



 

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 

Net gain on disposition of assets

 

 

 -

 

 

 -

Forecast EBITDAre

 

 

21.5 

 

 

22.4 

Acquisitions and terminated transactions expense

 

 

 -

 

 

 -

Stock-based compensation and LTIP expense

 

 

1.0 

 

 

1.0 

Forecast Adjusted EBITDAre

 

 

22.5 

 

 

23.4 

Cash general and administrative expense and other expenses

 

 

6.3 

 

 

6.3 

Forecast Hotel EBITDA

 

$

28.8 

 

$

29.7